Impact of Globalisation in India & The Struggle for Fair Globalisation

NCERT Understanding Economic Development | Chapter 4: Globalisation and the Indian Economy

How Has Globalisation Impacted Indian Consumers?

Over the past two decades, globalisation of the Indian economy has progressed significantly. The increased competition between local and foreign producers has been particularly advantageous for consumers, especially the well-off sections in urban areas. These consumers now enjoy greater choice, improved product quality, and lower prices for a wide range of goods. As a result, their standard of living has risen compared to what was possible earlier.

However, the impact among producers and workers has been far from uniform. While some have prospered, others have suffered severe hardship.

Which Indian Producers Have Benefited from Globalisation?

MNC Investments in India

MNCs have substantially increased their investments in India over the past twenty years, particularly in sectors like cell phones, automobiles, electronics, soft drinks, fast food, and banking services in urban areas. These are industries with a large number of well-off buyers. New jobs have been created in these sectors, and local companies supplying raw materials and components to MNCs have also prospered.

Top Indian Companies Going Global

Several leading Indian companies have benefited from the competitive pressure of globalisation. They invested in newer technologies, improved their production standards, and formed successful collaborations with foreign firms. Some large Indian companies have even emerged as multinational corporations^? in their own right, expanding operations worldwide.

IT and Service Sector Boom

Globalisation has created significant new opportunities for Indian companies providing services, particularly in the IT sector. Call centres, data entry, accounting, administrative tasks, and engineering services are now performed cheaply in India and exported to developed countries. This has generated millions of new jobs for educated Indian workers.

Steps to Attract Foreign Investment

Central and state governments in India have been actively working to attract foreign companies. One major initiative has been the establishment of Special Economic Zones (SEZs)^? — designated industrial areas equipped with world-class infrastructure including reliable electricity, water supply, good roads, transport networks, storage facilities, and recreational and educational amenities. Companies operating within SEZs enjoy tax exemptions for an initial period of five years.

Additionally, the government has introduced greater flexibility in labour laws to attract foreign investment. Companies are increasingly permitted to hire workers on temporary or contractual terms rather than on a permanent basis, thereby reducing their labour costs.

Small Producers — Compete or Perish

For a large number of small producers and workers, globalisation has posed severe challenges. Industries manufacturing batteries, capacitors, plastics, toys, tyres, dairy products, and vegetable oil have been particularly affected by foreign competition. Several manufacturing units have been forced to shut down, leaving many workers without employment. This is significant because small and medium industries in India employ the largest number of workers (approximately 11 crore) after agriculture.

Case Study: Ravi’s Capacitor Factory

Ravi took a bank loan and started manufacturing capacitors in 1992 in Hosur, an industrial town in Tamil Nadu. Capacitors are components used in many electronic appliances including tube lights and televisions. Within three years, his business expanded and he employed 20 workers.

His troubles began when the government removed import restrictions on capacitors in 2001, following India’s commitments at the WTO. His main clients — television manufacturing companies — shifted from buying domestically to importing capacitors at half the price. Some of these TV companies themselves moved from manufacturing to merely assembling products for MNCs. Ravi’s production fell by more than half, and his workforce shrank from 20 to just 7. Many of his fellow manufacturers in Hyderabad and Chennai were forced to close entirely.

How Has Globalisation Affected Competition and Employment?

Globalisation and competitive pressures have substantially changed the lives of workers across India. Faced with rising competition, most employers now prefer to hire workers on a ‘flexible’ basis rather than offering permanent employment. This means that job security has diminished significantly.

Case Study: Sushila — A Garment Worker

Sushila, a 35-year-old garment worker in Delhi, was once employed as a permanent worker entitled to health insurance, provident fund, and overtime pay at double rates. When her factory closed in the late 1990s, she spent six months searching for new work. She eventually found a job at a factory 30 kilometres from her home, but even after years of service, she remains a temporary worker earning less than half her previous salary.

Sushila leaves home at 7:30 a.m. every day, seven days a week, and returns at 10 p.m. A day off means no wages. She has lost all the benefits she previously enjoyed. Factories closer to her home offer even less pay due to fluctuating orders.

This pattern of insecure, poorly paid employment has become common across many industries and services in India. Most workers today are employed in the unorganised sector, and even conditions in the organised sector have started to resemble the unorganised sector as protections and benefits erode.

What Is the Struggle for Fair Globalisation and Why Does It Matter?

The evidence clearly shows that the benefits of globalisation have not been shared equally. People with education, skills, and wealth have capitalised on new opportunities. But many small producers, factory workers, and those in the unorganised sector have suffered. The critical question, therefore, is: how can we make globalisation more fair^??

What Can the Government Do?

In recent years, massive campaigns and representations by people’s organisations have influenced important decisions relating to trade and investments at the WTO. This demonstrates that ordinary citizens and their organisations can play a meaningful role in the struggle for a more equitable form of globalisation.