Industry and Labor in India
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Growth of industries and labor force.
labor commitment
Earlier studies of Indian industrial labor emphasized the inevitable consequences of introducing new technologies, their effects on a stable traditional society and institutions such as caste, village and joint family were assured to remain virtually unchanged for centuries until He did not feel the shock of contact. The exodus of industrialization from the villages and the development of new industrial and commercial cities such as Bombay, Calcutta and Madras, which were very different from the older cities that were the centers of Indian civilization. The impact of new technologies could not be separated from the impact of colonial rule, the new system of law,
Administration and education and the dominant position of the British community in India. Some writers justified the colonial rule and praised its achievements and some strongly criticized it. The inevitable impact of a dynamic West on a stagnant society became apparent not only to foreign writers but to many Indians.
Brief History of Industrial Labor in India
Apart from writing on the history of Indian industrial labour, besides containing a lot of material on the process of westernisation, now commonly called modernisation, also a body of useful descriptive material on the recruitment, migration and living conditions of industrial workers etc. is included. A stage or ideal type of society from pre-industrial to modern urban-industrial society was partially accomplished. Writers who described or speculated about industrialization emphasized various aspects of it, which they considered a prerequisite for successful industrialization. Were looking for the formula, the ingredients missing from a traditional society that must be added to make India an industrial country entrepreneurship, efficient management change in social values, “accomplishment orientation” or a committed labor force. It was the non-industrialized countries that lagged behind at various points in the path of development marked by the West and Japan.
The division of caste and labor inseparable from Hinduism prevented the emergence of ‘modern’ capitalism with its constant search for innovation and new markets. Restrictions on contact between castes in early times prevented merchants and artisans from coming together and Such attitude prevents rapid adaptation to change and new demands of the business.
The web of customers and rituals, as well as the firm belief in karma or reincarnation, that bound the Hindu at every point in his life, led to a ‘traditionalist’ outlook, which largely came in the way of economic development, as we It is well known that the division of labor in traditional India took the form of none other than caste. In a caste theory, which most people probably believed in and many still do, everyone is born with an aptitude for a kind of work which is in its very nature its dharma. Various types of work, the lowest as well as the highest are all essential to a social organism which is part of the universal organism, which is also the development of industry in pre-colonial India.
India has been a productive country since ancient times. It is said that ‘India won nutrition during the Mughal period’
Mother of Asia and ‘Industrial Workshop’ of the world. Dhaka muslins and calicos were in great demand all over the world. “Indian silks are said to have been sold in Rome for a weight equal to that of gold.”
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During the Mughal period, India had a great diversity of arts and crafts indicating a more advanced economic and financial organization than the crafts of contemporary Europe. In many handicrafts, specialization of jobs had advanced to such an extent that specialized classes of artisans adopted district processes in the chain of production. The products commanded extensive overseas markets. Artisans worked on their own account, as well as in factories under master craftsmen, dealers and financiers. At any rate it is well known that Indian textile fabrics, cotton silk and other industrial goods such as saltpeter and indigo were exported to Europe and Words were exported to other parts. Where he was highly respected. In the 17th century, India was the center of world trade and the world’s first metal magnet. In exchange for silk or cotton goods, nothing more could be given in India than in Europe. Europe had to pay manly in billions
Increasing volume of Indian exports. The report of the ‘Indian Industrial Commission-1916-18’ states, not without exaggeration, that “at a time when the West of Europe, the birthplace of the modern industrial system, was inhabited by uncivilized tribes, India was renowned for its wealth of artisans.” Was.
Development of History in Pre-Colonial India
During this period industries were spread not only in rural areas but also in urban countries. In rural areas, there were mostly cottage industries catering to local needs i.e. they manufactured useful goods like pottery, cloth, baskets etc. There was no specialisation, and the economic organization was of the most crude character. The urban industries, on the other hand, were more intensive and highly organized. They served extensive foreign markets, gold and silver goods. In England itself, fine Indian cloth and muslin were described as ‘smooth as women and as light as a spider’s web’ and their best part in the household was the count of the Emperor. Decline of early industries
Indian clothing in England, from the mid-17th century
There was an unprecedented increase in the import of goods. The beauty of Indian clothes became the envy of manufacturers in England. They wanted to stop the flow of Indian goods.
Another important factor that led to the decline of Indian industry was the death of Emperor Aurangzeb in 1707.
The great Mughal, who confused the country and spread hatred in trade and industry. Secondly, the Industrial Revolution in England during the late eighteenth century greatly affected the trade in Indian goods, allowing cotton, silk and calicos from India to be sold in England as well as on the continent, before the birth of modern British industry. Was. Difficulty. But when England began to produce goods there high tariffs were turned against outside manufacturers, especially India being the most dangerous of them all.
