Globalization in India started in the early 1990’s. Industrialization is the reason behind globalization. Business is the key. When a company operating in a home nation establishes its subsidiary in other nations (host nations), it becomes an MNC and there starts the process of globalization wherein a local company serves the entire world with its products and services. The advent of Internet and the ensuing “new economy” has opened up a plethora of new business opportunities – and an “inevitable” number of business casualties. Shapiro and Varian (1999) argue that while technology changes – economic laws do not. This is globalization in company’s perspective. Globalization in India has transformed the country’s system. Presently India is regarded as an economy dominated country rather than politics driven, as it was earlier. Political dominance has fallen significantly these days. Adoption of Globalization in India and liberalization principles has widened the horizon of country’s Consumers worldwide. Consumers in India have become more conscious. Market information in India has become clear.
Liberalized policies have led the industrial sector to grow at a faster pace. BPO, IT, ITES, Retail and Insurance sector have performed well. Both male and female have got equal opportunity in that sector. The success for India is the reduction in gender inequality in India. More over, development in education and awareness is largely marked in the country in the era of Globalization in India.
INDIAN ECONOMY – HIGHLIGHTS
- India is among the five countries sharing 50 per cent of the world production (or GDP).
- FDI inflows have jumped by almost three times to US$ 15.7 billion in 2006-07 as against US$ 5.5 billion in 2005-06.
- The aggregate income of the top 500 companies rose by 28.4 per cent in 2006-07 to total US$ 469.51 billion.
- India’s National Stock Exchange (NSE) ranks first in the stock futures and second in index futures trade in the world.
- Twenty Indian firms have made it to the list of Boston Consulting Group’s 100 New Global Challenger Giants list.
- According to a study by the McKinsey Global Institute (MGI), India’s consumer market will be the world’s fifth largest (from twelfth) in the world by 2025.
- The number of companies incorporated has increased at an annual average of 55,000 companies in the last two years to 865,000, from 712,000 companies at the end of 2005.
- Four Indians and seven Indian microfinance companies make it to the Forbes list of Top10 world’s wealthiest CEOs World’s Top 50 Microfinance Institutions, respectively.
- India has the most number of private equity (PE) funds operating amongst the BRIC markets.
- Mumbai has been ranked tenth among the world’s biggest centres of commerce in terms of the financial flow volumes by a survey compiled by MasterCard Worldwide.
Another significant aspect has been the broad-based nature of the growth process. While new economy industries like Information Technology and biotechnology have been growing around 30 per cent, significantly old economy sectors like steel have also been major contributors in the Indian growth process. For example, India has moved up two places to become the fifth largest steel producer in the world. And with its manufacturing and service sectors on a searing growth path, Lehman Brothers Asia estimates India to grow by as much as 10 per cent every year in the next decade.
CONTRIBUTION OF INDUSTRIES TO INDIAN ECONOMY
Industrial revolution is the stepping stone for globalization. In India, the contribution of different sectors is immense and all contributing to the fast growth of the Indian economy.
The IIP data show that during April-November 2007, cotton textiles grew by 5.5 percent. During 2006-07, textile exports recorded an increase of 6.9 per cent over 2005-06. During April-October 2007, textile exports increased marginally by 1.49 per cent on year-on-year basis. Indian Government has given a lot of subsidies to the textile industry through various fund schemes and textile parks. The rate of growth in the paper industry picked up to 8.7 per cent during 2006-07, but dropped to 1.6 per cent during April-November 2007.
Leather products, which contribute significantly to employment generation and export earnings, registered an impressive 12.2 per cent growth during April-November 2007. The chemical industry is growing steadily at 10%. The value of pharmaceutical output grew more than tenfold from Rs. 5,000 crore in 1990 to over 65,000 crore in 2006-07. India is now recognized as one of the leading global players in pharmaceuticals. While the production of rubber footwear grew by 4.7 per cent, sheets (PVC/rubber) grew by 18.8 per cent. PVC pipes and tubes, which have the highest weight in the product group, grew at 27 per cent during April-November 2007. Crude oil production during April-November 2007 was 22.69 million tonnes (MT) as against 22.56 MT during the corresponding period in the previous year, showing a marginal increase of 0.60 percent. In this sector, the demand will be always greater than the supply and India has to divest and encourage private players like Reliance to enter into the petroleum industry.
