Documente Academic
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effort of mine.
2
DECLARATION
that this project meets all the requirements that have been stated in
mentor.
3
NEED FOR THE STUDY
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OBJECTIVE OF THE STUDY
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CONTENTS
Acknowledgement 02
Declaration 03
Need for the study 04
Objective of the Study 05
2.Introduction 08
3.Industry 13
A. Foreign direct investments in India
1. Foreign investment
2. Potential for investment
3. Indian investments abroad
B. Global Trade Relations
1. Indian tigers
2. Recent acquisitions and mergers
4.Agriculture and others 26
5. Conclusion 40
6. Result 47
Bibliography 49
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1.Methodology And Research Section
NATURE OF RESEARCH
The present study is of analytical and exploratory nature, where I have analyzed
the facts and the information already available.
7
2.Introduction
Globalisation can be described as a process by which the people of the world are
unified into a single society and function together. This process is a combination of
economic, technological, sociocultural and political forces. Globalization is often
used to refer to economic globalization, that is, integration of national economies
into the international economy through trade, foreign direct investment, capital
flows, migration, and the spread of technology.It is the expansion of economic
transactions and the organization of economic activities across the political
boundaries of nation states. More precisely, it can be defined as a process
associated with increasing economic openness, growing economic interdependence
and deepening economic integration between countries in the world economy.
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Impact on India
It was on July 1, 1991 that India opened up the economy following a major crisis
that led by a foreign exchange crunch that dragged the economy close to defaulting
on loans. The response was a slew of domestic and external sector policy measures
partly prompted by the immediate needs and partly by the demand of the
multilateral organisations. The new policy regime radically pushed forward in favour
of a more open and market oriented economy.
There are at present 149 members in the World Trade Organisation (WTO). Some
25 countries are waiting to join the WTO. China has recently been admitted as a
member. What is needed is to evolve an appropriate framework to wrest maximum
benefits out of international trade and investment.
This framework should include (a) making explicit the list of demands that India
would like to make on the multilateral trade system, and (b) steps that India should
take to realize the full potential from globalisation.
The second set of measures that should form part of the action plan must relate to
strengthening India’s position in international trade. India has many strengths,
9
which several developing countries lack. In that sense, India is different and is in a
stronger position to gain from international trade and investment.
India’s rise to the top of the IT industry in the world is a reflection of the abundance
of skilled manpower in our country. It is, therefore, in India’s interest to ensure
that there is a greater freedom of movement of skilled manpower. At the same
time, we should attempt to take all efforts to ensure that we continue to remain a
frontline country in the area of skilled manpower.
India can attract greater foreign investment, if we can accelerate our growth with
stability. Stability, in this context, means reasonable balance on the fiscal and
external accounts. We must maintain a competitive environment domestically so
that we can take full advantage of wider market access. We must make good use
of the extended time given to developing countries to dismantle trade barriers.
Wherever legislations are required to protect sectors like agriculture, they need to
be enacted quickly.
In fact, we had taken a long time to pass the Protection of Plant Varieties and
Farmers’ Rights Act. We must also be active in ensuring that our firms make
effective use of the new patent rights. South Korea has been able to file in recent
years as many as 5000 patent applications in the United States whereas in 1986,
the country filed only 162. China has also been very active in this area. We need a
truly active agency in India to encourage Indian firms to file patent applications. In
effect, we must build the complementary institutions necessary for maximizing the
benefits from international trade and investment.
Changes in the foreign trade and foreign investment policies have altered the
environment in which Indian industries have to operate. The path of transition is,
no doubt, difficult. A greater integration of the Indian economy with the rest of the
world is unavoidable. It is important that Indian industry be forward looking and get
organized to compete with the rest of the world at levels of tariff comparable to
those of other developing countries. Obviously, the Indian Government should be
10
alert to ensure that Indian industries are not the victims of unfair trade practices.
The safeguards available in the WTO agreement must be fully utilized to protect the
interests of Indian industries.
Indian industry has a right to demand that the macro economic policy environment
should be conducive to rapid economic growth. The configuration of policy decisions
in the recent period has been attempting to do that. It is, however, time for Indian
industrial units to recognize that the challenges of the new century demand greater
action at the enterprise level. They have to learn to swim in the tempestuous
waters of competition and away from the protected waters of the swimming pools.
India is no longer a country producing goods and services for the domestic market
alone. Indian firms are becoming and have to become global players. At the
minimum, they must be able to meet global competition. The search for identifying
new competitive advantages must begin earnestly. India’s ascendancy in
Information Technology (IT) is only partly by design. However, it must be said to
the credit of policy makers that once the potential in this area was discovered, the
policy environment became strongly industry friendly.
Over a wide spectrum of activities, India’s advantage, actual and that which can be
realized in a short span of time must be drawn up. Of course, in a number of cases,
it will require building plants on a global scale. But, this need not necessarily be so
in all cases. In fact the advent of IT is modifying the industrial structure. The
revolution in telecommunications and IT is simultaneously creating a huge single
market economy, while making the parts smaller and more powerful. What we need
today is a road map for the Indian industry. It must delineate the path different
industries must take to achieve productivity and efficiency levels comparable to the
best in the world.