Furthermore, while British industry could produce goods cheaply because of new inventions, and especially because of the use of mechanical power for production, Indian products, which were mostly handmade and consequently expensive, could no longer compete with them and Thus, gradually displaced. , Even Indian markets were flooded with cheap British goods.
Indian handicrafts suffered a severe blow with the disappearance of the Nawab and the Raja counts. The process was not fast in the beginning but there was a steady decline in demand. With the establishment of foreign rule, certain influences entered India which proved fatal to the existence of those handicrafts. In an effort to compete with Eastern goods, artisans copied their designs and failed to produce quality goods. The newly created educated class turned away from indigenous products due to acceptance of European standards.
British rule weakened the organization of unions that supervised the quality and workmanship of products. As a result, the artistic and commercial values of the goods declined significantly. Indians were not allowed to go to England to train themselves in the techniques of mass manufacturing production.
development of modern industries
It was only in the second half of the nineteenth century that the foundation of modern industry was laid in India. Modern industrial enterprise in India developed after 1850, although beginnings date back to the late 18th century, when European planters began growing indigo. The new industrial activity took two forms a) Plantation b) Factory industry. The plantation industry was one of the earliest in India – it was from the beginning owned, controlled by former employees of the East India Company. Europeans became interested in indigo, tea and coffee plantations because of the easy and high return on investment.
Until the middle of the 19th century, Europeans took little interest in the factory industry in India. This could be due to many factors like 1) Lack of internal communication 2) Restrictions on British to acquire land permanently in India 3) Company’s monopoly trade till 1833 etc. By the second half of the 19th century all the factors inhibiting industrial establishment lost their power.
The first cotton mill was established in Calcutta in 1888, the first tanning factory in Madras in 1845 and the first jute mill in Serampore in 1852, and these industries flourished in the following years with a large internal and foreign market. By the end of the 19th century, many factories spread over many parts of the country started making tea, coffee, cotton, jute etc. as traditional items. Mechanical inventions in Great Britain, a result of the policy of the Government of British India and establishment of modern factories to produce goods on a large scale for the supply of enterprises
Changes in the preferences and habits of the people were some of the reasons for the development of modern industry in India.
Several committees and commissions were appointed to investigate and analyze the condition and problem of Indian industrial labor during the First World War and the post-war period.
The Indian Industrial Commission was formed in 1916-18 under the chairmanship of Sir Thomas Holland. The Fiscal Commission had Sir Ibrahim Rahimtola as its chairman and conducted the inquiry during 1921-22. The External Capital Committee was formed in 1925 and the Royal Commission on Labor conducted its inquiry in 1929–31 and made an in-depth study of the Indian labor situation. The Second World War gave a great impetus to the development of industries in India. India was the main supplier of men and money during the war period. New industries, such as hydrogenated oil, cotton mills, machine tools, transport and electrical equipment, basic chemicals, synthetic resins and plastics, electric wine, etc., began to be manufactured.
India has been a productive country since ancient times, it is said.
Mughal period India was the nutritious mother of Asia and the industrial workshop of the world. Dhaka muslin and cotton were in great demand all over the world. Indian silks are said to have been sold for their weight in gold.
During the Mughal period, India had a great diversity of arts and crafts indicating a more advanced economic and financial organization than the crafts of contemporary Europe. in
Many handicrafts specialized in jobs and advanced to such an extent that specialized classes of artisans carried out separate processes in the chain of production. The products appreciated wide overseas markets. Artisans worked on their own account, as well as in factories under master craftsmen, dealers and financiers
Worked. At any rate it is well known that Indian textile fabrics, cotton silk and other industrial goods such as saltpeter and indigo were exported to Europe and other parts of the world where they were held in high esteem. In the 17th century, India was the center of world commerce and the world’s magnet for precious metals.
Nothing more could be imported into India from Europe in exchange for silk or cotton goods. Summarizing India’s economic condition, the “Report of the Indian Industrial Commission-1916-18” during this period, which had to pay for the increasing volume of Indian exports to Europe mainly in bullion, states, not without exaggeration, that “such At a time when Western Europe, the birthplace of the modern industrial system, was inhabited by savage tribes, India was renowned for its wealth of artisans. And even at a much later period when the adventurers of the West made their first appearance in India, The industrial progress of this country was at any rate not inferior to that of the more advanced European countries. The skill of the Indians,” says Professor Weber, “in the production of delicate broadcloths, in the mixing of dyes, in the working of metals and precious stones , in the preparation of essences and precious stones of all kinds, has enjoyed a world-wide celebrity from the earliest times, in the preparation of essences and all kinds of technical methods. There is extensive evidence that Babylon had a great influence on India as early as 300 BC. Mummy in Egyptian tombs 2000 BC Fine quality Indian They have been found wrapped in muslin. There was a huge consumption of Indian products in Rome.
