ECONOMICS OF GLOBAL TRADE AND

FINANCEA PROJECT REPORT

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD

OF THE M.COM DEGREE OF

MASTER IN COMMERCE(MANAGEMENT)

SUBMITTED TO

UNIVERSITY OF MUMBAI,

LALA LAJPATRAI COLLEGE,MAHALAXMI,MUMBAI

SUBMITTED BY

NAME OF THE STUDENT: UNIVERSITY ROLL NO:

RAMSHA SHAIKH 15160618

SUPERVISED BY

MARCH 2016

CERTIFICATE

I hereby certify that the work which is being presented in the M.Com. Internal Project Report

entitled “Swot on Parle”, in partial fulfillment of the requirements for the award of the Master

of Commerce in Management and submitted to the Lala Lajpatrai College of Commerce and

Economics,Mahalaxmi,Mumbai 400034 is an authentic record of my own work carried out

under the supervision of _________________. The matter presented in this Project Report has

not been submitted by me for the award of any other degree elsewhere.

Signature of Student:

Signature of Supervisor(s):

Internal Examiner:

External Examiner:

College Stamp Principal

ACKNOWLEDGEMENT

I would like to place on record my deep sense of gratitude to professor ______________. Dept

of for his generous guidance,help and useful suggestions.

I express my sincere gratitude to professor_____________ or his stimulating guidance,

continuous encouragement and supervision throughout the course of present work.

I also wish to extend my thanks to professor______________ and other colleagues for

attending my seminars also for their insightful comments and constructive suggestions to

improve the quality of this project work.

I am extremely thankful to _______________ coordinator and Principal _____________for

providing me infrastructural facilities to work in, without which this work would not have been

possible.

Signature of Student:

CONTENT

CHAPTER 1

HISTORY AND EVALUTION OF MNCS

FIRST MNC’S IN WORLD : DUTCH EAST INDIA COMPANY

East India Company, Dutch, 1602–1798, chartered by the States-General of the Netherlands to

expand trade and assure close relations between the government and its colonial enterprises in

Asia. The company was granted a monopoly on Dutch trade E of the Cape of Good Hope and

W of the Strait of Magellan. From its headquarters at Batavia (founded 1619) the company

subdued local rulers, drove the British and Portuguese from Indonesia, Malaya, and Ceylon (Sri

Lanka), and arrogated to itself the fabulous trade of the Spice Islands. A colony, established

(1652) in South Africa at the Cape of Good Hope, remained Dutch until conquered by Great

Britain in 1814. The company was dissolved when it became scandalously corrupt and nearly

insolvent in the late 18th cent., and its possessions became part of the Dutch colonial empire in

East Asia.

The history of the Dutch East India Company, founded in 1602 and declared bankrupt in 1799,

spans almost the whole of the seventeenth and eighteenth centuries. For much of this time it

was the world’s largest trading company, owning, at the height of its wealth and power, more

than half the world’s sea-going shipping – with its characteristic ship, the ‘fluyt’, also being

produced for the merchant marines of other countries, including England. It was known

internationally by its distinctive VOC monogram, the initials standing for

‘VerenigdeOstindischeCompagnie’ – or simply the United East India Company.

FIRST MNC’S IN INDIA: IBM (headquartered in Armonk, New

York, United States)

International Business Machines Corporation abbreviated IBM and nicknamed "Big Blue” .It is

a Multinational computer technology and IT consulting corporation.

It’s headquartered inArmonk, New York, United States

The company is one of the few information technologyinformation technology and companies

with acontinuous history dating back to the 19th century.

IBM manufactures and sells computer hardware andsoftware (with a focus on the latter), and

offersinfrastructure services, hosting service, and consultingservices in areas ranging from

mainframe computers toand technology.

IBM was rated the No. 1 company amongst all IT companies in India on 'Employee

Satisfaction with Training' in Dataquest Top Employer Survey 2003 - An indication of how

Training is an integral part of life at IBM. Besides equipping our employees with newer sets of

skills every day, IBM's Training & Learning programs reflect our core belief that our workforce

is primed continually to face challenges every day. Join us and find out how far you can go

with IBM………

At IBM it is important to strike an optimum balance between work and play. So, while you

work among other extremely bright and talented individuals like yourself who share the same

desire and passion for what they do, you will also have a life along the way! IBM is committed

to creating a supportive work environment that allows the employee control over how, where

and when his/her work gets done. IBMers benefit from policies and programs supporting

work/life balance, including flexi-timing, working from home and mobility options.

FIRST INDIAN MNCS : INFOSYS

These corporations originated early in the 20th century and expanded after World War II.A

Multinational Corporation developed new products in its native country and manufactured

them abroad.Almost all the earliest and largest multinational firms were either American,

Japanese, or West European

During the last three decades, many smaller corporations have also become multinational.Such

enterprises maintain that they create employment, create wealth, and improve technology in

countries.

Multinational business operation is not a new concept. The British east India company,

Hudson’s bay corporation and Royal Africa companies are example of MNCs. The post second

world war period has however, witnessed a changing hand in colonialism and there emerged a

new thrusts for industrial and technological development as well as rise of the USA as the

largest industrial power.

. The Dutch East India Company was the first multinational corporation in the world and the

first company to issue stock It was also arguably the world’s first mega corporation possessing

quasi-governmental powers, including the ability to wage war, negotiate treaties, coin money,

and establish colonies. The first modern multinational corporation is generally thought to be the

East India Company.

RESEARCH METHODOLOGY

Research Methodology commonly refers to a search for knowledge. One can also define also

research as a scientific and systematic research for pertinent information a specific topic.

Research is an art of systematic investigation. Some people consider research as a movement, a

movement to the known to the unknown.

According to Clifford Woody: - “Research comprises defining and redefining problems,

formulating hypothesis or suggested solutions, collecting, organizing and evaluating data,

making deductions mil reaching conclusion, and at last carefully testing the conclusion to

determine whether they fit the formulating hypothesis.”

Marketing research is defined as a systematic gathering and analysis of the data concern with

an objective. The whole activity is divided into various parts and after compilation of that we

reach at certain findings, which enable us to marketing decision. It involves the diagnosis of

information needed and the selection of the relevant and inter-related variables.

Research design:

Exploratory research :- The research design used in this project is the exploratory type.

Exploratory type of research is used because the sources of information are relatively few and

the purpose is merely to find and to undertsand the possible actions. The exploratory study is

often used as an introductory phase of a larger study and result are used in developing specific

technique for larger study.

DATA SOURCES:

PRIMARY:

Primary sources of data are the data which needs the personal efforts of collect it and which are

not readily available. Primary source of data are the other type of source through which the data

was collected.

