MNC and its impact on Indian Economy

Introduction
The growing integration of economies and societies around the world has been
one of the most hotly-debated topics in international economics over the past few years.
Rapid growth and poverty reduction in India, and other countries that were poor 20
years ago, has been a positive aspect of Liberalization Privatization and Globalization
(LPG). But MNCs have also generated significant international opposition over
concerns that it has increased inequality and environmental degradation. There is a need to
study the impact of Multinationals on India from the viewpoint of inward
foreign direct investment.
The MNCs play an important role in the economic development of
underdeveloped countries. What are multinational companies? These are
enterprises or organizations with services spread across more than one
country on a global scale. They are huge industrial organizations which
extend their industrial and marketing operations through a network of
their branches or their majority owned Foreign Affiliates (MOFAs). MNCs
are also known as Transactional corporations (TNCs). Instead of aiming for
maximization of their profits from one or two products, the MNCs operate
in a number of fields and from this point of view, their business strategy
extends over a number of products and over a number of countries
India is a home to a number of multinational companies since the
countrys market was liberalized in 1991. India houses majority of
multinational companies hailing from the United States. There are also
multinational companies from other countries. The multinational
companies from the United States account to 37% of turnover of first 20
firms that operate in India; the others come from European Union and
their Asia counterparts.
The historical background of MNC investment in India can be traced back with the
establishment of East India Company of Britain. However, researchers could not
portray the complete history of FDI pouring in India due to lack of
abundant and authentic data.British capital came to India during the colonial era of
Britain in India. After Second World War, Japanese companies entered Indian market and
enhanced their trade with India, yet U.K. remained the most dominant investor in India.
Further, after Independence issues relating to foreign capital, operations of MNCs, gained
attention of the policy makers.
Since 1991,India has experienced dramatic increase in the presence of Moultinational
corporations and with it, tremendous increase in the amount of Foreign Ditect Investment

(FDI) inflows to the Indian economy after opening up of economy. The reason for the
liberalisation was the severe economic situation India faced during that time.