During this period industries were spread not only in rural areas but also in urban centres. In rural areas, most of the cottages were industrial to meet the local needs i.e. they manufactured useful articles like pottery, coarse cloth, baskets etc. There was no specialisation, and the economic organization was of the most crude character. On the other hand the urban industries were more intensive and highly organized. They served wide overseas markets. The most important of them were silk and woolen fabrics, calicos, gold and silver items. In England itself fine Indian cloth and muslin were described as “light as women and as light as a spider’s web” and at home their best patron was the Emperor’s court. The industry of fine woven cloth enjoyed a market in the island of the East Indies, on the African coasts and, as mentioned above, in England. Although production was small in volume by modern standards. In large cities, each craft was organized into a guild which was responsible for the quality of work for the welfare of its member. the industry was
were also conducted by middlemen who promoted artisans.
decline of early industries
From the middle of the 17th century, there was a dramatic increase in the import of Indian textile goods to England. The beauty of Indian clothes became the envy of manufacturers in England, who wanted to stem the flow of Indian goods.
Treating India as a Colony:- India was reduced to the status of a colonial dependency. Imperialism set out to destroy a large part of the independent economy and indigenous handicrafts. The Indian feudal system was overthrown and the capitalist economic system was introduced, each step in the expansion of Britain’s political dominance over India was a simultaneous step towards the destruction of the old Indian economic system. This led to the decay and even extinction of the old artisan and handicraft industries.
Prohibitive Tariffs on Indian Goods :- The expansion of British rule in India and the economic policy of the government increased the decline of indigenous industries. The Industrial Revolution created a powerful industrial and manufacturing class in England that won political victories over merchant capital. This dealt a blow to India’s export trade as the industrial class government in England prevented India from flooding the English market through tariffs and other measures. Indian cotton goods were diverted to the rest of Europe, Africa, America and the West Indies. By 1813, cotton and silk goods from India could be sold in the British market for 60–60% less than those manufactured in the market in England. As a result it became necessary to impose prohibitive duties on Indian goods. The sacrifices of the Indian manufacturers kept the Manchester mills running, otherwise they would have to be closed.
Arbitrariness of Company Agents:- The Gumasthas or agents of the East India Company were entrusted with such powers which they used to their advantage. He forced the artisans to accept advances and hence to return their products at low prices. The Company also imposed its goods on the ryots at arbitrary rates, forcing them to part with their labor at low prices and spreading the devastating effects of monopoly and extortion everywhere. It strangled the Indian handicraft. The oppressive tendencies of the Gumastas thus completely destroyed our weaving industry in Bengal.
Abolition of Company’s monopoly of trade:- In 1833, the whole of Indian trade was opened up and the East India Company was exclusively closed as a commercial organization. Declaration of freedom of trade and the resulting influx of private enterprise
greatly influenced the course of India’s industrial development. The company confined itself mainly to old methods and old branches of a particular business competence and a new branch
Enterprises with the result that they opened up markets in India to an increased variety of British goods. This new class of traders did not come to India to buy good produce unlike their predecessors
ceded here but came to secure a market for goods manufactured in the factories of England.
Specialization of the Indian Economy:- With the expansion of the English cotton textile industry, the East India Company was interested in expanding the area under cotton cultivation. It also took measures to improve the quality of cotton, with an emphasis on improving the quality of agricultural products and encouraging the export of Indian raw materials such as cotton, jute, silk, leather, oilseeds and dyestuffs, which were vital to the progress of the Industrial Revolution. were necessary for In England. India became more and more dependent on agriculture rather than industry for its survival. High purchasing power The riots spurred the import of Indian goods.
Another important factor that led to the decline of the industry was the death of Emperor Aurangzeb in 1707.
One of the great Mughals who threw the country into confusion and spread insecurity in trade and industry. Secondly, the Industrial Revolution in England in the late eighteenth century greatly affected the trade in Indian goods. Before the birth of modern British industry, Indian cotton, silk and calicos could be sold in England, the production of these goods began to impose high duties against outside manufacturers, India in particular being the most dangerous of them.
