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ROLE OF MNC’S IN INDIAN ECONOMY

INTRODUCTION Economists are not in agreement as to how multinational or transnational corporations should be defined. Multinational corporations have many dimensions and can be viewed from several perspectives (ownership, management, strategy and structural, etc.) The following is an excerpt from Franklin Root (International Trade and Investment, 1994) Ownership criterion: some argue that ownership is a key criterion. A firm becomes multinational only when the headquarter or parent company is effectively owned by nationals of two or more countries. For example, Shell and Unilever, controlled by British and Dutch interests, are good examples. However, by ownership test, very few multinationals are multinational. The ownership of most MNCs is uninational. (See videotape concerning the SmithCorona versus Brothers case) Depending on the case, each is considered an American multinational company in one case, and each is considered a foreign multinational in another case. Thus, ownership does not really matter. Nationality mix of headquarter managers: An international company is multinational if the managers of the parent company are nationals of several countries. Usually, managers of the headquarters are nationals of the home country. This may be a transitional phenomenon. Very few companies pass this test currently. Business Strategy: global profit maximization According to Howard Perlmutter (1969): Multinational companies may pursue policies that are home country-oriented. or host country-oriented or world-oriented. Perlmutter uses such terms as ethnocentric, polycentric and geocentric. However, "ethnocentric" is misleading because it focuses on race or ethnicity, especially when the home country itself is populated by many different races, whereas "polycentric" loses its meaning when the MNCs operate only in one or two foreign countries. According to Franklin Root (1994), an MNC is a parent company that engages in foreign production through its affiliates located in several countries, exercises direct control over the policies of its affiliates, implements business strategies in production, marketing, finance and staffing that transcend national boundaries.

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ROLE OF MNC’S IN INDIAN ECONOMY

Foreign Direct Investment
FDI or Foreign Direct Investment refers to the investment of foreign currency and other valuable resources by Multinationals into the host country. FDI allows the host country to earn valuable foreign exchange that can be used for future imports or to pay off existing loans of the country. The Government of the host country controls the FDI levels in various segments of the economy such as Telecom, Retail, Tourism, Infrastructure, Research and Development, Automobile and so on. Perhaps the biggest advantage of MNCs is the influx of valuable Foreign Exchange. FDI is required by a developing economy such as ours to tap unexplored resources and put them to more productive use. A series of ambitious economic reforms aimed at stimulating foreign investment has moved India into the front ranks of the rapidly growing Asia Pacific region.
 

The Finance Minister cleared 46 proposals of foreign direct investment (FDI) amounting to Rs 408.22 crore (US$ 93.4 million) in July 2004. With a half-billion strong middle class, consumer demand in India will grow sky high. According to some estimates, 487 million middle-class Indians will spend an additional $420 billion during the next four years.

It is evident. The investment scenario in India has changed. And the figures say that it is for the better.

There has been a sharp rise in the number of FDIs approved in 2004. During the first seven months of 2004, between January and July, Rs 5,220 crore worth of FDI was approved. This figure, which accounts for only seven months of 2004, amounts to 96 per cent of the total FDI approved during the full year of 2003. The actual FDI inflow too is expected to surpass last year's figure -- during the first seven months of 2004 actual FDI inflow at Rs 9.503 crore was more than 80 per cent of what the country received in 2003.

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78 billion in July 2004. and plans to increase the limit for investment in the infrastructure sector.ROLE OF MNC’S IN INDIAN ECONOMY In a bid to stimulate the sector further. which was acting as a deterrent to foreign investors. 3 . India's foreign exchange reserves raised $700 million to a record high of $120. The government has scrapped Press Note 18. It has set up an Investment Commission that will garner investments in the infrastructure sector among others. the government is working on a series of ambitious economic reforms. The FDI cap for aviation has been hiked from 40 to 49 per cent through the automatic route.     The Centre has divested some of its own powers of approving foreign investments that it exercised through the Foreign Investment Promotion Board (FIPB) and has handed them over to the general permission route under the RBI.