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3.Industry
New industrial policy 1991 was aimed at freeing Indian industry from official
controls and opportunities for promoting foreign investment in India. With
globalization Indian industry was flooded with technology transfer, marketing
expertise, introduction of managerial techniques and new possibilities for promotion
of exports.
This new policy necessary in the changing global scenario of industrial and
economic cooperation marked by mobility of capital headed a new era in industrial
sector of the country. The fruits of globalization has started showing in form of
Indian companies hunt for assets abroad to acquire global scale. There had been
large number of merger and acquisition in industrial sectors. Indian companies
have gone global and are now going stiff competition to their global counter parts.
All these had will possible due to opening of Indian economy in 1990’s.
Steel sector has been one of the major beneficiaries of the global economy. First
was an Indian, L N.Mittal who went on to become the largest producer of steel in
the world. Now it is turn of our very own TATAs to go global which began in 2004,
with TATA steel buying national steel of Singapore to enable its overseas expansion.
In 2007 TATA acquired Europe’s second largest steel company Corus with an annual
steel marketing capacity of 18 million tones to emerge as the world’s fifth largest
steel producer.
The Mahindra group has bought majority stake in Bristle cone, a California based
technologies consulting and services firm.
There had been huge investment by companies like ONGC(With its overseas arm
OVL, ONGC Videsh ltd.) in oil exploration in Russia and African countries. Reliance
industries(6th largest oil refinery in the World) had also started collaborating in
natural gas exploration in Australia and some African countries. Indian oil
Corporation board has approved a proposal to bid for 40% stakes in Indonesia’s
largest independent up Stream Company.
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With globalization paving way for capital flow, FDI in many sectors of
manufacturing industries have helped the companies like Reliance and TATAs to
grow exponentially. Many of the companies have now been listed in Hong Kong,
New York, Tokyo and many other stock exchange to mop up foreign funds to
develop their manufacturing capacity. Thus the globalization which till recently was
confined to academic discussion has now started bearing its fruits in most
important sector of Indian economy i.e. industrial sector.
Post-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. Seven Indian companies
have been listed in the Fortune Global 500 list for the year 2008. They are:
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A. Foreign direct investment in India
As the twelfth-largest economy(in USD GDP) in the world, India is one of the most
preferred destinations for foreign direct investments (FDI); India has strength in
information technology and other significant areas such as auto components,
chemicals, apparels, pharmaceuticals and jewellery. India has always held promise
for global investors, but its rigid FDI policies were a significant hindrance in this
regard. In the year 2007-08, foreign direct investment in India has crossed the
mark of US$25 billion, which was 56 per cent more than what it was in 2006-07,
i.e, US$15.7 billion. In the first half of the current financial year, 2008, India's
foreign direct investment was registered to be US $341 billion.
India's recently liberalised FDI policy (2005) allows up to a 100% FDI stake in
ventures. Industrial policy reforms have substantially reduced industrial licensing
requirements, removed restrictions on expansion and facilitated easy access to
foreign technology and foreign direct investment FDI. The upward moving growth
curve of the real-estate sector owes some credit to a booming economy and
liberalized FDI regime.
In March 2005, the government amended the rules to allow 100 per cent FDI in the
construction business. This automatic route has been permitted in townships,
housing, built-up infrastructure and construction development projects including
housing, commercial premises, hotels, resorts, hospitals, educational institutions,
recreational facilities, and city- and regional-level infrastructure.
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I. Foreign Investment
15
FDI Inflows Year-wise Data (In US$ millions upto Aug’08 )
16
The total estimated Investment Opportunity in the retail sector is around US$
5-6 Billion in the Next five years. Certain segments that promise a high
growth are Food and Grocery (91 per cent), Clothing (55 per cent), Furniture
and Fixtures (27 per cent), Pharmacy (27 per cent), Durables, Footwear &
Leather, Watch & Jewellery (18 per cent).
Healthcare sector provides another investment outlet. With the expected
increase in the pharmaceutical market, the total healthcare market could rise
from Rs 1,030 billion (US$ 22.2 billion) currently (5.2 per cent of GDP) to Rs
2,320 billion (US$ 50 billion)-Rs 3,200 billion (US$ 69 billion) (6.2-8.5 per
cent of GDP) by 2012.
Healthcare spending in the country will double over the next 10 years.
Private healthcare will form a large chunk of this spending, rising from US$
14.8 billion to US$ 33.6 billion in 2012. This figure could rise by an additional
US$ 8.4 billion if health insurance cover is available to the rich and the
middle class. The voluntary health insurance market, which is estimated at
US$ 86.3 million currently, is growing at a fast pace and Industry estimates
put the figure at US$ 2.8 billion by 2005.
The government has taken various steps to further facilitate and augment the
inflow of foreign investment into India.
17
Shri Kamal Nath, Union Minister of Commerce & Industry, has stated that
Foreign Direct Investment (FDI) up to 100 per cent is permitted under the
automatic route in most of the sectors.