Furthermore, when British industry could cheapen goods, due to new inventions and especially the use of mechanical power for production, Indian products, which were mostly handmade and consequently expensive, could no longer compete with them and thus gradually displaced. Even Indian markets were flooded with cheap British goods.
We realized that due to certain technological, economic and political developments the supremacy of Indian handicraft could no longer be maintained.
Impact of Industrial Revolution:- One of the most powerful reasons for the decline of indigenous industries was the Industrial Revolution in England which began in the late 18th century and was almost in full swing in the early 19th century. The invention of the spinning jenny and the steam engine in England increased the application of mechanical power to manufacturing industries. With the continuous improvement in the quality of production, artistic handicraft products suffered. Indian weavers could produce the finest material but in terms of price they were saddled with imported production. Factory made goods were very cheap by comparison. Even industries like other products like glass paper and shipbuilding faced the same blow. The development of railways and other transport systems made it possible to import industrial goods from England into India at a very low cost and even in remote parts of the country goods made in these factories could be obtained cheaply .
Quickly. Also the paucity of other jobs in India made craftsmen unable to adjust to the new situation. Since they lost their own market and at the same time they were not allowed to do any other work in competition with the manufacturers of England, the Indian artisans had to go back to the rural areas.
Miscellaneous Reasons:-
- a) The disappearance of the courts of Nawabs and Kings dealt a severe blow to Indian handicrafts. The process was not rapid in the beginning but there was a steady low demand with the establishment of foreign rule, certain influences entered India which proved fatal to the survival of those handicrafts. In an attempt to perfect Western goods, artisans copied their designs and failed to produce quality goods.
- b) The newly created educated class, due to the acceptance of European standards, turned away from indigenous products.
- c) British rule weakened the organization of guilds that supervised the quality of products and workmanship. As a result the artistic and commercial values of the goods declined significantly.
- d) Indians were not allowed to migrate to England to train themselves in the techniques of large scale manufacturing production.
- e) The construction of railways in India, the improvement of sea transport and the opening of the Suez Canal (1869) united the entire country and opened up the interior, thus enabling English goods and large-scale domestic market access easily Make. Mass production and specialize in food ingredients and raw materials from the country.
By 1880, the decline of Indian handicrafts was almost complete and the handicraftsmen had no new industrial means of survival. The policy of free trade and railway rates completed the work of eliminating indigenous handicrafts. India was reduced to the status of a “colonial agricultural appendage” of Britain.
Growth of Modern Industries:
The foundation of modern industry was laid in India only in the second half of the nineteenth century.
Modern industrial enterprise in India developed after 1850, beginning in the 18th century.
It took place in the late 1000s when European planters began growing indigo.
The new industrial activity took two forms:
(A) Plantation
(b) Factory Industry:
Plantation industry was first started in India. It was owned, managed and controlled from the beginning by former employees of the East India Company. Europeans became interested in indigo, tea and coffee plantations as they offered easy and high returns on investment.
Until the mid-19th century, Europeans took little interest in the factory industry in India. This could be due to several factors such as (1) lack of internal communication (2) restrictions on the British to acquire land permanently in India. (3) Company’s business monopoly till 1833 etc. By the second half of the 19th century all the factors which depended on the industrial establishment lost their force.
The first cotton mill was established in Calcutta in 1818, the first tanning factory in Madras in 1845 and the first jute factory in Serampore in 1852, and these industries flourished in the following years to a large internal and foreign market. By the end of the 19th century, many factories spread over many parts of the country started making tea, coffee, cotton, jute etc. as traditional items. Some of the development of mechanical inventions in Great Britain, the British Indian government’s policy and realization, setting up modern factories, on the part of entrepreneurs to produce goods on a large scale to meet the changes in people’s testes and habits There were reasons. modern industry in india
Between 1851 and 1860, the first few industries—cotton mills, jute mills, railways, plantations, and coal mines—were started in one day.
small scale. But since these were not broad based, they began to decay, it was only after 1875 that the factory industry began to grow. Initially in the late nineties, industrial progress took place rapidly throughout the country.
Role of cottage and small scale industries in the Indian economy:
The Second Plan emphasized the role of small-scale and village industries on the following five grounds:
- Creation of employment opportunities
- Equal distribution of national income
- Synthesis of Entrepreneurial Skills
- Regional spread of industries.
1) Employment Generation:
Agriculture after small scale &c
Cottage industries provided employment to the largest number of people. Within the manufacturing sector, the small and sterile sector contributes almost half of the value added and 4/5th of the manufacturing employment in India. Cottage industries and small scale industries can provide employment to many people, thus solving the problem of unemployment in India. The rural non-form sector accounting for about 22% of rural employment can play a significant role in the future expansion of employment opportunities in rural areas. Most of the manufacturing activities are based on textiles, agricultural products and construction materials. In urban areas, when large scale industries cannot generate employment opportunities; There is immense potential in the small scale sector. The employment potential appears to be greatest in the non-household small sector segment of the manufacturing sector in particular.
