1. What is a MNC? Discuss the impact of Foreign Direct Investments in at least two sectors of the Indian economy with examples.
MNC is an enterprise which operates in a number of countries and which has production and service facilities outside the country of its origin. MNC owns and controls assets in more than one country. It takes it principal decisions in global context.
FDI in Retail Sector
In November 2011, India's central government announced retail reforms for both multi-brand stores and single-brand stores. These market reforms paved the way for retail innovation and competition with multi-brand retailers such as Walmart, Carrefour and Tesco, as well single brand majors such as IKEA, Nike, and Apple. The announcement sparked intense activism, both in opposition and in support of the reforms. In December 2011, under pressure from the opposition, Indian government placed the retail reforms on hold till it reaches a consensus. On 14 September 2012, the government of India announced the opening of FDI in multi-brand retail, subject to approvals by individual states. This decision has been welcomed by economists and the markets, however has caused protests and an upheaval in India's central government's political coalition structure. On 20 September 2012, the Government of India formally notified the FDI reforms for single and multi brand retail, thereby making it effective under Indian law. On 7 December 2012, the Federal Government of India allowed 51% FDI in multi-brand retail in India. The Feds managed to get the approval of multi-brand retail in the parliament despite heavy uproar from the opposition. Some states will allow foreign supermarkets like Walmart, Tesco and Carrefour to open while other states will not. FDI in Real Estate
Companies, industries, and multi-mational corporations of the Information Technology and Outsourcing sectors are major and leading investors in the real estate of India, at present. According to an estimate, over 65 million square feet of IT space are to be developed in the next five years. Other popular means of FDI in Indian real estate are residential and commercial complexes, amenities of the hospitality sector, industries, healthcare facilities, leisure organizations, and infrastructure. Easy and cheap availability of talented and skilled work force, lower casts of logistics, constantly expanding Indian market, steady growth of Indian economy, etc. have been attracting and enticing factors for diverse foreign direct investment in real estate business in all across India.
2. “The technologies transferred by the MNC to their production units in the underdeveloped countries are appropriate for the latter’s social and economic development needed”. Do you agree or disagree with this statement. Support your answer with relevant examples.
Multinational corporations (MNCs) are huge business organizations which open up income-generating assets in more than one country through branches or their Majority Owned Foreign Affiliates (MOFAs). They are also known as Transnational Companies or Corporations (TNCs). An MNC engages itself in the production of goods or services outside the country of its origin. By opening up income generating assets in more than one country, it makes its presence felt in the global market. It has been estimated that around a quarter of the world economy is being controlled by the big MNCs. The combined sales of these top MNCs are estimated to be much higher than the combined worth of economies of around 182 countries. The MNCs, because of their huge resources and international presence, are able to conjure up desires for their products in the minds of the people in the country of their marketing base. The MNCs help to initiate development processes in several underdeveloped countries through the transfer of capital and technology. To establish a proper base in a foreign country, the MNCs invest in labor, raw materials, advertising and marketing. This...
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