NCERT Textbook: Globalisation & the Indian Economy - Social Studies (SST) Class 10

 Page 1


G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 55 55 55 55 55
GLOBALISA GLOBALISA
GLOBALISA GLOBALISA GLOBALISATION TION
TION TION TION
AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY
CHAPTER 4
As consumers in today’s world, some
of us have a wide choice of goods and
services before us. The latest models
of digital cameras, mobile phones and
televisions made by the leading
manufacturers of the world are within
our reach. Every season, new models
of automobiles can be seen on Indian
roads. Gone are the days when
Ambassador and Fiat were the only
cars on  Indian roads. Today, Indians
are buying cars produced by nearly
all the top companies in the world. A
similar explosion of brands can be
seen for many other goods: from shirts
to televisions to processed fruit juices.
Such wide-ranging choice of goods
in our markets is a relatively recent
phenomenon. You wouldn’t have
found such a wide variety of goods in
Indian markets even two decades
back. In a matter of years, our
markets have been transformed!
How do we understand these
rapid transformations? What are the
factors that are bringing about these
changes? And, how are these changes
affecting the lives of the people?
We shall dwell on these questions in
this chapter.
Rationalised 2023-24
Page 2


G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 55 55 55 55 55
GLOBALISA GLOBALISA
GLOBALISA GLOBALISA GLOBALISATION TION
TION TION TION
AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY
CHAPTER 4
As consumers in today’s world, some
of us have a wide choice of goods and
services before us. The latest models
of digital cameras, mobile phones and
televisions made by the leading
manufacturers of the world are within
our reach. Every season, new models
of automobiles can be seen on Indian
roads. Gone are the days when
Ambassador and Fiat were the only
cars on  Indian roads. Today, Indians
are buying cars produced by nearly
all the top companies in the world. A
similar explosion of brands can be
seen for many other goods: from shirts
to televisions to processed fruit juices.
Such wide-ranging choice of goods
in our markets is a relatively recent
phenomenon. You wouldn’t have
found such a wide variety of goods in
Indian markets even two decades
back. In a matter of years, our
markets have been transformed!
How do we understand these
rapid transformations? What are the
factors that are bringing about these
changes? And, how are these changes
affecting the lives of the people?
We shall dwell on these questions in
this chapter.
Rationalised 2023-24
56 56 56 56 56 U U U U UNDERST NDERST NDERST NDERST NDERSTANDING ANDING ANDING ANDING ANDING E E E E ECONOMIC CONOMIC CONOMIC CONOMIC CONOMIC D D D D DEVEL EVEL EVEL EVEL EVELOPMENT OPMENT OPMENT OPMENT OPMENT
Until the middle of the twentieth
century, production was largely
organised within countries.  What
crossed the boundaries of these
countries were raw material, food stuff
and finished products. Colonies such
as India exported raw materials and
food stuff and imported finished
goods. Trade was the main channel
connecting distant countries. This was
before large companies called
Spreading  of Production Spreading  of Production Spreading  of Production Spreading  of Production Spreading  of Production
by an MNC by an MNC by an MNC by an MNC by an MNC
A large MNC, producing industrial equipment, designs its
products in research centres in the United States, and then
has the components manufactured in China. These are then
shipped to Mexico and Eastern Europe where the products
are assembled and the finished products are sold all over the
world. Meanwhile, the company’s customer care is carried out
through call centres located in India.
PRODUCTION ACROSS COUNTRIES
multinational corporations (MNCs)
emerged on the scene. A MNC is a
company that owns or controls
production in more than one nation.
MNCs set up offices and factories for
production in regions where they can
get cheap labour and other resources.
This is done so that the cost of
production is low and the MNCs can
earn greater profits. Consider the
following example.
This is a call centre in Bengaluru, equipped with telecom facilities and access to
the Internet to provide information and support to customers abroad.