2) Efficiency of Small Scale Industries:
According to the Census of Manufacturing Industries, it was concluded that (i) both labor and capital productivity are low in small scale industries, and (ii) the ratio of material cost to value added is high in small scale industries. (That material cost is too high to suggest there). Thus SSIS cannot be relied upon as a source of skilled job creation.
However the Annual Survey of Industries of 1960, 63, 64 and 65 shows that the small scale sector is more efficient. As per the study, small scale industries generate more employment and productivity is also higher.
Even the All India Sample Survey of Small Scale Industries conducted by the RBI in 1976-77 and by the National Small Industries Corporation (NSIC) in 1979 also corroborates the above inference and emphasizes that smaller units are more capital efficiently. Also the profitability of the small scale sector is higher than the profitability of the large scale sector, for example RBI survey found that retained profit in terms of current profit after tax was 43.72 in small scale, whereas in corporate sector In I it was 34.90. , Profit after tax as a percentage of net worth was 21.05 for the small scale sector, while it was only 7.90 for the corporate sector.
The problem of unemployment can be tackled only when small and cottage industries are promoted on a large scale.
3) Equal distribution of national income:
Small scale industries ensure a more equitable distribution of national income and wealth. This is accomplished because of the following two considerations
(i) the ownership of small scale industries is more widespread than that of large scale industries and (ii) they have more employment potential than large scale industries.
There is a point against this agreement. Nowhere in the world, workers in such industries are paid as much as they are in large scale industries.
4) Raising Capital and Entrepreneurial Skills :-
Since the capital cost is low, many entrepreneurs can avail this facility. Many entrepreneurs are spread across the small towns and villages of the country. Large scale industries cannot utilize them effectively as their number is very large. Similarly, a network of small scale industries can be set up for large scale industries which cannot mobilize the savings made by the people in areas far away from the urban centres. Besides this, a large number of other resources spread across the country can be put to effective use by small scale and cottage industries. The rapid growth of small scale in the post-independence period is a testimony to the fact that in view of the necessary credit power and technical knowledge, a large amount was mobilized for industrial development.
5) Regional spread of industries: –
Large scale industries are mostly concentrated in a few big cities like Bombay, Calcutta and Madras. mass migration of people
numbers from villages and developed cities to these centers of industrial growth. In contrast, small scale industries are mostly set up to meet local demands and can be easily spread across the state. They can also effect a qualitative change in the economy, transform the economy. Punjab also has more small scale industrial units than the industrially developed state of Maharashtra.
6) Fewer Industrial Disputes:-
It appears that the relations between the workers and the management in small scale industries are harmonious and tension free but it is felt that the workers in small scale industries are not organised, so it is possible that they may not express their displeasure. Also, since there is no government protection, individual workers in small scale industries can be easily exploited.
7) Contribution to Exports:
With the setting up of a large number of modern small scale industries, the contribution of the small scale sector to export earnings has increased manifold and 93% of the export items are ready-made garments, sports goods, finished leather, leather products.
ucts, woolens and knitwear, processed foods, chemicals and allied products and a large number of engineering goods. The share of small scale industries in the total exports of the country has increased from 9.6% in 71.72 to 28% 190-91.
Sarka for the development of small and cottage industries
It has formed various boards in 1947 itself. (a) All India Handloom Board, (b) All India Handicrafts Board and (c) All India Khadi and Village Industries Board. Also (d) the Small Scale Industries Coir Board and (e) the Central Silk Board.
Many financial institutions have also been established to help these industries. Special incentives to small units, availability of raw material has increased substantially. The number of items that can be manufactured has also been increased. They have also been given import licences. The proactive policy of reservation for Government purchases has been further strengthened and more than 400 items have been specifically reserved for small scale units under the Government Stores Purchase Programme.
Problems of Small Scale Industries:
1) Finance and Credit: Lack of finance and credit is the main obstacle in the development of small scale units. The craftsmen of cottage industries do not have sufficient capital. They are easily exploited by local money lenders. Even small scale industries cannot avail credit facility through commercial banks and nationalized banks have liberalized their policy of lending to small and cottage industries.
