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International Research Journal of Business and Management – IRJBM

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Indian Technology and Globalization: A New Wrapper on Old Context
Soma Bandyopadhyay Department of Computer Science and Engineering MCKV Institute of Engineering Howrah, India Basab Bandyopadhyay Department of Civil Engineering Professional Engineering Services Pvt. Ltd. Kolkata, India

Abstract The objective of this paper is to explain the meaning of Globalization and to explore the impact of globalization in Indian context. Our study has two major goals: To analyse the globalization process before and after independence and to describe the main features of the Indian software industry, especially its competence and weakness. The study also reveals the trade and investment policies of the Government of India and its effects on Foreign Direct Investment. We have also done comparative study between Indian and Chinese economy, their strength and challenges. Keywords—Globalization; FDI; India; IT; China; Economic Policy; Industry; Technology.
Introduction

Globalization is a natural phenomenon of today’s world economies. However in the Indian perspective the globalization of its economy in general and science and technology in particular has taken varied course on its way to modern times. The key feature of this paper is to trace its path through the different periods, with special emphasis on the evolution of science and technology during this course. Different government policies adopted to cope with the rough terrains of economy has been discussed in brief to draw a sketch for the mentioned period. Since globalization of technology in India is incomplete without the discussion of development of IT and ITES industries, a special mention of its evolution, advancement and challenges has been discussed in detail. As an ideal case study, a comparative discussion of features of Chinese and Indian economy has been done to compare economics of two powerful developing nations. Globalisation in India Globalization in India - historical perspective The term globalization is attributed to International integration of business and it is a process through which diverse world is unified into a single society. Although the term is in widespread use during very recent times, the actual phenomenon happened at least a few thousand years ago when India, Roman civilization and West Asia had open trade links. Silk, different types of spices and aromatic goods were traded through sea and land links. Selucid
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International Research Journal of Business and Management – IRJBM

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dynasty, the Greek Ptolemaic dynasty and later on the Roman Empire had trading The term globalization is attributed to International integration of business and it is a process through which diverse world is unified into a single society. Although the term is in widespread use during very recent times, the actual phenomenon happened at least a few thousand years ago when India, Roman civilization and West Asia had open trade links. Silk, different types of spices and aromatic goods were traded through sea and land links. Selucid dynasty, the Greek Ptolemaic dynasty and later on the Roman Empire had trading and commercial links with India. Indian pearls, herbs, spices, pepper, lyceum, costus, sesame oil, sugar, indigo and ebony were exported through Western India to Rome. Western India, as a result was the recipient of large amounts of Roman Gold during 1st and 2nd Century AD. Thus the term globalization, being commonly perceived as a term coined by the Western world is wrong and west played a very minor role in its early phases. However the Islamic conquest of Egypt in 5th century AD, rising influence of Islamic states in the middle East and Persia and finally the conquest of Constantinople by Ottoman Turks in 1453 slowly eliminated the trade links between Eastern countries with Europe and West Asia. Later on during 16th Century onwards Mercantilism and eventually colonialism by European powers completely destroyed the free trade practices and set up unequal trade relationship with colonial countries. B. Globalization in India – post independence era Since independence from British in 1947, the process of globalization in India has been slow and cautious. India embarked on its own development strategies with an eye to curtail import. As a result large scale nationalization of the big enterprises and industries took place. Large public sectors with central planning, strong government intervention in labor and capital market and regulation of business were the features of Indian economy. Restricted flow of FDI, strong restriction on licensing of foreign technology, regulated business policy and reservation of 1500 items for production by small scale industries were all aimed at achieving self reliance. Although the policy allowed India to achieve self sufficiency to some extent the Indian economy grew very slowly between 1950 and 1980. This slow rate of growth of 2-3% is known as “Hindu rate of growth” [1]. The only silver lining in this period was the ‘Green Revolution’, wherein India achieved significant self reliance in agricultural productivity, thus becoming an agricultural exporter from a grain importing country with periodic famines. The first pro-business reforms in India was initiated in 1980s by Indira Gandhi and later carried forward by Rajiv Gandhi. The pro-business reforms included easing of restrictions on capacity expansion by large firms, removal of many price controls and the reduction of corporate taxes [1]. Globalization process in India is generally perceived as a phenomenon of post 1991, where the Government of India (GOI) had to liberalize economy due to severe balance of payments crisis. Government of India faced a troubled situation due to depletion of foreign exchange reserve to a rock bottom. International Monetary Fund and World Bank agreed to provide loans on the conditions that India make major changes to liberalize trade and investment in India [2]. The economic reforms included liberalization of imports, approval of automatic FDIs in some sectors, privatization of some public sector enterprises and reduction of number of products reserved for small scale industries. Industrial Licensing Policy came into place in 1991. Industrial licensing was abolished except for 18 industries. FDI up to 51% were allowed in 34 high priority industries and the concept of phased manufacturing was removed. Custom duties on the imports were removed in a phased manner [3]. Due to this reason after 1991 the FDI flooded in India especially in service sector.
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International Research Journal of Business and Management – IRJBM