Rationalised 2023-24
Page 3


G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 55 55 55 55 55
GLOBALISA GLOBALISA
GLOBALISA GLOBALISA GLOBALISATION TION
TION TION TION
AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY
CHAPTER 4
As consumers in today’s world, some
of us have a wide choice of goods and
services before us. The latest models
of digital cameras, mobile phones and
televisions made by the leading
manufacturers of the world are within
our reach. Every season, new models
of automobiles can be seen on Indian
roads. Gone are the days when
Ambassador and Fiat were the only
cars on  Indian roads. Today, Indians
are buying cars produced by nearly
all the top companies in the world. A
similar explosion of brands can be
seen for many other goods: from shirts
to televisions to processed fruit juices.
Such wide-ranging choice of goods
in our markets is a relatively recent
phenomenon. You wouldn’t have
found such a wide variety of goods in
Indian markets even two decades
back. In a matter of years, our
markets have been transformed!
How do we understand these
rapid transformations? What are the
factors that are bringing about these
changes? And, how are these changes
affecting the lives of the people?
We shall dwell on these questions in
this chapter.
Rationalised 2023-24
56 56 56 56 56 U U U U UNDERST NDERST NDERST NDERST NDERSTANDING ANDING ANDING ANDING ANDING E E E E ECONOMIC CONOMIC CONOMIC CONOMIC CONOMIC D D D D DEVEL EVEL EVEL EVEL EVELOPMENT OPMENT OPMENT OPMENT OPMENT
Until the middle of the twentieth
century, production was largely
organised within countries.  What
crossed the boundaries of these
countries were raw material, food stuff
and finished products. Colonies such
as India exported raw materials and
food stuff and imported finished
goods. Trade was the main channel
connecting distant countries. This was
before large companies called
Spreading  of Production Spreading  of Production Spreading  of Production Spreading  of Production Spreading  of Production
by an MNC by an MNC by an MNC by an MNC by an MNC
A large MNC, producing industrial equipment, designs its
products in research centres in the United States, and then
has the components manufactured in China. These are then
shipped to Mexico and Eastern Europe where the products
are assembled and the finished products are sold all over the
world. Meanwhile, the company’s customer care is carried out
through call centres located in India.
PRODUCTION ACROSS COUNTRIES
multinational corporations (MNCs)
emerged on the scene. A MNC is a
company that owns or controls
production in more than one nation.
MNCs set up offices and factories for
production in regions where they can
get cheap labour and other resources.
This is done so that the cost of
production is low and the MNCs can
earn greater profits. Consider the
following example.
This is a call centre in Bengaluru, equipped with telecom facilities and access to
the Internet to provide information and support to customers abroad.
Rationalised 2023-24
G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 57 57 57 57 57
Complete the following statement to show how the production process in the garment
industry is spread across countries.
The brand tag says ‘Made in Thailand’ but they are not Thai products. We dissect
the manufacturing process and look for the best solution at each step. We are
doing it globally. In making garments, the company may, for example, get cotton
fibre from Korea, ........
LET’S WORK THIS OUT
In this example the MNC is not only
selling its finished products globally,
but more important, the goods and
services are produced globally. As
a result, production is organised in
increasingly complex ways.  The
production process is divided into
small parts and spread out across the
globe. In the above example, China
provides the advantage of being a
cheap manufacturing location.
Mexico and Eastern Europe are useful
for their closeness to the markets
in the US and Europe. India has
highly skilled engineers who can
understand the technical aspects of
production. It also has educated
English speaking youth who can
provide customer care services. And
all this probably can mean 50-60 per
cent cost-savings for the MNC!
The advantage of spreading out
production across the borders to the
multinationals can be truly immense.
INTERLINKING PRODUCTION ACROSS
COUNTRIES
At times, MNCs set up production
jointly with some of the local
companies of these countries. The
benefit to the local company of such
joint production is two-fold. First,
MNCs can provide money for
additional investments, like buying
new machines for faster production.
Second, MNCs might bring with them
the latest technology for production.
In general, MNCs set up production
where it is close to the markets; where
there is skilled and unskilled labour
available at low costs; and where the
availability of other factors of
production is assured. In addition,
MNCs might look for government
policies that look after their interests.
You will read more about the policies
later in the chapter.
