International Journal of Engineering Technology, Management and Applied Sciences

www.ijetmas.com June 2017, Volume 5, Issue 6, ISSN 2349-4476

Multinational Companies and Their Effects on Indian

Economy

*Dr. Amit Kumar Khare,

MBA, Ph.D
Lucknow University, Lucknow,
Associate Professor
Rameshwaram Institute of Technology and Management

ABSTRACT: Since independence, India has gone through many changes firstly India based on socialist model, but now
it bases its government on a democratic model. During this period India had a very protectionist stance against foreign
investment in the country, because of this India fell behind in technology and in economy. The collapse of the Soviet
Union (India’s largest trading partner), the Persian Gulf crisis (higher world prices), and an increase in foreign dept led
to problems for India throughout the eighties. The liberalization of Indian economy has started during tenure of Dr.
Mamohan Singh in the year 1991 as a Finance Minister and carried out by Mr. Yashwant Sinha and Mr. Jaswant Singh
simultaneously. The markets are being flooded with a lot of brands from old and new brands from within the country and
multinationals who have ventured into India as a result of globalization of Indian economy. This has resulted in a fight
amongst competitors for survival and growth and also led them to provide value to their product for customer’s
satisfaction through quality and service. Indian economy had experienced major policy changes in early 1990s. The new
economic reform, popularly known as, Liberalization, Privatization and Globalization (LPG model) aimed at making the
Indian economy as fastest growing economy and globally competitive. While multinational companies played a
significant role in the promotion of growth and trade in South-East Asian countries they did not play much role in the
Indian economy where import-substitution development strategy was followed. Since 1991 with the adoption of industrial
policy of liberalization and privatization rote of private foreign capital has been recognized as important for rapid
growth of the Indian economy. Global markets, global technology, global ideas are seen as symbolizing enormous
potential to change the world through more wealth than at any time before. A number of companies worldwide are
coming together by way of mergers and joint ventures in order to consolidate their strengths and to take advantage of
opportunities of global trade. After adopting new economic policy many global corporations entered in the Indian
economy. This article highlights on trend of growth of foreign companies in India, their country wise distribution and
their impact on Indian economy. More specifically the objectives of the study are: To study the trend of growth of global
corporations in India, to analysis country wise distribution of global corporations in India and to study the impact of
increasing global corporate on Indian economy with special reference to Procter and Gamble (P&G).
KEYWORDS: Multinational, Wealth, Economy, Global, Development, India, Globalization etc.

OBJECTIVES:
 To Study the trend of growth of Multinational corporations in India
 To analyse the market share of Multinationals and their investments in India
 To study the impact of global corporations on Indian economy

INTRODUCTION: The domestic market is increasing because of the increasing of standard of living.
The multinationals are trying their best to bring in more modernize product at a higher price in the Indian
consumer market. The Indian consumer is very price conscious yet is willing to pay for quality products and
comfort. The object of this study is to find out the impact of the entry of multinational companies in the Indian
Market and economic growth of India. This topic is of great importance, as the entry of Multinational in India
will have a great effect on the Indian producers as they have to make efforts to exist in this competitive