2) Availability of raw materials: Most of the small scale and cottage industries depend on local resources for the requirement of raw materials. The handloom industry depends on local traders for its requirement of cotton. Those who exploit these weavers by forcing them to sell the finished cloth only to them (traders). Modern small scale industries use imported raw materials. Whenever there was difficulty in getting this raw material or for any other reason these industries suffered a severe blow.
3) Machines and other equipment:- Machines and other equipment have become obsolete in small scale industries. Hence, the cost of manufacture increases and the quality also deteriorates. Moreover, small scale industrial units often do not care about the changing tastes and fashions of the people. Accordingly, there is an urgent need for modernization and rationalization in small scale industries.
4) Low Capacity Utilization:- It is observed that the capacity utilization in small scale industries was only 48%. This means that resources and labor are underutilized and there is a lot of wastage.
5) Marketing Problems:- Marketing of the products is not well organized, so small scale industries suffer from competitive disadvantage with large scale industries. Due to lack of capital and financial resources, these units do not have “viability” and are often forced to sell their products at exorbitant prices. In order to protect small scale units from competing with large scale units, the government has reserved certain items for the small scale sector. Trade Development Authorities and State Trading Corporations help small scale industries in organizing their sales. The National Small Industries Corporation, established in 1955, is also helping small scale industries in obtaining government orders and locating export markets.
6) Urban base:- Most of the modern small areas are concentrated in big cities like Mumbai, Calcutta, Madras, Hyderabad, Kanpur or Ahmedabad. They contribute 75% of the total production. But the remaining 25% who are working elsewhere are struggling with capacity utilisation. Usually already developed diversions attract new industries. That’s why no new turn comes because of small industries.
7) Concentration of small scale industries:- Gujarat, Maharashtra, Tamil Nadu, Punjab, Haryana, Andhra Pradesh and Karnataka have a good number of small scale industries in some states, whereas developed areas like Orissa, Bihar, Madhya Pradesh, Uttar Pradesh and Rajasthan have few such industries. development is required. Started spreading legs behind. Thus, there is a difference in per capita income between these states. And it has become widespread because the farmer groups of statues can be more effective and imaginative government incentives.
8) Small Scale Industries:- Again Fruits of Rich Class’- Only upper class people can manage to run small scale industries as they can face initially poor returns.
9) Industries only in cities:- Industries can grow where infrastructural facilities are easily and cheaply available, electricity has still reached only one-third of the villages and where it is available in general, it is frequently Closed and subject to fluctuation. Roads are not built. Telephone facility is available. Bank not established. So inspite of huge incentives given to people in rural areas they do not prefer to move from urban areas.
1) Many such “incentives” or “concessions” are not given to those actually in need
Thus, many states are unable to effectively utilize the potential of skilled people. Neither the administration is correct nor is it working properly.
2) Formalities and Legal Restrictions:- Small entrepreneurs have to follow many formalities to get government approval and even after commencement of production they have to undergo severe harassment in the name of labor welfare. They have to pay huge compensation in case of any injury, or provident fund or insurance facilities.
The growth of small scale and village industries has been hindered by a number of factors “including technology obsolescence, inadequate and erratic supply of raw materials, lack of organized market channels, incomplete knowledge of market conditions, unorganized nature of operations, inadequate availability of resources” credit , electricity etc.
including lack of infrastructure and lack of managerial and technical skills. For the promotion and development of these industries there has been a lock of effective coordination between the various subsidiary organizations formed during this period. Despite various measures taken in this regard, the quality consciousness has not been generated to the desired level. All these factors led to slow growth of small scale industries.
Re-entry of MNCs:
Large corporations investing and trading in multiple countries, known by various names such as multinational corporations, trans-national corporations, transnational corporations and global enterprises, have become a very powerful driving force in the world economy today. MNCs grew rapidly after the Second World War.
In the early days, the United States was home to most of the multinational companies. Now there are many European and Japanese multinational companies. MNCs are also emerging from developing countries.
As the report of I.LO says. The essential nature of multinational enterprises lies in the fact that while its managerial headquarters are located in one country, the enterprise also operates in several other countries (“host countries”). Obviously, it means “a corporation that controls ore production facilities in more than one country, such facilities having been acquired through the process of foreign direct investment. Firms that participate in international trade, however, may can become large, are not multinational enterprises only by exporting or licensing technology.
Jacques Menes, president of IBM World Trade Corporation, defined an MNC as a company that meets five criteria.
1) It operates in many countries at different levels of economic development.
2) The management of its local subsidiaries is national.
3) It maintains the entire industrial organization including R&D and manufacturing in many countries.
4) IT is owned by a multinational stock.
MNCs differ from citizens in various ways. ‘MNCs are all usually organized around national
Headquarters that are under international control still have a national identity, even as subsidiaries may not always care that the markers they serve dispel that identity.
