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Impact of Globalisation on Indian Development

Globalization has been defined as the process of rapid integration of countries and happenings through greater foreign trade and foreign investment. It is the process of international integration arising from the interchange of world views, products, ideas and other aspects of culture.

The various beneficial effects of globalization in Indian Industry are that it brought in huge amounts of foreign investments into the industry especially in the BPO, pharmaceutical, petroleum, and manufacturing industries. As huge amounts of foreign direct investments (FDI) were coming to the Indian Industry, they boosted the Indian economy quite significantly.

The benefits of the effects of globalization in the Indian Industry are that many foreign companies set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and this helped to provide employment to many people in the country.

This helped reduce the level of unemployment and poverty in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the foreign companies brought in highly advanced technology with them and this helped to make the Indian Industry more technologically advanced.

The various negative Effects of Globalization on Indian Industry are that it increased competition in the Indian market between the foreign companies and domestic companies. With the foreign goods being better than the Indian goods, the consumer preferred to buy the foreign goods. This reduced the amount of profit of the Indian Industry companies. This happened mainly in the pharmaceutical, manufacturing, chemical, and steel industries.

The negative Effects of Globalization on Indian Industry are that with the coming of technology the number of labor required decreased and this resulted in many people being removed from their jobs. This happened mainly in the pharmaceutical, chemical, manufacturing, and cement industries. The effects of globalization on Indian Industry have proved to be positive as well as negative. The government of India must try to make such economic policies with regard to Indian Industry's Globalization that are beneficial and not harmful.

Benefits of Globalisation impacting India

  1. Rise in Employment:

    With the opening of Special Economic Zones, the availability of new jobs has been quite effective. Furthermore, Export Processing Zones or EPZs are also established employing thousands of people. Another factor is cheap labour in India. This has motivated big firms in the west to outsource work to companies present in this region. All these factors are causing more employment.
  2. Surge in Compensation:

    After the outburst of globalization, the compensation levels have stayed higher. These figures are impressive as compared to what domestic companies might have presented. The level of knowledge and skill brought by foreign companies is obviously advanced. This has ultimately resulted in modification of the management structure.
  3. Improved Standard of Living and Better Purchasing Power:

    Wealth generation across Indian cities has enhanced since globalization has fully hit the nation. You can notice an improvement in the purchasing power for individuals, especially those working under foreign organizations. Further, domestic organizations are motivated to present higher rewards to their employees.
Therefore, a number of cities are experiencing better standards of living together with business development.

Disadvantages of Globalization in India

The informal sector is purposely not listed in the labor legislation. For example, informal workers aren’t the subject considering the 1948 Factories Act. This scheme covers vital factors such as common working conditions, safety, and health, the ban on child labor, working hours etc. Also, globalization has caused poor health, disgraceful working conditions, as well as bondage, happening in different parts of the country.

Impact Of WTO On Indian Economy

The World Trade Organization (WTO) is a global international organization dealing with the rules of trade between nations. The work of WTO moves around WTO agreements, negotiated and signed by the bulk of the world’s trading nations and ratified in their parliaments. The goal is to help producers of goods and services, exporters, and importers conduct their business.

India is a founder member of the General Agreement on Tariffs and Trade (GATT) 1947 and its successor, the World Trade Organization (WTO), which came into effect on 1 January 2012 after the conclusion of the Uruguay Round (UR) of Multilateral Trade Negotiations. India's participation in an increasingly rule based system in the governance of international trade is to ensure more stability and predictability, which ultimately would lead to more trade and prosperity.

The World Trade Organization (WTO) is a Multi-lateral organization which facilitates the free flow of goods and services across the world and encourages fair trade among nations. It is a 149-member organization that represents all the trading nations of the world, who import-export goods & services. The basic objective of WTO is to increase the global income as a result of increased trade and the overall enhancement of the prosperity levels of the member nations.

WTO came into formal existence on January 1st 1995. As an organization it has vast powers and functions than its predecessor GATT (General Agreement on Tariffs and Trade). GATT came into existence in the year 1948, immediately after the Second World War with 23 countries became the founder members. GATT provided platform for 8 trade negotiations until 1994, the last trade negotiations, the Uruguay Round, resulted in the creation of WTO.

Objectives of WTO:

The objective of the World Trade Organization is to help trade flow smoothly, freely, fairly and predictably in order to meet its objective, WTO performs the following functions:
  1. Administers WTO trade agreements.
  2. Acts as a forum for trade negotiations.
  3. Settles and handles trade disputes.
  4. Monitors and reviews national trade policies.
  5. Assists the member in trade policies through technical assistance and training programmers.
  6. Provides technical assistance and training for developing countries.
  7. Co-operates with other international organization.
India is one of the founding member of WTO . There have been several benefits for India along with few concerns by virtue of its participation in the multilateral trading system within WTO.

Some of the benefits:
  1. WTO has helped India to improve its export competitiveness.
  2. Lower tariff barriers and market access has helped India to integrate and participate in the global economy in a more efficient manner.
  3. Transfer & Exchange of Technology, ideas etc. has been of tremendous help for India in pursuit of its growth and development.
  4. Having market access has helped in reduction of cost and time which would have otherwise required for bilateral trade negotiations.
  5. A well defined and structured dispute settlement mechanism also makes it easier to settle the trade disputes.