Establishment of the Indian Investment Commission to act as a one-stop
shop between the investor and the bureaucracy.
Progressively raising the FDI cap in other sectors like telecom, aviation,
banking, petroleum and media sectors among others.
Removal of the investment cap in the small scale industries (SSI) sector.
Companies will now require only an FIPB approval for investments up to US$
231.90 million (Rs 1,000 crore). Clearance from Cabinet Committee of
Economic Affairs (CCEA) will be imperative only for investments above US$
231.90 million (Rs 1,000 crore).
These measures will greatly enhance the global community's confidence in the
fundamentals of the Indian economy, and reflect the efforts of the Indian
Government to integrate with the global economy. With government planning more
liberalisation measures across a broad range of sectors and continued investor
interest, the inflow of FDI into India is likely to further accelerate. Already, upbeat
due to the buoyant FDI growth in the country, the government has put a target of
US$ 35 billion in FDI, in 2008-09.
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Tata Communications Ltd has entered into an agreement with the South
African government-owned Eskom Holdings Ltd and Transnet Ltd., to
acquire a further 30 per cent stake in South Africa's Neotel Ltd., in
addition to its existing 26 per cent stake in Neotel.
Reliance Communications plans to invest US$ 60 million in Saudi Arabia to
connect the Kingdom and other Gulf states with 53 countries around the
globe on its fibre optic network and provide value-added services to its
users.
Pharma major Lupin Limited has acquired over 30 per cent stake in
Generic Health Pty Ltd of Australia, after acquiring Hormosan Pharma, a
Germany-based company and Kyowa Pharmaceuticals, a Japanese firm, in
2007.
Tate Coffee, a 51% owned subsidiary of Tata Tea, on Sunday acquired the
US-based Eight O’clock Coffee Company (EOC) for US$ 220 million. The
acquisition, which will be financed through a combination of equity and
non-recourse debt, is in line with Tata Coffee's plans to enter the US
market.
Ruia-owned Dunlop India has bought Schlegel, UK's second largest auto
component manufacturing company.
Tanti group of companies, jointly with Bahrain-based Arcapita Bank, has
acquired Honiton Energy Holdings, a Chinese wind energy firm. The joint
venture partners will invest US$ 2 billion by 2012.
Tata Communications plans to invest more than US$ 2 billion by 2011.
Reliance Communications (RCom) the Indian telecom major will invest up
to US$ 500 million in establishing an internet Protocol-enabled integrated
telecom network in Uganda, by the end of this year.
Indian companies have invested in 75 projects in the United Kingdom
during 2007-08, in sectors like infotech and life sciences.
Tata Steel plans to build a plant in Vietnam, and the proposed 4.5-million
tonne, US$ 5 billion steel plant would be built through a joint venture with
Vietnam Steel and Vietnam Cement Industries. The first phase of the
complex is scheduled to be commissioned by the end of 2010.
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Tata Tea will manufacture and market tea from the second quarter of
2009, in China, following a 70:30 JV between Tata Tea and Chinese tea
major Zhejiang Tea Import & Export (ZTIE).
Indian fertiliser companies are planning to invest around US$ 5 billion in
overseas joint ventures over the next three years.
Until the liberalisation of 1991, India was largely and intentionally isolated from
the world markets, to protect its fledging economy and to achieve self-reliance.
Foreign trade was subject to import tariffs, export taxes and quantitative
restrictions, while foreign direct investment was restricted by upper-limit equity
participation, restrictions on technology transfer, export obligations and
government approvals; these approvals were needed for nearly 60% of new FDI in
the industrial sector. The restrictions ensured that FDI averaged only around $200M
annually between 1985 and 1991; a large percentage of the capital flows consisted
of foreign aid, commercial borrowing and deposits of non-resident Indians.
India's exports were stagnant for the first 15 years after independence, due to
the predominance of tea, jute and cotton manufactures, demand for which was
generally inelastic. Imports in the same period consisted predominantly of
machinery, equipment and raw materials, due to nascent industrialisation. Since
liberalisation, the value of India's international trade has become more broad-based
and has risen to Rs. 63,080,109 crores in 2003–04 from Rs.1,250 crores in 1950–
51. India's major trading partners are China, the US, the UAE, the UK, Japan and
the EU. The exports during September 2008 were US $13,748 which was 10.4%
higher and import were US $1,54,744 million against US $1,11,654 million during
the same period over the previous year.
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the inclusion of such matters as labor and environment issues and other non-tariff
barriers into the WTO policies.
DEPARTMENT OF COMMERCE
ECONOMIC DIVISION
I. INDIAN TIGERS
1. TATA STEEL:-
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GLOBAL POSITION: - since February 2000, companies across the group have
bagged 21 overseas targets for over Rs 50000 cr., Many for undisclosed amounts.It
is now the World’s 5th largest steel company.
(FOR 2007-08)
Total income: - Rs 20,028.28 crore
Profit: - Rs 4,687.03 crore
2. VIDEOCON:-
3. MAHINDRA N MAHINDRA: -
GLOBAL POSITION: - has acquired assets in china, Europe, U.S., and South
Africa, it is the third largest tractor maker in the World.
