Globalisation and the Indian Economy
Impact of globalisation in India
Weigh the gains and losses of globalisation in India.
Consumers: more choice. Over the last twenty years, globalisation and competition between local and foreign producers have helped consumers, especially well-off people in cities. They have more choice, better quality and lower prices for many products, and a much higher standard of living.
MNCs and top Indian companies.
- MNCs have increased investment in India, in cell phones, cars, electronics, soft drinks, fast food and urban banking, which have many well-off buyers. New jobs were created, and local companies supplying them prospered.
- Several top Indian companies gained from competition: they invested in new technology, raised standards, and some collaborated successfully with foreign firms.
- Some became multinationals themselves, such as Infosys (IT), Tata Motors (cars), Asian Paints, Ranbaxy (medicines) and Sundaram Fasteners (nuts and bolts).
- IT services grew: call centres, data entry, accounting, engineering and admin work are done cheaply in India and exported.
Attracting foreign investment.
- Special Economic Zones (SEZs): industrial zones with world-class electricity, water, roads, transport, storage and other facilities. Companies there pay no taxes for the first five years.
- Flexible labour laws: the government has let companies ignore many rules that protect workers. Instead of hiring regular workers, companies hire them 'flexibly' for short periods when work is heavy, to cut labour costs. Foreign companies still want even more flexibility.
(Some people oppose SEZs: remember Chapter 1, development for one can be harm for another.)
Small producers: compete or perish. Small makers of toys, tyres, batteries, capacitors, plastics, vegetable oil and dairy products were hit hard; many units shut down, leaving workers jobless. Small and medium industries employ about 11 crore workers, more than any sector except farming. Ravi's story: he started a capacitor company in Hosur (Tamil Nadu) in 1992 with a bank loan, and soon had 20 workers. In 2001, under its WTO agreement, the government removed restrictions on importing capacitors. TV companies bought imported capacitors at half his price. Ravi now makes less than half as many capacitors and has only seven workers; many friends closed down. Small producers need better infrastructure, modern technology and timely credit at fair interest.
Workers: jobs without security. Big garment MNCs in Europe and America look for the cheapest goods. To win orders, Indian exporters cut labour costs: they hire workers only temporarily, make them work very long hours and night shifts, and pay low wages. Sushila's story: she was a permanent garment worker in Delhi with health insurance, provident fund and double-rate overtime, until her factory closed in the late 1990s. Now she is a temporary worker, earning less than half her old pay, leaving home at 7:30 a.m. and returning at 10 p.m., seven days a week, with no benefits. The MNCs make large profits; workers are denied a fair share. Even organised-sector jobs now look like unorganised ones.
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