Effects of Globalization on Indian Industry Started When the Government Opened the Country
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Effects of Globalization on Indian Industry started when the government opened the country's markets to foreign investments in the early 1990s. Globalization of the Indian Industry took place in its various sectors such as steel, pharmaceutical, petroleum, chemical, textile, cement, retail, and BPO. Globalization means the dismantling of trade barriers between nations and the integration of the nations economies through financial flow, trade in goods and services, and corporate investments between nations. Globalization has increased across the world in recent years due to the fast progress that has been made in the field of technology especially in communications and transport. The government of India made changes in its economic policy in 1991 by which it allowed direct foreign investments in the country. As a result of this, globalization of the Indian Industry took place on a major scale. The various beneficial effects of globalization in Indian Industry are that it brought in huge amounts of foreign investments into the industry especially in the BPO, pharmaceutical, petroleum, and manufacturing industries. As huge amounts of foreign direct investments were coming to the Indian Industry, they boosted the Indian economy quite significantly. The benefits of the effects of globalization in the Indian Industry are that many foreign companies set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and this helped to provide employment to many people in the country. This helped reduce the level of unemployment and poverty in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the foreign companies brought in highly advanced technology with them and this helped to make the Indian Industry more technologically advanced. The various negative Effects of Globalization on Indian Industry are that it increased competition in the Indian market between the foreign companies and domestic companies. With the foreign goods being better than the Indian goods, the consumer preferred to buy the foreign goods. This reduced the amount of profit of the Indian Industry companies. This happened mainly in the pharmaceutical, manufacturing, chemical, and steel industries. The negative Effects of Globalization on Indian Industry are that with the coming of technology the number of labor required decreased and this resulted in many people being removed from their jobs. This happened mainly in the pharmaceutical, chemical, manufacturing, and cement industries. The effects of globalization on Indian Industry have proved to be positive as well as negative. The government of India must try to make such economic policies with regard to Indian Industry's Globalization that are beneficial and not harmful.
The initiation and development of globalization of the Indian manufacturing sector took place simultaneously in the 1990s. The widespread acceptance and development of globalization of the Indian manufacturing sector effected astronomical growth of this industry. The introduction and the subsequent development of globalization of the Indian manufacturing sector respectively helped India to shed its age old tag of being 'an agriculture based country'. The main growth driver of the Indian manufacturing sector are Information Technology and hardware, telecommunication hardware, automobile, pharmaceutical, biotechnology, infrastructure, electronic, electrical, textiles, etc. The effect of globalization of Indian manufacturing industry is reflected in the GDP's share of Indian manufacturing sector which has grown considerably over the years. The share of Indian manufacturing industry towards India GDP has grown from 25.38% in 1991 to 27% in 2004. Further, the contribution of the Indian manufacturing sector to the Indian export sector has increased from 52% in 1970 to 59% in 1980 and 71% in 1990 and 77% in 2000-01. Furthermore, the Indian manufacturing exports accounted for a little over 5% (in 1990) of the value of output of the Indian manufacturing sector but today it is close to 10%. India exports manufactured products worth about US$ 50 billion and a recent study on Indian manufacturing industry has forecast an annual growth of 17% by the end of the year 2015. In other words at this rate of increase the quantum of India's manufacturing exports will cross the US$ 300 billion mark by the end of the financial year 2015. Most of this business would be in the domain of auto components, pharmaceutical, apparel, specialty chemicals, and electrical and electronic equipment sectors. The Indian sectors which grew tremendously as a result of globalization of the Indian manufacturing sector are as follows • • • • • • • • • • •
Capital goods Engineering goods Chemicals Petroleum Chemicals & fertilizers Packaging Consumer non-durables Electronics IT Hardware & peripherals Gems & jewelry Leather & leather products
• • • •
Mining Steel & non-ferrous metals Textiles & apparels Water equipment
The positive effect of the globalization of the Indian manufacturing sector can be corroborated from the following facts • • • • • • • • • • •
The Indian industrial growth exceeded 10% Manufacturing growth rate exceeded 12 % Manufacturing of consumer durables and non-durables have also recorded upswings Telecommunication sector with inflows of US$ 405 million has registered the maximum growth of 950% Merchandise exports recorded strong growth The automotive industry achieved a growth rate of over 20% in 2006-07 The biotechnology industry witnessed another good year in 2006-07 and registering more than 40% of growth The US$ 47 billion Indian textile industry is expected to grow to US$ 115 billion by the year 2012 The US$6.4 billion Indian retail industry is expected to grow over 20% annually to US$ 23 billion by 2010 The robust pharmaceutical market in India ranks 4th worldwide and is expected to cross business worth Rs 1,00,000 crore in formulations and bulk drug production by 2010
Although, the process of globalization of the Indian manufacturing sector have contributed immensely for the overall development of the Indian economy but it still suffers from some bottlenecks, like the following • • • •
Use of primitive technology or under utilization of technology Poor infrastructure Over staffed operations Expensive financing and bureaucracy
India is slowly shedding its image from being an agriculture based country to a manufacturing based country and thus the above-mentioned bottlenecks should be immediately arrested and eradicated to ensure further growth of this industry. To ensure elimination of the above-mentioned aberrations form the Indian manufacturing sector the government of India must focus on areas like improving the urban infrastructure, ensuring fair competition and access to markets, reduction of import duties, quality improvements in vocational and higher education, increased investment in R&D and support of SMEs. The manufacturing industry is the backbone of any economy since it helps in the overall growth of productivity, employment, and it also strengthens agriculture and service
sectors. The astronomical growth in worldwide distribution systems and Information Technology, coupled with opening of trade barriers, has led to stupendous growth of global manufacturing networks, designed to take advantage of low-waged yet efficient Indian work force. The globalization of the Indian manufacturing sector has brought down the percentage of Indians living below poverty line from 40% to 25%. The Indian manufacturing sector is successfully competing in the global marketplace and registering high growth on year-on-year basis since the 1990s.
What are the advantages and disadvantages of Globalisation on Small scale industries in India? In: Small Business and Entrepreneurship, Economics, India, Industries [Edit categories]
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Answer advantages: Discuss the advantages and disadvantages of globalization to small scale industries in India. Increased free trade between nations Increased liquidity of capital allowing investors in developed nations to invest in developing nations Corporations have greater flexibility to operate across borders Global mass media ties the world together Increased flow of communications allows vital information to be shared between individuals and corporations around the world Greater ease and speed of transportation for goods and people
Reduction of cultural barriers increases the global village effect Spread of democratic ideals to developed nations Greater interdependence of nation-states Reduction of likelihood of war between developed nations Increases in environmental protection in developed nations disadvantages： Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labor • • • • • • • • •
Increased likelihood of economic disruptions in one nation effecting all nations Corporate influence of nation-states far exceeds that of civil society organizations and average individuals Threat that control of world media by a handful of corporations will limit cultural expression Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage Greater risk of diseases being transported unintentionally between nations Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity International bodies like the World Trade Organization infringe on national and individual sovereignty Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources Decreases in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries