2. WHAT MULTINATIONAL COMPANIES ARE?
A multinational corporation or a
multinational company is a
corporation enterprise that
manages production or delivers
services in more than one
country. It can also be referred to
as an international corporation.
3. ORIGIN OF MNC’S IN INDIA
Before 1991, India had the policy of closed economy
restricting foreign investment in the country. Due to this, by
the end of 1985, India started having Balance of Payments
problems. By the end of 1990, it was in serious economic
crisis. The government was close to default, its central bank
had refused to new credit and foreign exchange reserves had
reduced to such a point that India could barely finance three
week’s worth of imports. So India had to airlift its gold
reserves to pledge it with International Monetary Fund for the
loan of foreign exchange.
So to cope up with such a situation and
to attract FDI in the country India adopted the policy of
Liberalization, Privatization and Globalization. This paved the
way to the development of Multinational Companies in India.
4. WHY MNC’S CONSIDER INDIA AS A
PREFERRED DESTINATION
Now a days we can see a number of MNC’s operating in India.
There are a number of reasons why MNC’s are coming to
India:
• India has got a huge market for international products.
• It has got one of the fastest growing economies in the world
after China.
• Labour competitiveness.
• Government nowadays makes continuous efforts to attract
foreign relaxing many of its policies. As a result, a number of
MNC’s have shown interest in Indian market.
• Macro-economic stability.
5. MNC’S IN INDIA-WHETHER BOON OR
A BANE
FAVOURABLE ASPECTS OF MNC’S:
1.MNC’s have made the entire world a Global village. Now everything is
available at every place.
2.Interconnectivity among nations has improved through imports and
exports.
3.Bio-friendly, ecological, quality products are available at nominal rates.
4.Monopoly reduction through increased competition which benefits the
consumers.
5.Generation of FDI leading to increased foreign reserves.
6.Technology transfer from developed nations to developing one.
7.Generation of income through taxation.
8.Brain gain instead of Brain drain.
9.Reduction in corruption.
6. DRAWBACKS OF MNC’S:
1.Indegenous products and small organizations suffer.
2.Promotes Capital Intensive techniques which leads to unemployment.
3.No profit except taxes remain in the native country.
4.HR practices are not ethical i.e. cheap labor, extra working hours, hire and
fire policy.
5.Pollution and environmental hazards.
6.Some MNC’s come only for the tax benefits and are not concerned about
welfare of the nation.
7.Native companies are crumbled under the competition of MNC’s.
8.Security threat.
7. SUGGESTIONS FOR REMOVING THREATS FROM
MNC’S
1.There should be government side threat of nationalization.
2.Strict laws and their compliance which favors the home
country.
3.More concentration of Government on indigenous industries
and offering financial support, incentives, tax concessions.
4.No compromise on the cost of growth of home economic
conditions.
5.Ownership strategies with MNC’s having major shareholdings.
6.Mandatory joint venture with Small Scale Industries as a part
of development of both organizations.
7.Strict compliance of various laws on MNC’s.
8. TOP MNC’S OPERATING IN INDIA
• IBM
• MICROSOFT
• NOKIA CORPORATION
• PEPSICO
• RANBAXY LABORTARIES LTD.
• REEBOK INTERNATIONAL LTD.
• SONY
• VODAFONE
9. CONCLUSION
So it can be concluded that Multinational
Companies are the important source of
foreign exchange in India which have helped
in providing global image to India as well.
They are the source of development of
standard of living of the people by providing a
variety of branded products. They have
benefitted consumer by providing quality
goods at cheaper rates.