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Thus, from the above discussion we can infer that since Independence till date, the trends and patterns in FDI have been observed in four distinct phases as follows: 1. The period from independence to 1966 was marked by a gradual globalisation attitude. 2. The period from 1967 to 1980 was characterized by protecting the domestic base of created assets. 3. The period from1980 to 1990 was marked by cautious deregulations. 4. Since 1991 to the present times, there has been full-scale globalisation and integration with the world economy [2]. Present scenario and its effect India is a 'third world nation' but Indian minds are considered to be amongst the best in the world in application to technology. We take loans from the World Bank to set up technological projects but then, the initiative is our own. Today India can claim to have one of the best space programs in the world, and though extremely controversial, nuclear capability is again one of India's strengths on the technological field. We are consumers of mobile phones, smart phones, Laser Disk players, Pentium V, I-pad - all the latest technological innovations. Indians are well conversant with Internet and Wi-Fi system. Indians never compromise for their entertainment and convenience. Spreads of mobile phones provide on-line market price and climatic information to the farmers which help them to sell their product to most attractive buyers and freedom from clutches of the middleman and trades. Fishermen also get benefit of this technology for getting best mundies. The Multinationals are launching their products in India at the same time as in the 'rich' countries -an indication of the changed scenario in the Indian market. Furthermore, the spread of global brands - Nike, Sony - are setting new social standards from New Delhi to Tokyo [4]. Thus India being the third largest country in terms of purchasing power parity (PPP), justifies its position. The tomato growers, potato farmers, fruit growers farmers benefitted from the tie-up and collaboration with ketchup, potato chips, fruit juices & spices, pickles, papads, tobacco etc. The names of Indian tech-wizards like Azim Premji, S. Narayna Murti and Indian businessman Mukesh Ambani, Cyrus Mistri feature almost daily in world magazines. Some prominent examples of innovations emanating from India include the world’s cheapest car the Tata Nano; Mac 400, the handheld electrocardiogram (ECG) device of General Electric; and “Chhotu Kool”, a battery-run small-size refrigerator of Godrej & Boyce. Table I shows such innovations which often encompass the whole spectrum of product, process, marketing and organizational innovations [5].
TABLE I.

RECENT DISRUPTIVE INNOVATIONS OF INDIA Market Firm( year of market Introduction introduction) Price in USD $ 2,200 Tata Motors Entry level price of existing, competing products $ 6,500 $ 10,000 $ 180

Product Tata Nano (Car)

Mac 400(ECG General Electric $ 1,000 Machine) (2009) Chhotu Kool Godrej & Boyce $ 70 (Refrigerator) ( 2009)
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International Research Journal of Business and Management – IRJBM

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Market Firm( year of market Introduction Product introduction) Price in USD Hindustan Unilever $ 43 Pureit(Water Purifier) Ltd.(2005) Tata $ 21 Swach (Water Purifier) Chemicals(2009) Indian Govt. & Public $ 35 Sakshat (Tablet PC) Institutions

