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Globalization and Its Impact

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Globalization and Its Impact - Lesson Summary

Globalisation has influenced the Indian economy since 1991 but has had an uneven impact on the Indian economy. Some sectors have gained while others have suffered losses. Competition among producers has resulted in lower prices and a greater choice of goods. The biggest benefit has been for the well-off urban middle-class consumers who can afford to buy a wider range of goods.

MNC’s have posted tremendous profits and invested more and more in India since liberalization. MNC investment and production has largely been in the consumer goods sector like automobiles, electronic items, fast foods, cold drinks and mobiles. Some have also invested in sectors like power and banking.

Government policies have favoured MNC’s by providing them state-of the-art facilities in Special Economic Zones (SEZs), a five-year tax holiday, and flexible labour laws. Local companies who have collaborated with MNC’s to supply them raw material or services have also gained from globalisation. Indian companies like Tata Motors, Ranbaxy and Asian paints emerged as multinationals by spreading their operations worldwide.

IT-based companies, like Business Process Outsourcing companies (BPO’s), call centres, data entry operators, accounting firms and administrative service providers are another set of gainers. Small producers, have borne the negative impact as they have been forced to compete with MNCs. Some small producers who were hit the worst by MNC competition include dairy products, toys, vegetable oils, capacitors and batteries. They have either stopped production units or decreased the levels.

Labour employed in the factories, have increased working hours with insecure jobs. MNC’s often employ labour on a temporary basis. They have lost legal protection because labour laws have been liberalised in favour of the MNC’s and big companies. Labourers in most companies have to work overtime to earn their livelihood.


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