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environment. To overcome this competition Indian producers will have to have greater innovation and
creativity so that the products can match those made by the multinationals. Many countries are opening their
borders and reducing trade barriers. Multinational corporations are taking advantage of these inexpensive
trade barriers and moving in to these developing economies. The major way that these multinational
corporations capitalize on these opportunities is by engaging in direct foreign investment. Foreign direct
investment can be done in one of three ways. First a company can acquire a foreign firm. The second way of
engaging in foreign direct investment is to create a new foreign subsidiary .Finally a company can get a
partner and together they would start a business in a foreign country. This is known as a joint venture, and is
probably the most popular way to gain local support.
India also has an attractive resource base .The two main resources it has low labour cost and an educated pool
of management and technical personnel. These benefit makes India a competitor for foreign investment
unfortunately for India, it is not only competitor in the world but also china who is main rival of India. This
has been a classic rivalry since India began its reform. The object of this study is to find out the impact of the
entry of multinational companies in Indian Market. The purpose of this research project was to explore
management practices that successful multinationals doing in India to manage economical growth and
diversity."Success" in this study is measured in terms of revenue growth through foreign direct investment
ability and the extent to which the multinational meets corporate expectations. Multinationals was selected as
the research topic because the country’s national economical growth and diversity adds a new perspective to
the study of cross-cultural management. Moreover, India has been assuming a new role within the Asian and
the global economy since the liberalization plan in 1991. The international community has become
increasingly interested in developing awareness in this complex Indian culture. India is currently one of the
main receptors of foreign direct investment in Asia. The enterprises involved in international business are
referred to in various ways: multinational corporations, transnational corporations, global corporations, and so
on. Sometimes, the terms are intended to designate a specific type of operation, strategic approach or spatial
location, but often such terms are used interchangeably. It also happens that the meaning of the terms varies
from author to author and even changes over a period of time. MNC may be defined as a company, which
operates in number of countries and has production and service facilities out-side the country of its origin.
They are also called Trans National Company (TNC) their activities have both good and bad impacts on the
economy. According to Spero and Hart “a multinational corporation (MNC) as a business enterprise that
maintains direct investments overseas and that upholds value-added holdings in more than one country. They
take decisions on a global context or basis. Their maximum profit objectives take no account of the reactions
produced in the countries felling in their orbit. They operate in different institutional forms some are:
Subsidiaries companies wholly owned by MNC in other countries Subsidiary company enter into joint venture
with a company another company Agreement among companies of different countries regarding production
and discussion of market. Development and Activities: Soon after independence foreign capital entered India
in the form of direct investments through MNC's Companies had been formed in advanced countries with the
specific purpose of operating in India. Such companies started their subsidiaries, branches and affiliates in
India. At times government gave some tax concession to them with in the FERA (Foreign Exchange
Regulation Act) and streamlined the licensing procedures. The purpose was to secure advanced, technical and
industrial know how. During the janata rule the policy was outright purchase of technical know-how skills and
machinery. They took two major decisions. Coco cola was asked to wind up their operations. Asked IBM to
reduce their foreign equity to 40%. They did not agree, so asked to wind up MNC's operate in several sectors
like tobacco, toiletries beverages etc. Industrial Policy of 1991 accepted foreign investment essential for
modernization technology up gradation and industrial development. Several concessions were given FERA
regulations were liberalized and permitted to use their trademarks in the domestic market. Now it has become
a wide spread phenomena with USA the biggest among them. In the report of the International Labour
Organization (ILO), it is observed that “the essential of the MNCs lies in the fact that the managerial
headquarters are located in the home country, while the enterprise carries out operations in a number of other
countries (Host Countries).” The early decades of the twentieth century witnessed the multinational expansion