Having assured themselves of these
conditions, MNCs set up factories and
offices for production. The money that
is spent to buy assets such as land,
building, machines and other
equipment is called investment.
Investment made by MNCs is called
foreign investment. Any investment
is made with the hope that these
assets will earn profits.
WE WILL SHIFT
THIS FACTORY TO
ANOTHER COUNTRY.
IT HAS BECOME
EXPENSIVE HERE!
Rationalised 2023-24
Page 4


G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 55 55 55 55 55
GLOBALISA GLOBALISA
GLOBALISA GLOBALISA GLOBALISATION TION
TION TION TION
AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY
CHAPTER 4
As consumers in today’s world, some
of us have a wide choice of goods and
services before us. The latest models
of digital cameras, mobile phones and
televisions made by the leading
manufacturers of the world are within
our reach. Every season, new models
of automobiles can be seen on Indian
roads. Gone are the days when
Ambassador and Fiat were the only
cars on  Indian roads. Today, Indians
are buying cars produced by nearly
all the top companies in the world. A
similar explosion of brands can be
seen for many other goods: from shirts
to televisions to processed fruit juices.
Such wide-ranging choice of goods
in our markets is a relatively recent
phenomenon. You wouldn’t have
found such a wide variety of goods in
Indian markets even two decades
back. In a matter of years, our
markets have been transformed!
How do we understand these
rapid transformations? What are the
factors that are bringing about these
changes? And, how are these changes
affecting the lives of the people?
We shall dwell on these questions in
this chapter.
Rationalised 2023-24
56 56 56 56 56 U U U U UNDERST NDERST NDERST NDERST NDERSTANDING ANDING ANDING ANDING ANDING E E E E ECONOMIC CONOMIC CONOMIC CONOMIC CONOMIC D D D D DEVEL EVEL EVEL EVEL EVELOPMENT OPMENT OPMENT OPMENT OPMENT
Until the middle of the twentieth
century, production was largely
organised within countries.  What
crossed the boundaries of these
countries were raw material, food stuff
and finished products. Colonies such
as India exported raw materials and
food stuff and imported finished
goods. Trade was the main channel
connecting distant countries. This was
before large companies called
Spreading  of Production Spreading  of Production Spreading  of Production Spreading  of Production Spreading  of Production
by an MNC by an MNC by an MNC by an MNC by an MNC
A large MNC, producing industrial equipment, designs its
products in research centres in the United States, and then
has the components manufactured in China. These are then
shipped to Mexico and Eastern Europe where the products
are assembled and the finished products are sold all over the
world. Meanwhile, the company’s customer care is carried out
through call centres located in India.
PRODUCTION ACROSS COUNTRIES
multinational corporations (MNCs)
emerged on the scene. A MNC is a
company that owns or controls
production in more than one nation.
MNCs set up offices and factories for
production in regions where they can
get cheap labour and other resources.
This is done so that the cost of
production is low and the MNCs can
earn greater profits. Consider the
following example.
This is a call centre in Bengaluru, equipped with telecom facilities and access to
the Internet to provide information and support to customers abroad.
Rationalised 2023-24
G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 57 57 57 57 57
Complete the following statement to show how the production process in the garment
industry is spread across countries.
The brand tag says ‘Made in Thailand’ but they are not Thai products. We dissect
the manufacturing process and look for the best solution at each step. We are
doing it globally. In making garments, the company may, for example, get cotton
fibre from Korea, ........
LET’S WORK THIS OUT
In this example the MNC is not only
selling its finished products globally,
but more important, the goods and
services are produced globally. As
a result, production is organised in
increasingly complex ways.  The
production process is divided into
small parts and spread out across the
globe. In the above example, China
provides the advantage of being a
cheap manufacturing location.
Mexico and Eastern Europe are useful
for their closeness to the markets
in the US and Europe. India has
highly skilled engineers who can
understand the technical aspects of
production. It also has educated
English speaking youth who can
provide customer care services. And
all this probably can mean 50-60 per
cent cost-savings for the MNC!
The advantage of spreading out
production across the borders to the
multinationals can be truly immense.
