Globalisation – Opportunities & Challenges
🟠 Topic 98: Globalisation – Opportunities & Challenges
📖 Explanation (1000+ Words)
📌 Introduction
Globalisation refers to the increasing interconnectedness of economies, societies, and cultures across the world. It involves free flow of goods, services, capital, technology, information, and people across national boundaries. Since the 1991 economic reforms, India has integrated deeply with the global economy, benefiting from FDI, trade, technology transfer, and cultural exchange.
However, globalisation also poses challenges like economic inequality, cultural homogenisation, and environmental pressures.
🔹 What is Globalisation?
📖 Definition
Globalisation is the process of integration and interdependence among countries through economic, technological, social, and cultural exchanges.
Key Drivers of Globalisation
✔️ Trade liberalisation – Removal of tariffs, quotas, and trade barriers.
✔️ Technological advances – Faster communication and transportation.
✔️ Capital mobility – Cross-border investments and finance flows.
✔️ Multinational corporations (MNCs) – Global production networks.
✔️ International agreements – WTO, FTAs, regional trade blocs.
🔹 Phases of Globalisation in India
| Phase | Key Events |
|---|---|
| Pre-1991 | Import substitution, closed economy |
| Post-1991 Reforms | LPG (Liberalisation, Privatisation, Globalisation) |
| 2000s Boom | IT, services exports, rising FDI |
| Post-2008 | Global slowdown, protectionism |
| 2020s | Focus on Atmanirbhar Bharat, selective global integration |
🔹 Opportunities from Globalisation
1️⃣ Trade and Market Expansion
✔️ Access to global markets for Indian products (IT, textiles, pharmaceuticals).
✔️ Expanded consumer choices with diverse global products.
2️⃣ Technology Transfer
✔️ Collaboration with global firms brought: ✔️ Advanced manufacturing techniques.
✔️ Digital innovations.
✔️ Green technologies.
3️⃣ Foreign Direct Investment (FDI)
✔️ FDI inflows increased to ~$84 billion (2022-23).
✔️ Enabled: ✔️ Industrial modernisation.
✔️ Job creation.
✔️ Integration into global supply chains.
4️⃣ Employment Generation
✔️ Global integration boosted: ✔️ IT-BPO sector employment. ✔️ Jobs in export-oriented sectors (gems & jewellery, textiles). ✔️ Foreign companies established R&D centres, hiring local talent.
5️⃣ Cultural Exchange
✔️ Spread of: ✔️ Global cuisines. ✔️ Music, cinema, fashion. ✔️ Enhanced cultural understanding and tourism flows.
India’s Trade as % of GDP (Graph)
🔹 Challenges of Globalisation
1️⃣ Economic Inequality
✔️ Benefits of globalisation concentrated among: ✔️ Urban, educated elite.
✔️ Large corporations. ✔️ Rural and informal sector left behind.
2️⃣ De-industrialisation
✔️ Cheap imports from China and ASEAN hurt domestic MSMEs.
✔️ Informal manufacturing sector shrank, impacting rural livelihoods.
3️⃣ Cultural Erosion
✔️ Western consumerism diluted traditional cultural practices.
✔️ Standardisation of lifestyles reduces cultural diversity.
4️⃣ Financial Volatility
✔️ Global financial integration exposes India to: ✔️ Currency fluctuations.
✔️ Sudden capital outflows (like 2008).
5️⃣ Environmental Costs
✔️ Export-driven growth led to: ✔️ Over-extraction of natural resources.
✔️ Rising carbon emissions.
🔹 Impact of Globalisation on Sectors
| Sector | Impact |
|---|---|
| Agriculture | Exposure to global price fluctuations |
| Industry | Increased competition and FDI inflows |
| Services | IT, BPO sectors emerged as global leaders |
| Labour Market | Gig economy and outsourcing created new jobs but with low security |
Case Study – IT-BPO Boom Post Globalisation
- India became global IT outsourcing hub due to: ✔️ Skilled English-speaking workforce.
✔️ Cost competitiveness. - IT exports grew from $5 billion (1999) to ~$180 billion (2023).
- Contributed over 8% to India’s GDP.
🔹 Globalisation & Indian Policy Response
| Policy | Focus |
|---|---|
| Atmanirbhar Bharat | Self-reliance with selective global integration |
| PLI Scheme | Attracting FDI into manufacturing |
| FTA Negotiations | Expanding trade partnerships |
| Digital India | Enhancing global competitiveness in technology |
🔹 Way Forward
✔️ Balance global integration with domestic resilience.
✔️ Focus on skill upgradation for future jobs.
✔️ Strengthen social safety nets for vulnerable sectors.
✔️ Promote green globalisation with focus on sustainable practices.
✔️ Ensure fair trade agreements that protect domestic industries.
📚 Practice MCQs
1️⃣ Which of the following was a key driver of globalisation in the 1990s?
✅ Options:
(a) Nationalisation of industries
(b) Trade liberalisation
(c) Import substitution
(d) Closed economy policies
2️⃣ Which sector of the Indian economy benefited the most from globalisation?
✅ Options:
(a) Agriculture
(b) Manufacturing
(c) Services
(d) Mining
3️⃣ Which of the following reflects the negative impact of globalisation on India’s MSMEs?
- Increased competition from cheap imports
- Decreased domestic market share
- Technology obsolescence
✅ Options:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1, 2, and 3
(d) None of the above