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of European companies such as Unilever, Royal Dutch Shell, Imperial Chemical Industries and Philips. In the
1950s and 1960s, following the emergence of the USA as the world’s dominant industrial power at the end of
the Second World War, multinationals such as General Motors Corporation, Ford Motor Company,
International Business Machines, Coca- Cola and Procter & Gamble took on a prominent role in international
business expansion through foreign subsidiaries. The Japanese multinational expansion of the 1970s and
1980swas characterized by global strategies commanded by home based headquarters and manufacturing
facilities. A number of companies worldwide are coming together by way of mergers and joint ventures in
order to consolidate their strengths and to take advantage of opportunities of global trade.
The world's largest consumer goods company, Procter & Gamble (P&G), appears to be slowly but steadily
getting its act together in India, after announcing recently that it was moving away from unprofitable
businesses. The latest financial results of Gillette India, one of its two listed companies, had it reporting
double-digit revenue growth for the three months ended March, after consecutive quarters of single-digit
growth. Procter & Gamble Hygiene and Healthcare, the other listed company, reported double-digit revenue
growth for a second quarter in a row. Its earlier single-digit sales growth was for the three months ended
September 2015. Both listed entities follow a July-June accounting period. Results for a third firm, Procter &
Gamble Home Products, are not available in the public domain. On profit, Gillette reported triple-digit growth
for the March quarter; P&G Hygiene and Healthcare reported double-digit growth. A company spokesperson,
when asked, said, "India remains a critical market for P&G. In the past 18 months, P&G India has become
profitable. The results that India has delivered have contributed positively to the health of the parent
company." In an analyst call last month, its global finance head, Jon Moeller, said the firm had made a choice
to de-prioritise several unprofitable lines of business which negatively impacted short-term revenue growth
rates in India. "The strategic portion of our India business is growing at a high single-digit pace. Sales in the
portions we're fixing or exiting have been down more than 30 per cent. This top line pain is worth it. We're
making significant progress in improving local profit margins, up about 700 basis points," Moeller had said.
Strategic categories for P&G in India include baby care, where it has the Pampers brand; male grooming,
where Gillette sits; feminine care, which includes Whisper; health care, which includes Vicks; fabric care,
which has detergents such as Ariel and Tide; skin care, with brands such as Olay, and hair care, which
includes products such as Pantene and Head & Shoulders. Abneesh Roy, associate director at Edelweiss
Financial Services, had said in a report last month that P&G would probably exit Duracell (batteries),
AmbiPure (air fresheners), Old Spice (men's after-shave lotion) and Oral-B toothpaste in India. "Also, it could
defocus on lower-end Tide (detergent) and Wella (hair care products)." The company has in the past few
quarters attempted to move away from lower priced stock-keeping units in detergents and cut shampoo prices
by 25 per cent to shore up domestic market share, analysts said. The firm, which crossed Rs 10,000 crore in
turnover in financial year ended June 2015, is among the top three in most of its core categories. The
spokesperson said P&G would continue to focus on core brands and variants in India, in line with global
strategy. Internationally, P&G is exiting 105 brands. These include Duracell batteries, which it sold to
Berkshire Hathaway, and 43 beauty products which sold to New-York-based Coty Inc. last year.

GROWTH TREND OF MULTINATIONALS IN INDIA RECENT DEVELOPMENT

The object of this study is to find out the impact of the entry of multinational companies in Indian Market.
This topic is of great importance, as the entry of Multinationals in India will have great effects on the Indian
producers as they have to make efforts to exist in this competitive environment. Most of the Indian consumer
belongs to the lower and lower middle class for mass consumption. They are many big enterprises in India
who are successfully marketing their products to the Indian masses. They will in due course of time face the
challenges that will be posed by the multinationals. The upper and middle classes are also consumers of costly
goods, which are essential for their comfort and luxury. The multinational will be targeting the consumer of
the all classes.

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Indian consumer segment is broadly segregated into urban and rural markets, and is attracting marketers from
across the world. The sector comprises of a huge middle class, relatively large affluent class and a small
economically disadvantaged class, with spending anticipated to more than double by 2025.
India stood first among all nations in the global consumer confidence index with a score of 133 points for the
quarter ending September 2016. Further, in the discretionary spending category, 68 per cent respondents from
India indicated the next 12 months as being good to buy, thus ensuring once again that India leads the global
top 10 countries for this parameter during the quarter.
Global corporations view India as one of the key markets from where future growth is likely to emerge. The
growth in India’s consumer market would be primarily driven by a favourable population composition and
increasing disposable incomes. A recent study by the McKinsey Global Institute (MGI) suggests that if India
continues to grow at the current pace, average household incomes will triple over the next two decades,
making the country the world’s fifth-largest consumer economy by 2025, up from the current 12th position.
India’s robust economic growth and rising household incomes are expected to increase consumer spending to
US$ 3.6 trillion by 2020. The maximum consumer spending is likely to occur in food, housing, consumer
durables, and transport and communication sectors. The report further stated that India's share of global
consumption would expand more than twice to 5.8 per cent by 2020.

