DR.

SHAKUNTALA MISRA NATIONAL REHABILITATION UNIVERISTY

LUCKNOW

AN ASSIGNMENT OF

LAW RELATING TO MNCs IN INDIA

(UNDER THE SUPERVISION OF Mr. SHAIL SHAKYA)

MNCs IN INDIA

SUBMITTED TO: : SUBMITTED BY

Mr. SHAIL SHAKYA ADITYA SINGH

ASSISTANT PROFESSOR, ROLL NO. 143070005

FACULTY OF LAW B.COM.LLB (HONS.)

DSMNRU, LUCKNOW 10TH SEMESTER

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1. INTRODUCTION:

As the name suggests, any company is referred to as a multinational company or corporation (M.
N. C.) when that company manages its operation or production or service delivery from more
than a single country.

Such a company is even known as international company or corporation.

As defined by I. L. O. or the International Labor Organization,

“ M. N. C.” is one, which has its operational headquarters based in one country with several
other operating branches in different other countries. The country where the head quarter is
located is called the home country whereas; the other countries with operational branches are
called the host countries. Apart from playing an important role in globalization and international
relations, these multinational companies even have notable influence in a country's economy as
well as the world economy.” Nearly all major multinationals are American, Japanese or Western
European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW. Advocates of
multinationals say they create jobs and wealth and improve technology in countries that are in
need of such development. On the other hand, critics say multinationals can have undue political
influence over governments, can exploit developing nations as well as create job losses in their
own home countries

In other words, we may define MNC as a company, which operates in number of countries and
has production and service facilities outside the country of its origin. They are also called
Transnational Company (TNC) their activities have both good and bad impacts on the economy.
They take decisions on a global context or basis. Their maximum profit objectives take no
accounts of the reactions produced in the countries felling in their orbit. They operate in different
institutional forms some are: Subsidiaries companies wholly owned by MNC in other countries

Subsidiary company enters into joint venture with a company another company Agreement
among companies of different countries regarding production and discussion of market.

1.1 Feature of MNC:

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 1. It operates simultaneously in two or more countries
2. These are very large sized companies
3. These companies have centralized control with a head quarter or head office
4. These company have oligopolistic power
5. Sophisticated technology is used in MNC’S
6. The main objective of these companies is to maximize profit by reducing
transportation cost and making use of the comparatively cheaper raw material,
labor, capital and market of other foreign countries.
7. Large number of customer
8. Large number of competitors’
9. Structured way of decision making
10. Huge intellectual capital

1.2 ROLE OF MNC’S:

1) Growth of domestic firms

2) Improvement in standard of living
3) Deveopment of technology
4) Reduction in unemployment
5) Managerial revolution
6) Availability of foreign capital
7) Profit maximisation
8) International network of marketing
9) Diversification policy
10) Concentration in consumer goods
11) Location of central control offices
12) Existenence of modern and sophisticated technology
13) Business but not social justice
14) Cultural explosion
15) Mncs and process of planned economy development in india

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2 ADVANTAGE & DISADVNTAGES:

2.1 MNC's help the host country in the following ways:

1. The investment level, employment level, and income level of the host country
increases due to the operation of MNC's.

2. The industries of host country get latest technology from foreign countries
through MNC's.

3. The host country's business also gets management expertise from MNC's.

4. The domestic traders and market intermediaries of the host country gets increased
business from the operation of MNC's.

5. MNC's break protectionalism, curb local monopolies, create competition among

domestic companies and thus enhance their competitiveness.

6. Domestic industries can make use of R and D outcomes of MNC's.

7. The host country can reduce imports and increase exports due to goods produced
by MNC's in the host country. This helps to improve balance of payment.

8. Level of industrial and economic development increases due to the growth of

MNC's in the host country.

2.2 Advantages of MNC's for the home country

MNC's home country has the following advantages.

1. MNC's create opportunities for marketing the products produced in the home
country throughout the world.

2. They create employment opportunities to the people of home country both at

home and abroad.

3. It gives a boost to the industrial activities of home country.

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 4. MNC's help to maintain favorable balance of payment of the home country in the
long run.

