The MNCS Stands for Multinational Corporations. MNC relates to a corporation that operates from one nation in which it is headquartered and operates in two or more countries. In the present world of globalization Mnc’s play an important role in development of economy.MNC' contribute through Foreign direct investment in India. Fdi directly impacts to GDP, GNP, Foreign trade and Foreign Reserves.
ROLE OF MNC’S IN INDIA
- PROMOTION FOREIGN INVESTMENT : In the recent years, external assistance to developing countries has been declining. This is because the donor developed countries have not been willing to part with a larger proportion of their GDP as assistance to developing countries. MNCs can bridge the gap
between the requirements of foreign capital for increasing foreign investment in India.
- NON-DEBT CREATING CAPITAL INFLOWS :- In pre-reform period in India when foreign direct investment by MNCs was discouraged, we relied heavily on external commercial borrowing (ECB) which was of debt-creating capital inflows. This raised the burden of external debt and debt service payments reached the alarming figure of 35 per cent of our current account receipts.
- TECHNOLOGY TRANSFER : Another important role of multinational corporations is that they transfer high sophisticated technology to developing countries which are essential for raising productivity of working class and enable us to start new productive ventures requiring high technology.
- PROMOTION OF EXPORTS : With extensive links all over the world and producing products efficiently and therefore with lower costs multinationals can play a significant role in promoting exports of a country in which they invest. For example, the rapid expansion in China’s exports in recent years is due
to the large investment made by multinationals in various fields of Chinese industry.
- INVESTMENT IN INFRASTRUCTURE : With a large command over financial resources and their superior ability to raise resources both globally and
inside India it is said that multinational corporations could invest in infrastructure such as power projects, modernization of airports and posts, telecommunication.
- INVESTMENT : MNCs have brought significant direct investment (FDI) into India, which has contributed to the growth and development.
- EMPLOYMENT : MNCs have provided employment opportunities in various sectors, including manufacturing, services, and research and development.
- TECHNOLOGY TRANSFER : MNCs have brought new technologies and know-how to India, which has helped to modernize and upgrade the country's industries.
- COMPETITION : MNCs have increased competition in the domestic market, which has led to better quality products and services for consumers.
- UNEMPLOYMENT : MNCs may displace domestic firms and lead to unemployment in the local economy.
- INEQUALITY : MNCs may contribute to income inequality by paying higher wages to skilled workers and providing fewer opportunities for unskilled workers.
- ENVIRONMENTAL DEGRADATION : MNCs may contribute to environmental degradation if they do not follow proper environmental regulations and standards.
- CULTURAL EROSION : MNCs may influence local culture and values, leading to a loss of cultural identity.
Overall, it is important to recognize that the impact of MNCs in India is complex and multifaceted. While MNCs have brought economic benefits to the country, it is important to address and mitigate any negative impacts they may have on the local economy and society.