SECONDARY:

Secondary sources are the other important sources through which the data was collected. These

are the readily available sources of the data where one had need not put much effort to

collected, because it is already been collected and part in an elderly manner by some researcher,

experts and special.

The secondary sources helpful for the study were:

1) Text books were referred.

2) Internet was made use for the collection of the data

3) Newspapers were also referred.

4) Business magazines were referred.

CHAPTER 2

MULTINATIONAL CORPORATION

An MNC (Multinational Corporation) is a corporation that has its management headquarters in

one country, known as the home country, and operates in several other countries, known as host

countries.

As the name implies, a multinational corporation is a business concern with operations in more

than one country. These operations outside the company's home country may be linked to the

parent by merger, operated as subsidiaries, or have considerable autonomy. Multinational

corporations are sometimes perceived as large, utilitarian enterprises with little or no regard for

the social and economic well-being of the countries in which they operate, but the reality of

their situation is more complicated.

When a company operates in a home nation established its subsidiary inother nation it becomes

an MNC and there starts the process of globalization where in a local company serves the entire

worlds with itsproducts and services.India has experienced a dramatic increase in the presence

of Multinational Corporation having a tremendous expansion in the amount of foreign direct

investment inflows to the Indian economy. Internet tools like Google, Yahoo, MSN, E-Bay,

Skype, and Amazonmakeit easier for the MNCs to reach their potential customers in the

country

There are over 40,000 multinational corporations currently operating in the global economy, in

addition to approximately 250,000 overseas affiliates running cross-continental businesses. In

1995, the top 200 multinational corporations had combined sales of $7.1 trillion, which is

equivalent to 28.3 per cent of the world's gross domestic product. The top multinational

corporations are headquartered in the United States, Western Europe, and Japan; they have the

capacity to shape global trade, production, and financial transactions. Multinational

corporations are viewed by many as favouring their home operations when making difficult

economic decisions, but this tendency is declining as companies are forced to respond to

increasing global competition.

The modern multinational corporation is not necessarily headquartered in a wealthy nation.

Many countries that were recently classified as part of the developing world, including Brazil,

Taiwan, Kuwait, and Venezuela, are now home to large multinational concerns. The days of

corporate colonization seem to be nearing an end.

IBM computer and Pepsi-Cola from U.S.A., Siemens from Germany, Sony and Honda from

Japan Philips from Holland etc., are some of the MNCs operating at international levels.

Introduction Since 1991, India has experienced a dramatic increase in the presence of

Multinational Corporation (MNCs), and with it, a tremendous expansion in the amount of

FOREIGN DIRECT INVESTMENT inflows to the Indian economy.

Generally, any company or group that derives a quarter of its revenue from operations outside

of its home country is considered a multinational corporation.

MNC must have substantial direct investment in foreign countries

MNC must be engaged in the active management of these overseas assets

MNC is also involved in the management integration of operations located in different

countries

CHARACTERISTICS OF MNC’S

Following are the some of the important features/characteristics of MNCs: 

AREA OF OPERATION: - The MNCs operate in many countries with multiple

products on large scale. A MNC may operate both manufacturing and marketing

activities in a number of countries. Some MNCs operate in several countries, whereas,

others may operate in a few countries. Mostly MNCs from developed countries

dominate in the world markets.

ORIGIN:-The development of MNCs dates back to several centuries, but their real

growth started after the Second World War Majority of the MNCs are from developed

countries like U.S.A, Japan, UK, Germany and European countries. In recent years

MNCs from countries like Korea, Taiwan, India, China, etc. are operating in the world

markets.

COMPREHENSIVE TERM: - In general, the term ‘MNC’ is a Comprehensive term and

includes international and transnational corporations. The term global corporation is

also included in the list of ‘MNC’. 

PROFIT MOTIVE: - MNCs are profit oriented rather than social oriented. Such

corporations do not take much interest in the social welfare activities of the host

country.

MANAGEMENT: - The Parent company works like a holding company. The subsidiary

companies are to operate under control and guidance of parent company. The

subsidiaries functions as per the policies and directions of parent organisation.

MANUFACTURE AND MARKETING ACTIVITIES: - MNCs undertake both

Manufacturing and Marketing Activities and they are predominantly engaged in hi-tech

and consumer goods industries. Majority of the MNCs are engaged in pharmaceutical,

petrochemicals, engineering, consumer goods, etc.

QUALITY CONSCIOUSNESS: - MNCs are quality and cost conscious and managed

by professionals and experts. They have their own organisation culture and systems.

MNCs believe in the concept of total quality management.

BRANDING STRATEGIES OF MNCS IN INTERNATIONAL MARKETS:In today’s

global marketplace, MNCs need to set up effective brandingstrategies in order to be

competitive. Depending on the structure of thecompany and the products offered,

MNCs can use different strategies.

Their main aim is to obtain the HIGHEST POSSIBLE PROFIT.

They invest LARGE SUMS OF MONEY

THEY AID LOCAL COMPANIES &attain their benefits

They operate in more than one country at the same tim

Big size

Huge intellectual capital

Operates in many countries

Large number of customer

.Large number of competitors

Structured way of decision making

OBJECTIVE OF MNC

To expand the business beyond the boundaries of the home country.

Minimize cost of production, especially labour cost.

Capture lucrative foreign market against international competitors.

Avail of competitive advantage internationally.

Achieve greater efficiency by producing in local market and then exporting the products.

MNC’S STRUCTURE

Horizontally integrated multinational corporations: Horizontally integrated

multinational corporations manage production establishments located in different

countries to produce the same or similar products. (example: McDonald's )

Vertically integrated multinational corporations:Vertically integrated multinational

corporations manage production establishment in certain country/countries to produce

products that serve as input to its production establishments in other country/countries.

(example: Adidas )

Diversified multinational corporations:

diversified multinational Corporations do not manage production establishments located

in different countries that are horizontally nor vertically nor straight, nor non-straight

integrated. (example: Hilton Hotels )

TYPES OF MULTINATIONAL CORPORATIONS

ETHNOCENTRIC: These are the type of MNCs which have strong orientation towards

home country. This means that home country people are considered as superior and

allocated all key posts.

POLYCENTRIC: Just opposite to Ethnocentric polycentric type of MNCs has strong

orientation towards host country where few key people are nationals and remaining are

from the host country.

REGIOCENTRIC AND GEOCENTRIC: These MNCs have their concentration in

whole world and they make selection for best employees whether they are from host

country or home country it does not matter.

ADVANTAGES OF MNCS TO THE HOST COUNTRY:

Transfer of technology, capital and entrepreneurship.

