Role of MNC in india

International Buniness

1. Role of MNCs in India Dr. Sunita Sukhija Assistant Professor in Commerce Govt. National College, Sirsa (HRY)

2. Multinational Corporations M ultinational corporations are enterprises or organizations with services spread across more than one country on a global scale. India is a home to a number of multinational companies since the country’s market was liberalized in 1991. Multi National Corporations (MNCs) are huge industrial organizations which extend their industrial and marketing operations through a network of their branches or their majority owned Foreign Affiliates (MOFAs). MNCs are also known as Transactional corporations (TNCs).

3. ( i ) MNCs are playing a major role in the globalisation process. (ii) More and more goods and services, investments and technology are moving between countries. (iii) Most regions of the world are in closer contact with each other than a few decades back.

4. Role of MNCs ( i ) Availability of capital and foreign investment :  The Multinational Corporations or the MNCs help to solve the problem of capital and foreign investment of the underdeveloped and the developing countries. Most of the underdeveloped countries suffer from lack of capital . Consequently, their rate of economic growth is low. MNCs set up factories, and offices for the production in these developing and the underdeveloped countries, and make huge investments . The money that is spent to buy assets such as land , buildings, machines and other equipment, is called investment.

5. (ii) Availability of foreign exchange :  MNCs can be helpful in solving the problem of foreign exchange of the underdeveloped and the developing countries. In 90s, India faced a huge shortage of foreign exchange but, with the entry of the MNCs, today it has surplus foreign exchange reserves . (iii) Foreign trade and integration of markets :  the MNCs help in the integeration of world markets . With the entry of MNCs even the small countries have opened up their domestic markets for other countries . The MNCs increase the foreign trade.

6. (iv) Helpful in the growth of local producers:  Foreign trade by the MNCs create an opportunity for the local producers to reach beyond the domestic markets , i.e , markets of their own countries . (v) By spreading production activities :  MNCs spread their production activities in different parts of the world . For example they design their products in United States or Japan , then manufacture it in China where cheap labour is available and the customer care is carried out through call centres located in India as India provides cheap skilled as well as unskilled workers .

7. Other Beneficial Roles : The MNCs also bring several other benefits to the host country. (a) The domestic labour may benefit in the form of higher real wages. (b) The consumers benefits by way of lower prices and better quality products. (c) Investments by MNCs will also induce more domestic investment. For example, ancillary units can be set up to ‘feed’ the main industries of the MNCs (d) MNCs expenditures on research and development(R&D), although limited is bound to benefit the host country

8. Reasons of Growth of MNCs International Image Giant Size Financial Superiority Technological Superiority Marketing Superiority R&D Superiority

9. Thanks