(For the year 2007-08)
Total income: - Rs. 22,927.25 cr.
Profit: - Rs 1,571.12 cr.
4. BIRLA. A.V.:-
GLOBAL POSITION: - clinched five deals for undisclosed amounts last fiscal
including a paper mill in Canada, copper mines in Australia and a VSF plant in
china.
(For the year 2007-08)
Total income: - 432 million US $
Profit:- 68.2 million US $
5. RANBAXY:-
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(For the year 2007)
Total income: - Rs 47,783.22 cr.
Profit: - Rs 6177.2 millions.
6. WIPRO:-
GLOBAL POSITION:- Wipro Technologies has over 300 customers across U.S.,
Europe and Japan including 50 of the Fortune 500 companies. Wipro Technologies
has alliances with over 100 firms across the World to provide customers with the
highest quality of service. The following companies are examples of successful
customers of Wipro: Nokia, Cisco Systems, Toshiba TEC, Symantec, Compaq, and
Intel.
(For the year 2007-08)
Total income:-Rs. 203970 million.
Profit: - Rs. 32829 million.
7. WOCKHARDT:-
9. ASIAN PAINTS;-
GLOBAL POSITION:- Asian Paints is India's largest paint company and the
operates in 21 countries and has 29 paint manufacturing facilities in the world
servicing consumers in over 65 countries. Besides Asian Paints, the group operates
around the world through its subsidiaries Berger International Limited, Apco
Coatings, SCIB Paints and Taubmans.
Total income:-Rs. 7000 Cr.
Profit: - Rs. 3021 Cr. about 42%
TATA MOTORS:-
CEDIS, Germany, stake:-100%
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TATA COFFEE:-
EIGHT’O CLOCK, US, stake:-100%
APOLLO TYRES:-
DUNLOP TYRES, S.Africa, stake:-100%
BILT:-
PULP/PAPER FIRM, Malaysia, stake:-78%
M n M:-
STROKES GROUP, U K, stake:-100%
RANBAXY:-
ALLEN SPA, Italy, stake:-n/a
SUZLON ENERGY:-
HANSEN, Belgium , stake:-100%
NIIT:-
ROOM SOLUTIONS, U K , stake:-51%
WIPROTECH:-
QUANTECH, U S , stake:-100%
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1.Agriculture:-
From a historical perspective, it can be observed that till the late 80’s agricultural
sector in India was relatively closed as the export orientation confined to only
some commercial crops like spices, tea, and coffee and imports were largely
restricted. However during the period since then the degree of export orientation
increased considerably with the removable of some of the restriction and controls
on export of commodities.
The growth in agriculture over the years since independence can be traced fron the
following graph:
25
The agricultural yield increased after independence on account of
increased focus on the sector in the five-year plans and green revolution
that took place. However, in the recent past it has declined and has been
volatile. The decline in agricultural yield has impacted growth of the sector and
consequently its share as a percentage of GDP. While the economy and other
sectors are clocking near double-digit growth rates, the agricultural sector is merely
growing at the rate of 2% to 3%. In the past eighteen years, the sector has grown
at a CAGR of 1.8%. The growth in agricultural sector has slowed down on account
of small and fragmented farms, which has resulted in lower productivity.
The following priority tasks are identified for the government to help Indian
agriculture adjust to globalization:-
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1. Food self sufficiency at the national level is desirable so that the reliance on
trade can be kept within limits.
2 Safety nets are needed to protect the interests of crops, people and regions
which are likely to be affected by globalization.
3. Precautions on imports in view of the removal of quantitative restrictions.
4. Agricultural export policies need to be synchronized with the import policies
to avoid price fluctuations. There is a need for sequencing of measures. In
view of the removal of quantitative restriction in the coming days,
tariffication process needs to be done judiciously.
2.Infrastructure:-
Energy sector has also seen investment by many private companies. But debacle
like Enron has some what halted investment in power generation sector by private
companies. But companies like Reliance have started investing in power generation
on mega scale in places like Dadri, U.P.
But distribution of electricity has gone to many private companies like BSES and
NDPL in Delhi. TATA powers in Mumbai and in many other states, power reforms
are under process.
27
Similarly education has become qualitatively rich with many foreign universities of
Germany, UK and USA either opening there branches in the country or tying up
with Indian universities.
Health facility has also seen a drastic change with major players like Apollo,
forties, max, setting up larger corporate hospitals. This trend has slowly graduated
to other small towns from bigger cities. With more such hospitals coming up there
would be better health facility provided to common citizen. The new technology in
medical sector has made India medical hub of Asia to a greater extend. People from
countries like Pakistan, Bangladesh, and Myanmar etc. are coming to India and thus
bringing more foreign currency to India. However, there has to be word of caution
regarding investment in infrastructure especially in power sector. Our experience of
power sector had not been quite good and every step should be taken after proper
analysis.