Entry level price of existing, competing products $ 150 $ 150 $ 500

A. Growth of IT Industries and related services Discussion of Globalisation in India is never complete without the discussion of development of software industry in India. Indian software industry is now a small but a growing art of the international division of labour. Birth of software industry in India began in 1970 with the entry TCS into the domain of outsourced application migration work [6]. Although, initially it was body shopping onsite at U. S. Firms, presently India develops latest and very effective software for global clients, offshore in India. This is known as outsourcing. The success in ‘Y2K Bug’ is another reason for Indian software services and business process outsourcing (BPO) globally. Indian software products are valued all over the world. Despite the steady growth of software technology and tools, software development is still labour intensive. Now-a-day’s India is a large pool of experienced engineers at low cost as compared to the developed countries like US and UK etc. Production of software requires relatively less capital and is not heavily dependent on Physical Infrastructure such as roads and ports. Moreover the National Association of Service and Software Companies (NASSCOM), India's software industry association, also favours software industry by participating in global trade fairs, events and organizing learning events in India that features prominent experts from major markets. Developing country like India has a large consumption of IT product for its development. Its huge domestic and international market is the positive point for the growth of IT Industry in India. Governments of India (GOI) have also geared growth of Indian IT industry. The government allowed liberal imports of hardware and software tools, provided tax rebates, fast track approval of projects, cheap power and real estate, IT parks etc. The Reserve Bank of India also adopts several measures like simplification of filing of Software Export Declaration Form (SOFTEX) to support the IT industry [6]. According to the National Association of Software and Services Companies (NASSCOM) (2006), India has a dominant and growing share of the global IT-ITES pie: “Over [fiscal years] FY 2001-[20]05, India’s share in global sourcing has grown from 62 per cent to 65 per cent for IT and 39 per cent to 46 per cent for ITESBPO [7]. Though all the conditions favour India’s IT boom, steady supply of electricity and power is critical for running PC workstations and communications through Internet. India has emerged as large producer system of software for export purpose but no application software in Indian languages is available in the market. The rapid globalization in the field of IT sector has facilitated brain-drain in India which is one of its darker sides. During the year 2008-2009, India faced a major problem in IT-Sector due to global recession [6]. In this period, companies had decided to decline in the employee numbers which is shown in the figure below [6].

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International Research Journal of Business and Management – IRJBM

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Fig.1 Indian IT Services and IT Enabled Services (ITES) growth. Application of IT-based technology in rural areas India is in the forefront of IT-based rural applications. Many important experiments are already underway, both in hardware, software, and systems of e-based governance and ebased industry. Some projects to date have tended to be in four areas:

• Information centres – Information centres use IT to collect and disseminate information on farming, weather, markets, etc. • Training centres - IT-based distance learning centre set up in rural areas to provide training of rural people. • E-governance - Now-a-days IT-based retrieval of public documents such as deeds, birth certificates, etc is being done. • Rural E-kiosks - Provision of ICT tools, such as email and mobile phone services, electric-bill payment is provided. • Rural ATMs – ATMs are also available in rural areas to provide financial services to the rural people. They also use smart cards.

