2.4   Globalization in India

. Globalization in India In India the period after - was marked by severe balance of payment difficulties mainly due to hike in oil price and Gulf war in - and hostilities in West Asia. When the new government took over in June . India had unprecedented balance of payment crisis. With the downgrading of India’s credit rating by some international agencies, there was heavy flight of capital out of India. Since India lost its credit worthiness in the international market, the government mortgaged tons of gold to the Bank of England. Under these circumstances, the government for - presented its budget in July with a series of policy changes which underlined globalization, liberalization and privatization. This has come to be called as India’s new economic policy. These policies were strengthened when India signed the Dunkel Draft in . Reforms made to adopt Globalization:- (New Economic policy in India) . Abolition of Industrial licensing, except for a few industries. . Reduction in the number of industries reserved for public sector. . Fixation of a realistic exchange rate of rupee to exchange exports of Indian goods. - - . . AM - - . . AM Globalization and Trade of liberalization in the 1980s gave a substantial spurt to foreign collaborations. This would be clear from the fact that, a total of , foreign collaboration agreements were signed between and . As a result of liberalized foreign investment policy (FIP) announced in , there has a further spurt of foreign collaborations and increase flow of foreign direct investment. Reasons for the Growth of MNC . Expansion of Market Territory. As the operations of large-sized firm expand, it seeks more and more extension of its activates beyond the physical boundaries of the country in which it is in corporate. . Marketing Superiorities: A multinational firm enjoys a number of marketing superiorities over the national firms. It enjoys market reputation and faces less difficulty in selling its products and it adopt more effective advertising and sales promotion techniques. . Financial Superiorities It has financial resources and high level of funds utilization. It has easier access of external capital markets. Because of its international reputation it is able to raise more international resources. Find and write the largest Multinational Companies in India . Technological Superiorities: The main reason why MNCs have been encouraged by the underdeveloped countries to participate in their industrial development is on account of the technological superiorities which . Foreign private sector by making rupee convertible on trade, on current account and by reducing import duties. . Foreign exchanges regulations were suitably amended . The Statutory Liquidity Ratio (SLR) was reduced to increase lending by RBI.