5. Home country can also get the benefit of foreign culture brought by MNC's.

2.3 Disadvantages of MNC's for the host country:

1. MNC's may transfer technology which has become outdated in the home country.

2. As MNC's do not operate within the national autonomy, they may pose a threat to the
economic and political sovereignty of host countries.

3. MNC's may kill the domestic industry by monpolising the host country's market.

4. In order to make profit, MNC's may use natural resources of the home country
indiscriminately and cause depletion of the resources.

5. A large sums of money flows to foreign countries in terms of payments towards profits,
dividends and royalty.

2.4 Disadvantages of MNC's for the home country:

1. MNC's transfer the capital from the home country to various host countries causing
unfavorable balance of payment.

2. MNC's may not create employment opportunities to the people of home country if it adopts
geocentric approach.

3. As investments in foreign countries is more profitable, MNC's may neglect the home countries
industrial and economic development.

Applicability to particular business:

MNC's is suitable in the following cases.

1. Where the Government wants to avail of foreign technology and foreign capital e.g.
MarutiUdyog Limited, Hind lever, Philips, HP, Honeywell etc.
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2. Where it is desirable in the national interest to increase employment opportunities in the
country e.g., Hindustan Lever.

3. Where foreign management expertise is needed e.g. Honeywell, Samsung, LG Electronics etc.

4. Where it is desirable to diversify activities into untapped and priority areas like core and
infrastructure industries, e.g. ITC is more acceptable to Indians L&T etc.

5. Pharmaceutical industries e.g. Glaxo, Bayer etc

3. DEVELOPMENT AND ACTIVITIES:

Soon after independence foreign capital entered India in the form of direct investments through
MNC's Companies had been formed in advanced countries with the specific purpose of operating
in India. Such companies started their subsidiaries, branches and affiliates in India . At times
government gave some tax concession to them with in the FERA (Foreign Exchange Regulation
Act) and streamlined the licensing procedures. The purpose was to secure advanced, technical
and industrial knowhow. During the janata rule the policy was outright purchase of technical
knowhow skills and machinery.

They took two major decisions:

Coco cola was asked to wind up their operation. Asked IBM to reduce their foreign equity to
40%. They did not agree, so asked to wind up MNC's operate in several sectors like tobacco,
toiletries beverages etc. Industrial Policy of 1991 accepted foreign investment essential for

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modernization technology up gradation and industrial development. Several concessions were
given FERA regulations were liberalized and permitted to use their trademarks in the domestic
market. Now it has become a wide spread phenomena with USA the biggest among them.
Recently a large number of Indian brands were taken over by them some important takeovers are

1. Asian Paints ICI (UK)

2. Premier Automobiles transferred two plants to Peugeot (France)

3. Lakeme brand by Lever.

4. Hero Honda by TVS Suzuki etc.

Till 1991, India was more or less a closed Economy. The rate of growth of the economy was
limited. The contribution of the local industries to the country’s GDP was limited that were the
main cause of shortage of funds for various development projects initiated by the government.
In an effort to revive the industries and to bring the country back on the right track, the
government began to open various sectors such as Infrastructure, Automobile, Tourism,
Information Technology, Food and Beverages, etc to the Multinational Corporations. The MNCs
slowly but reluctantly began to pour capital investment, technology and other valuable resources
in the country causing a surge in GDP and upliftment of the economy as a whole. This was the
post 1991 era where the government began to invite and welcome giant MNCs into the country.

The opportunities for developing economies are significant as well. Through the application of
capital, technology, and a range of skills, multinational companies' overseas investments have
created positive economic value in host countries, across different industries and within different
policy regimes. The single biggest effect evidenced was the improvement in the standards of
living of the country's population, as consumers have directly benefited from lower prices, higher
quality goods, and broader selection. Improved productivity and output in the sector and its
suppliers indirectly contributed to increasing national income. And despite often-cited worries,
the impact on employment was either neutral or positive in two-thirds of the cases.
Investments by multinational companies (MNC) allow developing economies to share in the
considerable benefits of the global economy. Official incentives, trade barriers, and other

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regulatory policies, though, can result in inefficiency and waste.
Case studies reveal that in virtually all cases, MNC investment had a positive to very positive
impact on the host country. Rather than leading to the exploitation of lower-wage workers, as
some critics have charged, the investments fostered innovation, productivity, and an improved
living standard. Therefore, government seeking those advantages would be advised to favor
policies of openness, rather than regulation, when it comes to foreign direct investment.

