Effects of Globalization in India
India is a global market. Products of almost all the developed countries are sold in Indian marketplace. On the other hand, Indian firm are thinking in terms of reaching a global market even though it may be producing only a part of a product or a service.
Globalization of the economy and the resultant liberalization within the economic system of the country cannot any longer be reversed. These forces have emerged due to the complex nature of the interaction between the growth of economies of most countries, the resultant trade and market patterns which are unfolding.
The recent economic growth, trade and market patterns in India, to a great extent, have been shaped by the nature of scientific and technological changes. Due to continuous technological changes, the duration of product cycles have reduced significantly. Therefore their aim is to reap the benefits of a product within the shorter product cycles. This process necessitates a much larger market size than what business organizations use to be content with in earlier years.
In India, international business transactions through export and import have increased in recent years. A few rich Indians have already fully integrated themselves with global market. Their transactions with the global markets are highly simplified.
The rich Indians control many businesses in the cities and metropolis. Some have investments in foreign countries as well. From the lower economic levels of India, they get labor, raw material and space to operate.
The business operations in metropolis, big cities and big towns receive imported materials equipment and services; they also export goods abroad. Many foreigners come to these Indian cities, stay in the hotels and also transact business. There is a reasonable two way flow between global markets and these city, through many of them feel the competitive pressure such as loss of jobs, closure of inefficient businesses, etc.
Other small towns compete to do business and get integrated with these market forces by offering cost advantages such as low cost labor, lesser rentals for office spaces etc. In the IT fields and for some manufacturing sectors, this is particularly relevant. The low value products and services from smaller towns help to maintain a large workforce in the cities and the metropolis thus helping them to continue with their competitive advantages in the global market through cheap labor content and therefore lower costs.
Thus people in smaller town and rural areas still ‘subsidize’ Indian cities with cheap inputs. The supply of very cheap labor force in terms of house servants, hawkers, cleaners, casual workers etc. maintain the ‘competitive advantages’ of the work force of bigger businesses and the firms to face onslaught of global markets. We need to recognize the fact that since the technological sophistication of Indian industry in general is still poor, much of the competitive advantages in the global market are coming from very low wages of Indian people. How long such a situation can be sustained is a serious question.
Now comes the question of what happens to the poorly connected villages. Mostly people in these poorly connected villages live on low productivity agriculture, cattle rearing, and related casual work. They continue to struggle in the villages and get whatever seeds or fertilizers, they can get access to within the constraints, and produce whatever they can and sell the produce on whatever prices are offered to them by the markets of the small towns or the middlemen. Occasionally a few tourists may go to some of the villages which have some tourists’ attraction or have some other forms of archaeological industry develops.
The global markets are exerting the pressure for economic efficiency on businesses and operations in the city and urban areas. They can face these pressures only with high intake of science and technology. By technological inputs they can maintain their position in economic competition or even improve themselves. Many Indians have found their way to survive or even flourish against these competitive pressures or even take advantage of global opportunities by learning to live through this competition.
On the longer term, though, they themselves may be endangered if Indian firms do not become technologically & organizationally sophisticated. A perennial dependence on foreign technology through purchase or through investment partners would erode their competitive business advantages.
World is not static. Countries like China, a number of countries from south-east Asia, central Asian countries etc. are producing products and selling them in India. Then there may be a few corporate who may buy agricultural lands and introduce modern farming. Then only a few of them may be employed at economically efficient levels to produce competitive products. Similarly, many of the traditional crafts with ‘new look’ may be produced by investors from cities or foreign countries with more knowledge, skill and investment. Again only a few villagers may be employed. All these employments and payments will be driven purely by market forces. What happens of the residue of the Indians whose number will not be small.
The modern India should generate linkages of knowledge and skills and investments in suitable manner with a new approach so that larger value addition can be done to maintain the global competitive advantage.
Today, such linkages are absent or very minimal. It will require initial public investment in terms of economic connectivity and also in terms of knowledge and skills.
Indian firms should enable themselves to produce products and services of good competitive quality with each one having their own niche in a global chain of production.
In other words, they can master the market forces of liberalization and globalization with adequate tools with them to participate as equal partners. The win-win situation which is being talked in general terms for others in the global forums should also include the people of India. It cannot be win-win for others at the cost of these large numbers of poor people. To equip the poor people with the necessary tools is a necessity for India to become as a developed country.
The rates of changes due to globalization are fast. And time periods between opening and closing of windows of new opportunities are small.