EMERGING ECONOMY AND GLOBAL BUSINESS
India has initiated major economic changes in 1991 like lowering of import duties, subsidies on petroleum or petroleum based products and agricultural products, lowering of interest rates and rationalization of direct and indirect taxation. Entry barriers were lowered, although exit barriers (like the Exit policy which will affect labor) are still high. Public sector undertakings are sought to be privatized. The entire economic policy of the Government has been dictated by need to make Indian economy globally competitive. This in turn means the industry and firms will have to emerge globally competitive.
The last decade has also heralded major changes. For one the Uruguay round of GATT negotiations came to an end with substantial reduction in global tariffs Several new areas were included this time, and one was that of service and intellectual property and patents With customs or import duties substantially reduced markets all over the world are now offering opportunities to international firms.
Regionalization of trade was taking place. It was first the European Community and later the formation of the North American Free Trade Area (NAFTA). The US President hosted the first Heads of Country meet of Pacific Rim nations and North America in December 1993 in the US regionalization of trade has resulted in two things:
Â· Free flow of goods and services among the countries of the region and hence expansion of the total market and
Â· Increased bargaining power of the member countries with exporters from outside the region. In fact if one were to recall the negotiation process at GATT in December 1993, one will observe that the moment European Community leaders and the US representatives agreed, the negotiations were concluded and GATT agreement signed by member countries. Other countries like India were marginalized because they did not have the bargaining power. Market expansion for firms within the region or between the regions has been the logical outcome of these economic changes
To a large extent India has achieved the task of competitiveness in the Global markets since the advent of liberalization in 1991. A glaring example is service providers from India like BPOs, Software programmers and Complete Business solution providers involving large companies. Some of them from India like Satyam Computers, Wipro Infosys, Tata consultancy have even set up shop in U.S to provide faster and efficient service to the companies there.
The economy movement and globalization of business has benefited India to a large extent. Today India is considered as a hub of business for IT and ITeS, Automobile manufacturing, Pharmaceutical and even Management schools. In IT industry in addition to large companies smaller companies are also active in serving the firms located in US, UK, Australia, New Zealand, Western Europe and other countries. India is now in a neck to neck race with China as far as Global scenario is concerned. Politically whichever party comes to power is also supporting the liberalization norms and is likely to continue irrespective of the external environmental changes.