Indian Exports

In 2007, exports stood at US$145 billion and imports were around US$217 billion. Textiles,
jewellery, engineering goods and software are major export commodities while crude oil,
machineries, fertilizers, and chemicals are major imports. India's most important trading partners
are the United States, the European Union, and China.

Gross Domestic Product (GDP)

India is the world's most-populous democracy and has one of the fastest economic growth rates
in the world (8.9 percent GDP increase in 2007, the second-fastest major economy in the world
after China).
India Inc. is flying high. Not only over the Indian sky. Many Indian firms have slowly and surely
embarked on the global path and lead to the emergence of the Indian multinational companies.
With each passing day, Indian businesses are acquiring companies’ abroad, becoming world-
popular suppliers and are recruiting staff cutting across nationalities. While an Asian Paints is
painting the world red, Tata is rolling out Indicas from Birmingham and Sundram Fasteners nails
home the fact that the Indian company is an entity to be reckoned with.
Some instances
Tata Motors sells its passenger-car Indica in the UK through a marketing alliance with Rover
and has acquired a Daewoo Commercial Vehicles unit giving it access to markets in Korea and

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China.
Asian Paints is among the 10 largest decorative paints makers in the world and has
manufacturing facilities across 24 countries.
About 80 percent of revenues for Tata Consultancy Services come from outside India. This
month, it raised Rs 54.2 billion ($1.17 billion) in Asia's second-biggest tech IPO this year and
India's largest IPO ever.

Infosys has 25,634 employees including 600 from 33 nationalities other than Indian. It has 30
marketing offices across the world and 26 global software development centers in the US,
Canada, Australia, the UK and Japan.

4. IMPACT ON INDIAN INDUSTRIAL SECTORS:

So far, we have analyzed the Indian Economy and the way in which multinational have added
more value and increased the exports, GDP and productivity, resulting in all round development.
Further more, we have the actual analysis of the effect of MNCs on various Indian Industrial
Sectors. Certain important sectors are considered and the actual effects of MNCs i.e. the practical
way in which they are affected are studied viz.
1. Automobiles
2. Aviation
3. Insurance
4. Food and Beverages Industry
5. Telecommunications

The present scenario is a highly transformed one. Multinational giants are vying with one other

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to launch their models. Big names of the vehicle industry like the Korean giant, Hyundai,
General Motors, and Mitsubishi etc. have already opened their account. In other vehicle
segments too, Volvo, Mercedes Benz, Audi etc. have carved out their niche.
On the other hand, manufacturing in India has also come of age. The post liberation economical
scenario has resulted in all the big names such as General Motors, Ford, Toyota, Honda, Suzuki,
Mitsubishi, Mercedes-Benz, Fiat to come up with plants in India. The Indian automotive giants
like Telco, Mahindra, Ashok Leyland, and Bajaj are revamping their production strategies and
launching new models designed and developed indigenously. This has opened up numerous
opportunities or employment in this sector for trained and skilled professionals who are well
versed in the latest manufacturing process.
Sunny Days are here for the Indian automobile Industry as is corroborated by the latest report
made public by Society of automobile Manufacturers. The report speaks of the growth of car
sales by 22.42% in the month of September. The month saw the sales climb as high as to 94,734
units as opposed to 77,384 units in the same month last year. The growth spree seems to have
spilled onto the sale of commercial vehicles as well; the segment experienced a growth rate of
33.54% in the month of September.
The only French presence in the Indian automobile market was the Peugeot 309, a boxy sedan
that was manufactured by a joint venture, in which the Indian partner was already losing its hold
on the passenger car market.
The Peugeot 309 was launched when multinational carmakers were just beginning to corner the
Indian market. The car was too early for its times in terms of the demand in the segment it was
being positioned and it quickly became dated in terms of design. It only had a small fan
following, that is, among those that appreciated good engineering.
Renault, France's second-largest carmaker, formed a 125 million euro ($165 million) venture
with Mahindra & Mahindra Ltd to make Logan sedans in India, tapping into Asia's fourth-largest
car market.
Mahindra, India's biggest maker of sport-utility vehicles and tractors, will own 51% of the
company, with Renault holding the remainder.
Renault, which announced details of the agreement last month, is entering India with the $6,000
Logan it began producing in September at its Dacia (Romania). Overseas carmakers are
assessing the Indian market to expand their presence by introducing new models as rising

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incomes increased demand for cars in the world's second-most populous nation.

