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Globalisation and the Indian Economy

- A MNC is a company that owns or controls production in more

than one country.

* What are the things MNC looks for before setting up the
production unit?

1) Large Market: production unit should be close to their main

market where they want to sell their product.
2) Cheap Labour: Availability of skilled and unskilled labour at low
cost.
3) Government policies should be in their favour.
4) Availability of resources.
5) More profits.

* Foreign Investment: When MNC in other/foreign country invest in

our country.

* Ways to set up production unit:

1) Collaboration: MNC setup production jointly with some of te

local companies of that region.
- Mostly Done

* Benefits to MNC * Benefits to Local

- Get local knowledge - Foreign investment
- Increase contacts - Get latest knowledge

2) Buying: MNC buy a local company and then expand production.

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* Benefits to MNC
- Expand production
- Do not have to begin from scratch.

3)Placing Order: MNC place order for production with small

producers.

* Foreign Trade give advantage to both Producer and Consumer.

Producer Consumer

- More profits - Better quality products

- Increase competition due to - More options
which they have to increase
their production.

* Globalisation: It is a process of rapid Integration or

interconnection between countries.

- All the countries are depend on others due to globalisation

* Three things in globalisation

1) Transportation
2) Technology
3) Liberalisation - removing Trade barriers or restrictions set by
the government
* Trade barriers: Policies that restrict business.
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* During Independence we put many barriers.
- It is because: (i) To let local business grow
(ii) We just get independent from british rule so in
fear of not getting ruled by British again.
- But in 1991, they removed barriers.

* World Trade Organisation (WTO):

- Contains 160+ countries
- Aim: Liberalise international trade.
- make new laws, sometimes force countries to remove barriers
and follow their rules.

- Disadvantage: They don't force powerful countries like U.S.A and

U.S.A ruled WTO.

* Impact of Globalisation on India (Advantage)

1) MNC started investing in India and with time they increased

their investment as investing in India had been beneficial for
them.
2) Top Indian companies raised their production standards due to
competition and they also got new technology by collaborating
with MNC.
3) Some large Indian companies became MNC like TATA, Amul, ...
4) More jobs for people...and more opportunities for companies...
5) More choices for people...Cheap products...standard of living
increased..

* Disadvantages

1) Small business/companies could not face the competition and

had to be shut down. ex: Toy factories (now all toys come from
china)
2) Labour laws were made flexible which was against te
employees.
3) Domestic products like Dhoti, Matka, etc.. are slowly vanishing
from the market.
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* Special Economic Zones (SEZ)'s:

- To attract MNC's, government has made some special economic

zones. In which they provide:

1) World class facilities - Water, 24×7 electricity, roads, storage,

etc...
2) No tax for 5 years
3) Flexible labour laws
4) 94 subjects were free in union list for MNC's

* How can Globalisation be made more fair?

1) Government should make labour laws in favour of labours and

also implement them properly.
2) Government can support small producers by using trade
barriers...
3) Government can align with other developing countries to fight
against the domination of developed countries in W.T.O.

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