However, at the same time WTO also poses some serious challenges to the Indian agriculture. Issue of permanent “Peace Clause” and formula to calculate food subsidy cap of 10% is yet to get clarified. Poor farmers are bound to be at the receiving end that might be deprived of the subsidies which they receive from the government in the form of Minimum Support Price (MSP). Since India has recently ratified the Trade Facilitation Agreement now they can't deny market access to the other countries.

It might prove detrimental to the farmers to a certain extent because once the foreign players enters the domestic market completely it would be a herculean task for the Indian farmers to compete with them owing to their lack of competence in terms of production, quality, technology, manufacturing cost etc.

The World Trade Organization is playing an important role for administering the new global trade rules in the following ways:
  1. Trade Agreement:

    The WTO administers, through various councils and committees, the agreements contained in the final act of the Uruguay Round, plus a number of plurilateral agreements, including one government procurement.
  2. Tariffs Rules:

    The WTO also oversees the implementation of significant tariff cuts (averaging 40 percent) and reduction of non-tariff measures agreed to in the trade negotiations.
  3. Trade Watch Dog:

    The WTO is a watchdog of international Trade, regularly examining the trade regimes of individual members. In its various bodies, member’s flag proposed or draft measures by others that can trade conflicts. Members are also required to notify in detail various trade measures and statistics which are maintained by the WTO in a large data base.
  4. Various Conciliation Norms:

    The WTO provides several conciliation mechanisms for finding an amicable solution to trade conflicts that can arise among members.
  5. Trade Disputability Settlement:

    Trade disputes that cannot be solved through bilateral talks are adjudicated under the WTO Dispute Settlement Court Panels of Independent expert are established to examine disputed in the light of WHO rules and provide rulings .This tougher streamlined procedure ensures equal treatment for all training patterns and encourages members to live up to their obligations.
  6. WTO is consultant body:

    The WTO is a management consultant for world trade. Its economists keep a close watch on the pulse of the global economy and provide studies on the main trade issues of implementation or Uruguay Round results through a newly established Development division and strengthened technical co-operation and training division.
  7. Checks Of Trade Barriers:

    The WTO will be forum where countries continuously negotiate exchange of barriers all over the world. And the WTO already has a substantial agenda for further negotiations in many areas.

Impact of WTO on Indian Economy:

  1. Help to promote peace between the Nations.
  2. Disputes are handled constructively.
  3. Rules make it easier for all WTO based on rules not on power.
  4. Free trade cut the cost of living provides more choice of production quality.
  5. Trade stimulates economic growth.
  6. Rate raises income of country and its people.
  7. Basic principles make life more efficient.
  8. System encourages good governance.

Favorable impact of WTO on Indian economy:

  1.  Agriculture
    The Agreement of Agriculture (AoA) can generally be classified into four groups viz.
    (a) Imposition of import duties.
    (b) Withdrawal of Quantitative Restrictions (QRs).
    (c) Economic help admissible under WTO.
    (d) Export subsidies.
    (a) Imposition of Import Duties: The earlier GATT had a provision of trading in agricultural produce also, but it did no facilitated in providing free trade regime around the world. It was allowed to levy import duties and import quotas for restricting import and export subsidies as incentives to boost traditional exports and protect the domestic activities. Fishery, forestry, rubber, jute, sisal, coir and abaca were not covered under the traditional agricultural exports.
  2. Increase in export earnings:
    (i) growth in merchandise export: the establishment of the has increased export of developing countries because of reduction in tariff and non tariff trade barriers India's merchandise have increased.
    (ii) Growth in service export: WTO introduced the GATT that proved beneficial for countries like India.
  3. Textile and clothing: The phasing out of the multi fibre arrangements will help the developing countries like India to increase export of textile and clothing.
  4. Foreign direct investment: As per the TRM agreement restrictions on foreign investment have been withdrawn by the member nations of the WTO this has benefited developing  countries by way of foreign direct investment Euro qualities and portfolio investment in 2008 and 2009 the net foreign direct investment India was 35 million US $.

Unfavourable impact of WTO on Indian economy:

  1. TRIPS (trade related aspects of intellectual property)

    Protection of intellectual property rights has been the major concern of WTO as a member of WTO India has to comply with the TRIPS standards however the agreement on TRIPS goes against the Indian patent act 1970 in following ways pharmaceutical sector and agriculture.
  2. Trade related investment measures (TRIMs)

    The agreement on TRIMs also famous developing Nations as there are no rules in the agreement to formulate International rules for controlling business practices of foreign investors also complying with the TRIMs agreement will contradict objective of self reliant growth based on locally available technology and resources.
  3. GATS (General agreement on trade in services)

    The agreement on GATS will also favour the developing Nations more. Thus, the rapidly growing service sector in India will now have to complete with giant foreign firms. Moreover, since foreign firms are allowed to remove their profits, dividend and royalties to their parent company, it will cause foreign exchange burden for India.
  4. Trade and Non tariff barriers

    Reduction of trade and non tariff barriers has adversely affected the export of various developing Nations. Various Indian products have been hit by non tariff barriers. These include textile, Marine product, floriculture, pharmaceutical basmati rice, carpet, leather goods etc.