Mahindra Renault is also collaborating with Japan's Nissan Motor Co. in which the French auto
maker holds 44 per cent stake building a bigger plant near the southern Indian city of Chennai.
The three companies are together investing about US$900 million in that plant, which will be
completed in the second half of 2009 and will have capacity to manufacture 400,000 vehicles,
including the Logan.

Strategy of Mahindra Renault:

India's car market is dominated by small hatchbacks, but rapidly growing middle class incomes
has fueled demand for low-cost sedans. The pricing, which the manufacturer described as
``aggressive'', places Logan in competition with mid-size sedans from South Korean car maker
Hyundai Motor Co., homegrown Tata Motors Ltd. and the country's largest carmaker The Suzuki
Motor Inc. controlled by Maruti Udyog Ltd. The car is now being manufactured by M&M at its
Nasik facility and delivers on its promise of good engineering, great value and low prices. But it
still will have to face up to and get over a number of issues on the way before its Indian innings
can be counted amongst its successes worldwide. This, despite the killer pricing and feature-rich
package that is being offered with the India-made Logan. Logan coming to India is stripped-
down version of European Logan and will have very basic features only. It has very good space
and comfort is good too. This car is expected to do good in rural areas where Mahindra has better
reach. Size matters for Indians and the Logan offers enough of it in every department except the
choice of engines, which is again very relevant for us given the buyer's fixation with fuel
efficiency.
To compare the Renault Logan with the Toyota Corolla or the Mercedes Benz C-class sedan is
like comparing a hard-boiled lick-lolly with a Godiva specialty truffle. But if you are a sweet
tooth on a tight budget, the lick-lolly will be the automatic choice.
One of the issues that may not work in its favour is the Logan's unexciting, overly simplistic
design. The design was conceived with a purpose — to keep manufacturing and maintenance
costs low — especially in cost-sensitive markets such as India.

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Overall, the Logan successfully conceals the fact that it is a product of frugal engineering or cost
cutting, as we would call it in common parlance. But as you go up the price segment in the petrol
sedan category, buyers are more demanding even in the design department. The Logan's pricing
is what makes it even more attractive for those looking to purchase their next car from the
premium hatch or the entry-level sedan segments.
Global automakers have been stepping up efforts to increase their presence in India, where the
economy is growing close to nine per cent annually and demand for cars is strong, thanks to
rising middle class incomes and easier access to loans.
Toyota to bring its hybrid sedan to India
Toyota motors has an answer to growing emission concerns and rising fuel costs in the form of
its hybrid sedan Prius, which it plans to bring to India shortly. The Toyota ‘Prius’ is sold in
nearly 40 countries around the globe, and it is regarded as being the most fuel efficient midsize
car in the United States.

One of the fastest growing sectors in the country, telecommunications has been growing at a
feverish pace in the past few years. The speed of growth can be judged by the fact that in 2004,
ten years after private telephony was introduced in India, the mobile subscriber base had crossed
the number of fixed line connections. The non-voice market (message and data services) for
mobile operators has also registered tremendous growth in 2004. It had a growth of 139 per cent
year on year in 2004. At present non-voice revenue contributes around 4.7 per cent to the total
mobile services revenue, which is around Rs. 14,560 crore (US$ 3.3 billion). A study released by
Ernst and Young says revenues from the sector could touch US$ 25 billion by 2007.

Profit of MNC in India:

It is too specify that the companies come and settle in India to earn profit. A company enlarges
its jurisdiction of work beyond its native place when they get a wide scope to earn a profit and
such is the case of the MNCs that have flourished here. More over India has wide market for
different and new goods and services due to the ever increasing population and the varying
consumer taste. The government FDI policies have some how benefited them and drawn their
attention too. The restrictive policies that stopped the company's inflow are however withdrawn

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and the country has shown much interest to bring in foreign investment here.

