Globalisation and its benefits can be felt across the globe, regardless of where in the world you are reading this article from. It has helped people from around the world to connect like never before. Most importantly, globalisation has paved the way for businesses to expand in a way that wasn’t possible on a local scale. However, there is one country that has felt perhaps the largest impact of the globalisation phenomenon — India.
Known for having one of the largest populations in the world, India has very quickly become a great source of labour in the technology sector and is currently the sixth-largest economy in the world. In 2021, it enjoyed a nominal GDP of $3.17 trillion at a growth rate of 8.9%. However, because of its large population of 1.41 billion people, India’s nominal GDP per capita is the lowest of the top 10 world economies — $2,277.
So, what makes India special in this globalisation age, and how did it end up becoming one of the biggest economies in the world? In this article, we discuss all there is to know about globalisation and its impacts on the South Asian country — and more.
What is globalisation?
Markets, political and social structures, and cultural practices have been increasingly intertwined around the world since the second part of the 20th century. This is a phenomenon known as "globalisation". While this word is most often used to describe the process of global economic integration, it can also be used to describe issues of social policy and international relations.
The term "globalisation" has come to mean, especially in the context of modern economics, the process by which a company or other organisations either begins to operate on a worldwide scale or increases its influence in the nations in which it conducts business. As many people see the benefits of globalisation, it has many advocates.
Thanks to globalisation, a majority of people around the world have been able to enjoy the fruits of modern technologies invented on the other side of the planet. Apple and Google’s respective smartphones are used across the globe, while internet technologies such as Zoom have been crucial to the survival of many companies, allowing people from different countries to connect to one another and do business.
Factors that affect globalisation in India
Significant and almost instantaneous effects of globalisation have been felt over all of India. In order to level the playing field for multinational corporations in developing nations, developed nations have been pressuring such nations to liberalise trade and permit greater leeway in corporate rules. These nations have been aided in this effort by the creation of the International Monetary Fund (IMF) and the World Bank. By lowering excise taxes on electronic items over a set period of time, liberalisation established a firm foothold in the economically undeveloped regions of countries like India.
As a result of free trade made possible by the elimination of export subsidies and import obstacles, the unexplored Indian market has become very appealing to foreign investors. The country's industrial, financial, and agricultural sectors all underwent dramatic shifts as a result of these reforms. With that said, here are the four biggest factors that have helped speed up the process of globalisation in India:
The ease of communication has been greatly enhanced by modern technology. Distant relationships are no longer an issue because to the rise of social media in the modern world. Companies on different sides of the world can communicate in real-time with little effort.
Since India has been slow to adopt new technologies, many previously high-paying occupations have disappeared. In their place are lower-paying jobs that demand fewer skills but more responsibility, such as analytical, communication, and interaction abilities. This results in a rise in available employment.
Over the past few decades, barriers to the free movement of capital between economies have been systematically lowered. Consequently, businesses now have a better chance of sending and receiving funds. This development has also contributed to a deeper integration of financial markets around the world, including India.
Thanks to this increased ease of capital flow, India has been able to enjoy the benefits of globalisation by joining and contributing to the global market. Businesses are able to conduct transactions on a much larger scale than ever before and within a much quicker timeframe. Companies are able to hire a quality and skilled workforce remotely and are able to manage a global payroll with less hassle.
The rise in multinational corporations (MNCs) has helped pave the way for developing economies to shine on a global scale. With the increased ease of shipping, countries such as India have become focal points for MNCs to access more affordable manufacturing. The global reach of MNCs has facilitated the spread of successful business methods around the world. MNCs deal with local communities more frequently since they source resources internationally and sell their products in international marketplaces.
The globe has become a "global village" thanks to these characteristics, which have aided in economic liberalisation and globalisation. As people from different parts of the world connect more frequently, they share ideas, customs, and even their culinary delights. In recent decades, MNCs have placed a high priority on India, and as a result, the country is receiving massive investments from these organisations as they establish research and development centres there.
World Trade Organization
In the years after the establishment of the World Trade Organization (WTO) in 1994, tariff and non-tariff barriers were lowered around the globe. The WTO is the sole international body concerned with regulating trade internationally. Its primary goal is to facilitate unhindered, orderly, and unrestricted exchanges between trading partners.
Thanks to the establishment of the WTO, more countries signed free trade agreements, and people, as well as companies, have been able to enjoy the many benefits of globalisation. MNCs and governments from around the world have more opportunities to invest in emerging economies and spread trade. As a result, the global marketplace has become more diverse, and members of the WTO have also been able to enjoy a more diverse talent pool.
The impact of globalisation in India
The effects of urbanisation and globalisation on Indian society have been profound. The structural foundations of the economy owe a great deal on the decisions made by policymakers. Savings, employment, income, and investment levels were all crucially influenced by the economic policies set and administered by the government.