Impact of Globalisation on Environment and natural resources

Globalization has had far-reaching effects on our lifestyle. It has led to faster access to technology, improved communication and innovation. Apart from playing an important role in bringing people of different cultures together, it has ushered a new era in the economic prosperity and has opened up vast channels of development.

However, globalization has also created some areas of concern, and prominent among these is the impact that it has had on the environment. Globalization has featured extensively in the debates on environmentalism, and green activists have highlighted its far-reaching effects.

Activists have pointed out that globalization has led to an increase in the consumption of products, which has impacted the ecological cycle. Increased consumption leads to an increase in the production of goods, which in turn puts stress on the environment. Globalization has also led to an increase in the transportation of raw materials and food from one place to another. Earlier, people used to consume locally-grown food, but with globalization, people consume products that have been developed in foreign countries.

The amount of fuel that is consumed in transporting these products has led to an increase in the pollution levels in the environment. It has also led to several other environmental concerns such as noise pollution and landscape intrusion. Transportation has also put a strain on the non-renewable sources of energy, such as gasoline. The gases that are emitted from the aircraft have led to the depletion of the ozone layer apart from increasing the greenhouse effect.

The industrial waste that is generated as a result of production has been laden on ships and dumped in oceans. This has killed many underwater organisms and has deposited many harmful chemicals in the ocean. The damage caused to ecosystem from the oil that spilled from one of the leaking containers of British Petroleum in 2010 is just one of the examples of the threat globalization poses to the environment.

Due to globalization and industrialization, various chemicals have been thrown into the soil which has resulted into the growth of many noxious weeds and plants. This toxic waste has caused a lot of damage to plants by interfering in their genetic makeup. It has put pressure on the available land resources. In various parts of the world, mountains are being cut to make way for a passing tunnel or a highway.

Vast barren lands have been encroached upon to pave way for new buildings. While humans may rejoice on the glimmer with these innovations, these can have long-term effects on the environment. Various studies over the years, have found that plastic is one of the major toxic pollutants, as it is a non-biodegradable product. However, plastic is of immense use when it comes to packaging and preserving goods that are to be exported. This has led to increased use of plastic, causing widespread environmental pollution.

It has made so many changes in our lives that reversing it is not possible at all. The solution lies in developing effective mechanisms that can check the extent to which it can impact the environment. Researchers are of the view that the answer to this problem lies in the problem itself, that is, globalization itself can lend support to building a better structure which is economically feasible and environment-friendly. Globalization is about competition, and if certain privately owned companies can take the lead in being environment friendly.

Globalization is a process of globalization that participates in the exchange of information, material goods and ideas throughout the world. Since 1960, there has been an acceleration of international exchanges and the dissemination of the same political, cultural and economic models. Global trade growth is based on intensive exploitation of natural resources and on polluting modes of production and transport. However, globalization also allows the growth and development of new markets: this is the case for fair trade. Since 1950, almost half of the tropical forests have been destroyed.

Destruction arises due to globalization are:

  1. Deforestation: Today between 75,000 and 200,000 square meters of forests are destroyed. We must not forget that wood is a raw material for industry. Deforestation thus appears as a solution to gain space and produce more and to allow the development of certain countries.
  2. The depletion of water: The 20th century was marked by an explosion of water consumption due to strong population growth, an increase in the standard of living and a high level of agricultural production. Freshwater comes in two forms: Underground aquifers (basin, groundwater) as well as lakes, rivers and rivers. Overexploitation, which must respond to the ever-increasing needs of industry, agriculture and private individuals, is the very important and poorly controlled drain in groundwater that is not renewed on the scale of human time.
  3. The water pollution: Domestic and industrial uses lead to bacteriological pollution of water. Industries emit water loaded with metals and chemicals. Agriculture charges water to nitrate due to the release of fertilizer. Thus, water pollution is due to the search for productivity in agriculture and industry.
  4. Depletion of fishery resources: In recent years there has been a resurgence of endangered marine species. Overfishing, tools, and pollution of the seas and oceans are largely responsible for this depletion. The overexploitation of fishery resources has led to the proportion of species in danger rising from about 10% in the 1970s to 24% today ¾ of the world’s fishery resources are currently caught at their maximum rate above sustainable levels. With its heavy environmental consequences, over exploitation is also felt for the economy.
We cannot say that the impact of globalization has been totally positive or totally negative. It has been both. Each impact mentioned above can be seen as both positive as well as negative. However, it becomes a point of concern when, an overwhelming impact of globalization can be observed on the Indian culture. Every educated Indian seems to believe that nothing in India, past or present, is to be approved unless recognized and recommended by an appropriate authority in the West.

There is an all-pervading presence of a positive, if not worshipful, attitude towards everything in western society and culture, past as well as present in the name of progress, reason and science. Nothing from the West is to be rejected unless it has first been weighed and found wanting by a Western evaluation. This should be checked, to preserve the rich culture and diversity of India.   

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