Post on 05-Apr-2018
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EFFECT of GLOBALIZATION
on INDIAN MARKET!
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How globalization is
changing the Indianmarket
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Definition
Globalization (or globalisation) is theprocess of making, transformation of regional things
or phenomena into global ones. This process is a combination of economic,
technological, sociocultural and political forces.
Integration of national economies into the
international economy through trade, foreign directinvestment, capital flows, migration, and the spreadof technology.
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How & When ?
Globalization started when the Indian government (PM-Mr P V Narsimha Rao, finance minister-Dr.ManmohanSingh) opened the country's markets to foreigninvestments in the early 1990s. Globalization of the
Indian Industry took place in its various sectors such assteel, pharmaceutical, petroleum, chemical, textile,cement, retail, and BPO.
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Effects of globalization Industrial
Financial
Economic
Political
Informational
Cultural
Ecological Transportation
International cultural exchange
Pharmaceutical market
Tourism Sector Sports Industry
Technological effect
Education
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Effects of globalizationGlobalization has various aspects affecting the Indian economy in
several different ways such as:Industrial
Broader access to a rangeof foreign products for
consumers andcompanies.
Eg. Opening up of themajor internationalbrands in India- Walmart,KFC, McDonalds, Kazo,mercs, audi, Volkswagon,BMW etc.
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Financial
Better access to externalfinancing for corporate,
national and subnationalborrowers.
Eg. Many foreigncompanies and banks areopening their branches inIndia- Barclays(UK),Wizardloans(Australia),HSBC.
http://images.google.co.in/imgres?imgurl=http://www.thelondondailynews.com/images/Barclays+sign_1068_18175652_0_0_3477_300.jpg&imgrefurl=http://www.thelondondailynews.com/business-news-c-23_53.html&h=300&w=300&sz=17&hl=en&start=2&tbnid=oS1kr7OcrXLabM:&tbnh=116&tbnw=116&prev=/images?q=barclays&gbv=2&hl=en&sa=X7/31/2019 Globalisation(2) (1)
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Economic- Permission of Indian
govt for Foreign DirectInvestment(FDI).
Indian economy isgoing great guns, theGDP is growing at therate of about 8-9%, butat the same time rate ofinflation has alsoincreased to11-12%
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India GDP growth-
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Political
Political globalization is the creation of a worldgovernment which regulates the relationships among
nations and guarantees the rights arising from socialand economic globalization.
Eg-One of the more recent examples is the ongoing
nuclear power deal between India and the US; the gaspipeline being built from Iran to India.
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Informational
Increase in informationflows between
geographically remotelocations. Because offibre opticcommunications,satellites, and increased
availability oftelephony and Internet.
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Cultural
Growth of cross-cultural contacts.the desire to
consume and enjoy foreign products and ideas,adopt new technology and practices, andparticipate in a world culture.
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Ecological-
Globalism and free tradeinterplay to increase
pollution and accelerate itin the name of an everexpanding capitalistgrowth economy in anon-expanding world.
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Transportation The world has become a
smaller place and thetravel time has reducesconsidersably.
Eg- the advent of newcheaper airlines like airdeccan, jet airways,indigo,spice etc,delhimetro and BRT.
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International culturalexchange-
Spreading ofmulticulturalism, andbetter individual access
to cultural diversity. Eg-through the export of
Hollywood andBollywood movies, Osianfilm festival,trade fair,
international bookfair,auto expo.
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Pharmaceuticalmarket- Spread of local
consumer products anddrugs to other
countries. Eg- Roohafza,
Himalayapharmaceuticals,Lipitor Generic version(Ranbaxy), ShahnazHussain Herbalproducts,Himalayaherbal health care.
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Tourism Sector-
Greater internationaltravel and tourism.
Eg-Incredible indiacampaign- atithidevobhava,rajasthan
tourismpackage,medicaltourism.
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Sports Industry-
Eg-World wide sporting
events such as FIFAworld cup,the OlympicGames,theCommonwealthgames,IPL series.
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Technological effect-
Development of a globaltelecommunications
infrastructure and greatertransborder data flow,using such technologiesas the Internet,communication satellites
and wireless telephones.
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Education-
Eg-Tie ups with global
industry, ICRI, IIPM,Manipal university.
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Negative effects-
It may be difficult to survive for SSI and other industrieswhich are unable to cope up with the changes due toinsufficient fund.
Accelerating brain drain.
Due to heavy taxation and levies in India,end product iscostly as compared to imported brands.
Due to the difference of USD, GBP, Euro and othercurrencies are more stronger than Indian rupee.