By 2008, India also has a total of 49,750,000 telephone lines in use,a total of
233,620,000 mobile phone connections, a total of 60,000,000 Internet users—
comprising 6.0% of the country's population,and 4,010,000 people in India have
access to broadband Internet— making it the 18th largest country in the world
in terms of broadband Internet users. Total fixed-line and wireless subscribers
reached 325.78 million as of June, 2008.
McKinsey & Co. predicts global market for IT-enabled services to be over $140
billion by this year. In that the opportunity for India will be around $ 17 Billion. The
industry will attain a growth rate of over 35% in the next few years, says Jainder
Singh, Secretary, IT, Government of India.The market potential for Business
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Transformation Outsourcing (BTO) is expected to be around US $ 680bn by the end
of March 2009. IT software exports, which grew at 32% during 2005-06 had a
growth rate of 23.4% in the last couple of years, said the IT Secretary. IT and ITES
will record a growth rate of over 40% with KPO and BTO services making further in
roads in to the IT sector.
"The concept of BTO is new to India in particular. Its growth rate, estimated in most
pessimistic form is expected to be around 5%. But as BTO gains popularity and
vendors become more mature in providing these services, it is expected to grow at
9% to 10% per annum," said Singh.
The market potential for BTO is expected to be around US $ 680bn by 2008-09.
Also, the percentage of BTO services in the outsourcing pie is expected to increase,
from 19% in 2004 to 31% by 2009.
Globalisation has not only opened the flood gates of new products in Indian
market but has also brought new dimensions to the research and development in
various sectors of Indian economy and industry. The exchange of knowledge and
import of new technologies has improved the manufacturing capability of Indian
industries both in quality and quantity.
India has entered into bilateral science and technology cooperation with 56
countries of the world. With global market open to India, it has expanded it wings
in space technologies. ISRO has become a major player in space technology market
for mainly developing nation. France has been major partner in this sector, helping
in exchange of technology.
Similarly, pharmaceutical companies have been major beneficiary of the
research and development in open market. Companies like Ranbaxy have popped
14 companies for over $500 million since 2004 to enter the league of top 8 global
generic drug markets.
29
Besides all these, Indian technocrats have been increasingly engaged to developed
new technologies in different fields like information technology, plasma technology,
nano technology etc.
Globalisation has also removed several technological restriction which were put by
develop nations to debar countries like India to take advantage of new
technologies.
In recent years, considerable efforts have been made in domain of the discovery of
drugs through contract research organization, there are signs that an effort towards
innovation has started in a big way. Venture capitalist and strategic investors are
beginning to come, as Indian pharmaceuticals companies have demonstrated the
capability for high value added work at low cost. The Indian pharmaceutical market
has been forecast to grow to as much as US$ 25 billion by 2010 as per Organization
of Pharmaceutical Producers of India (OPPI) estimates. However, Espicom's market
projections forecast more modest but stable annual market growth of around 7.2
per cent, putting the market at US$ 11.6 billion by 2009.
Health tourism presents significant investment potential. At the current pace of
growth, medical tourism, currently pegged at US$ 350 million, has the potential
to grow into a US$ 2 billion industry by 2012.
4.Service sector:-
One of the major beneficiaries from globalisation has been India’s service sector
and especially BPOs and KPOs. But outsourcing of services has not been limited to
these sectors. The drug’s R and D had been outsourced to India and so had been
accounting with tax preparation next in line.
Outsourcing, perhaps, is industrial evolution in its highest form. That evolutionary
baton is now, happily enough, in India’s hand. According to current data BPO
industry in India employs around 400 people every day with the people exiting from
this sector being round 12% of the total work force.
The BPO sector is beginning to be addressed comprehensively as an industry and
once it moves beyond metros, there will be a better demand-supply situation. The
30
BPO industry recorded export revenue of $6.3 billion during fiscal 2005-06 and is
expected to touch 8-8.5 billion during 2006-07.
This sector currently also offers a faster career path and the myriad possibilities of
becoming specialist in a few key areas like insurance under writers or logistic
specialists. The global large customers are also showing an increasing preference
for the large and global technology service providers for sourcing their IT needs
which also have a strong BPO division.
The evolution and maturity of the Indian BPO sector has given birth to yet another
wave in the global outsourcing scene-KPO (knowledge process outsourcing).
According to a report by global sourcing now, KPO is expected to reach $ 17billion
by 2010 of which $12 billion would be outsourced to India. India controls at the
present 45 per cent of the global outsourcing market with an estimated income of $
50 billion.
KPO function are intellectual property or patent research, R and D in
pharmaceuticals and biotechnology, data-mining, data-base creation, and a range
of analytical services such as equity research, competitive intelligence industry
reports and financial modeling.
Typical users of KPO services include market research and consulting firms,
investment banks and financial services institutions, industry associations, media,
publishing and database firms and corporate planning development of large fortune
500 companies. Several global players such as Mckinsey, Goldman Sachs, Reuters,
IMS health, Harris interactive, IPSOS, Martitz, AC Nielsen groups are already using
India as a remote base. Companies like Infosys, Wipro and Satyam have
revolutionized the entire IT sectors and has become biggest provider IT services
world-wide. Service sector of India today has proved – ‘knowledge is power’.