Besides the foreign directive policies the labour competitive market, market competition and the
macro-economic stability are some of the key factors that magnetize the foreign MNCs here.

Following are the reasons why multinational companies consider India as a preferred destination
for business:

• Huge market potential of the country

• FDI attractiveness
• Labor competitiveness
• Macro-economic stability

Impact of Multinationals:

At the time of Independence, most of our industries were concerned with consumer goods.
Barring two steel plants, we had hardly any capital goods or intermediate goods industries.
Today the industrial scene is dominated by petroleum refining, chemicals and pharmaceuticals,
light and heavy engineering, steel, man-made fiber manufacture and several other industries.

These industries would not have come into existence but for the technical know- how and skills
obtained from abroad. The gain is not merely in terms of physical output, but in the training of
technicians and developing the skills of modern management.

In an interesting study on "the impact of foreign subsidiaries on India's balance of payments" for
the year 1975-76 covering 133 companies (total 171) operating in India Dr. S.K. Goyal has
drawn out following conclusions:

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 1. Majority of foreign subsidiaries operating in India either belong to the U.K. (68%) or the
U.S.A. (15%).
2. Most of the foreign subsidiaries have raised financial resources from within India, and the
transfer of capital from the parent company has been marginal.
3. Nearly all the branches and subsidiaries of foreign companies have accepted the
Indianization scheme and a large number of them have already taken measures to reduce
the degree of foreign shareholding.
4. A number of foreign companies in India are acquiring the character of multi-product and
multi-industry enterprises. For instance, the Imperial (now Indian) Tobacco Company
(ITC) has recently diversified its activities to hotel industry constructing a chain of hotels
all over India.
5. The assumption that the entry of Transnational Corporation (TNCs) would ensure
transfer of sophisticated technology to developing countries has not been found valid in
practice
6. Large amount of tax collection through MNCS
7. Increased revenue
8. Economic health improved
9. Employment increased
10. Foreign relation increased.

4.1 MNC IMPACT ON SOCIETY AND ECONOMY:

• The MNCs are characterized by their huge assets. The principal decisions taken by the
company take into account their global market. The emergence of the MNCs has led to
the monopolization of the markets. Production and investment have become global as a
result of which economic activities pertaining to production; investment and trade are

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 being conducted by the MNCs through their branches or firms in the different countries.
Inter-firm transactions have led to the concentration of economic power across the
countries. Initially, the development of the MNCs was through 'creeping increment'.
Slowly, but steadily, the MNCs have established their subsidiaries beyond their country
of origin, in developed and underdeveloped countries. The MNCs also aid in the transfer
of resources from the host country to the country of its operations which includes
technical expertise, equipment, managerial and marketing skills, among others.

• The MNCs help to initiate development processes in several underdeveloped countries

through the transfer of capital and technology. To establish a proper base in a foreign
country, the MNCs invest in labor, raw materials, advertising and marketing. This helps
the underdeveloped countries to develop their resources. The MNCs help in the
development of human resource generates further employment and also help to transfer
sophisticated western technologies to the underdeveloped countries. The technological
expertise, advanced production skills and use of local labor in the units facilitate transfer
of technology to those countries. Through Research and Development, the MNCs
develop products which are superior in all respects to those which are indigenously
produced by the host countries. This induces the indigenous industries to brace up for
competition and encourages them to develop superior products. The MNCs, thereby, end
the domestic monopoly of the indigenous industries. The MNCs, apart from the transfer
of technology for production, sometimes provide marketing services for the export of
indigenous products manufactured by the host countries. Exports generate foreign
exchange which helps the host country in developing its economy.

• The MNCs have been quite successful in India. In the post-liberalization era, as the
license regime has been more or less abolished the MNCs are thriving in India. They are

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 present in almost every sector of the Indian economy, especially in the consumer durable
market and automobiles. Automobile manufacturers like General Motors, Ford, Toyota
and Hyundai are making good profits. Korean companies LG and Samsung have become
market leaders in electronic goods. The entire soft drink market of India is being
monopolized by US Multinationals Pepsi and Coke. Though the pesticides controversy
has affected the popularity of Pepsi, Coke and Cadbury's they are still key players in their
segments.