INTERLINKING PRODUCTION ACROSS
COUNTRIES
At times, MNCs set up production
jointly with some of the local
companies of these countries. The
benefit to the local company of such
joint production is two-fold. First,
MNCs can provide money for
additional investments, like buying
new machines for faster production.
Second, MNCs might bring with them
the latest technology for production.
In general, MNCs set up production
where it is close to the markets; where
there is skilled and unskilled labour
available at low costs; and where the
availability of other factors of
production is assured. In addition,
MNCs might look for government
policies that look after their interests.
You will read more about the policies
later in the chapter.
Having assured themselves of these
conditions, MNCs set up factories and
offices for production. The money that
is spent to buy assets such as land,
building, machines and other
equipment is called investment.
Investment made by MNCs is called
foreign investment. Any investment
is made with the hope that these
assets will earn profits.
WE WILL SHIFT
THIS FACTORY TO
ANOTHER COUNTRY.
IT HAS BECOME
EXPENSIVE HERE!
Rationalised 2023-24
58 58 58 58 58 U U U U UNDERST NDERST NDERST NDERST NDERSTANDING ANDING ANDING ANDING ANDING E E E E ECONOMIC CONOMIC CONOMIC CONOMIC CONOMIC D D D D DEVEL EVEL EVEL EVEL EVELOPMENT OPMENT OPMENT OPMENT OPMENT
But the most common route for
MNC investments is to buy up local
companies and then to expand
production. MNCs with huge wealth
can quite easily do so. To take an
example, Cargill Foods, a very large
American MNC, has bought over
smaller Indian companies such as
Parakh Foods. Parakh Foods had
built a large marketing network in
various parts of India, where its brand
was well-reputed. Also, Parakh Foods
had four oil refineries, whose control
has now shifted to Cargill. Cargill is
now the largest producer of edible oil
in India, with a capacity to make 5
million pouches daily!
In fact, many of the top MNCs
have wealth exceeding the entire
budgets of the developing country
governments. With such enormous
wealth, imagine the power and
influence of these MNCs!
There’s another way in which
MNCs control production. Large
MNCs in developed countries place
orders for production with small
producers. Garments, footwear,
sports items are examples of
industries where production is
carried out by a large number of
small producers around the world.
The products are supplied to the
MNCs, which then sell these under
their own brand names to the
customers. These large MNCs have
tremendous power to determine price,
quality, delivery, and labour
conditions for these distant
producers.
Thus, we see that there are a
variety of ways in which the MNCs are
spreading their production and
interacting with local producers in
various countries across the globe. By
setting up partnerships with local
companies, by using the local
companies for supplies, by closely
competing with the local companies
or buying them up, MNCs are exerting
a strong influence on production
at these distant locations. As a
result, production in these widely
dispersed locations is getting
interlinked.
Women at home in Ludhiana making footballs for large MNCs
Jeans produced in developing countries being
sold in USA for Rs 6500 ($145)
Rationalised 2023-24
Page 5


G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 55 55 55 55 55
GLOBALISA GLOBALISA
GLOBALISA GLOBALISA GLOBALISATION TION
TION TION TION
AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY AND THE INDIAN ECONOMY
CHAPTER 4
As consumers in today’s world, some
of us have a wide choice of goods and
services before us. The latest models
of digital cameras, mobile phones and
televisions made by the leading
manufacturers of the world are within
our reach. Every season, new models
of automobiles can be seen on Indian
roads. Gone are the days when
Ambassador and Fiat were the only
cars on  Indian roads. Today, Indians
are buying cars produced by nearly
all the top companies in the world. A
similar explosion of brands can be
seen for many other goods: from shirts
to televisions to processed fruit juices.
Such wide-ranging choice of goods
in our markets is a relatively recent
phenomenon. You wouldn’t have
found such a wide variety of goods in
Indian markets even two decades
back. In a matter of years, our
markets have been transformed!
How do we understand these
rapid transformations? What are the
factors that are bringing about these
changes? And, how are these changes
affecting the lives of the people?
We shall dwell on these questions in
this chapter.
