Details — Globalisation and the Indian Economy

1. Production Across Countries & MNCs

MNC: Company that owns or controls production in more than one nation. Sets up offices/factories where labour/resources are cheap → low cost → greater profits.

Example: Design in USA; components in China; assemble Mexico/Eastern Europe; customer care call centres in India — possible 50–60% cost savings.

Production divided into parts and spread globally (garments: cotton fibre from one country, etc.).

Where MNCs set up

Close to markets; skilled/unskilled labour at low cost; other factors assured; government policies favourable.

Investment: Money spent to buy assets (land, building, machines). Foreign investment = investment by MNCs.

Ways MNCs interlink production

Joint production with local companies (money + latest technology for local partner).
Buy up local companies (e.g., Cargill Foods bought Parakh Foods — marketing network + 4 oil refineries; Cargill largest edible oil producer in India, capacity 5 million pouches daily).
Place orders with small producers (garments, footwear, sports) then sell under MNC brand — power over price, quality, delivery, labour conditions.
Compete with or partner local firms.

Ford Motors: American MNC; production in 26 countries; came to India 1995; spent Rs 1700 crore near Chennai with Mahindra & Mahindra. By 2017 sold 88,000 cars in India; exported 1,81,000 to South Africa, Mexico, Brazil, USA. Later stopped producing cars for Indian sale but small-scale export of cars/engines continued (as per book).

2. Foreign Trade and Integration of Markets

Foreign trade lets producers reach beyond domestic markets; buyers get more choice via imports.

Chinese toys in India: Cheaper + new designs → within a year 70–80% toy shops replace Indian toys; buyers gain; Chinese makers expand; Indian toy makers face losses.

General effects of opening trade: Goods move; choice rises; prices of similar goods tend to equalise; producers compete across distances → integration of markets.

Large part of foreign trade controlled by MNCs (Ford plant produces for India and exports).

3. What Is Globalisation?

Process of rapid integration or interconnection between countries. Result of greater foreign investment and foreign trade → greater integration of production and markets. MNCs play major role. Goods, services, investments, technology move between countries. People also move for income/jobs/education, but recent decades saw limited increase due to restrictions.

4. Factors Enabling Globalisation

Technology

Transport improvements (50 years): faster, cheaper long-distance delivery; containers cut port handling costs/speed exports; cheaper air transport.
IT: telecom, computers, Internet, satellites — instant contact; services produced across countries (Delhi designs/prints London magazine; e-banking payments).

Liberalisation of trade and investment

Trade barrier example: tax on imports; also quotas (limit on numbers). Barriers regulate what/how much comes in.
After Independence, India used barriers to protect producers (1950s–60s industries); allowed mainly essential imports (machinery, fertilisers, petroleum). Developed countries also protected early on.
Around 1991, India removed barriers to a large extent — compete globally; improve quality; supported by powerful international organisations.
Liberalisation = removing government barriers/restrictions; businesses freer to import/export; government more “liberal.”

WTO

Aim: liberalise international trade; rules for international trade; see rules obeyed.
Started at initiative of developed countries.
About 160 member countries.
Practice uneven: developed countries unfairly retain barriers; developing forced to remove. Agriculture debate: US agriculture ~1% GDP, 0.5% employment yet massive subsidies → sell abroad abnormally cheap, hurting farmers elsewhere. Developing countries ask: is this free and fair?

5. Impact of Globalisation in India

Consumers

Advantage especially to well-off urban sections: greater choice, improved quality, lower prices, higher living standards.

Producers/workers — not uniform

Gainers

MNC investments in cell phones, automobiles, electronics, soft drinks, fast food, urban banking → new jobs; local suppliers prosper.
IT/service exports: call centres, data entry, accounting, admin, engineering done cheaply in India.
Top Indian companies: new technology, collaborations; some become MNCs — Tata Motors, Infosys, Ranbaxy, Asian Paints, Sundaram Fasteners.

Attracting FDI

SEZs: world-class facilities; companies get tax holiday initial 5 years.
Flexibility in labour laws: hire “flexibly” for short periods instead of regular organised-sector rules — cuts labour cost; foreign firms demand still more flexibility.
SEZs opposed by some (link to Ch.1 conflicting goals) — book asks students to find who/why; do not invent specifics beyond that prompt.

Small producers

Hit hard: batteries, capacitors, plastics, toys, tyres, dairy, vegetable oil, etc.; units shut; workers jobless.
Small & medium industries employ largest worker number after agriculture — 11 crores.
Ravi (Hosur capacitors from 1992): expanded to 20 workers; after import restrictions removed per WTO 2001, TV firms assemble for MNCs or import capacitors at half price → Ravi production < half of 2000 level; only 7 workers; many friends closed units.

Workers / uncertain employment

Prefer flexible/temporary hiring.
Sushila (Delhi garment export): was permanent with health insurance, PF, double overtime; factory closed late 1990s; later temporary, earns < half, 7:30 a.m.–10 p.m., 7 days, no benefits.
MNCs order cheapest garments → Indian exporters cut labour costs → temporary work, long hours, night shifts, low wages. Women get paid work opportunities but denied fair share of benefits.

6. Struggle for Fair Globalisation

Fair globalisation: opportunities for all; benefits shared better.

Government can: protect all people’s interests; ensure labour laws; support small producers (roads, power, water, raw materials, marketing, technology, timely cheap credit); use trade/investment barriers if needed until competitive; negotiate fairer WTO rules; align with other developing countries.

People’s organisations’ campaigns have influenced WTO decisions — people matter in fair globalisation struggle.

Not everyone benefited: Educated, skilled, wealthy used opportunities best; many did not share benefits.