Market size
The growing purchasing power and rising influence of the social media have enabled Indian consumers to
splurge on good things. The Indian consumer sector has grown at an annual rate of 5.7 per cent between
FY2005 to FY 2015. Annual growth in the Indian consumption market is estimated to be 6.7 per cent during
FY2015-20 and 7.1 per cent during FY2021-25.
The Indian fast-moving consumer goods (FMCG) companies have performed better than their multinational
peers as the combined revenue of country's seven leading FMCG companies stood at US$ 11.1 billion in FY
2015-16, as compared with US$ 9.4 billion revenue generated by select seven Multinational Companies
(MNCs).
A study by US-based networking solution giant CISCO, reveals that in India, the second-largest smart phone
market globally, the number of smart phones is expected to grow strongly to over 650 million by 2019. Indian
smart phone shipments reached 103.6 million in 2015, thus crossing the 100 million mark, and becoming one
of the fastest growing smart phone markets in Asia Pacific region. Smartphone shipments rose to 30 million in
July-September 2016 quarter, maintaining its healthy traction with 11 per cent YoY growth. It is estimated
that smart phone sales in India will grow about 15 per cent to 125 million in 2017. The number of tablets is

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estimated to reach more than 18 million by 2019 in India, one of the world’s fastest growing Internet market.
The online retail sector in India is expected to be a US$ 1 trillion (Rs 660,000 crore) market by 2020.
Amazon expects India to become its quickest market to reach US$ 10 billion in gross merchandise value
(GMV) and to become its largest overseas market surpassing Japan, Germany and the UK. The Indian beauty,
cosmetic and grooming market is likely to reach US$ 20 billion by 2025 from the current US$ 6.5 billion, on
the back of growing aspirations and rising disposable income of middle class.

Investments
Following are some major investments and developments in the Indian consumer market sector. US-based
food company Cargill Inc, aims to double its branded consumer business in India by 2020, by doubling its
retail reach to about 800,000 outlets. Yum! Brand, plans to open 100 Taco Bell outlets in India over the next
five years, which makes Indian expansion a key part of its plan to triple its outlets outside US to 1,000.
Hamleys has stated that India is one of the most important markets for Hamleys globally, and outlined plans
of opening six more stores, taking its total store count in the country to 32 by the end of March 2017. Roche
Bobois Group, outlined plans of opening new stores in cities like Hyderabad, Chennai, Pune, Kolkata and
Ahmedabad, in order to make India one of its top five markets by 2021. Diageo, the world’s largest spirit
maker, has announced opening of a new business service centre called Diageo Business Services India (DBSI)
in Bengaluru, which aims to increase its workforce to 1,000 from 100 currently. Amway, India’s largest
company in the Rs 7,500 crore (US$ 1.12 billion) direct-selling market, plans to invest Rs 400 crore (US$ 60
million) over the next five years to expand its product portfolio and open 50 ‘express’ stores in top 20 cities of
India, in addition to strengthening its e-commerce website.

BALANCED GROWTH AND LEADERSHIP VALUE CREATION IS TOP PRIORITY

P&G is focused on four key areas of transformation to deliver balanced growth and leadership value Creation:
• Accelerating Top-Line Growth
• Improving Productivity and Cost Structure
• Streamlining the Product Portfolio
• Strengthening Organization and Culture

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Furlenco, an online furniture rental company, has raised US$ 30 million in series B round of funding led by
Light Box Ventures, Axis Capital and a number of high net-worth individuals, which will be used to expand
its geographical presence and product offerings in the next 12 months.
Dyson, the UK-based manufacturer of innovative vacuum cleaners and air purifiers, plans to enter Indian
consumer market by 2017 and invest GBP 154 million (US$ 190 million) over the next five years in areas of
retail infrastructure, marketing, promotion and taxes to the government.
Zefo, a Bengaluru-based refurbished goods marketplace, has raised Rs 40 crore (US$ 6 million) in a funding
round led by Sequoia India, with participation from Beenext and Helion Venture Partners, which will be used
to expand its team, invest in technology, and expand its presence in Mumbai and Delhi, which were recent
additions. Adidas India Private Limited, outlined plans of opening around 30-40 big flagship stores across
Delhi, Mumbai and Bengaluru, by 2020.
Swiss watchmaker Montres Corum Sàrl, better known as Corum, has partnered with the luxury watch retailer
Ethos Watch Boutiques to sell Corum watches in India, in order to strengthen its presence in India by
rebuilding its distribution network and boosting revenues.

