ESSAY FOR SBI PO - ROLE OF MULTINATIONAL COMPANIES IN INDIA

ROLE OF MULTINATIONAL COMPANIES IN INDIA

The MNCs play an important role in the economic development of underdeveloped countries. What are multinational companies? These are enterprises or organizations with services spread across more than one country on a global scale. India is a home to a number of multinational companies since the country’s market was liberalized in 1991. India houses majority of multinational companies hailing from the United States. There are also multinational companies from other countries. Multi National Corporations (MNCs) are huge industrial organizations which extend their industrial and marketing operations through a network of their branches or their majority owned Foreign Affiliates (MOFAs). MNCs are also known as Transactional corporations (TNCs). Instead of aiming for maximization of their profits from one or two products, the MNCs operate in a number of fields and from this point of view, their business strategy extends over a number of products and over a number of countries. 

The main reason why MNCs have been encouraged by the underdeveloped countries to participate in their industrial development is on account of the technological superiorities which these firms possess as compared to national companies. The under developed countries regard transfer of technology from MNCs useful on account of the following reason: 1) Industrialization represents the most important way out of under development and the resources of these countries are insufficient to sustain the industrial progress on their own; 2) Local manpower, materials, Local capital equipment etc have to be optimally exploited and these countries are unable to accomplish these; 3) Depending totally on local companies would required heavy imports of raw materials, capital equipment, machinery and technical knowledge whereas MNCs bring these on their own; and 4) The underdeveloped countries have to face stiff competition for selling their products in international markets. Unless their goods meet international standards and quality specifications, they cannot sell. MNCs help them in producing such goods.

Arguments for MNCs (The positive role):

These corporations bring new technology in the country and thus bring economies of large scale.

• They bring lots of new job opportunities reducing the level of unemployment and variety of products.
• They help in maximizing resource utilization.
• MNCs invest largely in Indian economic sectors making it strong.
• The healthy competition created by them improves the performance of domestic players in the industry.
• Investments by MNCs will also induce more domestic investment. For example, ancillary units can be set up to ‘feed’ the main industries of the MNCs

Arguments against MNCs (The negative role):

• Multinational corporations put in so much pressure on the employees to meet up deadlines. They take double the work from the employees for low salary packages.
•  They create lot of competition in the domestic markets
• Many multinational companies require their employees to work as per their time zones which sometimes create health disorders
• Their main aim is to maximize profits at low cost.
• The money earned by them finally goes out to their mother countries leaving our economyweaker. 
• India is a highly populated country. Importing manually produced goods by these countries increase unemployment in our country.

Multinational companies are blessing in disguise to any nation as they invest in the country, bring new technology which improves the economy of the country. Today whether it a multinational company or an domestic company every company wants to make high profits to sustain in the market and to become global players they exploit labours and satisfy their shareholders. But these multinational companies are providing the society with quality service and high rewards to their shareholders.