• Source: An article "Impact of Multinational Corporations on Society and Economy"

published in "Outlook" magazine in December, 2008 by William Brown

6. TOP MNC’S IN INDIA:

The country has got many M. N. C.s operating here. Following are names of some of the most
famous multinational companies, who have their headquarters of operational branches based in
the nation:

IBM: IBM India Private Limited, a part of IBM has been operating from this country since the
year 1992. This global company is known for invention and integration of software, hardware as
well as services, which assist forward thinking institutions, enterprises and people, who build a
smart planet. The net income of this company post completion of the financial year end of 2010
was $14.8 billion with a net profit margin of 14.9 %. With innovative technology and solutions,
this company is making a constant progress in India. Present in more than 200 cities, this
company is making constant progress in global markets to maintain its leading position.

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Microsoft: A subsidiary, named as Microsoft Corporation India Private Limited, of the U. S.
(United States) based Microsoft Corporation, one of the software giants has got their headquarter
in New Delhi. Starting its operation in the country from 1990, this company has got the
following business units:

• Microsoft Corporation India (Pvt.) Limited (Marketing Division)

• Microsoft Global Services India
• Microsoft Global Technical Support Centre
• Microsoft India Development Center
• Microsoft IT
• Microsoft Research India

The net income of Microsoft Corporation grew from $ 14, 569 million in 2009 to $ 18, 760
million in 2010. Working in close association with all the stakeholders including the Government
of India, the company is committed towards the development of the Indian software as well as I.
T. (Information Technology) industry.

Nokia Corporation: Nokia Corporation was started in the year 1865. Being one of the leading
mobile companies in India, their stylish product range includes the following:

• Normal mobile handsets

• Smartphone
• Touch screen phones
• Dual sim phones
• Business phone

The net sales of the company increased by 4 % in the last financial year with sales of EUR 42.4
billion as compared to 2009's EUR 41 billion. Over the past few years, this company in India has
been acquiring companies, which have got new and interesting competencies and technologies so
as to enhance their ability of creating the mobile world. Besides new developments to fight
against mineral conflicts, they are even to set up Bridge Centers in the country for supporting re-
employment.

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PepsiCo: PepsiCo. Inc. entered the Indian market with the name of PepsiCo India from the year
1989. Within a short time span of 20 years, this company has emerged as one of the fast growing
as well as largest beverage and food manufacturer. As per the annual report of the company in
the last business year, the net revenue of PepsiCo grew by 33 %. By the year 2020, this food
manufacturing company intends to triple their portfolio of enjoyable and wholesome offerings.
The expansion of their Good-For-You portfolio is believed to be assisting the company in
attaining the competitive advantage of the growing packaged nutrition market in the world,
which is presently valued at $ 500 billion.

Ranbaxy Laboratories Limited: Ranbaxy Laboratories Limited, one of the biggest

pharmaceutical companies in India, started their business in the country from the year 1961. The
company made its public appearance in 1973 though. Headquartered in this nation, this
international, research based, integrated pharmaceutical company is the producer of a huge range
of affordable cum quality medicines that are trusted by both patients and healthcare professionals
all over the world. In the business year 2010, the registered global sales of the company was US
$ 1, 868 Mn. Successful development of business forms the key component of their trading
strategy. Apart from overseas acquisitions, this company is making a continuous endeavor to
enter the new global markets, which have got high potential. For this, they are offering value
adding products as well.

Reebok International Limited: This global brand is a famous name in the field of sports as well
as lifestyle products. Reebok International Limited, a subsidiary of Adidas AG, is based in U. S.
A. (United States of America) started its operation in 1890s. During the last financial year,
Adidas's currency neutralized group sales increased by 9 %. Apart from their alliance with Cross
Fit that is among the largest contemporary fitness movements, in the current year, Reebok's
announcement of its partnership with artist, designer and producer Swizz Beatz reflects its long
term future growth.

Sony: Sony India is a part of the renowned brand name Sony Corporation, which started their
business operation in the year 1946 in Japan. Established in India in November 1994, this

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company has captured one of the leading positions in the field of consumer electronics goods. By
the end of the business year 2010 on 31st March, 2011, the company showed a remarkable
increase in the share related to numerous categories. Sony India is planning to invest around
INR. 150 crore for the marketing of the activities related to ATL and BTL. As far as Bravia TVs
are concerned, they are looking forward to hold their market share of 30 %. In between the last
and the current financial year, the number of their outlets in the country increased by 1, 000.