The contribution of the service sector to GDP has increased considerably with
globalization as can concluded from the following graph.
31
5.Education
32
have advantages, particularly for India, which has a large educational system and
infrastructure and diverse human capabilities.
While the foreign institutions may be allowed to set up their campuses in India,
they should function under the control of the government or specialized bodies like
the National Assessment and Accreditation Council (NAAC) set up by the
Government for the purpose;
The universities which want to function in India should have been
accredited in their own countries;
The foreign institutions should be subjected to pre-entry academic audit and
accreditation norms devised by the designated government agencies;
They should sign Memoranda of Understanding (MOU) with the government or a
body designated by it. The Memorandum should give details of the courses of
studies, infrastructural facilities, both academic and non-academic and the amount
of expected cost recoveries from Indian students and the entry of foreign
institutions should be allowed on the basis of reciprocity.
The countries exporting education to India should also permit the opening of Indian
university campuses in their countries. In the entire process of the entry of foreign
institutions the paramount of national interests should be the crucial guiding factor.
Globalisation has a multi-dimensional impact on the system of education. It
has underlined the need for reforms in the educational system with particular
reference to the wider utilization of information technology; giving productivity
dimension to the educational system and emphasis on research and development.
It has also given rise to controversies relating to introducing changes in the inter-
sectoral priorities in the allocation of resources leading to the misconceived policy of
downsizing of secondary and higher education. It has also advocated privatization
of higher education without realizing the dangerous possibility of making the
system a commercial enterprise. Further, internationalization of education
particularly higher education has been advocated without due regard to the needs
and susceptibilities of the developing countries.
It is, therefore, necessary that each country should decide about the nature and
extent of globalisation that can be constructively introduced in their socio-economic
and educational systems. While it is difficult to resist the temptation of falling in line
33
with the international community, it is necessary that while doing so, the
paramount of national interests should be kept in view. This is more so in the field
of education which is intimately concerned with the development of human capital.
Any thoughtless entry into the global educational market can end up in harming the
vital interests of students for generations to come.
India has long been a major supplier of foreign students for American colleges, but
the numbers have shot up dramatically in the last decade, such that India now
sends more students to the United States than any other country and students from
India now make up 14 percent of all foreign students in the United States (double
the share of 10 years ago).
The amount spent by the India Govt. on education has rose steeply over the years
indicating the rising importance on education.
34
6.Media
Pre 1990’s, the people of the country lived with only on Doordarshan and all India
radio as only mode of modern mass media. The window to the information was
limited and it was often alleged that these media often distorted facts to suite the
power that be. Suddenly, with LPG, the various windows to source of knowledge in
form of various radio-channel and innumerable TV channels opened up.
Today our life has been guided by remote of TV, thanks to liberalised government
policy. Today people have access to numerous source of information which has
bought qualitative change in people’s life.Today media, where though FDI had been
still capped up to 49% of total equity and control of board still in Indian hands, has
brought profound change in way we think, dress, and behave and react. Though
there have been several ill effects from these media exposure but no body can deny
numerous benefits it had brought.Today, if elections have become free and fair, it is
all thanks to the media which has different angles of approach thus bringing out
truth behind any incident. The transparencies in government dealing have been also
bought due to sustained effort by media.
Similarly, globalisation has freed media from few hands to more democratic and
wider-based population. This has helped media to give voice to down trodden
sections of society. It has also brought justice to several people.
Thus media has not only changed political destiny of country but also our culture,
and thinking. Globalisation has brought more closely the other countries with media
crossing borders of nation-states and blurring international boundaries.
Indian film industry has become a major revenue career in markets of USA and
Europe, 23% of total revenue of films comes from overseas market like USA,
Canada, UK, and Mauritius. Music companies also earn about 15% of their revenue
from overseas market.
With the introduction at multiplex culture and entry of corporate houses in film-
producing business, it has been further professionalized. Ad labs acquired by
Ambanis, pantaloons own production house along with Zee’s own production house
are soon going to globalise the Indian media.
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India is poised to become the fastest growing market in the global
entertainment and media sector in the next five years. The business of
internet portals and online advertising also are developing on a large scale in the
country.
A study by Pricewaterhouse Coopers (PwC) India reveals that India’s growing
market in the global entertainment and media (E&M) space will have a size of over
Rs100,000croreby2011.
With the arrival of new web portals and rising number of internet users, a major
chunk of television advertising and viewership has now passed on to internet.
However, traditional segments like radio, television and films are not much worried
about the development, the PwC study shows.
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4. Conclusion
Though globalisation has brought many opportunities to India there had also been
certain problems related with it. The bulk of FDI went into telecommunication,
electrical equipment & chemicals. There is however, need to increase FDI in rural
sector which has lagged behind in this decade.
Similarly, with era of merger and acquisition going on there is a need to protect
small scale industries. These industries provide employment to a large section of
population and therefore there is a need to protect their interests.
Poverty, inequality and deprivation persist and there is poverty every where.