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AO Smith, a US based water technology and air purification solutions company, sees India as one of key
markets and plans to grow at double-digit growth rate, having invested US$ 75 million so far. Crocs India Pvt
Ltd, outlined plans of increasing its store count in India from 38 to 100 by the end of 2017, and increasing its
focus on the casual footwear category to expand its consumer base and thereby boost its overall revenue.

Government Initiatives
The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in online retail of goods
and services through the automatic route, thereby providing clarity on the existing businesses of e-commerce
companies operating in India. With the demand for skilled labour growing among Indian industries, the
government plans to train 500 million people by 2022 and is also encouraging private players and
entrepreneurs to invest in the venture. Many governments, corporate and educational organisations are
working towards providing training and education to create a skilled workforce. The Government of India has
drafted a new Consumer Protection Bill with special emphasis on setting up an extensive mechanism to ensure
simple, speedy, accessible, affordable and timely delivery of justice to consumers.
In the Union Budget 2017, the government has proposed to spend more on the rural side with an aim to double
the farmer’s income in five years; as well as the cut in income tax rate targeting mainly the small tax payers,
focus on affordable housing and infrastructure development will provide multiple growth drivers for the
consumer market industry.
Union Cabinet reforms like implementation of the Goods and Services Tax (GST) and Seventh Pay
Commission are expected to give a boost to consumer durable sector in India.

Procter and Gamble (P&G), Gillette India trends of Growth in India:

Your Company’s positive performance results for the Financial Year 2015-16, against a backdrop of
challenging market environment, are testament to our focus on winning with the consumer. As I share with
you, your Company's annual performance for the Financial Year 2015-16, I take pride in the fact that the
Company’s net sales went up by 4% versus last year, driven by Company’s focus on brand fundamentals and
strength of product portfolio. Profit After Tax (PAT) for the Financial Year went up by 35% behind focus on
productivity and cost optimization. As one of the world’s largest consumer products Company, we have both
a responsibility and an opportunity to do the right thing and create change. This strategy has inspired an
enduring CSR strategy supported by two pillars – P&G Shiksha and Timely Disaster Relief. While P&G
Shiksha provides children from underprivileged backgrounds with an access to a holistic education, P&G's
disaster relief activities aim to rehabilitate and empower the victims of natural disasters by providing them
with daily essential commodities and safe drinking water. By the end of Financial Year 2015-16, P&G
Shiksha built and supported over 1,000 (+550 since last year) schools across the country that will impact the
lives of over 1 million (+200,000 since last year) children. P&G, over the last year, continued its efforts to
provide timely aid and relief to families affected by natural disasters. P&G sent out relief aid to over 10,000
families affected by the Tamil Nadu floods comprising of P&G products. Any company that wants to drive
growth and create value in the long run needs to adopt a mindset of ‘winning’.
Company’s positive performance results for the Financial Year 2015-16, against a backdrop of challenging
market environment, are testament to our focus on winning with the consumer. Driven by the Company’s
focus on brand fundamentals and strength of product portfolio, net sales increased to 2,052 crores, up 4%
versus last year. Your Company made strategic portfolio choices that have resulted in strong margin
improvement as Profit After Tax (PAT) for the Financial Year stood at 213 crores versus 158 crores last year,
behind continued focus on productivity, operational excellence and cost optimization. The Company has
benefited from the portfolio optimization, even as it continues to focus on productivity and cost efficiency.