Increase in the investment level and thus, the income and employment in the host

Country.

Greater availability of products for local consumers.

Increase in exports and decrease in imports.

ADVANTAGES OF MNCS TO THE HOME COUNTRY:

Acquisition of raw materials from abroad.

Technology and management expertise acquired from competing in global markets.

Export of components and finished goods for assembly or distribution in foreign

markets.

Inflow of income from overseas profits, royalties and management contracts.

ROLE OF MNC

Multinational corporations (MNCs) are huge industrial organizations having a wide network of

branches and subsidiaries spread over a number of countries. The two main characteristics of

MNCs are their large size and the fact that their worldwide activities are centrally controlled by

the parent companies. Such a company may enter into joint venture with a company in another

country. There may be agreement among companies of different countries in respect of division

of production, market, etc.

These companies are to be found in almost all the advanced countries, with the USA perhaps

the biggest amongst them. Their operations extend beyond their own countries, and cover not

only the advanced countries but also the LDCs.

Many MNCs have annual sales volume in excess of the entire GNPs of the developing

countries in which they operate. MNCs have great impact on the development process of the

Underdeveloped countries.

MNC's plays an important role in boosting up Indian Economy. In support of this we can say,

MNC's bring foreign investors to India and hence helps in globalization of Indian Market.

Arguments for MNCs (The positive role:) 

The MNCs play an important role in the economic development of underdeveloped countries.

Filling Savings Gap: The first important contribution of MNCs is its role in filling the

resource gap between targeted or desired investment and domestically mobilized

savings. For example, to achieve a 7% growth rate of national output if the required rate

of saving is 21% but if the savings that can be domestically mobilised is only 16% then

there is a ‘saving gap’ of 5%. If the country can fill this gap with foreign direct

investments from the MNCs, it will be in a better position to achieve its target rate of

economic growth.

Filling Trade Gap: The second contribution relates to filling the foreign exchange or

trade gap. An inflow of foreign capital can reduce or even remove the deficit in the

balance of payments if the MNCs can generate a net positive flow of export earnings.

Filling Revenue Gap: The third important role of MNCs is filling the gap between

targeted governmental tax revenues and locally raised taxes. By taxing MNC profits,

LDC governments are able to mobilize public financial resources for development

projects.

Filling Management/Technological Gap: Fourthly, Multinationals not only provide

financial resources but they also supply a “package” of needed resources including

management experience, entrepreneurial abilities, and technological skills. These can be

transferred to their local counterparts by means of training programs and the process of

‘learning by doing’.

Moreover, MNCs bring with them the most sophisticated technological knowledge about

production processes while transferring modern machinery and equipment to capital poor

LDCs. Such transfers of knowledge, skills, and technology are assumed to be both desirable

and productive for the recipient country.

Arguments Against MNCs(The negative role): 

There are several arguments against MNCs which are discuss below.

Although MNCs provide capital, they may lower domestic savings and investment rates

by stifling competition through exclusive production agreements with the host

governments. MNCs often fail to reinvest much of their profits and also they may

inhibit the expansion of indigenous firms.

Although the initial impact of MNC investment is to improve the foreign exchange

position of the recipient nation, its long-run impact may reduce foreign exchange

earnings on both current and capital accounts. The current account may deteriorate as a

result of substantial importation of intermediate and capital goods while the capital

account may worsen because of the overseas repatriation of profits, interest, royalties,

etc.

While MNCs do contribute to public revenue in the form of corporate taxes, their

contribution is considerably less than it should be as a result of liberal tax concessions,

excessive investment allowances, subsidies and tariff protection provided by the host

government.

The management, entrepreneurial skills, technology, and overseas contacts provided by

the MNCs may have little impact on developing local skills and resources. In fact, the

development of these local skills may be inhibited by the MNCs by stifling the growth

of indigenous entrepreneurship as a result of the MNCs dominance of local markets.

MNCs’ impact on development is very uneven. In many situations MNC activities

reinforce dualistic economic structures and widen income inequalities. They tend to

promote the interests of some few modern-sector workers only. They also divert

resources away from the production of consumer goods by producing luxurious goods

demanded by the local elites.

CHAPTER 3

Top MNCs in India

The country has got many M. N. C.s operating here. Following are names of some of the

most famous multinational companies, who have their headquarters of operational

branches based in the nation:

IBM- IBM India Private Limited, a part of IBM has been operating from this

country since the year 1992. This global company is known for invention and

integration of software, hardware as well as services, which assist forward thinking

institutions, enterprises and people, who build a smart planet. The net income of

this company post completion of the financial year end of 2010 was $14.8 billion

with a net profit margin of 14.9 %. With innovative technology and solutions, this

company is making a constant progress in India. Present in more than 200 cities,

this company is making constant progress in global markets to maintain its leading

position. 

Microsoft: A subsidiary, named as Microsoft Corporation India Private Limited, of

the U. S. (United States) based Microsoft Corporation, one of the software giants

has got their headquarter in New Delhi. Starting its operation in the country from

1990, this company has got the following business units:

a. Microsoft Corporation India (Pvt.) Limited (Marketing Division)

b. Microsoft Global Services India

c. Microsoft Global Technical Support Centre

d. Microsoft India Development Center

e. Microsoft IT

f. Microsoft Research India

The net income of Microsoft Corporation grew from $ 14, 569 million in 2009 to $ 18,

760 million in 2010. Working in close association with all the stakeholders including

the Government of India, the company is committed towards the development of the

Indian software as well as I. T. (Information Technology) industry. 

Nokia Corporation: Nokia Corporation was started in the year 1865. Being one

of the leading mobile companies in India, their stylish product range includes

Normal mobile handsets , Smartphones, Touch screen phones, Dual sim

phones,Business phone.

The net sales of the company increased by 4 % in the last financial year with sales of EUR 42.4

billion as compared to 2009's EUR 41 billion. Over the past few years, this company in India

has been acquiring companies, which have got new and interesting competencies and

technologies so as to enhance their ability of creating the mobile world. Besides new

developments to fight against mineral conflicts, they are even to set up Bridge Centers in the

country for supporting re-employment. Their first onsite for the installation of renewable power

generation are already in place. 

PepsiCo: PepsiCo. Inc. entered the Indian market with the name of PepsiCo

India from the year 1989. Within a short time span of 20 years, this company

has emerged as one of the fast growing as well as largest beverage and food

manufacturer. As per the annual report of the company in the last business year,

the net revenue of PepsiCo grew by 33 %. By the year 2020, this food

manufacturing company intends to triple their portfolio of enjoyable and

wholesome offerings. The expansion of their Good-For-You portfolio is

believed to be assisting the company in attaining the competitive advantage of

the growing packaged nutrition market in the world, which is presently valued at

$ 500 billion. 

