GLOBALISATION AND INDIAN BUSINESS ENVIRONMENT

PRESENTED BY,

ROHIT KAMALAKAR HEGDE

NEW ECONOMIC POLICY 1991

Liberalization

Privatization

Globalization

globalization

The IMF defines globalization as “the growing economic interdependence of countries worldwide

through increasing volume and variety of cross border transactions in goods and services and of

international capital flows, and also through the more rapid and widespread diffusion of technology.”

Multi national companies“The essential nature of the multi national

enterprise lies in the fact that its managerial head quarters are located in one country (home country )while it carries out operations in a number of countries ( host countries) as well.”

Foreign collaboration Joint ventureStrategic alliancesFranchising agreementsMergers and acquisitions

Stages of globalization First stage ( distributors or traders )

Second stage ( direct export )

Third stage ( setting up of production & marketing system )

Fourth stage (emulate model of foreign company)

Fifth stage (transitional stage )

Characteristics of globalization Economy of a country will open itself to the global economy. It enables a country to purchase commodities from any country in

the world Expanding the business across the world & formulate plans for

that. Removing difference between Domestic market & foreign market. Securing factors of production. Relaxation of restriction on imports easily securing the foreign

exchange necessary for imports. Developing a perspective that the whole world market is a simple

market. Developing production, manufacturing , and distribution facility

in any part of the world . Substantially rising FOREIGN DIRECT INVETMENT in domestic

industries and projects.

globalizationpro con

1) Development of trade throughout world

2) Increase in foreign investment3) Free flow of technology4) Expansion of production5) Industrialization6) Increase in employment &

income7) Decline of cost of production8) Balanced development9) Uniform global management10) Increase in welfare & standard

of living11) Evaluation of competitive

international business.

1. Decay of business in developing country.(small enterprises )

2. Replacement of production system

3. Danger of unemployment4. Dominance of large companies5. Increase in dumping6. Brain drain7. Export of unwanted products8. Skewed investment9. Exclusive growth10. Widening of gap between rich &

poor countries11. Market failure

Indian business environment India’s economic integration with the rest of

the world was very limited because of the restrictive economic policies followed until 1991. Indian firms confined themselves, by and large, to the home market. Foreign investment by Indian firms was very insignificant.

With the new economic policy ushered in 1991, there has, however, been a change. Globalisation has in fact become a buzz-word with Indian firms now, and many are expanding their overseas business by different strategies

Obstacles in IndiaGovernment policy and procedureHigh costPoor infrastructureObsolescenceResistance to changePoor quality managementSupply problemSmall sizeTrade barriersLimited R&D and marketing researchGrowing competition

Factors favoring globalisationHuman resourcesWide baseGrowing entrepreneurshipGrowing domestic marketNiche marketExpanding MarketsTransnationalisation of World EconomyNRIsEconomic LiberalisationCompetition

Sectoral development in IndiaPrimary sector

Secondary sector

Tertiary sector

Revolution Name ProductBlue Revolution Fisheries

Brown Revolution Leather

Gray Revolution Housing Development

Green Revolution Agriculture

Pink Revolution Drugs & Pharmaceuticals

Silver Revolution Egg Production

White Revolution Dairy Development

Yellow Revolution Oil Seed

Black Revolution Petroleum

Golden Fiber Revolution Jute

Golden Revolution Horticulture

Grey Revolution Fertilizer

Red Revolution Meat & Tomato Production

Round Revolution Potato

Silver Fiber Revolution Cotton

Silver Revolution Egg/Poultry

Evergreen Revolution Over all Agriculture Development

Industrial sectorPost-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.[16]

Service sectorDuring the Internet bubble that led up to 2000, heavy

investments in undersea fibre-optic cables linked Asia with the rest of the world. The fall that followed the economic boom resulted in the auction of cheap fiber optic cables at one-tenth of their original price. This development resulted in widely available low-cost communications infrastructure. All of these investments and events, not to mention a swell of available talent, resulted in India becoming almost overnight the centre for outsourcing of Business process. Within this sector and events, the ITES-BPO sector has become a big employment generator especially amongst young college graduates. The number of professionals employed by IT and ITES sectors is estimated at around 1.3 million as on March 2006. Also, Indian IT-ITES is estimated to have helped create an additional 3 million job opportunities through indirect and induced employment.

(US $ million)

Source/Industry 2008-09 2009-10 2010-11 2011-12 P 2012-13 P

1 2 3 4 5 6

Total FDI 22,697 22,461 14,939 23,473 18,286

Country-wise Inflows

Mauritius 10,165 9,801 5,616 8,142 8,059

Singapore 3,360 2,218 1,540 3,306 1,605

U.S.A 1,236 2,212 1,071 994 478

Cyprus 1,211 1,623 571 1568 415

Japan 266 971 1,256 2,089 1,340

Netherlands 682 804 1,417 1,289 1,700

United Kingdom 690 643 538 2760 1,022

Germany 611 602 163 368 467

UAE 234 373 188 346 173

France 437 283 486 589 547

Switzerland 135 96 133 211 268

Hong Kong SAR 155 137 209 262 66

Spain 363 125 183 251 348

South Korea 95 159 136 226 224

Luxembourg 23 40 248 89 34

Others 3,034 2,374 1,184 983 1,540

Manufacture 4,777 5,143 4,793 9,337 6528

Construction 2,237 3,516 1,599 2,634 1319

Financial Services 4,430 2,206 1,353 2,603 2760

Real Estate Activities 1,886 2,191 444 340 197Electricity and other Energy Generation,

Distribution & Transmission

669 1,877 1,338 1,395 1653

Communication Services 2,067 1,852 1,228 1,458 92

Business Services 643 1,554 569 1590 643

Miscellaneous Services 1,458 888 509 801 552

Computer Services 1,647 866 843 736 247

Restaurants & Hotels 343 671 218 870 3129Retail & Wholesale

Trade 294 536 391 567 551

Mining 105 268 592 204 69

Transport 401 220 344 410 213

Trading 400 198 156 6 140Education, Research &

Development 243 91 56 103 150

Others 1,097 384 506 419 43P : Provisional.

Note : Includes FDI through SIA/FIPB and RBI routes only

International organization and India

India

WTO

IMF

WHOUNESC

OIAEAILO

FAO

SAARC

Emerging India