Current Position of Multinational Corporations in India

Drastic political changes taking place at the global level along with the economic liberalisation has given rise to the flow of multinational corporations. Multinational Corporations are large companies with their headquarters situated in one country and with a number of different business operations situated in different countries. They are also sometimes called Transnational Corporations because their operations extend beyond the boundaries of the country in which they were originally started.

 

Multinational Corporations have a strong hold over the Indian Economy. The Multinational Companies in India have a very wide portfolio of companies from different countries of the world. As a matter of fact, even two decades ago these companies controlled 53.7% of the assets of the country. In 1996, there were about 112 multinational companies in India controlling assets of Rs. 10 crore or more. The majority of the MNCs in India are of American companies. They account for about 37%  of the income of the top 20 firms operating in India. But this structure has changed over the years. A number of different enterprises from the European Union like Britain, France, Netherlands, Italy, Germany, Belgium and Finland have come to India or have outsourced their work in the country.

 

There are a number of different reasons because of which multinational companies prefer to come to India. India has a massive market and it is also one of the fastest growing economies of the world. Apart from this, government policies like FDI have played an important role in attracting multinational companies in India.  For a very long time, India had a restrictive foreign direct investment policy. Because of this reason, very few international companies had shown their interest in investing in Indian market. But this framework has changed during the financial liberalization of the country in 1999. But nowaday government is making continuous efforts  by giving relaxation in its policies. Because of this reason a number of different multinational companies have shown their interest in the Indian market.

 

There are a number of reasons why multinational companies consider India as their ideal destination for business-

  • Labour Competitiveness
  • Huge market potential of the country
  • Macro-economic stability
  • FDI attractiveness

 

Some of the major multinational companies operating their businesses in India are-

  • Vodafone
  • British Petroleum
  • Reebok
  • LG
  • Samsung
  • Ford Motors
  • Hyundai
  • Skoda Motors

 

 

Indian MNCs in Global Market

 

Products that are made for the Indian market are now being advertised abroad as well by the multinational companies who made FMCG products for the Indian market. The concept of reverse innovation is gaining momentum in the Indian FMCG market. Reverse innovation means products that were initially made for the developing economies but with time they are being marketed in other countries as well. For instance,

 

  • Hindustan Unilever (HUL) is taking its water purifier brand Pureit to new global markets. After launching Pureit in Indonesia and Bangladesh in 2010, HUL is currently targeting markets of South Asia, Latin America and Africa. Pureit is currently being sold in Sri Lanka, Brazil, Mexico and Nigeria.
  • PepsiCo is the world’s second largest food and Beverage company, and is now adapting its Indian innovation Kurkure in western countries. PepsiCo India’s baked crackers brand Aliva and lemon-flavoured drink Nimbooz are some of the company’s innovations for the Indian market, but now they are attracting attention globally as well. Presently they are being adapted to being adapted to suit the local market overseas.
  • Similarly, French major cosmetic brand L’Oreal has taken a slew of its innovations made for the Indian market like, Garnier Men-PowerLight range of skincare products and Garnier Fructis shampoo to global markets as well.
  • Another multinational, Nestle SA, the swiss food and nutrition band is taking its Indian brand Maggi Masala Noodles to the global market as well. In addition to this, the company is planning to take its spice brand which was developed for Indians like Maggi Pulao Masala (in sachets) and Maggi Masala Magic to other markets as well. At the same time the company is also planning to take its Indian brands like Maggi Atta Noodles and Maggi pasta soup outside India as well.
  • After witnessing the growing importance of Indian innovations, various multinationals are increasingly increasing in India as an Innovation hub. In November 2012, Nestle opened its first research and development centre in Manesar, which is quite close to Nestle India’s headquarters in Gurugram.
  • Although, not all Indian innovations have been marketed successfully in the global market. For example, Coca Cola India found it difficult to introduce its Indian acquired brands Limca, Mazza and Thumps-Up in other markets because consumers of other countries have found Mazza and other brands too sweet.

 

Conclusion

 

In the modern world, globalization is unavoidable. Today Multinational Corporations play a very important role in development of the Indian economy, by initially when MNCs were introduced in the country the government faced many fears. But at the same time, not all the MNCs are helpful for the host country. Some companies establish their businesses in other countries with the only motive to capture the domestic market. Because of this reason governments should be cautious while allowing such companies in their country.

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