Ranbaxy Laboratories Limited: Ranbaxy Laboratories Limited, one of the

biggest pharmaceutical companies in India, started their business in the country

from the year 1961. The company made its public appearance in 1973 though.

Headquartered in this nation, this international, research based, integrated

pharmaceutical company is the producer of a huge range of affordable cum

quality medicines that are trusted by both patients and healthcare professionals

all over the world. In the business year 2010, the registered global sales of the

company was US $ 1, 868 Mn. Successful development of business forms the

key component of their trading strategy. Apart from overseas acquisitions, this

company is making a continuous endeavor to enter the new global markets,

which have got high potential. For this, they are offering value adding products

as well. 

Reebok International Limited: This global brand is a famous name in the field

of sports as well as lifestyle products. Reebok International Limited, a

subsidiary of Adidas AG, is based in U. S. A. (United States of America) started

its operation in 1890s. During the last financial year, Adidas's currency

neutralized group sales increased by 9 %. Apart from their alliance with

CrossFit that is among the largest contemporary fitness movements, in the

current year, Reebok's announcement of its partnership with artist, designer and

producer Swizz Beatz reflects its long term future growth. 

Sony: Sony India is a part of the renowned brand name Sony Corporation,

which started their business operation in the year 1946 in Japan. Established in

India in November 1994, this company has captured one of the leading positions

in the field of consumer electronics goods. By the end of the business year 2010

on 31st March, 2011, the company showed a remarkable increase in the share

related to numerous categories. Sony India is planning to invest around INR.

150 crore for the marketing of the activities related to ATL and BTL. As far as

Bravia TVs are concerned, they are looking forward to hold their market share

of 30 %. In between the last and the current financial year, the number of their

outlets in the country increased by 1, 000. 

Tata Consultancy Services: Commonly known as T. C. S., this multinational

company is a famous name in the field of I. T. (Information Technology)

services, Business Process Outsourcing (B. P. O.) as well as business solutions.

This company is a subsidiary of the Tata Group. The first center for software

researching was established in the country in 1981 in the city of Pune. Tata

Consultancy earned a growth of 8.9 % during the latest quarter of this financial

year, which ended on 30th September, 2011. This renowned company is

presently looking forward to the 10 big deals that they have received besides the

Credit Union Australia's contract as well as Government of Karnataka's INR. 94

crore deal for a total period of 6 years. In this current business year, they are

about to employ 60, 000 people to meet their business requirement. 

.Vodafone: Vodafone Group Plc is an international telecommunication

company, which has got it's headquarter based in London in the United

Kingdom (U. K.). Earlier known as Vodafone Essar and Hutchison Essar,

Vodafone India is among the largest operators of mobile networking in the

country. The parent company Hutchison started its business in the year 1992

along with the Max Group, which was its business partner in India. Much later

in 2011, Vodafone Group Plc decided to buy out mobile operating business

of Essar Group, its partner. The turnover of the Vodafone Group Plc after the

completion of the last financial year grew to £ 44, 472 m from £ 41, 017 m that

was the turnover of the business year 2009. 

Tata Motors Limited: The biggest automobile company in India, Tata Motors

Limited, is among the leading commercial vehicles manufacturer in the country.

They are one of the top 3 passenger vehicle manufacturers. Established in the

year 1945, this company, a part of the famous Tata Group, has got its

manufacturing units located in different parts of the nation. Some of their well

known products of the company are categorized in the following heads:

a. Commercial Vehicles

b. Defence Security Vehicles

c. Homeland Security Vehicles

d. Passenger Vehicles

e. Post completion of the financial year 2010 to 2011, the global sales of the company

grew by 24.2 % with sales crossing INR. 1 million. 

WHAT IS THE FUTURE OF MNCS IN INDIA?

Current trends in the international marketplace favour the continued development of

multinational corporations. Countries worldwide are privatizing government-run industries, and

the development of regional trading partnerships such as the North American Free Trade

Agreement (a 1993 agreement between Canada, Mexico, and United States) and the European

Union have the overall effect of removing barriers to international trade. Privatization efforts

result in the availability of existing infrastructure for use by multinationals seeking to enter a

new market, while removal of international trade barriers is obviously a boon to multinational

operations.

Perhaps the greatest potential threat posed by multinational corporations would be their

continued success in a still underdeveloped world market. As the productive capacity of

multinationals increases, the buying power of people in much of the world remains relatively

unchanged;this could lead to the production of a worldwide glut of goods and services. Such a

glut, which has occurred periodically throughout the history of industrialized economies, can in

turn lead to wage and price deflation, contraction of corporate activities, and a rapid slowdown

in all phases of economic life. Such a possibility is purely hypothetical, however, and for the

foreseeable future the operations of multinational corporations worldwide are likely to continue

to expand.

PROFIT OF MNCS IN INDIA

It is too specify that the companies come and settle in India to earn profit. A company enlarges

its jurisdiction of work beyond its native place when they get a wide scope to earn a profit and

such is the case of the MNCs that have flourished here. More over India has wide market for

different and new goods and services due to the ever increasing population and the varying

consumer taste. The government FDI policies have somehow benefited them and drawn their

attention too. The restrictive policies that stopped the company's inflow are however withdrawn

and the country has shown much interest to bring in foreign investment here.

Besides the foreign directive policies the labour competitive market, market competition and

the macro-economic stability are some of the key factors that magnetize the foreign MNCs

here.

Following are the reasons why multinational companies consider India as a preferred

destination for business:

Huge market potential of the country

FDI attractiveness

Labour competitiveness

Macro-economic stability

MNC IN INDIA ARE ATTRACTED TOWARDS:

India’s large market potential

India presents a remarkable business opportunity by virtue of its sheer size and growth

Labour competiveness

FDI attractiveness

GOVERNMENT SUPPORT:

Both revenue and capital expenditure on R&D are 100% deductible from taxable

income under the Income Tax Act.

A weighted tax deduction of 125% is allowed for sponsored research in approved

national laboratories and institutions of higher technical education.

A weighted tax deduction of 150% is allowed on R&D expenditure by companies in

government-approved in- house R&D centres in selected industries.

A company whose principal objective is research and development is exempt from

income tax for ten years from its inception.Accelerated depreciation is allowed for

investment in plant and machinery made on the basis of indigenous technology.

Customs and excise duty exemptions for capital equipments and consumables required

for R&D.

Excise duty exemption for three years on goods designed and developed by a wholly

owned Indian company and patented in any two countries out of: India, the United

States, Japan and any country of the European Union.