Other countries expending less amount in India to
promote their brand whereas it is very expensiveforIndian Brand to promote.
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Positive effects-
Globalization helps Indian Entrepreneur to know moreabout the competitors, recent trends, quality of products.
Helps in sourcing new technology for improving their
quality.
Hiring competent person irrespective of the nationality.
Good exposure of Indian brands to overseas market.
Due to increase in healthy competition with otherbrands,Indian brands will be forced to improve theirquality and services to customers.
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The World Trade Organization(WTO)
It is the global international organization dealingwith the rules of trade between nations. At itsheart are the WTO agreements, negotiated and
signed by the bulk of the worlds trading nationsand ratified in their parliaments. The goal is tohelp producers of goods and services, exporters,and importers conduct their business.
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WTO : in the interest of SMEs
A rules based system is in the interest of smallercompanies,
rather than large ones
The GATT/WTO system has led to increased possibilitiesto export for SMEs:
Lower (and bound) tariffs for goods
Guaranteed access conditions for services, includingright of establishment, cross border and movement ofservice providers and consumers
Protection of intellectual property Disciplines for subsidies and trade defence instruments
Effective system of dispute settlement
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Impact of WTO on SSI:
A major part of our industry comprises Small andMedium Enterprises (SMEs).
As much as 35.19% of our total exports are thecontribution of SSI
SSI accounts for 52% of our non-traditional productexports and 10% of our traditional product exports.
The positive factors are that the WTO regime allows theSSI sector to avail of MFN and National Treatment for its
exportable items the world over. These are unquantifiable benefits, which India enjoys as
a founder member of GATT and the WTO and to gainwhich benefits, at least 30 countries (including Chinaand Russia) are willing to make numerous concessionsin return for accession to WTO.
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IMPACT OF WTO:Small Scale Industry
The WTO Agreements can be classified broadlyin 3 components:
1. Those affecting QRs (quantitative restrictions)ofproductse.g. the GATT Agreements, Agreements on
Agriculture ATC. 2. Those, which deal with Intellectual Properly
Rightse.g. the TRIPs (Agreement on Trade RelatedAspects of Intellectual Property Rights ).
3. Those which deal with barriers to trade, standards,investment and subsidiese.g. SPS Measures, TBT,TRIMS, ASCM.
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Weaknesses of small scaleindustries
Obsolete Technology
Un-competitive prices
Poor quality Costly credit
Weak infrastructure backs up like power, roads,communication, etc.
Lack of cohesion among SSI units. Ineffective Associations.
Lack of information
Lack of standards conforming to international
standards.
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What has the EC (European commission)done for
its SMEs?Market Access Strategy:
Market Access Database:
Gives information on all trade barriers affecting exports.Interactive: gives SMEs possibility to flag problems in thirdcountry markets
Applied tariffs database:
Provides information on duties and taxes applicable to goodsimported into almost one hundred non-EU countries
Trade Barriers Regulation
A legal instrument that gives the right to companies from the EUto lodge a complaint with the European Commission who theninvestigate and determine whether there is evidence of a violationof international trade rules which has resulted in either adverse
trade effects or injury.
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What has the EC done for SMEs
from developing countries?
Export Helpdesk for Developing Countries andExporters Guide to Import Formalities in the EU
On line service with information on all import
requirements in the EU (tariffs, documents, rules oforigin, taxes) as well as a "market place" to do business
Trade-Related Assistance
Since the launch of the Doha Round, the EC hasallocated around 3.3 billion euros on tradepolicy/regulations, trade development and privatesector support in developing countries.
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What more can be done in WTO to help
SMEs?
Trade Facilitation
Reduction and simplification of import, export, transit and customsprocedures.
Examples of measures under negotiation:
publish and make available information time periods for consultation and comments before new rules come
into force advance rulings easier procedures for release and clearance of goods appeals procedures limits to fees and charges applied easier transit
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What more can be done in WTO to help
SMEs?
Proposed procedures for the Facilitation of Solutions to NTBs
SME's want quick, pragmatic solutions to concrete tradingproblems. Dispute settlement is not always an option. WTOregular bodies are not well-suited for problem solving
Procedure should be simple, conciliatory and expedient, withwell-defined steps and tight time lines
It should involve a facilitator acting as a mediator giving non-binding recommendations
Any WTO member country facing an NTB in another countrycould file a properly substantiated complaint requesting theWTO to launch a procedure
The facilitator would help clarify the issue, lead theconsultations and make recommendations on possible (non-
binding) solutions