One eighth of the people in the industrialized world are affected by or live in
poverty. Almost one third of the people in the developing world an estimated 1.5
billion, live in poverty and experience absolute deprivation in so far as they can not
meet their basic human needs.
The same numbers do not have access to clean water as many as 840 million
people suffer from malnutrition. More then 300 million children who should be in
school are not. Nearly 380 million women are not expected to survive to the age of
forty. And as we enter the 21 st century more than 900 million adults remain
illiterate most of them live in the developing world. But in a functional sense the
number of illiterate people in the industrialized world, at 100 million, is also large.
Globalisation may have created opportunities for a few countries and some people
in the developing world, but a very large proportion of both countries and people
have remained untouched or have been marginalized by the same process. Such
exclusion has had social consequences as some of those deprived have turned to
crime, drugs, or violence. Similarly environmental destruction continues. The accent
on deregulation has possibly accelerated the over exploitation and degradation of
common property resources Implications of globalisation for a national economy are
many. Globalisation has intensified interdependence and competition between
37
economies in the world market. This is reflected in Interdependence in regard to
trading in goods and services and in movement of capital. As a result domestic
economic developments are not determined entirely by domestic policies and
market conditions. Rather, they are influenced by both domestic and international
policies and economic conditions. It is thus clear that a globalising economy, while
formulating and evaluating its domestic policy cannot afford to ignore the possible
actions and reactions of policies and developments in the rest of the world. This
constrained the policy option available to the government which implies loss of
policy autonomy to some extent, in decision-making at the national level.
India clearly lags in globalisation. Number of countries has a clear lead among them
China, large part of east and far east Asia and Eastern Europe. Let’s look at a few
indicators how much we lag.
Over the past decade FDI flows into India have averaged around 0.5% of GDP
against 5% for China 5.5% for Brazil. FDI inflows into China now exceeds US $ 50
billion annually. It is only US $ 4billion in the case of India
Consider global trade – India’s share of world merchandise exports increased from
.05% to .07% over the past 20 years. Over the same period China’s share has
tripled to almost 4%.
India’s share of global trade is similar to that of the Philippines and economy 6
times smaller according to IMF estimates. India under trades by 70-80% given its
size, proximity to markets and labour cost advantages.
We are nowhere ever close being globalized in terms of any commonly used
indicator of globalisation. In fact we are one of the least globalized among the
major countries – however we look at it.
As Amartya Sen and many other have pointed out that India, as a geographical,
politico-cultural entity has been interacting with the outside world throughout
history and still continues to do so. It has to adapt, assimilate and contribute. This
goes without saying even as we move into what is called a globalized world which is
38
distinguished from previous eras from by faster travel and communication, greater
trade linkages, denting of political and economic sovereignty and greater
acceptance of democracy as a way of life.
India has to concentrate on five important areas or things to follow to achieve this
goal. The areas like technological entrepreneurship, new business openings
for small and medium enterprises, importance of quality management, new
prospects in rural areas and privatisation of financial institutions. The
manufacturing of technology and management of technology are two different
significant areas in the country.
There will be new prospects in rural India. The growth of Indian economy very
much depends upon rural participation in the global race. After implementing the
new economic policy the role of villages got its own significance because of its
unique outlook and branding methods. For example food processing and packaging
are the one of the areas where new entrepreneurs can enter into a big way. It may
39
be organised in a collective way with the help of co-operatives to meet the global
demand.
Poverty Reduction
Year Poverty Rate (%)
per year(%)
1977-78 51.3
40
Another outcome of globalisation has been a huge increase in salaries of senior
managers, accountants, lawyers and public-relations personnel working for MNC’s
or their local competitors. For the IT-literate, job opportunities have been plentiful,
and there are also opportunities to live and earn abroad. For the English-speaking
upper middle-class, this has come as a boon. With greater access to disposable
income, the seduction of consumerism becomes hard to resist, and the demand for
unrestricted globalisation inevitably follows the attraction for new and ever more
advanced consumer goods. This new and more prosperous class of Indian
consumers associates India's progress with the availability of the latest automobile
models and consumer goods. The local availability of imported European cosmetics
and fashions, imported drinks and confectioneries - these have all become
important to those who have sufficient disposable income to purchase such items.
Globalisation has other champions too. Importers have a strong financial interest in
a globalized economy. But so do exporters dependent on imported parts and
machinery. Industrialists with interests in ports, shipping, international warehousing
and other aspects of international trade and commerce may also see globalisation
as beneficial to their sectors of the economy. Indian industrialists who have so far
failed to invest in research and development and are losing the battle for market
share are also becoming amenable to globalisation in the fond hope of partnering
with an MNC that will enable them to stabilize or expand their sinking business
ventures.
Although these sections of society are in numerical terms a very small minority in
the country, they are able to wield considerable authority on account of their
financial clout. Their voices are far more likely to be heard in the Indian media, and
they are much more likely to be able to influence important political decisions in the
country. Because of their familiarity with English, and privileged access to major
media outlets and institutions of higher learning, they are taken to be more
credible, and are thus able to exercise tremendous influence on public policy.