One can easily find the showrooms of the multinational automobile companies like Fiat.National Corporation) is an organization whose scope of operation is not limited to a single country. the number of multinational companies in India has increased noticeably. with a value of 22. India today is improving industrially every day. Outbound acquisitions and mergers from India. The later one is in fact one of the earliest entrants in the list of multinational companies in India. according to Grant Thornton. Start-ups and new ventures are increasing day by day in India. Belgium and Finland have come to India or have outsourced their works to this country. French Heavy Engineering major Alstom and Pharma major Sanofi Aventis have also started their operations in this country. account for about 37% of the turnover of the top 20 firms operating in India. stood as 198 in number in the year 2010. Netherlands. And India has been the home to a number of multinational companies.38 billion dollars. 4 . since the financial liberalization in the country in 1991. India has a huge market for automobiles and hence a number of automobile giants have stepped in to this country to reap the market. Piaggio. but the scenario has changed a lot off late. In fact. There are also MNCs like British Petroleum and Vodafone that represent Britain. Multinational companies are the organizations or enterprises that manage production or offer services in more than one country. Germany.the majority of the MNC in India. and Ford Motors in India.ROLE OF MNC’S IN INDIAN ECONOMY ROLE OF MNC IN INDIAN ECONOMY A MNC (Multi.5 billion dollars. when compared with the previous year 2009. Emerging talents and entrepreneurship has begun to create prosperity to Indian business sector. Globalization of Indian multinational enterprises which were undertaken historically through Greenfield investments is now taking place through mergers and acquisitions across nations. Italy. whose value were worth 1. There are also a number of oil companies and infrastructure builders from Middle East. The multinational companies in India represent a diversified portfolio of companies from different countries. which was 82 in number. France. which is currently growing at a very enviable rate. . Electronics giants like Samsung and LG Electronics from South Korea have already made a substantial impact on the Indian electronics market. Finnish mobile giant Nokia has their second largest base in this country. which is remarkably high. Hyundai Motors has also done well in mid-segment car market in India. More enterprises from European Union like Britain. Though the American companies .

etc. What are the primary responsibilities. etc. Moreover it has been identified that almost 83% of the value of outbound acquisitions in India between the years 2000 and 2009. GE. 5 . accountability and moral resp to be set and imposed on Multi-national companies spreading their wings in India? Globalization is the driver to multi-nationalism. with this. In this process. was made in developed countries. Similarly. Another instance where entrepreneurs are running ancillary and distribution business for large retail and industrial manufacturers like 3M India. logevity. Large MNCs (Fortune 500 companies) have looked at India as potential growth market. there has been huge loss to small and medium enterprises when a foreign company enters Indian market to offer their products and services. for example under huge trust and confidence. which was an increase of 9. as Indian Economy would be the 4th Largest Economy in terms of Purchasing Power parity and by 2025 it is projected to be about 60% of US Economy.. who have invested in products and solutions. On the other hand. such companies end up selling with desperation and close down their business in a short span.87 billion dollars over the same period in the year 2009. but to lose the money where they have paid it through nose. according to a weekly supplement of Reserve Bank of India. emotional fitment and the cost. Outbound mergers and acquisitions are keeping on increasing every day.. India’s foreign exchange reserves as on June 4 of 2010 was around 271 billion dollars. the balancing act between the RICH and the POOR is not maintained. 100's of MNCs coming into Indian Market in the name of liberalization every year. SMEs in specific. These MNCs load these small and medium entrepreneurs with such terms and conditions that protect the principal companies than the entrepreneurs. those who have/having potential to do multi-million $ business are being acquired and/or merged with the world's large organizations. Internationalization of Indian organizations is taking place in almost all sector right from automobile sector to pharmaceutical sector. stand nowhere.ROLE OF MNC’S IN INDIAN ECONOMY This makes it clear that the internationalization process is taking place at a rapid pace in India. Not all such companies see growth & profits unless the local needs are met in terms of requirements. Yes. This has created and/or increased the wealth of the stake holders of Indian companies including employees. However. Large corporations whose entry into Indian Economy has resulted in mergers and acquisitions in a big way through FDI.

creating havoc in the latter's organizations. pouching of resources from those distributors. how do we protect the interest of our own people's interest and how our Governments act in favor of our own countrymen in the days to come. The question is. It is just a minute's job for them to close down the business leaving all its employees and distributors in lurch. 6 .ROLE OF MNC’S IN INDIAN ECONOMY Recent experience in the Indian market. than the economic condition of our country and its people. For such MNCs. Such brutal act on MNC's part is killing the entrepreneurship in India. global strategies matters more. the imbalance between rich and poor is well maintained and no such efforts are being put in to bring the living of millions of our country.. where one of the large MNCs established the business through distribution network (where direct selling was self-prohibited) has started direct selling. In this corrupt economy. etc.

