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Joint Venture

Joint Venture



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Published by _Rahul_Sayal_6078

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Published by: _Rahul_Sayal_6078 on Apr 08, 2010
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Globlisation means linking the economy of a country with the economies of other countries by means of free trade, free mobility of capital and labour, etc. it also meansinviting multinational corporations to invest in India. Economic Reforms assume thatIndian economy should have close link with the world economy. As a result, therewill be unrestricted flow of goods and services, technology and expertise amongdifferent countries of the world. These will be creased cooperation of Indian economywith different economies across the world. Capital and technology will flow from thedeveloped countries of the world towards India.
1.1.Effects of Globalization on Indian Economy(1) Increase in Foreign Trade:
As a result of foreign trade policies adopted in thewake of globalization, India’s share in the world trade has gone up. In 1990-91,India’s share in world trade was 0.53 per cent. In 1995-96, it rose to 0.60 per cent. In2005-06 it further increased to 1.0 per cent.
(2) Increase in Foreign Investment:
As a consequence of globalization, there has been a considerable increase in foreign direct investment as well as foreign portfolioinvestment.
(a)Foreign Direct Investment (FDI):
Foreign Direct Investment is made by foreigncompanies in order to establish wholly owned companies in another country and tomanage them or to purchase share of companies in another country for the purpose of managing such companies. The main characteristic of foreign direct investment is thatnative companies are managed by the foreign companies or new companies are set upin India by foreign companies. In this type of investment, it is the foreign investor who takes risk and is solely responsible for profit/loss of such company.
(b)Portfolio Investment:
Under this type of investment, foreign companies/foreigninstitutional investor (FIIs) buy shares/debentures of native companies, however management and control remain vested with the native companies themselves. There1
is significant increase in foreign investment in India. In the year 1990-91, totalforeign investment (FDI and Portfolio investment) was US$ 103 million. In the year 2005-2006 amount of foreign investment increase to US$ 20,155 million. Because of significant increase in foreign investment, India began to experience a surplus balanceof payments and very remarkable improvement in foreign exchange reserves.
(3) Increase in Foreign Collaboration:
Globalization has promoted collaboration of foreign companies with many India companies. These collaboration agreements can betechnical collaboration. Financial collaboration or both. In financial collaboration,foreign technology is provided by foreign companies. Foreign companies are settingup many enterprises in India in collaboration with Indian companies.
(4) Increase in Foreign Exchange Reserves:
As a result of globalization of Indianeconomy, foreign exchange reserves have also increased substantially. In 1991,foreign exchange reserves of India amounted to Rs.4,388, crore which in 2006-07increased to Rs.7,96,000 crore (US$ 185.1 billion). Thus, there has been an increaseof 181 times in foreign exchange reserves of India.
(5) Expansion of Market:
Globalization has expanded the size of market. It has permitted Indian business units to expand its business in the whole world. Nowmultinational corporations have no national boundaries. Indian companies likeInfosys. Tata Consultancy, Wipro, Tata Steel etc, doing their business in manycountries. 
(6) Technological Development:
Globalisation has enabled the inflow of foreigntechnology, which is very superior and advance. Now Indian business units use thismodern technology.
(7) Brand Development:
Globalisation has promoted the use of branded goods. Now branded goods are not only durable goods but products of daily use like soap, cold-drinks, tooth-paste, garments, food grains, etc., are also branded. Foreign brands are2
very popular among Indian consumers. Brand-development has led to qualityimprovement.
(9) Development of Service Sector:
Globalization has helped in growth of servicesector. With the entry of foreign companies, tremendous improvement has beenwitnessed in various services like telecommunication, insurance, banking, e.g. nowmobile phones are very cheap and popular in India.
(10) Increase in Employment:
Globalization has promoted employmentopportunities. Foreign companies are establishing their production and trading units inIndia. It has increased employment opportunities for Indian, e.g. many Indians are presently employed in foreign insurance companies, mobile companies, etc.
(11) Reduction in Brain Drain:
As a result of globalization, many multinationalcorporations have set up their business units in India. These MNCs provide attractivesalary package and good working conditions to efficient, skilled Indian engineers,managers, professionals, etc. Now Indians get good employment opportunities inIndia. It has resulted in reduction of brain drain.
(12) Improvement in Standard of Living:
As a result of globalization, the standard of living of Indian population has improved. Now Indian get better quality goods at low prices.Globalisation has resulted in reduction of prices many products particularly electronic itemslike television, A.C., mobile phones, refrigerator, etc. now middle-income group also usesthese luxury products, why
 joint venture
(often abbreviated
) is an entity formed betweentwo or more parties to undertake economic activity together. The parties agree to create anew entity by both contributingequity, and they then share in therevenues,expenses,and control of the enterprise. The venture can be for one specific project only, or a continuing business relationship such as theFuji Xeroxjoint venture. This is in contrast to astrategic  alliance,which involves no equity stake by the participants, and is a much less rigidarrangement.3

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