But it should be noted that the interests of a particular section of Indians need not
match the real interests of all other sections of Indian society. Other sections of
society may benefit only to the extent that a fraction of this new prosperity trickles
down to them. Some may not benefit at all, while some may even be adversely
41
affected. In addition, globalisation may have hidden consequences that may
negatively impact the quality of life even of those prospering through globalization.
But the greatest danger posed by unrestricted globalisation is that it may
exacerbate the problems of nagging poverty and uneven development, and create
grave infra-structural mismatches. It is already evident that the Indian economy
has become more dependent on imports which has brought with it constant
pressure on the value of the Rupee, leading to recursive bouts of high inflation. And
rather than expand India's manufacturing strength and develop new capabilities
and technological development in India, globalization may in fact put India at a
global disadvantage in key sectors of modern industry leading to an economy that
is always chasing scientific and technological advances that occur in other nations.
There is a long list of the worst of the times, the foremost casualty being the
agriculture sector. Agriculture has been and still remains the backbone of the Indian
economy. It plays a vital role not only in providing food and nutrition to the people,
but also in the supply of raw material to industries and to export trade. In 1951,
agriculture provided employment to 72 per cent of the population and contributed
59 per cent of the gross domestic product. However, by 2001 the population
depending upon agriculture came to 58 per cent whereas the share of agriculture in
the GDP went down drastically to 24 per cent and further to 22 per cent in 2006-
07. This has resulted in a lowering the per capita income of the farmers and
increasing the rural indebtedness.
The agricultural growth of 3.2 per cent observed from 1980 to 1997 decelerated to
two per cent subsequently. The Approach to the Eleventh Five Year Plan released in
December 2006 stated that the growth rate of agricultural GDP including forestry
and fishing is likely to be below two per cent in the Tenth Plan period.
The proportion of the unemployed to the total labor force has been increasing from
2.62 per cent (1993-94) to 2.78 per cent (1999-2000) and 3.06 per cent (2004-
05). In absolute figures, the number of unemployed had been in those years 9.02
million, 10.51 million and 13.10 million respectively. (Economic Survey 2006-07,
Table 10.4)
42
Results Section
The implications of globalisation for a national economy are many. Globalisation has
intensified interdependence and competition between economies in the world
market. This is reflected in Interdependence in regard to trading in goods and
services and in movement of capital. As a result domestic economic developments
are not determined entirely by domestic policies and market conditions. Rather,
they are influenced by both domestic and international policies and economic
conditions. It is thus clear that a globalising economy, while formulating and
evaluating its domestic policy cannot afford to ignore the possible actions and
reactions of policies and developments in the rest of the world. This constrained the
policy option available to the government which implies loss of policy autonomy to
some extent, in decision-making at the national level.
India has to concentrate on five important areas or things to follow to achieve its
goal of globalisation. The areas like technological entrepreneurship, new business
openings for small and medium enterprises, importance of quality management,
new prospects in rural areas and privatisation of financial institutions.Some
recommendations that can make globalisation work can be summed up as follows:
India should pay immediate attention to ensure rapid development in
education, health, water and sanitation, labor and employment so
that under time-bound programmes the targets are completed without delay.
A strong foundation of human development of all people is essential for the
social, political and economic development of the country.
The government should take immediate steps to increase agricultural
production and create additional employment opportunities in the rural
parts, to reduce the growing inequality between urban and rural areas and
to decentralize powers and resources to the panchayati raj institutions for
implementing all works of rural development. Steps should be taken for early
linking of the rivers, especially in the south-bound ones, for supply of the
much-needed water for irrigation.
43
Local communities and markets should be reinforced to take advantage of
finance, trade and investment changes flowing from the national and global
levels. Investing to improve productivity in agriculture is essential for
sustainable poverty reduction. There is no successful globalisation without
successful localisation.
Fairness should be injected at all levels. That includes respecting core
labour standards, promoting forms of basic social protection, and reducing
unbalanced patterns of investment and trade. For example, most foreign
direct investment is concentrated in only 12 developing countries.
We should reach a global agreement that employment is a key source of
human dignity and is essential to addressing migration, mass youth
unemployment, gender inequality and poverty.
The way global institutions work with one another should be greatly
improved to achieve a sustainable reduction of poverty and insecurity
through employment creation. Each organisation has its own mandate,
which must be respected, but the whole should be more than the sum of the
parts.
The challenge of making globalisation work for people, families and local
communities is a central test of our times. I believe we have much to learn from
the Indian experience. Perhaps no country better demonstrates the
interdependence of today's world and how globalisation can bring both jobs and
profits for some but not yet for all. Globalisation is thus a necessary but not
sufficient process for India’s goal towards a developed country.
44
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1. Kapila, Uma (2006-07) Indian economy performance and policies
JOURNALS
3. India today
4. Business today
INTERNET SOURCES
6. www.globalresearch.com
7. www.worldbank.org
8. www.vedamsbooks.com
9. www.CNNMoney.com
10.www.wikipedia.org
11. www.businessweek.com
12.www.economictimes.com
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