Globalisation and its impact on India

1. Globalization
Indian Context and its effects
By- Sachin Mohanty (19MBA004)
Ravenshaw University

2. Introduction
• Globalization is a process of interaction and integration among the
people, companies, and governments of different nations, a process
driven by international trade and investment and aided
by information technology.
• This process has effects on the environment, on culture, on political
systems, on economic development and prosperity, and on human
physical well-being in societies around the world.

3. Objectives of globalization
• Reduction of trade barriers so as to permit free flow of capital and
services across national frontiers.
• Creation of an environment in which free flow of capital can take
place.
• Creation of an environment permitting free flow of technology
among nation-states.
• Creation of an environment in which free movement of labor can
take place in different countries of the world.

4. Goal of globalisation
• To achieve high rate of growth of national and per capita income;
• To achieve full employment;
• To achieve self-reliance;
• To reduce the inequality of income and wealth;
• To reduce the number of people living below the poverty line;
• To develop a pattern of society based on equality and absence of
exploitation.

5. Types of globalization
• Political globalization- Political globalization refers to the amount of
political co-operation that exists between different countries.
• Social globalization- Social globalization refers to the sharing of ideas
and information between and through different countries.
• Economic globalization- Economic globalization refers to the
interconnectedness of economies through trade and the exchange of
resources.

6. Dimensions of globalisation
Globalisation
of corporate
mindset
Globalisation
of capital
base
Globalisation
of market
presence
Globalisation
of supply
chain
• Globalisation of market presence: refers to the extent
to which company targets customers in all major
markets within the industry.
• Globalisation of supply chain: refers to the extent to
which company is accessing the optimal locations.
• Globalisation of capital base: refers to the extent to
which company is accessing capital markets.
• Globalisation of corporate mindset: refers to the
ability of the company to understand and integrate
diversity across cultures.

7. Importance of globalization
• Proper use of Resources: Globalization leads to expansion of markets and this
enable organization to make proper use of available resources.
• Multiple choices: No country is self sufficient, and every country depends upon
other country. Globalization has solved this problem and people can have better
choice to satisfy their need.
• Foreign Exchange: Globalization encourage exports and discourage imports. This
help to earn foreign exchange.
• Creates Employment: Globalization helps to provide employment to a large
number of people. MNC’s such as BPO’s popularly known as Call Centre employs
and appoint a large number of personnel with high pay scale and other benefits.

8. Importance of globalization (cont.)
• Government incentives: Government also provides various incentives in taxes, custom duties,
pre-shipment finance, post shipment finance and many more. This is done to encourage
globalization.
• Technology: Technology is the latest and fruitful outcome of globalization. Technologies can not
only increase efficiency but also the organizations and everyone having a little knowledge can
update and can stand by world. Globalization not only enables competition but also very much
helpful for profit of maximization.
• Spreading of Risk of Loss: Business thy name is risk. There may be different types of losses in
every business. Various losses which may be in domestic market can be easily compensated from
international market.
• Benefit to the consumers: Globalization encourages free and fair competition at world level. Due
to this, organizations try to supply quality goods and that also at a reduced price. This benefits
consumers.

9. Some international organisations that facilitate the process of
globalisation are:
• International Monetary Fund (IMF)
• World Bank
• World Trade Organisations (WTO)
• United Nations Conference on Trade and Development (UNCTAD)
Organisations facilitating globalisation.

10. Merits of globalisation
• Encourages producers and consumers to benefit from deeper division of labor and
economies of scale.
• Competitive markets reduce monopoly profits and incentivize businesses to seek cost-
reducing innovations.
• Enhanced growth has led to higher per capita incomes – and helped many of poorest
countries to achieve faster economic growth.
• Advantages from the freer movement of labor between countries.
• Gains from the sharing of ideas / skills / technologies across national borders.
• Opening up of capital markets allows developing countries to borrow money to over a
domestic savings gap.
• Increased awareness among consumers of challenges from climate change and
wealth/income inequality.
• Competitive pressures of globalization may prompt improved governance and better
labor protection.