Rationalised 2023-24
56 56 56 56 56 U U U U UNDERST NDERST NDERST NDERST NDERSTANDING ANDING ANDING ANDING ANDING E E E E ECONOMIC CONOMIC CONOMIC CONOMIC CONOMIC D D D D DEVEL EVEL EVEL EVEL EVELOPMENT OPMENT OPMENT OPMENT OPMENT
Until the middle of the twentieth
century, production was largely
organised within countries.  What
crossed the boundaries of these
countries were raw material, food stuff
and finished products. Colonies such
as India exported raw materials and
food stuff and imported finished
goods. Trade was the main channel
connecting distant countries. This was
before large companies called
Spreading  of Production Spreading  of Production Spreading  of Production Spreading  of Production Spreading  of Production
by an MNC by an MNC by an MNC by an MNC by an MNC
A large MNC, producing industrial equipment, designs its
products in research centres in the United States, and then
has the components manufactured in China. These are then
shipped to Mexico and Eastern Europe where the products
are assembled and the finished products are sold all over the
world. Meanwhile, the company’s customer care is carried out
through call centres located in India.
PRODUCTION ACROSS COUNTRIES
multinational corporations (MNCs)
emerged on the scene. A MNC is a
company that owns or controls
production in more than one nation.
MNCs set up offices and factories for
production in regions where they can
get cheap labour and other resources.
This is done so that the cost of
production is low and the MNCs can
earn greater profits. Consider the
following example.
This is a call centre in Bengaluru, equipped with telecom facilities and access to
the Internet to provide information and support to customers abroad.
Rationalised 2023-24
G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 57 57 57 57 57
Complete the following statement to show how the production process in the garment
industry is spread across countries.
The brand tag says ‘Made in Thailand’ but they are not Thai products. We dissect
the manufacturing process and look for the best solution at each step. We are
doing it globally. In making garments, the company may, for example, get cotton
fibre from Korea, ........
LET’S WORK THIS OUT
In this example the MNC is not only
selling its finished products globally,
but more important, the goods and
services are produced globally. As
a result, production is organised in
increasingly complex ways.  The
production process is divided into
small parts and spread out across the
globe. In the above example, China
provides the advantage of being a
cheap manufacturing location.
Mexico and Eastern Europe are useful
for their closeness to the markets
in the US and Europe. India has
highly skilled engineers who can
understand the technical aspects of
production. It also has educated
English speaking youth who can
provide customer care services. And
all this probably can mean 50-60 per
cent cost-savings for the MNC!
The advantage of spreading out
production across the borders to the
multinationals can be truly immense.
INTERLINKING PRODUCTION ACROSS
COUNTRIES
At times, MNCs set up production
jointly with some of the local
companies of these countries. The
benefit to the local company of such
joint production is two-fold. First,
MNCs can provide money for
additional investments, like buying
new machines for faster production.
Second, MNCs might bring with them
the latest technology for production.
In general, MNCs set up production
where it is close to the markets; where
there is skilled and unskilled labour
available at low costs; and where the
availability of other factors of
production is assured. In addition,
MNCs might look for government
policies that look after their interests.
You will read more about the policies
later in the chapter.
Having assured themselves of these
conditions, MNCs set up factories and
offices for production. The money that
is spent to buy assets such as land,
building, machines and other
equipment is called investment.
Investment made by MNCs is called
foreign investment. Any investment
is made with the hope that these
assets will earn profits.
WE WILL SHIFT
THIS FACTORY TO
ANOTHER COUNTRY.
IT HAS BECOME
EXPENSIVE HERE!
Rationalised 2023-24
58 58 58 58 58 U U U U UNDERST NDERST NDERST NDERST NDERSTANDING ANDING ANDING ANDING ANDING E E E E ECONOMIC CONOMIC CONOMIC CONOMIC CONOMIC D D D D DEVEL EVEL EVEL EVEL EVELOPMENT OPMENT OPMENT OPMENT OPMENT
But the most common route for
MNC investments is to buy up local
companies and then to expand
production. MNCs with huge wealth
can quite easily do so. To take an
example, Cargill Foods, a very large
American MNC, has bought over
smaller Indian companies such as
Parakh Foods. Parakh Foods had
built a large marketing network in
various parts of India, where its brand
was well-reputed. Also, Parakh Foods
had four oil refineries, whose control
has now shifted to Cargill. Cargill is
now the largest producer of edible oil
in India, with a capacity to make 5
million pouches daily!