A transnational company is a multinational company “in which both ownership and control are so dispersed internationally” that there is no principle domicile and no controlling source of power. Examples include Royal Dutch Shell and Unilever.
According to David E. Lillian, MNC refers to corporations that have their home in a country, but operate and live under the laws and customs of other countries.
Properties:-
1) MNCs are giant corporations established with large capital in rich and developed countries, but with large scale and business operations in many countries (host countries) as well.
2) The activities of MNCs include manufacturing, marketing, research and development, transfer of technology, etc. Currently 40% of world trade is in the form of intrafarm trade and 25% of global manufacturing activities are carried out by multinational companies.
3) The owners and management of MNCs do not come primarily from one nation. Although most MNCs have their origins in the rich and developed countries of the West, the successor management is multinational in nature.
4) MNC invest money in developing countries of Asia, Africa, Latin America and make huge profits there. They also facilitate the flow of modern technology to less developed countries.
5) MNCs dominate global marketing and also play an important role in the expansion of world trade.
6) MNCs operate in different countries according to the rules and laws of the countries in which they operate. However, their top-level decisions are made in a global context.
7) Developing countries in particular find it difficult to control the activities of MNCs as they are often more powerful than the countries they operate in.
8) MNCs expand their business activities in various ways such as investment of funds, establishment of foreign branches subsidiaries, provision
About technology know how and so on.
Expansion of multinational companies: –
Expansion provides huge benefits to MNCs.
Method used:
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Transfer of Technical Know-How:- MNCs supply modern technology to the industrial enterprise. Along with such transfer of technology, machinery and technical consultancy services are also provided – similar to how offered by multinational companies on royalty basis.
Foreign Direct Investment:- MNCs have huge financial resources. Branches of multinational companies in different countries make profits which are reinvested in industrial. region of the country concerned. This leads to expansion in the activities of multinational companies. MNCs based in USA have the largest share of FDI followed by UK, Germany, Japan etc. multiple
Indian companies prefer to invest their money in countries that offer favorable economic climate followed by political stability, large markets, cheap labor and easy access to natural resources.
Marketing of products:- MNCs manufacture goods in different countries using local raw material, the output of subsidiary companies is sold in most of the country as well as abroad.
Mergers and Acquisitions:- Recently Tata group company TOMCO in India was merged with the famous multinational Hindustan Lever Limited. Earlier Search India Limited was merged with Ponds India Limited. (PIL) Now PIL, BBIL, Lipton and Hindustan Lever Limited will work as subsidiaries of Unilever which is a leading MNC in the world.
Turnkey Projects: Sometimes multinational companies give complete projects and through this they further expand the business opportunities.
profit:
- a) MNCs increase the rate of investment, thus helping in rapid industrial development.
- b) They also transfer new technology.
- c) MNCs speed up the establishment of collaborations, joint ventures and branch subsidiaries.
- d) They promote exports.
- e) They provide services of efficient professional managers. It enhances the overall managerial efficiency of the enterprises.
- f) Multinational companies present in different countries.
- g) MNCs facilitate the expansion of international trade and promote co-operation between developed and developing countries.
Danger :-
Although it has many advantages, there are also some dangers.
1) MNCs design technologies for which they charge huge services. Sometimes these technologies become out of date in their own countries and may not even suit the needs of developing countries.
2) MNCs are only profit oriented
3) Harmful to producers and consumers – Since MNCs cross national boundaries, they have no loyalty to anyone. And since they are in the national form of oligopoly i.e. trade within their firms. They have power and do everything possible to eliminate any real/potential competition. they can do
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Manipulating future markets, using misleading advertisements etc. and in this way they create serious currency crisis.
4) Since they charge heavy duty and outflow of capital from most of the countries duty makes balance of payment difficult.
5) MNCs later acquire monopoly in certain sectors.
6) MNCs use their money and power for political purposes in developing countries. They take undue interest in economic and political matters.
7) MNCs create a poor and developing countries demand for various goods and services which are not really useful.
8) They have poor business ethics,
Since we cannot avoid them, we must use them for our creative development. Korea and Japan have used multinational companies for their economic development. We have to keep a close watch on them.
MNCs in India:
Relatively little foreign investment has taken place in India, for a number of reasons (mainly due to restrictive government policy towards foreign investment). Some MNCs, Coca-Cola and IBM picked up India in the late 1970s because the government’s terms were unacceptable to them.