9 %.s operating here. S. this company is making constant progress in global markets to maintain its leading position. one of the software giant’s has got their headquarter in New Delhi. who have their headquarters of operational branches based in the nation IBM IBM India Private Limited. Indian businesses are acquiring companies abroad. Not only over the Indian sky. The country has got many M. Many Indian firms have slowly and surely embarked on the global path and lead to the emergence of the Indian multinational companies. of the U. enterprises and people. The net income of this company post completion of the financial year end of 2010 was $14. C.8 billion with a net profit margin of 14. N. named as Microsoft Corporation India Private Limited. Present in more than 200 cities. With each passing day.) Limited (Marketing Division) Microsoft Global Services India Microsoft Global Technical Support Centre Microsoft India Development Center Microsoft IT 7 . While an Asian Paints is painting the world red. Starting its operation in the country from 1990. hardware as well as services. Following are names of some of the most famous multinational companies. who build a smart planet. this company is making a constant progress in India. becoming world-popular suppliers and are recruiting staff cutting across nationalities. this company has got the following business units:      Microsoft Corporation India (Pvt. With innovative technology and solutions. a part of IBM has been operating from this country since the year 1992. Microsoft: A subsidiary. This global company is known for invention and integration of software. Tata is rolling out Indicas from Birmingham and Sundram Fasteners nails home the fact that the Indian company is an entity to be reckoned with. is flying high. which assist forward thinking institutions.ROLE OF MNC’S IN INDIAN ECONOMY Top multinational corporation in India India Inc. (United States) based Microsoft Corporation.

T. Their first onsite for the installation of renewable power generation are already in place. . they are even to set up Bridge Centers in the country for supporting reemployment. which is presently valued at $ 500 billion. 760 million in 2010. this food manufacturing company intends to triple their portfolio of enjoyable and wholesome offerings.4 billion as compared to 2009's EUR 41 billion. Working in close association with all the stakeholders including the Government of India. Nokia Corporation: Nokia Corporation was started in the year 1865. Besides new developments to fight against mineral conflicts. 569 million in 2009 to $ 18. which have got new and interesting competencies and technologies so as to enhance their ability of creating the mobile world. Being one of the leading mobile companies in India.ROLE OF MNC’S IN INDIAN ECONOMY  Microsoft Research India The net income of Microsoft Corporation grew from $ 14. entered the Indian market with the name of PepsiCo India from the year 1989. PepsiCo: PepsiCo. Over the past few years. this company has emerged as one of the fast growing as well as largest beverage and food manufacturer. the company is committed towards the development of the Indian software as well as I. their stylish product range includes the following:      Normal mobile handsets Smartphone’s Touch screen phones Dual sim phones Business phone The net sales of the company increased by 4 % in the last financial year with sales of EUR 42. Within a short time span of 20 years. As per the annual report of the company in the last business year. The expansion of their Good-For-You portfolio is believed to be assisting the company in attaining the competitive advantage of the growing packaged nutrition market in the world. the net revenue of PepsiCo grew by 33 %. 8 . By the year 2020. Inc. . this company in India has been acquiring companies. (Information Technology) industry.

Headquartered in this nation. they are offering value adding products as well.. this company is making a continuous endeavor to enter the new global markets. In between the last and the current financial year. a subsidiary of Adidas AG. Tata Consultancy Services: Commonly known as T. This renowned company is presently looking forward to the 10 big deals that they have received besides the Credit. As far as Bravia TVs are concerned. started their business in the country from the year 1961. research based. S. integrated pharmaceutical company is the producer of a huge range of affordable cum quality medicines that are trusted by both patients and healthcare professionals all over the world. T. 2011. Business Process Outsourcing (B. Apart from their alliance with Cross Fit that is among the largest contemporary fitness movements. For this. Sony: Sony India is a part of the renowned brand name Sony Corporation. Successful development of business forms the key component of their trading strategy. this multinational company is a famous name in the field of I. Adidas's currency neutralized group sales increased by 9 %. one of the biggest pharmaceutical companies in India. In the business year 2010. Reebok International Limited: This global brand is a famous name in the field of sports as well as lifestyle products. 868 Mn. which started their business operation in the year 1946 in Japan. which have got high potential. Apart from overseas acquisitions. is based in U. 2011. C.ROLE OF MNC’S IN INDIAN ECONOMY Ranbaxy Laboratories Limited: Ranbaxy Laboratories Limited. the registered global sales of the company was US $ 1. the company showed a remarkable increase in the share related to numerous categories.9 % during the latest quarter of this financial year. The company made its public appearance in 1973 though. A. This company is a subsidiary of the Tata Group. Reebok International Limited. By the end of the business year 2010 on 31st March. P. Sony India is planning to invest around INR 150 crore for the marketing of the activities related to ATL and BTL.) as well as business solutions. Tata Consultancy earned a growth of 8. Reebok's announcement of its partnership with artist. 9 . in the current year. O. (Information Technology) services. . which ended on 30th September. this international. this company has captured one of the leading positions in the field of consumer electronics goods. Established in India in November 1994. The first center for software researching was established in the country in 1981 in the city of Pune. they are looking forward to hold their market share of 30 %. the number of their outlets in the country increased by 1. designer and producer Swizz Beatz reflects its long term future growth. S.000. During the last financial year. (United States of America) started its operation in 1890s.