POLICIES THAT HELPED MNCs GROW IN INDIA

FDI Policy: Most sectors including manufacturing activities permitted 100% FDI

under automatic route (No prior approval required)

Industrial Licensing: Licensinglimited to only5 sectors (security, public health & safety

considerations)

Exchange Control: All investments are on repatriation basis.

Original investment,profits and dividend can be freely repatriated

Taxation: Companies incorporated in India treated as Indian companies for taxation

Convention on Avoidance of Double Taxation with 71 countries including Korea

WHY MNC’S IN INDIA 

There are a number of reasons why the multinational companies are coming down to India.

India has got a huge market. It has also got one of the fastest growing economies in the world.

Besides, the policy of the government towards FDI has also played a major role in attracting

the multinational companies in India.

For quite a long time, India had a restrictive policy in terms of foreign direct investment. As a

result, there was lesser number of companies that showed interest in investing in Indian market.

However, the scenario changed during the financial liberalization of the country, especially

after 1991. Government, nowadays, makes continuous efforts to attract foreign investments by

relaxing many of its policies. As a result, a number of multinational companies have shown

interest in Indian market.

Impact Of MNCs on Automobile industry

The present scenario is a highly transformed one. Multinational giants are vying with one other

to launch their models. Big names of the vehicle industry like the Korean giant, Hyundai,

General Motors, Mitsubishi etc. have already opened their account. In other vehicle segments

too, Volvo, Mercedes Benz, Audi etc. have carved out their niche. In the two-wheeler segment

besides the other major MNC brands made available to the Indian consumers.

As a result conducting business in the Automotive Industry has become more competitive and

sophisticated, which increases the demand for multi skilled personnel. Employment

opportunities are emerging with Manufacturers, Dealership Operations including Parts, Sales,

Service, Leasing & Financing, as well as in the fast developing Automotive Aftermarket sector.

On the other hand, Manufacturing in India has also come of age. The post liberation

economical scenario has resulted in all the big names such as General Motors, Ford, Toyota,

Honda, Suzuki, Mitsubishi, Mercedes-Benz, Fiat to come up with plants in India. The Indian

automotive giants like Telco, Mahindra, Ashok Leyland, Bajaj are revamping their production

strategies and launching new models designed and developed indigenously. This has opened up

numerous opportunities or employment in this sector for trained and skilled professionals who

are well versed in the latest manufacturing process.

Impact on the Indian Manufacturing sector:

The resurgence of India's manufacturing sector has been quite magical. Not only are profits

soaring, the sector is fast spreading its tentacles abroad as many Indian manufacturing firms

inch close to becoming true blue multinationals.

The Indian economy grew by 7.4 percent in the April-to-June quarter, FY2005, buoyed by

growth in manufacturing and services. Manufacturing grew 8 percent in the quarter, compared

with 7.6 percent in the previous quarter. The picture is about to brighten further.

According to a CII-McKinsey report, manufacturing exports from India are likely to

grow to $300 billion in 2015 from $48 billion in 2003. The country would then have a

3.5 per cent share of the world manufacturing trade.

To reach the $300 billion target, the industry has to clock a growth of 17 per cent every

year as against the 11 per cent rate at which it is growing at present.

Manufacturing exports from India grew 20 per cent in 2003 over the previous year.

Impact on Telecom Industry

One of the fastest growing sectors in the country, telecommunications has been growing at a

feverish pace in the past few years. The speed of growth can be gauged by the fact that in 2004,

ten years after private telephony was introduced in India, the mobile subscriber base had

crossed the number of fixed line connections.

While fixed lines touched 44 million at the end of 2004, the cellular user base registered

a 68 per cent growth to touch the 48-million mark. More than a third of these

subscribers were added during 2004.

The total telecom subscriber base, consisting of fixed as well as mobile users, registered

a growth of 31.42 per cent to touch 92.76 million at the end of 2004. The gross telecom

user base stood at 70.58 million at the end of 2003. (According to the Telecom

Regulatory Authority of India (TRAI), the growth in the mobile subscriber segment

picked up in December 2004 after remaining at around 1.5 million per month for the

previous two months.)

The year 2004 ended with the tele-density reaching an all-time high of 8.62, as

compared to 6.65 at the end of 2003, an increase of over 30 per cent.

In the mobile segment, additions consisted of 1.42 million GSM subscribers and 0.53

million CDMA subscribers. The total of 19.51 million mobile users in 2004 marks an

increase of 11.5 per cent over the 17.49 million additions made in 2003.

Even in fixed line, 2.67 million subscribers were added as compared to 2.15 million

new users during 2003, registering an increase of 24 per cent.

Impact on Research & Development

India has emerged as the hottest destination for multinational companies (MNCs) starting or

relocating their research & development (R&D) centres over the past two years. China comes

next, though it continues to be the leading destination for MNCs relocating their manufacturing

operations.

These are some of the underlying trends that emerge from the Ernst & Young Transfer Pricing

2005 global survey that polled 348 multinational parent companies and 128 subsidiary

corporations in 22 countries.

Around 10% of the respondents reported either new or relocated R&D operations in the past

two years. Of this, 27% identified India as the leading relocation destination for R&D, followed

by China with 17%.

The best-known Indian R&D companies are in pharmaceuticals and biotech sectors. Companies

such as Ranbaxy, Dr Reddy's Laboratories, Sun Pharma and Biocon and Shanta Biotech are

attracting interest from companies in the US and Europe, which are seeking a strong platform

for development skills.

Impact On Food and Beverages Sector

New Delhi: India's booming tourism sector and its rapidly growing Western-style fast food

joints offer unlimited opportunities for foreign food and beverage exporters, as Indian food

imports are likely to grow 6-7 per cent over the next few years, says a study.

Eyeing the over 250 million-strong middle class, a US department study says the

prospects for investment in Indian markets could be gauged from the fact that total

Hotel, Restaurant and Institutional (HRI) service sector sales of F and B amounted to $

8 billion during 2003-04.

An upswing in the Indian hotel industry since 2003 following turnaround of the global tourism

industry, positive impact of 'Incredible India' tourism promotion campaign and the world's

increasing interest in India's rapidly growing economy are some of the main reasons cited for

growth.

Though Indian consumers, on an average, spend only 2.5 per cent of their food expenditure in

hotels and restaurants, the HRI service sector is expected to grow by 6-7 per cent over the next

few years.

"Though new, unorganised and untapped so far, the HRI service sector in India has vast

potential for growth as there are approximately 55,000 registered restaurants in the organised

sector and in the range of 1,00,000 to 5,00,000 in the unorganised sector, comprising

innumerable roadside eateries and tea/snack shops," the study noted.