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FINANCIAL RESULTS
(Figures in Crores)
2015-16 2014-15
Sales including excise 2071 1981
Net sales (less excise duty) 2052 1971
Profit before tax 327 246

Profit after tax 213 158

Proposed dividend plus tax thereon 78 59

Transfer to general reserve 21 16

Balance carried forward 421 341

Corporate Social Responsibility

The only way to build a sustainable business is to improve lives At P&G, sustainability means making every
day better for people through how we innovate and how we act. As one of the world’s largest consumer
products Company, we have both a responsibility and an opportunity to do the right thing and create change.
P&G’s sustainability objective is to create long-term value for our consumers and shareholders by growing
our brands and operations responsibly to conserve resources and improve life in the communities we impact
across the world. This strategy has inspired an enduring CSR strategy supported by two pillars – P&G Shiksha
and Timely Disaster Relief. While P&G Shiksha provides children from underprivileged backgrounds with an
access to a holistic education, P&G's Timely Disaster Relief activities aim to rehabilitate and empower the
victims of natural disasters by providing them with daily essential commodities and safe drinking water.

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Source: Annual Report Gillette India Limited 2015-16

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Source: Annual Report Gillette India Limited 2015-16

Source: Annual Report Gillette India Limited 2015-16

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GROWTH OF INDIAN ECONOMY

India has become the sixth largest manufacturing country in the world, rising up from the previous ninth
position, and thus retaining its bright spot in the world economic landscape. Post the demonetization
announcement, the pace of remonetisation has picked up, and it is expected that the effects of demonetisation
will not spill over into the next financial year. The IMF expects the Indian economy to grow by 6.6% in 2016–
17, which is not only a significant one percentage point lower than the previous estimate, but also brings India
back to the status of the second-fastest growing economy, especially as China is expected to outgrow by 6.7%.
However, this is cited as the result of short-term disruption caused by the government’s move to invalidate
high-value currencies, which dampened the economy’s biggest growth drivers – consumption and investment
demand. Recognising the strength of Indian economic fundamentals, the IMF expects the impact of
demonetization to fade away gradually, as it pegs the 2017–18 growth at 7.2%, overtaking China again by a
good 0.7 percentage points. The World Bank, however, is more optimistic and has projected a GDP growth of
7% in 2016–17, 7.6% in 2017–18 and 7.8% in 2018–19. Clearly, what makes India resilient to global flurries,
to a great extent, is its rock-solid domestic demand, accounting for about 60% of the GDP. This figure is 37%
for China, and this has led the Chinese economy’s restructuring and rebalancing to rely less on exports and
investment and more on consumption demand. The broad macroeconomic indicators, based on latest data, are
as follows:

Inflation: The retail inflation stayed above the comfort zone of 5% till August 2016, but it started moderating
thereafter during the normal monsoon, dropping to a two-year low of 3.4%. The average for the year-to-date
(April-December 2016) stood at 4.85%, a tad higher than 4.8% during the same period of the previous year.
Fiscal Deficit: The fiscal deficit as a percentage of GDP was budgeted at 3.5% for 2016–17 in the previous
year’s budget. This is revised to 3.2% for 2017–18.
Trade Deficit: India’s trade deficit narrowed by 25% in the cumulative period of April to December 2016
when it stood at $76.5 billion, as against $100.1 billion in the corresponding period of the previous year. This
is on the back of a 7.4% decline in imports coupled with a meagre growth of 0.75% in exports during said
period. Imports of both oil and non-oil products dropped during this period by 10.76% and 6.42%,
respectively, reflecting the subdued gross capital formation.
Currency: The rupee saw a depreciation of 3.3%, as it stood at an average of ₹67.21 per US dollar during
April 2016 to January 2017 against an average of ₹65.03 per US dollar during the same period in the previous
year.
Future Outlook: According to the Central Statistical Organisation’s first advance estimates for 2016–17, the
GDP is expected to grow by 7.1%, which is slower than 7.6% in the previous year. However, this discounts
the impact of demonetization. Factoring in this impact, we expect the growth to decline by another about 50
basis points.

Impact of Global Corporations on Indian Economy

The operation of the global corporations increases with the reduction of barriers to trade and investment. The
benefit of larger world trade, larger incomes, lower cost and prices due to economy scale follow for their
operations. The share of global capital raises productivity and wages by shifting employment from local to
global market. The vast amount of unused resources can be diverted to productive purposes. The inflow of
funds would have simultaneously led to the growth of allied industries that also help to increase employment
opportunities indirectly. The functioning of global corporate has been said to make its impact on the economic
structure and social systems in the country. Impact of global corporate can be examined on the basis of the
parameters as follows.

