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GLOBALISATION AND INDIAN BUSINESS ENVIRONMENT
PRESENTED BY,
ROHIT KAMALAKAR HEGDE
NEW ECONOMIC POLICY 1991
Liberalization
Privatization
Globalization
globalization
The IMF defines globalization as “the growing economic interdependence of countries worldwide
through increasing volume and variety of cross border transactions in goods and services and of
international capital flows, and also through the more rapid and widespread diffusion of technology.”
Multi national companies“The essential nature of the multi national
enterprise lies in the fact that its managerial head quarters are located in one country (home country )while it carries out operations in a number of countries ( host countries) as well.”
Foreign collaboration Joint ventureStrategic alliancesFranchising agreementsMergers and acquisitions
Stages of globalization First stage ( distributors or traders )
Second stage ( direct export )
Third stage ( setting up of production & marketing system )
Fourth stage (emulate model of foreign company)
Fifth stage (transitional stage )
Characteristics of globalization Economy of a country will open itself to the global economy. It enables a country to purchase commodities from any country in
the world Expanding the business across the world & formulate plans for
that. Removing difference between Domestic market & foreign market. Securing factors of production. Relaxation of restriction on imports easily securing the foreign
exchange necessary for imports. Developing a perspective that the whole world market is a simple
market. Developing production, manufacturing , and distribution facility
in any part of the world . Substantially rising FOREIGN DIRECT INVETMENT in domestic
industries and projects.
globalizationpro con
1) Development of trade throughout world
2) Increase in foreign investment3) Free flow of technology4) Expansion of production5) Industrialization6) Increase in employment &
income7) Decline of cost of production8) Balanced development9) Uniform global management10) Increase in welfare & standard
of living11) Evaluation of competitive
international business.
1. Decay of business in developing country.(small enterprises )
2. Replacement of production system
3. Danger of unemployment4. Dominance of large companies5. Increase in dumping6. Brain drain7. Export of unwanted products8. Skewed investment9. Exclusive growth10. Widening of gap between rich &
poor countries11. Market failure
Indian business environment India’s economic integration with the rest of
the world was very limited because of the restrictive economic policies followed until 1991. Indian firms confined themselves, by and large, to the home market. Foreign investment by Indian firms was very insignificant.
With the new economic policy ushered in 1991, there has, however, been a change. Globalisation has in fact become a buzz-word with Indian firms now, and many are expanding their overseas business by different strategies
Obstacles in IndiaGovernment policy and procedureHigh costPoor infrastructureObsolescenceResistance to changePoor quality managementSupply problemSmall sizeTrade barriersLimited R&D and marketing researchGrowing competition
Factors favoring globalisationHuman resourcesWide baseGrowing entrepreneurshipGrowing domestic marketNiche marketExpanding MarketsTransnationalisation of World EconomyNRIsEconomic LiberalisationCompetition
Sectoral development in IndiaPrimary sector
Secondary sector
Tertiary sector
Revolution Name ProductBlue Revolution Fisheries
Brown Revolution Leather
Gray Revolution Housing Development
Green Revolution Agriculture
Pink Revolution Drugs & Pharmaceuticals
Silver Revolution Egg Production
White Revolution Dairy Development
Yellow Revolution Oil Seed
Black Revolution Petroleum
Golden Fiber Revolution Jute
Golden Revolution Horticulture
Grey Revolution Fertilizer
Red Revolution Meat & Tomato Production
Round Revolution Potato
Silver Fiber Revolution Cotton
Silver Revolution Egg/Poultry
Evergreen Revolution Over all Agriculture Development
Industrial sectorPost-liberalisation, the Indian private sector, which was
usually run by oligopolies of old family firms and required political connections to prosper was faced with foreign competition, including the threat of cheaper Chinese imports. It has since handled the change by squeezing costs, revamping management, focusing on designing new products and relying on low labour costs and technology.[16]
Service sectorDuring the Internet bubble that led up to 2000, heavy
investments in undersea fibre-optic cables linked Asia with the rest of the world. The fall that followed the economic boom resulted in the auction of cheap fiber optic cables at one-tenth of their original price. This development resulted in widely available low-cost communications infrastructure. All of these investments and events, not to mention a swell of available talent, resulted in India becoming almost overnight the centre for outsourcing of Business process. Within this sector and events, the ITES-BPO sector has become a big employment generator especially amongst young college graduates. The number of professionals employed by IT and ITES sectors is estimated at around 1.3 million as on March 2006. Also, Indian IT-ITES is estimated to have helped create an additional 3 million job opportunities through indirect and induced employment.
(US $ million)
Source/Industry 2008-09 2009-10 2010-11 2011-12 P 2012-13 P
1 2 3 4 5 6
Total FDI 22,697 22,461 14,939 23,473 18,286
Country-wise Inflows
Mauritius 10,165 9,801 5,616 8,142 8,059
Singapore 3,360 2,218 1,540 3,306 1,605
U.S.A 1,236 2,212 1,071 994 478
Cyprus 1,211 1,623 571 1568 415
Japan 266 971 1,256 2,089 1,340
Netherlands 682 804 1,417 1,289 1,700
United Kingdom 690 643 538 2760 1,022
Germany 611 602 163 368 467
UAE 234 373 188 346 173
France 437 283 486 589 547
Switzerland 135 96 133 211 268
Hong Kong SAR 155 137 209 262 66
Spain 363 125 183 251 348
South Korea 95 159 136 226 224
Luxembourg 23 40 248 89 34
Others 3,034 2,374 1,184 983 1,540
Manufacture 4,777 5,143 4,793 9,337 6528
Construction 2,237 3,516 1,599 2,634 1319
Financial Services 4,430 2,206 1,353 2,603 2760
Real Estate Activities 1,886 2,191 444 340 197Electricity and other Energy Generation,
Distribution & Transmission
669 1,877 1,338 1,395 1653
Communication Services 2,067 1,852 1,228 1,458 92
Business Services 643 1,554 569 1590 643
Miscellaneous Services 1,458 888 509 801 552
Computer Services 1,647 866 843 736 247
Restaurants & Hotels 343 671 218 870 3129Retail & Wholesale
Trade 294 536 391 567 551
Mining 105 268 592 204 69
Transport 401 220 344 410 213
Trading 400 198 156 6 140Education, Research &
Development 243 91 56 103 150
Others 1,097 384 506 419 43P : Provisional.
Note : Includes FDI through SIA/FIPB and RBI routes only
International organization and India
India
WTO
IMF
WHOUNESC
OIAEAILO
FAO
SAARC
Emerging India