Globalisation(2) (1)

7/31/2019 Globalisation(2) (1)

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EFFECT of GLOBALIZATION

on INDIAN MARKET!


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How globalization is

changing the Indianmarket


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Definition

Globalization (or globalisation) is theprocess of making, transformation of regional things

or phenomena into global ones. This process is a combination of economic,

technological, sociocultural and political forces.

Integration of national economies into the

international economy through trade, foreign directinvestment, capital flows, migration, and the spreadof technology.


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How & When ?

Globalization started when the Indian government (PM-Mr P V Narsimha Rao, finance minister-Dr.ManmohanSingh) opened the country's markets to foreigninvestments in the early 1990s. Globalization of the

Indian Industry took place in its various sectors such assteel, pharmaceutical, petroleum, chemical, textile,cement, retail, and BPO.


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Effects of globalization Industrial

Financial

Economic

Political

Informational

Cultural

Ecological Transportation

International cultural exchange

Pharmaceutical market

Tourism Sector Sports Industry

Technological effect

Education


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Effects of globalizationGlobalization has various aspects affecting the Indian economy in

several different ways such as:Industrial

Broader access to a rangeof foreign products for

consumers andcompanies.

Eg. Opening up of themajor internationalbrands in India- Walmart,KFC, McDonalds, Kazo,mercs, audi, Volkswagon,BMW etc.


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Financial

Better access to externalfinancing for corporate,

national and subnationalborrowers.

Eg. Many foreigncompanies and banks areopening their branches inIndia- Barclays(UK),Wizardloans(Australia),HSBC.
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Economic- Permission of Indian

govt for Foreign DirectInvestment(FDI).

Indian economy isgoing great guns, theGDP is growing at therate of about 8-9%, butat the same time rate ofinflation has alsoincreased to11-12%


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India GDP growth-


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Political

Political globalization is the creation of a worldgovernment which regulates the relationships among

nations and guarantees the rights arising from socialand economic globalization.

Eg-One of the more recent examples is the ongoing

nuclear power deal between India and the US; the gaspipeline being built from Iran to India.


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Informational

Increase in informationflows between

geographically remotelocations. Because offibre opticcommunications,satellites, and increased

availability oftelephony and Internet.


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Cultural

Growth of cross-cultural contacts.the desire to

consume and enjoy foreign products and ideas,adopt new technology and practices, andparticipate in a world culture.


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Ecological-

Globalism and free tradeinterplay to increase

pollution and accelerate itin the name of an everexpanding capitalistgrowth economy in anon-expanding world.


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Transportation The world has become a

smaller place and thetravel time has reducesconsidersably.

Eg- the advent of newcheaper airlines like airdeccan, jet airways,indigo,spice etc,delhimetro and BRT.


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International culturalexchange-

Spreading ofmulticulturalism, andbetter individual access

to cultural diversity. Eg-through the export of

Hollywood andBollywood movies, Osianfilm festival,trade fair,

international bookfair,auto expo.


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Pharmaceuticalmarket- Spread of local

consumer products anddrugs to other

countries. Eg- Roohafza,

Himalayapharmaceuticals,Lipitor Generic version(Ranbaxy), ShahnazHussain Herbalproducts,Himalayaherbal health care.


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Tourism Sector-

Greater internationaltravel and tourism.

Eg-Incredible indiacampaign- atithidevobhava,rajasthan

tourismpackage,medicaltourism.


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Sports Industry-

Eg-World wide sporting

events such as FIFAworld cup,the OlympicGames,theCommonwealthgames,IPL series.


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Technological effect-

Development of a globaltelecommunications

infrastructure and greatertransborder data flow,using such technologiesas the Internet,communication satellites

and wireless telephones.


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Education-

Eg-Tie ups with global

industry, ICRI, IIPM,Manipal university.


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Negative effects-

It may be difficult to survive for SSI and other industrieswhich are unable to cope up with the changes due toinsufficient fund.

Accelerating brain drain.

Due to heavy taxation and levies in India,end product iscostly as compared to imported brands.

Due to the difference of USD, GBP, Euro and othercurrencies are more stronger than Indian rupee.

Other countries expending less amount in India to

promote their brand whereas it is very expensiveforIndian Brand to promote.


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Positive effects-

Globalization helps Indian Entrepreneur to know moreabout the competitors, recent trends, quality of products.