One of globalisation's most significant effects on Indian culture is the spread of cross-national pop culture. It has had a major impact on the country's culture, society, government, and economy. But the single most important ingredient in transforming a national economy into a global one is economic unity. Here are some of the biggest impacts of globalisation enjoyed by India today:
More consumer choice
Much like other countries around the world, globalisation has helped India and its people enjoy more consumer products than ever before. Nowadays, consumers have a wider selection of products from a larger variety of brands to choose from — not just from local manufacturers but also from those around the world. And thanks to the increased ease of transportation and shipping, the typical Indian consumer can purchase the latest consumer electronics at a much faster rate, for a much cheaper price.
Increase in employment
The rise of MNCs expanding into India has led somewhat to a boom in employment opportunities. Increased exports as a result of the country's relative cost advantage in production resulted in the creation of many new jobs. Having fewer limits on bringing in and taking out money has also helped the job market expand. However, the development of modern technology and the increased need for skilled, remote workers have also boosted employment prospects in India.
More disposable income
Because of the high level of expertise and experience provided by international firms, salaries in India have risen in the wake of globalisation. There was a shift in the management structure, which resulted in this opening of not just opportunity but increased wages, too. Many people in India were able to escape from abject poverty because of the country's recent economic revival and growth, which also increased wages and other advantages for workers.
Advantages of globalisation
The opening up of the Indian market to global trade provided foreign corporations with a once-in-a-lifetime chance for development and expansion. The world's second-most populous nation was suddenly available for trade. Further, the positive impacts of this breakthrough persist to this day, such as:
1. Access to global markets
As countries around the world gained access to India, India, in turn, gained access to the global marketplace. Interested foreign businesses are flocking to India because of the country's expanding globalisation, which has made the country's enormous consumer market accessible to them. On the other hand, Indian companies have gained access to a greater range of technologies and opportunities to develop niche skills.
This resulted in greater inflows of foreign capital for the country and its people, both in the form of portfolio investment and direct investment. The outcome was a meteoric rise in the import-export business. Hundreds of millions of additional customers and potential employees were made available to multinational corporations immediately, expanding their capacities and market dominance.
Today, more than ever, globalisation makes India a prime location for a company's expansion efforts. By expanding their reach into new markets, businesses can boost their economies of scale and specialisation, reducing their unit production costs and, in turn, their profit margins.
2. Access to education
Alongside the rapid rise of globalisation came the increased ease of access to internet infrastructures. This has helped India gain better access to quality education through up-to-date information across a variety of industries and fields. This trend has increased the importance of higher education in the country and the need for specialised training within it which, in turn, have greatly increased both the literacy rate in India as well as created a boom in skilled workers within the country.
3. Greater employment opportunities
The influx of international businesses and general economic expansion have resulted in the establishment of new employment opportunities. However, these positions are skewed toward the service sector, and the latter's explosive expansion has caused difficulties for the least-educated among us. The last decade was dubbed the "jobless growth" decade because job creation lagged behind economic expansion.
4. Reduced risk profile
In order to lower total risk, corporations should explore expanding into the Indian market, particularly for manufacturing purposes. Having numerous hubs in different parts of the world reduces the risk of supply chain disruptions. The supply chain as a whole will not be disrupted if just one link is delayed.
In addition, India has a varied export market that attracts investors from around the world. According to the OECD's 2019 Economic Survey of India, the South Asian country has expanded its exports and begun serving new markets and countries. Its exports to emerging countries are rapidly expanding, and the country's export basket is very diverse. The Indian economy's adaptability is highlighted by this diversity. It also lessens the likelihood of negative outcomes, such as a drop in sales due to weak demand in a single market or for a single item.
5. Higher standard of living
Perhaps the biggest advantage and impact of globalisation in India is the increased standard of living enjoyed by Indians today. The advent of globalisation has helped boost the economy and living conditions in India. Individuals' purchasing habits, especially those of those affiliated with MNCs, serve as early indicators of this shift. Through globalisation, Indians have gained access to greater technologies — both in consumer goods as well as sectors such as medicine — alongside an increased educational standard and, ultimately, increased wages.
Final thoughts on our globalisation guide to India
The Indian economy's participation in globalisation has contributed to positive changes in the global economy. India's economy has grown thanks to liberalisation during the 1990s, but it still faces difficulties in the form of rigid business regulation, rampant corruption, and pervasive poverty. However, for international businesses, this means a significant competitive advantage in the form of easy access to huge pools of consumers and workers, making the country an excellent location for strategic investment and growth.
If India isn't already on your radar, you should move quickly to put it there if you're considering expanding your business into new markets. With some of the world’s best tech workforce originating from the country, tech companies should utilise the great benefits of globalisation and hire talent from India with the help of an experienced global expansion partner.