Positive and Negative Effects of Globalisation on Indian Industry


Globalisation has had many positive effects on Indian industries

1.) Globalisation has attracted a number of MNCs to Indian industries. These MNCs have brought in huge amount of foreign investment into the Indian industries, especially in pharmaceutical, petroleum, chemical, textile, and cement manufacturing industries. A huge amount of FDI coming to the Indian industries has boosted the Indian economy.

2.) One of the major benefits of globalisation has been the emergence of information technology (IT) sector and business process outsourcing (BPO) sector. The IT and BPO sectors are providing outsourcing to the customers in other countries, particularly the USA and Europe. The opening of the call centres, outsourcing of IT and BPO services, and MNCs have also created tremendous job opportunities in the country. The last few years have seen an increase in the number of skilled professionals in India being employed in these sectors. A new middle class has emerged around the wealth that the IT and BPO industries have brought.

3.) Another benefit for the Indian industries is that the MNCs have brought in highly advanced technology with them. This has helped to make Indian industry technologically advanced.

4.) SEZs have been set up to attract foreign companies. Creation of SEZs has enhanced the growth of industrialisation. They have helped in generating employment opportunities, creating world class infrastructure and investment, including foreign investment.

5.) Some of the leading Indian industries such as the Tata, Reliance etc., have gone global by undertaking investment abroad and by acquiring some of the leading foreign companies. From steel to textiles, from cars to IT, Indian companies have themselves emerged as the new major players in globalisation.

However, the process of globalisation in India has generated some negative effects as well

1.) One of the adverse effects of globalisation on Indian industry is that it has increased competition in the Indian market between foreign companies and domestic companies. In many cases, it has led to unequal competition between the giant cash-rich MNCs and Indian companies.

2.) Another negative effect is that due to the in-coming advanced foreign technology, the requirement of labour has decreased. This has resulted in many people losing their jobs.

3.) Much of FDI has gone into takeovers of the existing enterprises and towards speculative investment in Indian stock market.

Thus, despite positive effects of globalisation on Indian economy, there have been some negative effects as well. Therefore, there is a need for evolving an appropriate policy to minimise the harmful effects of globalisation.

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