The cement industry recorded a growth of 7.72 per cent (provisional) during April-November 2007. The production increased from 99.99 MT during April-November 2006 to 107.71 MT during April-November 2007. Indian steel companies have marked their diversified presence in the global market, effected mainly through the establishment of the state-of the-art plants, continuous modernization, and improved energy efficiency of plants. Mittal Steel has created a buzz all over the world with its recent merger with arcelor. While overall industrial production grew by 9 per cent during April-December 2007, importantly capital goods production rose by 20.2 per cent compared to 18.6 per cent during same period in 2006. Services grew by 10.5 per cent in April-September 2007, on the back of 11.6 per cent during the corresponding period in 2006-07. Manufacturing grew by 9.6 per cent during April-December 2007, on the back of 12.2 per cent growth during same period in 2006-07. Core infrastructure sector continued its growth rate recording 6 per cent growth in April-November 2007. While exports grew by 21.76 per cent during April-December 2007, imports increased by 25.97 per cent in the same period.
ROLE OF INFORMATION TECHNOLOGY
The IT/ITES industry’s contribution to the country’s GDP has been steadily increasing from a share of 1.2% in FY98 to 5.2% in FY07; it has contributed to foreign exchange reserves of the country by increasing exports by almost 36% and its direct employment as grown at a CAGR of 26% in the last decade, making it the largest employer in the organized private sector in the country.
In the last two decades, the Indian IT/ITES industry has contributed significantly to Indian economic growth in terms of GDP, foreign exchange earnings and employment generation. The industry has been the trigger for many “firsts” and has contributed not only to unleashing the hitherto untapped entrepreneurial potential of the middle class Indian but also taking Indian excellence to the global market.
The current and evolving role of IT/ITES industry in India’s economy is well established. The sector is proving to be the major growth pole within the services sector, which in turn drives several economic indicators of growth in the country.Export earnings in FY08 stood at approximately USD 40.0 billion with a growth of 36%.Direct employment in the sector is expected to be 2.0 million by end of FY08 growing at a CAGR of 26% in the last decade, making it the largest employer in the organized private sector of the country. IT Industry is spearheading India global.
According to some experts, the share of the US in world GDP is expected to fall (from 21 per cent to 18 per cent) and that of India GDP to rise (from 6 per cent to 11 per cent in 2025), and hence the latter will emerge as the third pole in the global economy after the US and China.
Indian Economy experienced a GDP growth of 9.0 percent during 2005-06 to 9.4 percent during 2006-07. By 2025 the India’s economy is projected to be about 60 per cent the size of the US economy. The transformation into a tri-polar economy will be complete by 2035, with the Indian economy only a little smaller than the US economy but larger than that of Western Europe. By 2035, India is likely to be a larger growth driver than the six largest countries in the EU, though its impact will be a little over half that of the US.
India, which is now the fourth largest economy in terms of purchasing power parity, will overtake Japan and become third major economic power within 10 years.
A large number of global multinational brands such as Coca-Cola, Google, Micro-soft and Mercedes-Benz have successfully operating in India. Indian Brands which were operating locally in India earlier have started competing internationally. From New Delhi to New York brands have become global. Pattern of consumption in India has also changed. Level of spending on the private consumption has been growing significantly. Spending by young consumers in India is regarded as the most powerful consumers. In an era of globalized environment, the country has become a major player in the socio-economic fields from merely a third world country. BRIC and other reports have forecasted India to be the third largest economy by 2020. Everything looks ominous for India.