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i) Increasing flow of Goods and Services

The observation of the total foreign trade, the exports are increasing at a decreasing rate but the imports are
increasing at an increasing rate during the period of 1991-2012. India’s total trade increased from Rs. 91893
crore in 1991-92 to Rs. 22205809 crore in 2015-16.
ii) Balance of Trade in Services
Services trade surplus which increased steadily in this decade to reach US$53.9 billion in 2008-09, fell
drastically in the global crisis year of 2009-10 to US$ 35.7 billion. This was caused by the collapse in exports
of non-software services, particularly business services, the slow growth of software services, and the rise in
import of non software services, particularly business and financial services. The low service trade surplus
situation continued in the first half of 2010-11.
iii) Increasing Flow of Capital
It is observed that with increase in number of foreign companies the amount of FDI also goes on increasing
but it is in many folds. In 1991 number of foreign companies was 489and FDI was $129 mn. In 2001 number
of foreign companies increased as 1141the amount of FDI was US $ 4031 Million that increased more than
seven times i.e. US $ 29029 Million and in 2012 number of foreign companies increased as 3191, the amount
of FDI also increased as US $ 32952Million.
iv) Information and Technology
7,941 technology transfer approvals sanctioned by the government during 1991 -2011. USA ranks number one
in providing technology to India with 1750 approvals since 1991. The sector wise technology transfers out of
the total technology transfer approvals. Electrical equipment including computer hardware and software sector
made highest technology transfers i.e.1255 technology transfer agreements concluded from the rest of the
world over a period of 18 years i.e.1991 – 2008.
Many MNCs help in improving the infrastructure and provision of basic needs in their specific areas of
operation. They either do so directly or provide funds for this purpose to civil society organizations. This also
improves business conditions within and in the vicinity of the areas where they are operating. In some cases,
large-scale economies, quality control and a healthy competition lead to price cuts and other benefits for the
end-user. People have more access to the comforts of life with a large variety of choices. Another significant
advantage of foreign companies is its contribution to government revenues.

CONCLUSION:
When we consider an overall picture of the MNCS, the beneficial role is much limited in the limited stages of
development they are helpful in area of needed technology and global marketing. They care only to the need
of upper middle and affluent classes. It creates a new culture of colas, jams, ice-creams and processed goods.
Another threat to Indian economy is the manipulation on the capital market to suit their goals. They are
increasing the shareholding in Indian companies swallowing them. They transfer attractive and profitable
business to these newly started subsidiaries so a large number of Indian share holders get cheated. Summing
up over dependence on MNC may be harmful in terms of economic dependence and political interference.
Capital flow of MNC's may be permitted but not at the cost of national interest. At present the world economy
is an integrated economy i.e. a world without borders, a world in which all goods and factors can be
transported across different regions at negligible cost. Some industries spread their production process across
many regions searching for the ideal environment for each specific phase of production. The magnitude and
dimensions of human activities are squarely rising. The concept like 'closed economy' and protectionist
policies are being gradually replaced by 'market based global corporate economy’.
Thus the most significant development in international economic scenario during the past two decades has
been spectacular rise in power and influence of giant global corporate. It may be said that the role of the
global corporate is crucial and their existence is indispensable. However, their functioning needs proper

634 Dr. Amit Kumar Khare

 International Journal of Engineering Technology, Management and Applied Sciences

www.ijetmas.com June 2017, Volume 5, Issue 6, ISSN 2349-4476

regulation so as to ensure protection of national interests and to maintain the character of national economy as
a separate family of the global economy. In the present international environment, though, it seen difficult to
follow a close door policy, yet it should not be an open policy as well. We have to be selective for allowing
the foreign investment and at the same time we must encourage the indigenous industry.

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635 Dr. Amit Kumar Khare