Impact of
Multinational
Corporations on
Indian Economy COMPILED AND PRESENTED
BY:
Ruchika Batra
MBA Hospital Management

CONTENTS
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• Meaning of MNC
• History of MNC
• MNC in India
• Impact on Local and National Economies
• Impact on the World Economy
• Favourable Impact of MNCs
• Harmful effect of MNCs
• Impact on India
• Future of MNC
• Factors Responsible for the Growth of MNCs: Worldwide: Post
Globalization Phenomenon.
• General Impact of MNC Entry in Retailing
• Conclusion

Meaning of MNC
• An enterprise operating in several countries but
managed from one (home) country.
• A multinational corporation (MNC) or multinational
enterprise (MNE) is a corporate enterprise that
manages production or delivers services in more than
one country.
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History of MNC
• The history of Multinational Corporations can be traced to trading
and business activities since time immemorial.
• Mesopotamian and Phoenician are said to be the first
transnational merchants entering into business activities with
Greeks. With the fall of Roman empire, Middle East and European
took to transnational trading.
• However, due to fall of Roman empire and war between feudal
lords and church's prohibitory order of trading with Muslim states
withheld the pace of trading.
• The city-states of Venice, Florence, Geneva, Pisa provided a
platform for trading to Christian. In the 17th and 18th centuries,
the modus operandi of business drastically changed replacing
barter economy with money economy.

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List of Top 10 Best
Multinational Companies
in India
• Microsoft
• IBM
• Nestle
• Procter & Gamble
• Coca Cola
• Pepsico
• Citi Group
• Sony Corporation
• Hewlett Packard
• Apple Inc.

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Impact on Local and
National Economies
• Multinational corporations affect local and national
policies by causing governments to compete with
each other to be attractive
to multinational corporation investment in their
country.
• For example: Walmart is an example of a large
multinational corporation that often
exerts influence on political processes through
lobbying, contributions to campaigns, and threats
of market withdrawal.

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• Multinational corporations play an important
role in the world economy through the process
of economic globalization; in other words, the
increasing economic interdependence of
national economies across the world through a
rapid increase in cross-border movement of
goods, services, technology and capital.
• For Example: India is an example of a country
that, economically, has benefitted from
globalization — it has seen rapid GDP growth
and has a growing middle class with a rising
standard of living.
Impact on World
Economy

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• MNCs create employment opportunities in the host countries. It
helps to create a pool of managerial talent in the host country.
• Helps removal of monopoly and improve the quality of domestic
made products.
• Promotes exports and reduce imports by raising domestic
productions.
• Goods are made available at cheaper price due to economies of
scale.
• Job and career opportunities at home and abroad in connection
with overseas operations.
• Encourages the world unity and all resulting in world harmony.
Favorable Impact
of MNC

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• The host county is likely to lose its economic sovereignty.
• The host nation may also experience some loss of control
over its own economy.
• Feeling that labour is being exploited by the MNC/
Outsourcing.
• Lost of cultural moorings.
• The problem of Dumping.
Example – Chinese products are priced low in Indian market.
Harmful Effects of
MNCs

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• Profit maximization
• Increased revenue
• Large amount of tax collections through MNC’s
• Economic health improved
• Employment increased
• Foreign relation increased
• International network of marketing
• Concentration in consumer goods Cultural
explosion
Impact On India

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Factors Responsible for the Growth of
MNCs: Worldwide: Post Globalization
Phenomenon
• From the foregoing discussion and analysis, it is an established fact
that the MNCs all over the world are growing at phenomenal rate.
• The main reasons responsible for this are attributed to the following
factors:
1. Growing Size of Market
2. Varied Field of Operations
3. Improved Marketing Incentives
4. Sound Financial Background
5. Advanced Technology

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• Accelerate retail market growth
• Farmers will benefit
• Foreign brands will promote healthy competition in market
• Push to infrastructure
• Push to productivity
• Customers feel that retail stores offer better deals
• But a few thousand jobs will not compensate for the millions of
livelihood destroyed by MNCs.
• For each employee recruited in MNC, 10 jobs are lost in domestic
retail market
• Small retailers will slowly and silently get displaced and deprived of
their daily bread
• Traditional business forms will be destroyed.
• If 4 million jobs are to be created in 3 years, the entire domestic
retail sector in India will be completely wiped out.
General Impact of MNC
Entry in Retailing

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• Increasing international competition.
• Global consumer awareness.
• Technological advancement.
• Reduction in friction among nations.
• World Business Community coming together.
• Growing role of private sector inn developing countries.
• Regional economic Integration.
• Increase in the number of bilateral treaties that promote FDI
has increased considerably.
• Privatization programmes.
Future of MNCs

““Instead of everyone sharing the world's
resources for the benefit of all,
multinationals like McDonald's just want to
use these resources to make profits for
themselves. We have to fight back!”
― Helen Steele
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