In fact, many of the top MNCs
have wealth exceeding the entire
budgets of the developing country
governments. With such enormous
wealth, imagine the power and
influence of these MNCs!
There’s another way in which
MNCs control production. Large
MNCs in developed countries place
orders for production with small
producers. Garments, footwear,
sports items are examples of
industries where production is
carried out by a large number of
small producers around the world.
The products are supplied to the
MNCs, which then sell these under
their own brand names to the
customers. These large MNCs have
tremendous power to determine price,
quality, delivery, and labour
conditions for these distant
producers.
Thus, we see that there are a
variety of ways in which the MNCs are
spreading their production and
interacting with local producers in
various countries across the globe. By
setting up partnerships with local
companies, by using the local
companies for supplies, by closely
competing with the local companies
or buying them up, MNCs are exerting
a strong influence on production
at these distant locations. As a
result, production in these widely
dispersed locations is getting
interlinked.
Women at home in Ludhiana making footballs for large MNCs
Jeans produced in developing countries being
sold in USA for Rs 6500 ($145)
Rationalised 2023-24
G G G G GL L L L LOBALISA OBALISA OBALISA OBALISA OBALISATION TION TION TION TION     AND AND AND AND AND     THE THE THE THE THE I I I I INDIAN NDIAN NDIAN NDIAN NDIAN E E E E ECONOMY CONOMY CONOMY CONOMY CONOMY 59 59 59 59 59
Read the passage on the left and answer the questions.
LET’S WORK THESE OUT
1. Would you say Ford Motors is a MNC? Why?
2. What is foreign investment? How much did Ford Motors invest in India?
3. By setting up their production plants in India, MNCs such as Ford
Motors tap the advantage not only of the large markets that countries
such as India provide, but also the lower costs of production. Explain
the statement.
4. Why do you think the company wants to develop India as a base for
manufacturing car components for its global operations? Discuss the
following factors:
(a) cost of labour and other resources in India
(b) the presence of several local manufacturers who supply auto-
parts to Ford Motors
(c) closeness to a large number of buyers in India and China
5. In what ways will the production of cars by Ford Motors in India lead to
interlinking of production?
6. In what ways is a MNC different from other companies?
7. Nearly all major multinationals are American, Japanese or European,
such as Nike, Coca-Cola, Pepsi, Honda, Nokia. Can you guess why?
For a long time foreign trade has been
the main channel connecting
countries. In history you would have
read about the trade routes
connecting India and South Asia to
markets both in the East and West
and the extensive trade that took place
along these routes. Also, you would
remember that it was trading interests
which attracted various trading
companies such as the East India
Company to India. What then is the
basic function of foreign trade?
To put it simply, foreign trade
creates an opportunity for the
producers to reach beyond the
domestic markets, i.e., markets of their
own countries. Producers can sell their
produce not only in markets located
within the country but can also
compete in markets located in other
countries of the world. Similarly, for the
buyers, import of goods produced in
another country is one way of
expanding the choice of goods beyond
what is domestically produced.
FOREIGN TRADE AND INTEGRATION OF
MARKETS
Ford Motors, an American
company, is one of the
world’s largest
automobile manufacturers
with production spread
over 26 countries of the
world. Ford Motors came
to India in 1995 and
spent Rs. 1700 crore to
set up a large plant near
Chennai. This was done
in collaboration with
Mahindra and Mahindra,
a major Indian
manufacturer of jeeps
and trucks. By the year
2017, Ford Motors was
selling 88,000 cars in the
Indian markets,
while another 1,81,000
cars were exported from
India to South Africa,
Mexico, Brazil and United
States of America. The
company wants to
develop Ford India as a
component supplying
base for its other plants
across the globe. Cars made by Indian workers being
transported to be sold abroad by MNCs.
Rationalised 2023-24