GROWTH OF MNC’S IN INDIA

NUMBER OF COMPANIES

Most of the largest companies, by revenue, are American or Japanese. In 1996, 162 of the 500

largest companies globally were from the United States and 126 from Japan. Only a few of the

largest companies are from developing countries. An exception is China, which has three

entries in the top 500 list (Fortune Magazine, Top 500 and Biggest revenues and increases in

revenues: http://www.fortune.com)

Measured by foreign assets, the distribution of the largest companies looks very much the

same. Most of the top 100 companies with largest foreign assets are from the United States,

Japan, the United Kingdom, France and Germany. In this list, Japanese companies are not as

prominent.

In 1995, the list of the top 100 transnational corporations (TNCs), measured by foreign assets,

included two companies from developing countries for the first time. These were Daewoo and

Venezuela (Oil Company). Total foreign assets of the top 100 TNCs in 1995 amounted to $1.7

trillion, while total foreign sales were $2 trillion, and total employment 5,800,000.

In 1996, the total revenues of the 500 largest companies globally were $11.4 trillion, total

profits were $404 billion, total assets were $33.3 trillion, and the total number of employees

was 35,517,692.

SECTOR WISE GROWTH: BANKING SECTOR

India's banking sector is booming at a great pace in spite of its relatively small size in

comparison of its counterparts in other leading economies. Indian banking sector has been

found lucrative by eminent players from the international world. For e.g.In India, Citibank and

Standard Chartered Bank has more than half of all credit card receivables and personal loans,

which has generated more than Rs. 200 crore of profit for both banks. In 2003, Oriental Bank

of Commerce was listed by Forbes magazine in its 'Global 200 Best Companies' list. In 1990s,

after a long gap of more than 20 years, the apex bank, Reserve Bank of India (RBI) has issued

licenses to 9 new private banks. In this, Times Bank got merged with the HDFC Bank. The RBI

also allowed Kotak Mahindra Finance Company to become a bank. These banks have shown

their edge over each other’s with the introduction of new products and technologies. Most of

the banks paid their focus on the retail sector and provide internet banking, phone banking and

mobile banking services to their customers and have cornered one of the largest segments of

the India's banking sector by targeting the India's growing middle income class. The Indian

banking sector has seen a proliferation of new services which has shown an improvement in

customer service.

Indian banking sector's growth to remain high

MUMBAI: Despite intense competition and high inflationary pressures, India's banking sector

will continue to show high growth owing to the country's strong economic expansion, credit

rating agency Standard & Poor's (S&P) said on Thursday.

"Growth in India's banking sector will remain high, bolstered by sound economic growth

prospects. “Thegross non-performing loans (NPLs) for our portfolio of rated Indian banks

increased to 2.5 per cent as of March 31, 2010, from 2.2 per cent a year ago. This was in line

with our expectations," the ratings agency said.

It added, however, that the increase in NPLs was contained by the quick economic recovery,

modest leverage and low sectorial concentration in the banks' loan books. Besides this, the

banks had low exposure to sensitive sectors.

SERVICE SECTOR:

Service Sector in India today accounts for more than half of India's GDP.

According to data for the financial year2006-2007, the share of services, industry and

agriculture in India’s GDP is 55.1% 26.4% and 18.5% respectively

The sector, growing by 10 per cent annually, contributes 55.2 per cent to the GDP and a quarter

of total employment. It also contributes over one-third of country's total exports, besides

accounting for a higher share in foreign direct investment (FDI), the Survey noted.

As per the advance estimates for 2010-11, the two broad services categories -- trade, hotels,

transport and communication and financing, insurance, real estate and business services -- have

performed well with growth of 11 per cent and 10.6 per cent, respectively.

The survey said only community; social and personal services have registered a low growth of

5.7 per cent, thuscontributing to the slight deceleration in the growth of the sector.

Service sector and its growth

It mainly consists of following:

Trade, Hotels and Restaurants , Railways ,Other Transport & Storage, Communication (Post,

Telecom) ,Banking ,Insurance ,Dwellings, Real Estate, Business Services ,Public

Administration, Defence ,Personal Services ,Community Services ETC.

Reasons for growth

1. Strong growth in foreign demand

2. Liberalisation

3. Sophistication in the information technology

4. Foreign Investment and Deregulation

5. (36% between 1992-2002)

6. Greater private sector participation

7. Increased private consumption of services ( 64 % of India’s GDP-Europe-58%,Japan-55%)

REASON FOR SLOW GROWTH

Some problems are shared by domestic corporations.

Taking advantage of limited liability.

Mining companies take out resources, distribute profits, leaving no money To clean up

mess.

Use of economic power to get favourable legislation.

Campaign contributions.

Distorted information (cigarette companies oil companies)

Massive cheating in hard-to-detect ways

Even in U.S.—Exxon in Alaska and Alabama cases

Required extra-ordinarily sophisticated detection, beyond capability of most

developing countries

If this happens in U.S., what must be happening elsewhere?

power—to get special legislation and treatment that benefits themselves,

regulations, short circuiting environmental, health, worker regulations

Sometimes they seek, and get, special tax and tariff treatment; sometimes simply

persuading governments not to enforce existing regulations.

Sometimes special treatment is above board—necessary to induce corporation to come;

but sometimes based on corruption.

Leverage economic power with political power.

CHAPTER 4

FDI POLICY AND ITS IMPACT ON MNC’S

FOREIGN DIRECT INVESTMENT POLICY

MNCs are source of FDI, the movement of capital across national borders that grants the

investor control over an acquired asset.

FDI may comprise > 20% of global GDP.

In its recent foreign direct investment (FDI) policy, the Government of India had announced

additional methods for issue of shares for consideration other than cash, such as: (a) import of

capital goods/ machinery/ equipment (including second-hand machinery); (b) pre-operative/

pre-incorporation expenses (including payments of rent, etc.). The RBI has now implemented

these schemes by prescribing the detailed conditions on which this share issuance facility will

be available to Indian companies.)

Foreign direct investment (FDI) has become a key battleground for emerging markets and some

developed countries. Government-level policies are needed to enable FDI inflows and

maximize their returns for both investors and recipient countries.

Foreign direct investment (FDI) has become a key battleground for emerging markets and some

developed countries. Government-level policies are needed to enable FDI inflows and

maximize their returns for both investors and recipient countries.

Foreign direct investment (FDI) policies play a major role in the economic growth of

developing countries around the world. Attracting FDI inflows with conductive policies has

therefore become a key battleground in the emerging markets.

