GLOBALISATION AND THE INDIAN ECONOMY

Production Across Countries
Multinational Corporations - A company that owns or controls production in more than one nation. The goods and services are produced globally. Production is organized in increasingly complex ways.
Interlinking Production Across Countries
MNCs set up production where it is close to the markets; where there is skilled and unskilled labour available at low costs; and where the availability is assured. MNCs might look for government policies that look after their interests.
Ways in which the MNCs spread their production across the globe -
(i) Joint production with local companies
(ii) Buy up local companies
(iii) Place orders for production with small producers
Foreign Trade And Integration of Markets
Foreign trade creates an opportunity for the
(i) Producers to reach beyond the domestic markets
(ii) For buyers, expanding the choice of goods beyond what is domestically produced
(iii) Prices of similar goods in the two markets tend to become equal. Producers in two countries closely compete against each other even though they are separated by thousands of miles.
What Is Globalisation ?
Globalisation is the process of rapid integration or interconnection between countries.
More and more goods and services, investments and technology are moving between countries.
People usually move from one country to another in search of better income, better jobs or better education.
Factors That Have Enabled Globalisation
(i) Rapid improvement in technology has been one major factor that has stimulated the globalization process.
(ii) Even more remarkable have been the developments in information and communication technology.
Liberalisation of foreign trade and foreign investment policy
Trade Barrier - Restrictions on export and import. Governments can use trade barrier to increase or decrease foreign trade and to decide what kinds of goods and how much of each should come into the country. After independence, the Indian government had put barriers to protect the Indian producers from international competition.
Starting around 1991, the government decided that the time had come for Indian producers to compete with producers around the globe. Thus barriers on foreign trade and foreign investment were removed to a large extent. Removing barriers or restrictions set by the government is what is known as liberalisation.
World Trade Organisation
A group of 149 countries (2006), this organisation say that all the barriers to foreign trade and investment are harmful. There should be no barriers. Trade between countries should be free. All countries in the world should liberalise their policies.
Impact of Globalisation in India
Positive Impacts
(i) MNCs have increased their investments in India, new jobs have been created. Local companies supplying raw materials, etc. to these industries have prospered.
(ii) Several of the top Indian companies have been able to benefit from the increased competition.
(iii) Globalisation has enabled some large Indian companies to emerge as multinationals themselves.
(iv) Created new opportunities for companies providing services, particularly those involving IT.
Negative Impacts
(i) Small producers : Compete or perish
(ii) Competition and uncertain employment
The Struggle for a Fair Globalisation
Not everyone has benefited from globalisation. People with education, skill and wealth have made the best use of the new opportunities. On the other hand, there are many people who have not shared the benefits.
Steps that can be taken by the Government to ensure a fair globalisation :
(i) Policies to protect the interests of all the people in the country.
(ii) Proper implementation of labour laws.
(iii) Support to small producers, use of trade and investment barriers.
(iv) Negotiation at the WTO for ‘fairer rules’.