Helps in sourcing new technology for improving their

quality.

Hiring competent person irrespective of the nationality.

Good exposure of Indian brands to overseas market.

Due to increase in healthy competition with otherbrands,Indian brands will be forced to improve theirquality and services to customers.


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The World Trade Organization(WTO)

It is the global international organization dealingwith the rules of trade between nations. At itsheart are the WTO agreements, negotiated and

signed by the bulk of the worlds trading nationsand ratified in their parliaments. The goal is tohelp producers of goods and services, exporters,and importers conduct their business.


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WTO : in the interest of SMEs

A rules based system is in the interest of smallercompanies,

rather than large ones

The GATT/WTO system has led to increased possibilitiesto export for SMEs:

Lower (and bound) tariffs for goods

Guaranteed access conditions for services, includingright of establishment, cross border and movement ofservice providers and consumers

Protection of intellectual property Disciplines for subsidies and trade defence instruments

Effective system of dispute settlement


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Impact of WTO on SSI:

A major part of our industry comprises Small andMedium Enterprises (SMEs).

As much as 35.19% of our total exports are thecontribution of SSI

SSI accounts for 52% of our non-traditional productexports and 10% of our traditional product exports.

The positive factors are that the WTO regime allows theSSI sector to avail of MFN and National Treatment for its

exportable items the world over. These are unquantifiable benefits, which India enjoys as

a founder member of GATT and the WTO and to gainwhich benefits, at least 30 countries (including Chinaand Russia) are willing to make numerous concessionsin return for accession to WTO.


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IMPACT OF WTO:Small Scale Industry

The WTO Agreements can be classified broadlyin 3 components:

1. Those affecting QRs (quantitative restrictions)ofproductse.g. the GATT Agreements, Agreements on

Agriculture ATC. 2. Those, which deal with Intellectual Properly

Rightse.g. the TRIPs (Agreement on Trade RelatedAspects of Intellectual Property Rights ).

3. Those which deal with barriers to trade, standards,investment and subsidiese.g. SPS Measures, TBT,TRIMS, ASCM.


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Weaknesses of small scaleindustries

Obsolete Technology

Un-competitive prices

Poor quality Costly credit

Weak infrastructure backs up like power, roads,communication, etc.

Lack of cohesion among SSI units. Ineffective Associations.

Lack of information

Lack of standards conforming to international

standards.


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What has the EC (European commission)done for

its SMEs?Market Access Strategy:

Market Access Database:

Gives information on all trade barriers affecting exports.Interactive: gives SMEs possibility to flag problems in thirdcountry markets

Applied tariffs database:

Provides information on duties and taxes applicable to goodsimported into almost one hundred non-EU countries

Trade Barriers Regulation

A legal instrument that gives the right to companies from the EUto lodge a complaint with the European Commission who theninvestigate and determine whether there is evidence of a violationof international trade rules which has resulted in either adverse

trade effects or injury.


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What has the EC done for SMEs

from developing countries?

Export Helpdesk for Developing Countries andExporters Guide to Import Formalities in the EU

On line service with information on all import

requirements in the EU (tariffs, documents, rules oforigin, taxes) as well as a "market place" to do business

Trade-Related Assistance

Since the launch of the Doha Round, the EC hasallocated around 3.3 billion euros on tradepolicy/regulations, trade development and privatesector support in developing countries.


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What more can be done in WTO to help

SMEs?

Trade Facilitation

Reduction and simplification of import, export, transit and customsprocedures.

Examples of measures under negotiation:

publish and make available information time periods for consultation and comments before new rules come

into force advance rulings easier procedures for release and clearance of goods appeals procedures limits to fees and charges applied easier transit


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What more can be done in WTO to help

SMEs?

Proposed procedures for the Facilitation of Solutions to NTBs

SME's want quick, pragmatic solutions to concrete tradingproblems. Dispute settlement is not always an option. WTOregular bodies are not well-suited for problem solving

Procedure should be simple, conciliatory and expedient, withwell-defined steps and tight time lines

It should involve a facilitator acting as a mediator giving non-binding recommendations

Any WTO member country facing an NTB in another countrycould file a properly substantiated complaint requesting theWTO to launch a procedure

The facilitator would help clarify the issue, lead theconsultations and make recommendations on possible (non-

binding) solutions

Globalisation(2) (1)

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