Developed countries also seek to bring in more FDI and use various policies and incentives to

attract overseas investors, particularly for capital-intensive industries and advanced technology.

The primary aim of these policies is to create a friendly business environment where foreign

investors feel comfortable with the legal and financial framework of the country, and have the

potential to reap profits from economically viable businesses. The prospect of new growth

opportunities and outsized profits encourages large capital inflows across a range of industry

and opportunity types.

Investors tend to look for predictable environments where they understand how decision-

making processes work. Governments therefore are incentivized to build up a track record of

rational decision making. The business environment often requires work to remove onerous

regulations, reduce corruption and encourage transparency. Governments often also seek to

improve their domestic infrastructure to meet the operational needs of investors.

Providing fiscal incentives for attracting FDI is a subject of controversy – analysts have argued

both in favour and against the idea. A general consensus is developing in favour of certain

incentives which have been proven historically to grow profits and therefore foreign

investments.

When policies are effective, significant FDI investments are injected into countries that help the

domestic economy to grow. Different countries and regions offer various kinds of fiscal

incentives, with a related variance in the level of FDI investments attracted.

Governments are increasingly setting up promotional agencies to foster foreign direct

investment. These agencies promote FDI-friendly policies, identify prospective sectors and

investors, and structure specific deals and incentives for major foreign investors such as multi-

national corporations (MNCs).

Global trade associations also play a major role in some of these investment activities. These

associations are tasked with creating a positive environment for foreign direct investors and

ensuring that both investors and recipient countries enjoy a favourable environment.

The formation of human capital is vital for the continued growth of FDI inflows. To enable the

most beneficial, technology and IP-driven FDI, highly skilled personnel are necessary.

Governments must therefore enact policies to provide training and skills upgrading to develop

their workforce and meet the employment needs of foreign investors.

The advantages of FDI are as follows.

1. It supplements the meagre domestic capital available for investment and helps set up

productive enterprises.

2. It creates employment opportunities in diverse industries.

3. It boosts domestic production as it generally comes in a package - money, technology etc.

4. It paves the way for internationalisation of markets with global standards and quality

assurance and performance based budgeting.

5. It pools resources productively - money, manpower, technology.

6. It creates more and new infrastructure.

7. For the home country it a good way to take advantage in a favourable foreign investment

climate (e.g. low tax regime).

8. For the host country FDI is a good way of improving the BoP position.

FDI is prohibited in only the following activities:

i. Retail Trading (except single brand product

retailing);

ii. Atomic Energy;

iii. Lottery Business;

iv. Gambling and Betting;

v. Business of chit fund;

Vi.Nidhi Company;

vii. Trading in Transferable Development Rights

(TDRs); and

viii. Activities/sectors not open to private sector

Investment.

GROWTH IN FDI

FDI equity inflows into India :

Thirteen-fold growth between 2003-04 and 2009-10

FDI inflows into India:

In terms of international practices of calculating FDI (i.e. by taking into account re-

invested earnings and other capital), FDI inflows were nearly US $ 37.18 billion during

2009-10

Stable pace of inflows:

FDI inflows have somewhat flattened out over the course of the last three years

However, the pace of inflows has been stable This is including during 2009-10, at the

height of the global economic slowdown

This is despite a significant fall in global FDI inflows

Global FDI flows to India down 31% in 2010

However, China and other countries in South-East Asia continued to witness massive FDI

flows, UNCTAD said in its Global Investment Trends Monitor report issued on Tuesday.

UNCTAD says global FDI flows remained almost stagnant in 2010, increasing by 1 per cent to

$1.122 trillion. UNCTAD forecasts that global FDI flows are likely to remain between $1.3

trillion and $1.5 trillion in 2011. FDI inflows into India amounted to just $23.7 billion last year,

as against US$34.6 billion in 2009. “In India, we have seen a sharp decline and we can’t

explain why this has happened,” said UNCTAD Investment & Enterprise Division Chief, James

X Zhan, who prepared the investment report.

“We don’t have the analysis,” he said, maintaining that the decline in global FDI flows into

India was based on the figures compiled by the central bank.

However, in sharp contrast, China received FDI worth$274.6 billion last year, compared to

$233 billion in 2009. There is a “structural change,” Zhan said in regard to the higher FDI

flows to China, which is receiving huge investments on services and research and development

activities.

Many Western companies have shifted their research facilities to China and there is rapid

development in the hinterlands of the Communist country as well. The sharp increase in global

FDI flows to East and South-East Asian countries and Latin American nations in 2010 marked

the first time that developing countries outpaced rich nations in attracting foreign investments.

China, Hong Kong and other South-East Asian countries like Indonesia, Malaysia, Singapore

and Thailand were the main beneficiaries of the heightened FDI flows in the form of mergers

and acquisitions (M&As) and greenfield investment.

Part of the reason for the stagnant investment flows the world-over was largely due to the poor

performance of the developed economies, especially European countries, which were the

worst-hit by the global financial turmoil. The United States, which was the epicentre of the

global economic meltdown in 2008, is gradually recovering from the crisis, with FDI flows

increasing by 40 per cent last year to $186.1 billion from $129.9 billion in 2009.

“The quarterly fluctuations during 2010 indicate that the worldwide FDI recovery is still

hesitant,” said the report.

Several risk factors such as the slow global economic recovery, investment protectionism,

rising sovereign debt and continued volatility in the currency markets are likely to slow down

the pace of foreign direct investment across the globe in 2011, it said.

FDI Approvals in 2007

The FDI Approvals in 2007 resulted in stupendous rise of the Indian Services, Computer

Software & Hardware and Telecommunication sectors. The cumulative amount of Foreign

Direct Investment in India during the period from April 2007 to October 2007 was Rs 269,786

Crores.

This resulted in significant growth in areas like industrial production, agriculture, food grain

production, imports, exports and wholesale price indexes, which further fuelled growth,

productivity and employment in India.

