Contents :

  • Meaning of Globalization.
  • Definition of Globalization.
  • Favorable / Positive Effects of Globalization on Indian Industry.
  • Adverse / Negative Effects of Globalization on Indian Industry.

What is meant by Globalization ? 

In the field of science and technology, many changes have taken place during the last two centuries. These changes have resulted in bringing the changes in aids to trade and interdependence of various countries has also increased. Fastest means of transports and communications have come into existence. In the entire world, the competition has increased as well as expansion of business has become possible. Financial assistance given by developed countries to underdeveloped countries, technology assistance has facilitated development of economies of different countries. The entire world has been converted into single market. Many barriers in the way of international marketing have been removed. Globalization in the real sense is a way of corporate life which has further made essential the trans-nationalism of world economy

Meaning of Globalization :

Globalization in simple words means expansion of businesses globally and giving up the consideration of regional or national boundaries for expansion of business activities. In simple words, it means developing a global outlook or approach of business. The word 'Globalization' shows the 'Broad attitude' and 'Long vision' of entrepreneurs in the market. It is in other words the removal of short-sighted approach, irrespective of the number of difficulties business are required to face in routine life.

Definition of Globalization :

1) The World Bank :
Globalization Means :
i) Gradual abolishment of import controls over all items including consumption goods.
ii) Reducing the rate of import duty.
iii) Privatising public sector enterprises.

2) Shrawan Kumar Singh :
“Globalization means the global reach of capital to all the world's resources and markets."

3) Russi Mody :
"Globalization in a two way traffic :first it means free competition, high productivity using new technology and second, selling goods in a single market of the whole world."

What are the effects of Globalization on Indian industry ?

Effects of Globalization on Indian Industry :

a) Favorable Effects :

1) Better and Faster Industrialization :
The flow of industrial units from developed countries to developing countries gives speed of industries helping global industrialization. Helps overall balanced development.

2) Flow of Capital :
Capital moves from surplus countries to the needy in globalization. Investors get advantage of better returns for their capital. Globalization brings economic activities and faster growth. The exports credits in last three years have doubled and growth rates in exports credits are on the increase. Table gives figures of export credit :

                                     Flow of Capital

Outstanding as on

Export Credit

(Rs. Crores)


(Per Cent)

Export Credit

(as Per Cent of NBC)

March 24, 2000

March 23, 2001

March 22, 2002

March 21, 2003

March 19, 2004

March 18, 2005

March 31, 2006

30 Mar. 2007

28 Mar. 2008

27 Mar. 2009

26 Mar. 2010

25 Mar 2011

23 Mar 2012

30 Nov. 2012











































3) Speed of Production Facilities Through Out the World:
The production units give cost competitive advantage and wider availability of manufactured goods. Globalization helps free flow of goods.

4) Higher Standard of Living :
Globalization increases job and income where there were no industries in earlier period. Hence, it helps balanced human development globally. In other words welfare of humanity and spread of prosperity takes place globally. It helps balanced human development globally. In other words, welfare of humanity and spread of prosperity takes place globally. It helps balanced development and world economics.

5) Flow of Technology :
The advanced levels of technology flow from development countries to less developed countries. Up-gradation and improvements in technology levels become an ongoing process.

6) Increase in Consumption :
Due to technology and the spread of up-gradation, the demand increases for manufactured goods.

7) Productive Utilization of Resources :
Productive utilization of resources becomes possible. Similarly, it becomes possible to use the full capacities of the industry and the removal of 'idle capacities'.

8) Large Scale Economies :
Every business or company gets the benefit of large-scale production and simultaneously to curtail the cost of production.

9) Improvement in Efficiency of People :
It improves the efficiency of employees in the organisation as they get technical and managerial assistance from outside as well as from within the business.

10) Reduction in Risks of Uncertainty :
Globalization reduces the risk of loss, risk uncertainties, as both the local as well as global markets can be used for effective distribution of goods and services.

11) Easier Achievement of Goal of Profit Maximization :
Businesses can easily achieve the goals of maximum profits or attractive rates of returns on investment. The loss in local markets can be easily recovered by exporting commodities to other countries. Losses can be easily compensated by availing the opportunities in foreign countries.

12) Improvement in Quality :
The quality of goods and services improves to meet the requirements of foreign customers.

13) Level of Productivity Goes Up :
Level of productivity as well as the level of efficiency also increases.

14) Indirect Incentives Provided :
Indirectly incentives are provided to undertake research and development activities in business and industrial units.

15) Development of Goodwill :
Globalization also adds to development of goodwill, the spirit of co-operation among in the domestic market as well as global markets.

b) Adverse Effects :

1) Globalization Discourages Domestic Industry and Business :
With sophistication in technologies and large scale production facilities of other countries the domestic trade and industry is hit. The domestic industry cannot compete and hence is killed in the process of globalization.

2) Problems on the Labour Front :
The process of globalization leads to job lay offs and exploitation of human resources. This is especially applicable to under developed countries. For example if a large sophisticated cloth mill or polyester fiber unit starts churning out cheap clothing, the local handloom and associated workers lose their livelihood. Even in those factories very few will be employed considering higher level of sophistication. That is, under employment and unemployment comes in.

3) Widening Rich and Poor Divide :
The unemployment and decline in income levels in lower strata of society widens the gap between the rich and the poor, more and more.

4) Transfer of Natural Resources :
The developed countries tend to establish factories in under-developed countries near the natural resources to get cost advantages. This is actually transferring natural resources.

5) Commercial Exploitation :
The establishment of industrial units by rich countries in under developed countries may lead to commercial exploitation. This leads to the next step of political colonization and thereafter national sovereignty will be endangered. The classic example is that of British rule in India.