which was its business partner in India. Established in the year 1945.). Much later in 2011. K. 472 m from £ 41. Earlier known as Vodafone Essar and Hutchison Essar. 10 . this company. The parent company Hutchison started its business in the year 1992 along with the Max Group. They are one of the top 3 passenger vehicle manufacturers. The turnover of the Vodafone Group Plc after the completion of the last financial year grew to £ 44. 017 m that was the turnover of the business year 2009. Tata Motors Limited. Tata Motors Limited: The biggest automobile company in India. Vodafone Group Plc decided to buy out mobile operating business of Essar Group. which has got it's headquarter based in London in the United Kingdom (U. Some of their well known products of the company are categorized in the following heads:     Commercial Vehicles Defense Security Vehicles Homeland Security Vehicles Passenger Vehicles Post completion of the financial year 2010 to 2011.ROLE OF MNC’S IN INDIAN ECONOMY Vodafone: Vodafone Group Plc is an international telecommunication company. the global sales of the company grew by 24. Vodafone India is among the largest operators of mobile networking in the country. a part of the famous Tata Group. is among the leading commercial vehicles manufacturer in the country.2 % with sales crossing INR 1million. its partner. has got its manufacturing units located in different parts of the nation.

S.613 million in the year 2009. however one can also find companies from other countries as well. The list of multinational companies in India is ever-growing. General Electric. MNCs are investing with long term horizon to help India realize its potential in new areas. Hence. The MNCs are bringing in and adapting global best practices to help solve local problems and help India get interlinked better with the global economy. issued by the UNCTAD (United Nations Conference on Trade and Development). There are a number of reasons why the multinational companies are coming down to India. According to the World Investment Report 2010. MNCs are now developing more strategic partnerships with the Indian industry. MNCs have become growth partners and have a major role to play in India’s development. Microsoft. Pros: India offers a grand opportunity to the MNCs with its large pool of talent and a market that is fast growing. India has got a huge market. IBM. Pepsi. The rise of MNCs in India is going to be a hot topic at the Group Discussion rounds at B-schools this year. since the financial liberalization in the country in 1991. Oracle and Coca-Cola.ROLE OF MNC’S IN INDIAN ECONOMY Rise of MNC & its Advantages & Disadvantages India has been the home to a number of multinational companies.. the FDI inflow into India has been US$ 34. Intel. Ford. Colgate Palmolive. Texas Instruments. virtually all the big MNCs in the world have operations in India. Besides. Though majority of the multinational companies in India are from the U. To help you prepare well and increase your knowledge bank today we discuss the pros and cons about the rise of MNCs in India. Today. BAT. 11 . The MNCs and the Indian industry are gaining a lot from each other. the policy of the government towards FDI has also played a major role in attracting the multinational companies in India. it is clear that India provides a green ground to the MNCs. General Motors. It has also got one of the fastest growing economies in the world. These include Unilever. Procter & Gamble. In fact. India is now considered by many MNCs to be a strategically important market. the number of multinational companies in India has increased noticeably. China is the only other country from the Asian region that tops the list of countries with largest FDI inflows for the year 2009.

MNC's have made entire world a Global Village. but has created vast difference between those who have and those who have not. Cons: Though it has given boost to our economy. Rich have become richer while the poor have become poorer. agriculture. Example. Monopoly reduction. provided education and health care for communities whose workforces they rely upon. And this has helped us to develop our businesses to compete with any country. new work culture. biotech. 12 . Bharti Group and many others. foreign reserves and more physical means to enjoy. not just the affluent class. nuclear. Filling the gaps left by government. increased foreign exchange. Other key positive points: Brain gain instead of brain drain. and implemented environmental programs to protect precious natural resources needed to keep supply chains running smoothly. Multinationals create false needs in consumers and have had a long history of interference in the policies of sovereign nation states. and it is not only job opportunities.ROLE OF MNC’S IN INDIAN ECONOMY MNCs are focusing on catering to the larger population. MNCs have built roads in rural India that help them deliver their goods. This understanding of international markets has contributed to Indian companies going multinational. We have understood what global market demands are. such as Tata. but we are able to really understand where we stand in the international scenario. Hindustan Unilever Limited MNCs are helping diffuse technology and innovation in key sectors. no profit except taxes remain in home country  Employment imbalance  Give rise to materialistic societies. cheaper goods. Other Negative points:  Indigenous products may suffer  Security threat might be there  Often. defense. MNC's have influenced the whole business infrastructure in India. solar energy. diversified portfolios. such as Pharma.