The main countries that contributed to the inflow of FDI in India during April 2007 to

October 2007 were -

Mauritius ,USA ,UK ,Netherlands ,Singapore ,Japan ,Germany ,France , Switzerland,

Cyprus ,

The main sectors which contributed to the bulk of the FDI inflow in India during April

2007 to October 2007 were -

Services sector - including financial and non-financial sector

Computer Software and Hardware

Telecommunication - including radio paging, cellular mobile and basic telephony

Automobile industry

Housing and real estate

Power

Chemicals - other than fertilizers

Metallurgical industries

Drug and pharmaceuticals

Share of top investing countries FDI equity inflow

SECTORS ATTRACTING HIGHEST FDI EQUITY INFLOW

RANK SECTOR

Cumulative

inflows(august

1991-

march2010)

amount in

Rs.crore(US $

IN MILLION)

PERCENTAGEOF

TOTAL

INFLOWS (RS)

1 SERVICES SECTOR

(financial & non-financial)

101,019

(22,687)

22(%)

2 Computer software &

hardware

42,259 (9,529) 9(%)

3 TELECOMMUNICATIONS

(radio paging, cellular

mobile, basic telephone

services)

39,179 (8,600) 8(%)

4 Housing & real estate 34,348 (7,701) 7(%)

5 Construction activities

(including roads&

highways)

30,557 (6,945) 7(%)

6 Power 20,006 (4,428) 4(%)

7 Automobile industry 19,566 (4,322) 4(%)

8 Metallurgical industries 12,990 (3,032) 3(%)

9 Petroleum & natural gas 11,261 (2,612) 2(%)

10 Chemicals(other than

fertilizers)

10,567 (2,343) 2(%)

Total FDI inflow 2,32,014

Share of top 7 investing Countries: FDI equity inflows

(Percentage to total inflows - in terms of US$)

Why Indian youth prefer MNC'S than domestic companies:

Many of Indian youth's prefer MNC's Because of Saturday and Sunday Off .One of the reason

is the fast work, promotion according to growth, no ego between employees everyone sharing

equal platform and no attitude of sluggish work. Above all is the better packages being offered

and chances of going abroad.

There are various opportunities provided in MNC's like cross functional responsibilities, etc.

which is definitely missing in Indian companies hence work become monotonous and people

loose interest....

Secondly, MNC's try to make work culture employee friendly and help people to get a break

from there usual hectic schedule like organising cultural events.

INDIA VS CHINA

For investors, India is less risky than China

NEW DELHI : India continues to be less risky than China as a business destination, according

to a corporate study. India has been ranked 10th among 29 emerging markets in the latest

country risk analysis by Economic Intelligence Unit (EIU), an information service arm of the

Economist group.

With a score of 39 out of 100 in the risk scale, India has got 'B' risk rating and has outranked

China (41), Saudi Arabia (41), South Africa (45), Mexico (45), Brazil (48) and Egypt (49), who

have got 'C' rating.

However, Singapore (11, A rating), Hong Kong (21) continue to be the safest place for foreign

investment, followed by Taiwan (25), Israel, Hungary and Poland (37), who have qualified for

'B' rating. Not surprisingly, Iraq is the most dangerous country to do business, with a score of

91 out of 100, followed by Argentina (76).

A low risk rating is an important indicator of a country's global credit rating and the willingness

of foreign investors to invest in a country. Industry representatives said India has an

opportunity to gain from China 's slowdown.

Experts said country risk report comes in handy as a decision making tool for MNCs to enter or

expand in new markets.

EIU country risk rankings combine measures of political risk (like threat of war) and economic

risk (like size of fiscal deficits). They also include measures that affect a country's liquidity and

solvency (debt structure and forex reserves). Some of the operational factors that are considered

in determining country risk include security, political stability, government effectiveness, legal

& regulatory framework, macroeconomic conditions, financial & tax policy, labour market and

infrastructure. EIU reviews the risk ratings of over 100 emerging markets on a monthly basis.

Rapid growth, highly skilled labour and opportunities in outsourcing boosted India 's ratings.

While change in government brings no decline in risk for India , EIU says that Manmohan

Singh-led coalition must support reforms to sustain current ranking.

" India is watched closely by overseas investors on whether reforms will continue in the Left

supported government. There is little awareness about economic policies adopted by Left in

West Bengal ," says Amit Mitra, secretary general, Ficci. He said FDI investment will gather

momentum. " India is as safe as what it was and change in government has not changed the

situation," says N Srinivasan , DG-designate, CII. "Indian industry is upbeat and full of self-

belief."

Former RBI governor Bimal Jalan is confident that the country can handle any economic crisis.

Compared to China , India has become marginally safer in 2004. This perception could be

partly attributed to the strong external sector performance and reduced border-tension that India

experienced a year back.

EIU says that India is poised to grow at 8.3% in 2003-04 (April-March) and will grow at 7.3%

in 2004-05 — owing to a "smaller harvest and hence less robust growth in personal incomes".

It also predicted a slowdown in China . " China 's GDP is likely to grow by 9.4% this year and

by 8.1% in 2005, with the slowdown being led by an easing of investment growth," projects

EIU. India has an edge over other global competitors in outsourcing opportunities, R&D. China

has scored over every country in cheap labour.

Despite slowdown, China will continue to be among top emerging markets for FDI, but India is

also becoming very attractive to global investors. EIU has projected FDI flows to India to touch

$13 billion in 2008 from $5 billion in 2003. However, China is forecast to receive $58 billion

in FDI this year. " India 's performance as one of the most attractive destinations for FDI is

based on several criteria, considering Indian authorities' commitment to attract more FDI is yet

to be fully matched by more investment-friendly policies," says EIU.

CII says effective communication is key to reduce India 's risk further, saying, "The biggest

challenge is spreading the right message to the global investing community." Jalan pointed out

the need to reduce fiscal deficit.

CHAPTER 5

CONCLUSION

They serve the customers and the institution best and therefore chemistry between country and

foreign MNCS has fruitful results .FDI attractiveness, labour competitiveness. Huge market

potential of the country. Policies such as FDI, Industrial licencing, taxation, exchange control

has helped MNCS to grow .there is a growth of MNCS in India because of huge market and

fast growing economies in world has played important role.

Due these MNC’S competition increase and more employment opportunities are available &

there will be reduction in reasonal disparities

To conclude, we would opine that MNC’S having a wide ambit is enviable to us, as to the fact

that, there exists lots of job opportunity paves a path for the increase in national income.

And also to create a better society, with better standard of living,and it increases labour

productivity , decrease in unemployment, and also increases the net national income of the

country. This will help the government and this will lead to increase in the export and imports

in the country.

Gives advantages to Domestic Companies throughpurchasing of raw material &resources.New

company having network to expand their business.

The present scenario is a highly transformed one. Multinational giants are vying with one other

to launch their models. Big names of the vehicle industry like the Korean giant, Hyundai,

general motors, Mitsubishi etc. Have already opened their account. In other vehicle segments

too, Volvo, Mercedes Benz, and Audi etc. Have carved out their niche.

One of the fastest growing sectors in the country, telecommunications has been growing at a

feverish pace in the past few years. The speed of growth can be judged by the fact that in 2004,

ten years after private telephony was introduced in India, the mobile subscriber base had

crossed the number of fixed line connections.

REFERENCE