Features of MNC

1. Big size 2. Huge intellectual capital 3. Operates in many countries 4. Large number of customer 5. Large number of competitors 6. Structured way of decision making

FACTORS ATTRACTING MNC IN INDIA:

Economic Liberalization The Economic Policy Reforms The Indian Innovation System after 1991 Government Support for Technological Innovation Geographical Clustering

POLICIES THAT HELPED MNCs GROW IN INDIA

FDI Policy: Most sectors including manufacturing activities permitted 100% FDI under automatic route (No prior approval required) Industrial Licensing : Licensing limited to only 5 sectors (security, public health & safety considerations) Exchange Control: All investments are on repatriation basis. Original investment, profits and dividend can be freely repatriated Taxation: Companies incorporated in India treated as Indian companies for taxation Convention on Avoidance of Double Taxation with 71 countries including Korea

MERITS OF MNC
1. MNCs create employment opportunities in the host countries. It helps to create a pool of managerial talent in the host country. 2. Helps removal of monopoly and improve the quality of domestic made products. 3. Promotes exports and reduce imports by raising domestic productions. 4. Goods are made available at cheaper price due to economies of scale. 5. . Job and career opportunities at home and abroad in connection with overseas operations. 6. Encourages the world unity and all resulting in world harmony 7. Infrastructure & Technology transfer 8. Increased productive efficiency due to competition from multinational subsidiaries 9. Improvement in the quality of the factors of production 10. 11. 12. 13. 14. Inflow in investment fund (To fill the gape..) Faster growth of output and employment [2] quality [3] varieties

Consumer benefits [1]Price Increase in exports

DEMERITS OF MNC
1. The host county is likely to lose its economic sovereignty 2. The host nation may also experience some loss of control over its own economy 3. Feeling that labour is being exploited by the MNC/ Outsourcing

4. Lost of cultural moorings 5. The problem of Dumping Example Chinese products are priced low in indian market.

Problem of Indian company

Inadequate availability of finance and credit Inadequate Import Quota of Raw Materials Expensive Mode of Communication Problem in introduction of products in overseas market Insufficient Incentive Cheap and low Quality Product Lack of Knowledge to customs officers. Delayed Payments Equity participation by large scale units Limited partnership act technological obsolescence