11. Drawbacks of globalization
• Inequality: Globalization has been linked to rising inequalities in income and wealth.
• Inflation: Strong demand for food and energy has caused a steep rise in commodity prices.
• Vulnerability to external economic shocks – national economies are more connected and interdependent;
this increases the risk of contagion i.e. an external event somewhere else in the world coming back to affect
you
• Threats to the Global Commons: Irreversible damage to ecosystems, land degradation, deforestation, loss of
bio-diversity, etc.
• Race to the bottom – nations desperate to attract inward investment may be tempted to lower corporate
taxes, allow lax health and safety laws and limit basic welfare safety nets with damaging social
consequences.
• Trade Imbalances: Global trade has grown but so too have trade imbalances.
• Unemployment: Concern has been expressed by some that capital investment and jobs in advanced
economies will drain away to developing countries.
• Standardization: Some critics of globalization point to a loss of economic and cultural diversity.
• Dominant global brands – globalization might stifle competition if global businesses with dominant brands
and superior technologies take charge of key markets be it telecommunications, motor vehicles and so on.

12. Globalization in India
• The wake of globalization was first felt in the 1990s in India when the then
finance minister, Dr. Manmohan Singh initiated the economic liberalization
plan.
• Since then, India has gradually become one of the economic giants in the
world.
• Today, it has become one of the fastest growing economies in the world
with an average growth rate of around 6-7 %.
• There has also been a significant rise in the per capita income and the
standard of living. Poverty has also reduced by around 10 %.
• Globalization has really put out a positive impact on today's economy and
it is expected to develop in the years to come.

13. Steps taken to implement globalization
• Reduction of import duties:
a. There has been a considerable reduction in import duties.
b. A reduction in import duties and the extension of MODVAT (Modified Value Added
Tax) credit on taxes paid on inputs have been important measures for improving
efficiency of the tax system.
• Encouragement of foreign investment:
The government has taken a number of measures to encourage foreign investment.
a. Approval would be given for direct investment upto 51 per cent foreign equity in high
priority industries as per Industrial Policy of 1991.
b. There shall be no bottlenecks of any kind in this process. Such clearances will be given
if foreign equity covers the foreign exchange requirements for imported capital goods.
c. To provide access to international markets, majority foreign equity holding up to 51%
equity would be allowed for trading companies primarily engaged in export activities.

14. Steps taken to implement globalization (cont.)
• Encouragement to foreign technology agreement:
The Industrial Policy of 1991 undertook the following measures:
a) Automatic permission will be given for foreign technology
agreements in high priority industries .
b) In respect of other industries, automatic permission would be given
if no free foreign exchange were required for any payments.
c) No permission will be necessary for hiring of foreign technicians
and foreign testing of indigenously developed technologies.

15. Impact of globalization in India
• There is immense effects observed in educational sector due to
globalization such as literacy rate become high and Foreign Universities are
collaborating with different Indian Universities.
• It is observed in current Indian society that through globalization, women
have gained certain opportunities for job options and to recognize
women's rights as a part of the human rights.
• Since liberalization in the 1990s (precipitated by a balance of payment
crisis), India's exports have been consistently rising, covering 80.3% of its
imports in 2002–03, up from 66.2% in 1990–91.
• The technology sector has also improved a lot. Companies now can bring in
foreign technologies into India and export its best technologies.

16. Impact of globalization in India (cont.)
• India's reliance on external assistance and commercial borrowings has
decreased since 1991–92.
• India's economy has grown drastically since it integrated into the
global economy in 1991. It has drastic impact on India's economical
condition.
• Remittances to India are money transfers from Indian workers
employed outside the country to friends or relatives in India. Since
1991, India has experienced sharp remittance growth, and it is now
the world's leading receiver of remittances.

17. Some Indian companies after globalisation

18. Some Indian companies after globalisation (cont.)

19. Some Indian companies after globalisation (cont.)

20. Globalization in Business Environment
• Increased competition - this is caused by more foreign investment flowing
to countries, de-regulation which allows businesses to enter markets from
which they once precluded.
• Greater awareness and reactions to customer needs - the consumer is now
very selective on such essentials as quality, service and price.
• Economies of scale - by selling across many continents business can
acquire economies of large-scale production. This makes them very
competitive.
• Location flexibility - many modern production techniques and service
provisions can be allocated almost anywhere. This allows to them gain the
advantages of low cost labor and other resource charges.
• Increased mergers and joint ventures - allowing access to bigger markets
and associated cost advantages.

21. Conclusion
• The advent of globalization as result of liberalization and privatization
has both positive and negative impact on the economy.
• One group of people argue that it provided greater opportunities,
new markets, better technology, etc. While other group feels that it
does not protect domestic industries.
• From Indian prospective, globalization improved our condition of
living, opening up employment in the field of IT, Telecom, Hospitality,
Banking and others.

22. Any Questions?