A common criticism against MNCs is that they tend to invest in low-priority and high-profit sectors in developing countries, ignoring national priorities. However, in India, government policy limited foreign investment to priority sectors such as high technology and sectors of national importance, and heavy investments in export sectors. Firms established in non-priority sectors prior to the implementation of the policy have, however, been allowed to continue in the three sectors.
Foreign companies in India were required to reduce foreign equity holding to 40% under the controversial Foreign Exchange Regulation Act (FERA).
A common criticism leveled against MNCs is that they drain the foreign exchange resources of developing countries. But often this does not happen. But due to the policy of the government which has so far emphasized on the local market rather than the export market; We could not earn much through exports.
Although export promotion has been followed since the Third Plan, the highly protected domestic market and unrealized exchange rate have made the domestic market far more attractive than exports. However, since the mid-1980s with economic
Due to liberalisation, increased domestic competition and continuous depreciation of rupee, exports became attractive and Indian companies along with foreign companies and companies with foreign participation became serious about exports. This was reflected in a sharp increase in export growth.
The new policy is expected to give a big boost to the investment of multinational companies in India. But the environment as well as the policy in India is so confusing that Motorola, a multinational, has basically canceled some of its projects.
Shifted from China to India where the government environment is much more favorable.
At the end of March 1990, there were 469 foreign companies (a foreign company is defined as a company incorporated outside India but having a place of business in India). Apart from this, there are many Indian companies with foreign equity participation.
Many Indian conglomerates of multinational companies such as Pond, Johnson & Johnson, Lipton, Brooke, Colgate, and Palmolive are in the low technology consumer goods sector. Hindustan Lever, while popular in low-tech consumer goods, has diversified into high-technology and export-oriented sectors; Ponds has diversified into high-technology and export-oriented sectors. Ponds has diversified, making thermometers, leather uppers and mushrooms entirely for export (Ponds, Brooke Bond, Lipton and Hindustan Lever come under the multinational Ambarla if Unilever) ITC (Indian Tobacco Company) has established hotels, paper It has diversified into sectors such as boards and edible oils. There are multinational companies like Slimens which are high technology sectors. There are many multinational companies in the pharmaceutical industry such as Glaxo, Bayer, Sandoz and Hoechst.
It is wrong to assume that the success of multinational companies or foreign brands is certain in developing countries and that small domestic firms cannot fulfill them.
Double Cola was not successful in India: Parle appeared very worried about Pepsi’s entry and did everything to enter. But when competition became a reality, it battled it out and there are reports that the Parle brand is far from selling Pepsi in a soft drink-centric market, while Kothari’s juice – general food (MNC) tie-up failed, PIOMA industries The production oozes became a huge success. A small unit of Asian plants, Nirma had successfully completed with foreign collaboration, Foreign production ie Tang has failed miserably in India.
MNCs have helped India in the transfer of technology and in the development and modernization of some Indian industries. eg. The Bhilai and Bokaro Chori plants were initially aided by Turkish projects.
by multinational. Multinational companies are operating in India in different sectors like beverages, tobacco, tolls, medicines and other consumer goods industry – as we have seen Hindustan Lever Phillips. Union Carbide Indian Aluminium. Nestle etc are the leading multinational companies in India. MNCs prefer those industries where capital investment and risk are less and quick returns are possible. UK From MNCs and quick returns are possible. UK and U.S.A. Multinational companies of Germany, Japan, France, Canada etc. are active in our country. They operate through subsidiaries of the branches and also through Indian companies in the case of branches, where they provide capital, technology, machinery and managerial skills. Labor and local resources are used by the branches for production purposes. The products are marketed in the host country as well as exported to other countries. They enter the country through collaboration agreements and are governed by the FERA and MRTP Acts.
Some multinational companies like Hindustan Lever Good Year, Alkali Chemicals are making huge profits in India and are responsible for capital outflow from India. It is not possible to control or restrict their activities. People’s rule was successful in shutting down some multinational companies like Coca-Cola and IBM but this is no longer possible.
The government has now become liberal and has given a free hand to MNCs to expand. Economic reforms have been introduced and the new economic policy aims at increasing the inflow of foreign capital into India through multinational companies for industrial development, technological up-gradation, modernization of Indian industries and ultimately to promote exports. One Indian Rupee has now been made fully convertible, all these reform measures create a favorable environment for MNCs to enter India with large scale investments.
It is desirable to take the services of multinational companies for modernization, quality improvement, product diversification and cost control in Indian industries. MNCs are no longer exploiters. Consumers have become aware and they will not go for high priced items with same quality. In short the future of MNCs in the context of India’s development depends on our attitude and approach towards them. The Government of India has to be careful about its limits.
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