Furthermore. Ashok Leyland. As a result conducting business in the Automotive Industry has become more competitive and sophisticated. Big names of the vehicle industry like the Korean giant. In other vehicle segments too. Audi etc. On the other hand. Ford. Employment opportunities are emerging with Manufacturers.0 per cent in April-December. Mitsubishi. In the two-wheeler segment besides the other major MNC brands made available to the Indian consumers. Mercedes Benz. has been on an upswing for the past few years. Annual growth was 16. Suzuki. which increases the demand for multi skilled personnel. Leasing & Financing. and Fiat to come up with plants in India. The high growth observed since 2001-02 in automobile production continued in the first three quarters of the 2004-05. General Motors. have carved out their niche. have already opened their account. Hyundai. Dealership Operations including Parts. Toyota.1 percent. Certain important sectors are considered and the actual effects of MNCs i. and Mitsubishi etc.e. This has opened up numerous opportunities or employment in this sector for trained and skilled professionals who are well versed in the latest manufacturing process. Service. resulting in all round development. and Bajaj are revamping their production strategies and launching new models designed and developed indigenously. Sales. the growth rate in 2003-04 was 15. we have analyzed the Indian Economy and the way in which multinational have added more value and increased the exports. Multinational giants are vying with one other to launch their models. The post liberation economical scenario has resulted in all the big names such as General Motors. Volvo. Manufacturing in India has also come of age. The growth curve of India Auto Inc. we have the actual analysis of the effect of MNCs on various Indian Industrial Sectors. the practical way in which they are affected are studied viz. Mahindra.ROLE OF MNC’S IN INDIAN ECONOMY IMPACT OF MNC ON DIFFERENT SECTORS So far. 2004. as well as in the fast developing Automotive Aftermarket sector. 13 .  Impact of MNCs on Automobile industry The present scenario is a highly transformed one. The Indian automotive giants like Telco. Honda. GDP and productivity. Mercedes-Benz.

Ashok Leyland. Porsche is bringing in the Cayenne and Toyota is planning a simultaneous release of its IMV. Note. these models are the latest cars zipping on international roads and not the dated versions that were passed on earlier.ROLE OF MNC’S IN INDIAN ECONOMY Consequent to liberalization. Maruti Udyog. The Indian economy grew by 7. The picture is about to brighten further. manufacturing exports from India are likely to grow to $300 billion in 2015 from $48 billion in 2003. Manufacturing grew 8 percent in the quarter. India has become a launch pad Rising sales and strong growth prospects heightened the popularity of auto stocks in July 2004 as foreign institutional investors (FIIs) increased their stakes in key automobile companies like Mahindra & Mahindra.  Impact on the Indian Manufacturing sector The resurgence of India's manufacturing sector has been quite magical.5 per cent share of the world manufacturing trade. the arrival of new and contemporary models. the sector is fast spreading its tentacles abroad as many Indian manufacturing firms inch close to becoming true blue multinationals. compared with 7. Global names such as Daimler Chrysler and Porsche have begun introducing their new offerings in India. TVS Motors and Hero Honda. The automotive industry is the barometer of any major economy and the same holds true for India as well. in India by October-November 2004. DaimlerChrysler plans to launch the new Mercedes SLK roadster. 14 . The country would then have a 3. which has just hit European roads.6 percent in the previous quarter. easy availability of finance at relatively low rate of interest and price discounts offered by the dealers and manufacturers appear to have stimulated the demand for vehicles and a strong growth of the industry. buoyed by growth in manufacturing and services.4 percent in the April-to-June quarter. There has been a phenomenal growth in the automotive manufacturing sector in our economy.  According to a CII-McKinsey report. FY2005. Not only are profits soaring.