Tata Consultancy Services: Commonly known as T. C. S., this multinational company is a

famous name in the field of I. T. (Information Technology) services, Business Process
Outsourcing (B. P. O.) as well as business solutions. This company is a subsidiary of the Tata
Group. The first center for software researching was established in the country in 1981 in the city
of Pune. Tata Consultancy earned a growth of 8.9 % during the latest quarter of this financial
year, which ended on 30th September, 2011. This renowned company is presently looking
forward to the 10 big deals that they have received besides the Credit Union Australia's contract
as well as Government of Karnataka's INR. 94 crore deal for a total period of 6 years. In this
current business year, they are about to employ 60, 000 people to meet their business
requirement.

Vodafone: Vodafone Group Plc is an international telecommunication company, which has got
it's headquarter based in London in the United Kingdom (U. K.). Earlier known as Vodafone
Essar and Hutchison Essar, Vodafone India is among the largest operators of mobile networking
in the country. The parent company Hutchison started its business in the year 1992 along with
the Max Group, which was its business partner in India. Much later in 2011, Vodafone Group
Plc decided to buy out mobile operating business of Essar Group, its partner. The turnover of the
Vodafone Group Plc after the completion of the last financial year grew to £ 44, 472 m from £
41, 017 m that was the turnover of the business year 2009.

Tata Motors Limited: The biggest automobile company in India, Tata Motors Limited, is
among the leading commercial vehicles manufacturer in the country. They are one of the top 3
passenger vehicle manufacturers. Established in the year 1945, this company, a part of the
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famous Tata Group, has got its manufacturing units located in different parts of the nation. Some
of their well known products of the company are categorized in the following heads:

• Commercial Vehicles
• Defence Security Vehicles
• Homeland Security Vehicles
• Passenger Vehicles

Post completion of the financial year 2010 to 2011, the global sales of the company grew by 24.2
% with sales crossing INR. 1 million

MNCs and Globalization:

Globalization has accelerated in recent years, a development that has significant implications for
the regulation and governance of international business, trade and investment. International
business implies no fundamental shift in the underlying principles of trading or business
functions but simply more cross-border transactions. In simpler terms it includes all commercial
transactions – private and governmental – between two or more countries. Private companies
undertake such transaction for profit; governments may or may not do the same in their
transactions. The world has seen a tremendous increase in the global transactions and foreign
trade in recent years. The main reason behind this is that now more and more countries are
getting engaged in trading with each other in order to increase their profit or sales or protecting
them from being eroded by competition. The main objectives which are influencing the
companies to engage in international business are expansion of sales, acquiring resources,
minimizing competitive risk and diversification of sources of sales and supplies (Johnson &
Turner, 2003). Besides these there are other few factors like economic factors, cultural factors,
technological factors, and social factors which have influence to a greater extent. The emergence
and activities of transnational and multinational enterprises had impacted to a huge extent on the
concept of globalization, and multinationals have played an important role. Given their

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international reach and mobility, prospective countries, and sometimes regions within countries,
must compete with each other to have MNCs locate their facilities (and subsequent tax revenue,
employment and economic activity) within.

10. CONCLUSION:

When we consider an overall picture of the MNCS, the beneficial role is much limited in the
limited stages of development they are helpful in area of needed technology and global
marketing.
They care only to the need of upper middle and affluent classes. It create a new culture of colas,
Jams, ice-creams and processed goods. Another threat to Indian economy is the manipulation on
the capital market to suit their goals. They are increasing the shareholding in Indian companies
Swallowing them. They transfer attractive and profitable business to this newly started
Subsidiary so a large number of Indian share holders get cheated.
Summing up over dependence on MNC may be harmful in terms of economic dependence
and political interference. Capital flow of MNC's may be permitted but not at the cost of national
Interest.

REFRENCES:

www.investopedia.com

www.wikipedia.com

www.economic times.com

www.times of india.com

www.indiatoday.com

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Outlook magazine

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