Question.
Explain the role of Multinationals in the globalization of Industries in India. ( UPSC PYQ)
Answer.
Multinational Corporations (MNCs) are companies that operate in multiple countries, integrating production, marketing, and investments across borders.
In India, MNCs have been pivotal in deepening the process of industrial globalization, especially after the 1991 economic liberalization.
Role of MNCs in Globalizing Indian Industries:
Foreign Direct Investment (FDI):
MNCs have brought large capital inflows, enabling modernization and capacity expansion in sectors like automobiles, pharmaceuticals, and electronics.
Technology Transfer:
Advanced manufacturing and management techniques (e.g., in IT, telecom, and biotech) have been transferred to Indian industries, raising productivity and global competitiveness.
Integration with Global Supply Chains:
Indian firms, especially in IT, auto components, and textiles, have become part of global production networks due to MNC collaborations.
Skill Development & Employment:
MNCs provide training, skill upgradation, and job opportunities, aligning Indian human resources with global standards.
Boost to the Service Sector:
Global IT and BPO giants (like IBM, Accenture) have expanded operations in India, turning cities like Bengaluru and Hyderabad into global service hubs.
Infrastructure and Industrial Clusters:
MNC presence has driven the development of SEZs, IT parks, and industrial corridors (e.g., Delhi-Mumbai Industrial Corridor), enhancing India's industrial landscape.
Export Orientation:
MNC-led industries have promoted export-oriented manufacturing, making India a key exporter in sectors like pharma, textiles, and software.
Competition and Innovation:
The entry of MNCs has increased competition, compelling Indian firms to innovate, improve quality, and reduce costs.
Challenges or Disadvantages of MNCs:
The following are major challenges:
- Domination over local industries.
- Repatriation of profits to the originating country of MNCs.
- Regional concentration of MNCs (mostly in urban/metropolitan areas) creates regional imbalance ( Example, North India vs South India, Urban vs Village).
- Labor and environmental concerns in some sectors.
Conclusion:
MNCs have played a transformational role in globalizing Indian industries by integrating them with international markets, technologies, and standards.
However, to ensure inclusive growth, balanced regional development, and regulatory safeguards are essential.
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