The two most important destinations for Indian FDI last year were the US and the Russian Federation. the industry has to clock a growth of 17 per cent every year as against the 11 per cent rate at which it is growing at present.000 cr.$90 billion is expected to come from just four sectors . Mexico 15 .     Of Rs 200. while Europe accounted for 40 per cent of the total outflow.000 cr will come from internal generation Half of this debt may come through the ECB route Most corporate are going for Brownfield expansion Rising interest rates won't impact India Inc's investments With annual outflows averaging at $1 billion.ROLE OF MNC’S IN INDIAN ECONOMY    To reach the $300 billion target.000 crore over the next two years. auto components. Of the total $300 billion.apparel. Manufacturing firms on expansion binge Manufacturing companies are planning to invest as much as Rs 200. specialty chemicals and electrical and electronic products. Rs 100. Some large Indian investments    ONGC's 25 per cent stake buy-out in a Sudan oil firm from Talisman Energy of Canada for $720 million (around Rs 3. a call centre in the Philippines Msource's Spanish language centre in Tijuanna. India's exports in these sectors were $10 billion in 2002. the country's ranking in UNCTAD's outward FDI performance index has already shot up from the 107th position in 1999 to the 61st spot in 2003. accounting for around 37 per cent of the total Indian overseas investments during last year. $70. Manufacturing exports from India grew 20 per cent in 2003 over the previous year.312 crore) The Hinduja's purchase of controlling interest in C3.

Global consumer electronics giant Matsushita of Japan has decided to source Panasonic color television sets from India for its international market. others have Indian arms to supply to global markets.ROLE OF MNC’S IN INDIAN ECONOMY Manufacturing Outsourcing India is fast developing into a manufacturing hub for world corporations wanting to leverage the sector's proven skills in product design. assured quality and value addition. South Korean two-wheeler major Hyosung is making India the manufacturing hub for its 250cc cruiser bike.      GE has entered into an OEM deal with Thermax India to supply chillers for the latter's power systems. Colgate is setting up a brand new toothpaste facility in western India which will be one of 15 such facilities across the world. 16 . reconfiguration and customization with creativity. While some MNCs enter into OEM deals to source components. Ford Motor Company is aiming to source US$ 120-160 million worth of auto components from Indian manufacturers over the next two years under its India Sourcing Program. About 20 percent of Indian automotive production in 2004 is exported to developed countries. Aquila through a technical tieup with Pune-based Kinetic Engineering.

The Top Five The top five Indian IT companies based on FY04 revenues-TCS. and the Standard Chartered Bank. As a result. According to Nasscom. setting up centers across the world and competing with the top tier global IT companies. Currently India is the Power House. the software industry has overtaken the gems and jewellery as well as textiles industries.ROLE OF MNC’S IN INDIAN ECONOMY Impact on IT (Information Technology) sector Information Technology enabled Services (ITES) by MNCs has probably generated the maximum number of sunshine stories in the Indian industry in the last few years. Infosys. the likelihood is restricted to only the top five and. The world software Arena. IT is now an industry. The global locations for Infosys. Wipro acquired Nervewire. Satyam and HCL Technologies-are the prime contenders in the race to the Fortune 500. to become the number one exporter in the country. These companies serve some of the top clients globally including the likes of GE. Ericsson. a Deutsche Bank-owned outfit. The top companies are indeed rapidly expanding their global outlook and reach. Some of them are the big home-grown IT Services companies like Infosys. Transco. which is growing by leaps and bounds both through participation by captive units of multinationals and third party providers of Indian origin. a USbased financial services consultant and utilities' practice of consultancy AMS. Prudential. the way things are shaping up the companies that are most likely to make it are going to be the ones from the current top 10 because the dip-offs in size are sharp beyond the top 10. Experts feel that even within the top 10 the dip-offs start getting sharper after the top three to five companies. to the top three. the remaining two are already half way through to that mark. these companies have also been open to foreign acquisitions and JVs. Wipro and Tata Consultancy Services (TCS). to expand their global footprint. Deutsche Bank. Wipro. Wipro and HCL Technologies range between 10-20 countries. TCS is located across over 30 countries and serves clients in around 60. HCL 17 . While the first three have made it to the billion-dollar club. And the acquisition list is very long: TCS acquired Phoenix Global Services (technology solution provider). American Express. According to Karnik. In the last two to three years. Ford. Infosys acquired Expert Information Services of Australia and US-based Trade IQ product division of IQ Financial Systems. more specifically.

600 employees in software operations and 3. HP is in the process of acquiring the public stake of Indian software services exporter.7 149 63 10.000 in HP's Global e-Business.6 HP marks Indian employment milestone Hewlett-Packard has become the largest multinational IT employer in India Beating more well-known contenders such as IBM. DGS had a headcount of 4.400 by the end of September this year. with another 2. turning its current 51 percent stake into an acquisition.ROLE OF MNC’S IN INDIAN ECONOMY Tech has acquired majority stake in Aalayance.23 79. reported the daily. Intel and Microsoft. With another 800 from sales and support teams. the back office division. a business integration firm with offices in San Jose.000 staff.7 23 8. with more than 10.800 staff.6 15.9 20. IBM's headcount goes over 10. US.000 employees. Digital Global Soft (DGS). 18 . HewlettPackard has recently become India's largest multinational IT employer. HP's total rises to around 10. Including the DGS employees.1 14. Some IT MNCs in 2004 Global Fortune 500 Name Revenues ($ bn) Market Cap ($ bn) IBM HP EDS Accenture CSC 96.

while HP has a smaller overall headcount of around 140.000 global employees. With Indian outsourcing a hot topic in the US and other source markets. Big Blue also has a relatively weaker presence in India compared to HP.000 people by the end of 2004. wants to rise from its current 3. Other large foreign companies in India are also expanding.000 employees within the next two years. 6. the Economic Times said none of the IT MNC executives it contacted were willing to comment on their hiring plans.000 to rival HP with more than 10. While Microsoft officially says it only has 700 staff in India now.000 by the end of this year. Of the estimated 320. and that they expected it to hire 3.000 now and Oracle will expand to 4. most of them working for GE's business-process outsourcing and call-centre operations. Cisco has 3.000 in India in 2005. beating HP and the rest of the MNCs in India for IT employment by a broad margin is USbased General Electric (GE). The conglomerate has 22.000 employees in India. IBM is growing quickly in India.ROLE OF MNC’S IN INDIAN ECONOMY This puts HP far ahead of its main rival. which makes its India operations account for well over 7 percent of headcount. However. which has an Indian headcount of 6. Outsourcing is seen as a threat to US IT jobs. 19 . Accenture. and a rise to 8.000-plus is expected. human resource recruiters in Bangalore told the Economic Times that Microsoft was aggressively recruiting for back-office operations. the IT consulting and services corporation. However.000 is just under 2 percent.000. and Intel plans to hit 3.000. IBM.

An upswing in the Indian hotel industry since 2003 following turnaround of the global tourism industry. says a study. the study said. spend only 2. noting that close to 30 per cent of the population live in urban areas. Foreign tourist arrivals into the country in 2004 crossed 3. Eyeing the over 250 million-strong middle class. positive impact of 'Incredible India' tourism promotion campaign and the world's increasing interest in India's rapidly growing economy are some of the main reasons cited for growth. According to the study. the study said.300 on purchasing power parity basis) compared to less than seven per cent in 1995. A rapidly growing Indian economy (6 per cent annually over the last decade) has increased incomes of the consuming class. Sixty-five million people are expected to enter the 20-34 year age group from 2001 to 2010 in India and the number of dual income households has been expanding rapidly in urban areas. 20 . a growth of 24 per cent over the previous year. the study pointed out. An expanding young population. This growth is expected to remain strong over the next few years. Though Indian consumers. more women in the workforce and increasing urbanization support HRI food sales. adding that the Indian hotel industry was gearing up to cater to the food needs of the international visitors.ROLE OF MNC’S IN INDIAN ECONOMY Impact on Food and Beverages Sector India's booming tourism sector and its rapidly growing Western-style fast food joints offer unlimited opportunities for foreign food and beverage exporters. This share was likely to grow to 40 per cent by 2025. Restaurant and Institutional (HRI) service sector sales of F and B amounted to $ 8 billion during 2003-04. the study observed. hotels managed to get a miniscule five per cent of total sales of Indian food service sector while restaurants and institutional caterers together cornered 52 and 43 per cent respectively. In recent years. the Indian hospitality industry has benefitted from a steadily growing economy and a booming tourism sector. approximately 22 per cent of households (44 million) are expected to have an average annual income of $3. as Indian food imports are likely to grow 6-7 per cent over the next few years.150 (USD 17.36 million. By 2007. a US department study says the prospects for investment in Indian markets could be gauged from the fact that total Hotel. the HRI service sector is expected to grow by 6-7 per cent over the next few years.5 per cent of their food expenditure in hotels and restaurants. on an average.

It is believed that the multinational and domestic multi-unit restaurant segment will drive the future expansion of the Indian restaurant industry. 21 . Urban Indians are aware of international cuisines and an increasing number are willing to try new foods. the younger urban population is increasingly shifting to Western-style fast food items.5 per cent of urban consumers eat outside their home at least once a week. Cafe Coffee Day). the study observed. as regional cuisines offer many choices. There has been double-digit growth in the Western-style fast-food outlets and coffee shops. However. and about 12 per cent eat out once a month. Barista. Pizza Corner. Most Indians still prefer Indian food. and Dominos etc) and Indian chains (Nirula's. About 4. adding "vegetarianism" was still a widely popular culinary tradition in India.ROLE OF MNC’S IN INDIAN ECONOMY The eating-out culture is evolving fast in India. both multinational chains (McDonald. it said. it said quoting a survey. Pizza Hut. as more consumers seek variety in their food choices.

As a result. The restrictive policies that stopped the company's inflow are however withdrawn and the country has shown much interest to bring in foreign investment here. there was lesser number of companies that showed interest in investing in Indian market.ROLE OF MNC’S IN INDIAN ECONOMY RECOMMENDATION There are a number of reasons why the multinational companies are coming down to India. market competition and the macro-economic stability are some of the key factors that magnetize the foreign MNCs here. More over India has wide market for different and new goods and services due to the ever increasing population and the varying consumer taste. The government FDI policies have somehow benefited them and drawn their attention too. nowadays. Besides the foreign directive policies the labour competitive market. India has got a huge market. For quite a long time. makes continuous efforts to attract foreign investments by relaxing many of its policies. A company enlarges its jurisdiction of work beyond its native place when they get a wide scope to earn a profit and such is the case of the MNCs that have flourished here. . It has also got one of the fastest growing economies in the world. Besides. the scenario changed during the financial liberalization of the country. Government. It is too specify that the companies come and settle in India to earn profit. Following are the reasons why multinational companies consider India as a preferred destination for business:     Huge market potential of the country FDI attractiveness Labor competitiveness Macro-economic stability 22 . As a result. India had a restrictive policy in terms of foreign direct investment. the policy of the government towards FDI has also played a major role in attracting the multinational companies in India. However. especially after 1991. a number of multinational companies have shown interest in Indian market.

ROLE OF MNC’S IN INDIAN ECONOMY There are certain advantages that the underdeveloped countries like and the developing countries like India derive from the foreign MNCs that establishes. So it is recommended that multinational companies not only harms Indian economy but also by providing employment & competitive market helps Indian economy. 23 . The foreign exchange gap is reduced Boosts up the basic economic structure. They are as under:      Initiating a higher level of investment. Reducing the technological gap The natural resources are utilized in true sense.

Economy of India increases. India is a developing country.ROLE OF MNC’S IN INDIAN ECONOMY CONCLUSION Multinational companies are like double-edged sword. The extent of technology and management of know-how transfer by the MNCs depend to a large extent on their corporate strategy. In Against:       The main advantage of MNCs is reducing of unemployment. The stress of MNC employees is more compared to others. As pointed out in the World Investment Report. It is noted that MNCs are more likely to license older technologies from which they have already derived significant rents than newer technologies on which there are still relying for market leadership. for example. They are introducing new products of cost effective. The employees of these companies are having high salary. There are many cases of mental health problems in these employees. They are helping us to connect with whole world. Some MNCs are including in social activities. they may hold back the upgrading of the affiliate technology or invest insufficiently in host-country training and R&D in accordance with their global corporate strategies. Similarly the Multinational companies have their own pros and cons. firms desiring to have a longer-term relationship with the suppliers (rather than those simply using the host country as a marketing/export base) will be more inclined to effect transfer technology. 2000. The sword can harm if not handled properly. MNCs may restrict the access of particular affiliates to technology in order to minimize inter-affiliate competition. 24 . Further. which is highly necessary for developing countries in present generation. But the intelligence is not used by India. and using for the development of the other countries. MNCs helping India to become developed country. Many talented people are settling in foreign countries to work for MNCs. In Favor:   India has many intelligent people.

Some young people are attracted by the high salary and moulding their career wrongly for luxury life. So that. Multinational companies are not disadvantage to our country. But employees of these companies should not take responsibility for overloaded work just for high salary. Mostly.ROLE OF MNC’S IN INDIAN ECONOMY      The pay scale of Indian employees of these companies is less compared to foreign employees of the same companies. 25 . Employees of these companies are working like robots. employees are just following instructions of their superiors. and not spending their valuable time with their family. local companies are having losses. there can have fulfillment of passion and also fulfillment of personal life. India need MNCs to become developed country. By MNCs. In these companies there is least scope of using creativity.

php  http://en.com/study-aids/free-essays/business/indiaattractive-destination-to-the-world.com/2012-0822/news/33322303_1_average-return-indian-companies-brand-equity 26 .americanessays.html  http://www.answers.com/Q/What_is_the_role_of_MNC_in_India  http://www.html  http://articles.blogspot.indiatimes.html  http://wiki.economictimes.in/2011/03/multinationalcompanies-are-they-devils_21.com/economics-articles/impact-of-mncs-ondeveloping-countries-685604.com/india-company/multinational.mapsofindia.wikipedia.articlesbase.org/wiki/Multinational_corporation  http://business.ROLE OF MNC’S IN INDIAN ECONOMY Bibliography  http://groupdiscussionideas.

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