Most of the projects have not yet been scaled up due to lack of ICT initiatives from public policy to reach scale. Enabling IT infrastructure and a workforce trained in IT and other skills will make rural areas attractive for setting up larger commercial and industrial enterprises if complementary infrastructure, adequate and reliable power, roads, rail and drinking water are present. More than 50 percent villages in India do not even have tele connectivity, the basic vehicle for penetration of IT [8]. A Comparative study between China and India –Two developing countries of Asia India and China have been marked out in discussions on economic success stories, for their steady and higher than other countries, GDP growth rates. They have of course other interesting similarities, - both are in Asia, have large populations and land mass. While India’s economy was typical of the “mixed economy” without comprehensive government control over the financial system; financial liberalization since early 1990s meant further loss of control over financial allocations by the state. China was mostly a command economy,
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which until recently had a very small private sector; there is still substantial state control over macroeconomic processes in forms that have differed from more conventional capitalist macroeconomic policy. But China started out on its reform process since late the 1960s as compared to India which started it in early 1990s. It is sometimes said that India is about 10 to 12 years behind China in its reform and development process. With regard to GDP per capita this is just about right, in the sense that India’s GDP per capita from 2010 to 2011 was 5 per cent less than China’s was in 2000 [9]. With fewer jobs created by industry and exports, urbanization has progressed slower in India: the urbanization rate stood at 31 per cent in 2011, compared to 51 per cent in China [9]. In terms of Global export services China ranks at no. 9 while India at number 12 [7]. About 80% of PhD students in US in natural science and engineering from China and India plan to remain there. Productivity in India is just 8 percent of US rates while Chinese productivity is 14 percent. China has a very strong transport network. The country is connected internally by 1,870,661 km of roadways, 74,408 km of railways and 123,964 km of waterways. Although India has one of the largest road networks in the world, with 3.34 million km of roadways, it is not adequate for speedy and efficient transport, as the quality of the roads is bad [7]. Broad trends in GDP (%) rate of growth: While both trajectories have ups and downs, China’s GDP growth rates are in the range 814% whereas India is in the range 4-8%. Both however settled down to steady rates of around 8% for China and 6% for India as from the early 2000s. Fig. 2 shows the GDP growth comparison between the two countries [10].

Sources: CEIS: RBA Fig.2 GDP Growth China and Indian

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Inflation China and India: Fig. 3 depicts the effect of inflation on economy. The inflation in India has been higher in almost all the periods as shown in the figure.

Fig.3 Inflation China-India Darker side and deterrent factors of globalisation Although India has maintained its pace with the rest of the world in globalizing its culture and technology, the globalization has a few ill effects on its society. Government policies are guided by the welfare of the multinational companies (MNC) rather than welfare of its general mass. As a result, the gap between rich and poor has rapidly widened with the globalization. MNCs play a leading role for ruling the country instead of the Government. High competition in the market leads to continuous pressure on rising productivity, enhancing consumer service, improving product quality, in order to survive. Due to fierce competition, the emerging technologies are associated with greater risk. Closure of inefficient unit causes voluntary retirement in public sector units, making a large population redundant. Unplanned growth has led to shortage of power and lack of infrastructure and thus affects the industrial expansion in an adverse way. Traffic congestion, growth in consumerism, too many sales person chasing customers, instability in profits due to too much choice among customers are also deterrent for globalization. Conclusion India is fast emerging as an attractive global hub for low cost, frugal innovations. There are numerous advantages in the shift to a global economy including the possibility to increase benefits from economic scale. A vast domestic market with positive outlook, strong domestic technological base and a relatively open FDI policy enabled participation of foreign owned firms for trading in India while Indian firms making them known in other markets and thus creates positive country-of-origin effects. Globalization offers a new opportunity for knowledge dissemination, but this does not mean that all the nations and institutions will equally benefit from it. On the contrary, it seems that the institutions that have managed to
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benefit most from globalization are those that already are at the core of scientific and technological advance. Developing countries like India are not automatically excluded from the advantages. India can benefit from globalization of technology if they implement active policies designed to increase learning and improve access to knowledge and technology [11]. References [1] Dahlman, C. (2007), 'Technology, globalization, and international competitiveness: Challenges for developing countries', u: UN (2007), Industrial Development for the 21 st Century: Sustainable Development Perspectives, Department of Economic and Social Affairs, United Nations, New York. [2] G Shanmugasundaram, Globalization of Indian Industries Different Phases, 2010, Chapter II [3] Amar K J R Nayak, Kalyan Chakravarti, Prabina Rajib, Globalization Process in India: A Historical Perspective Since Independence, 1947, Academic journal article from South Asian Journal of Management, Vol. 12, No. 1 [4] Technology in Indian Culture and Effects of Globalisation of Technology and Media, A Term Paper [5] Rajnish Tiwari,Cornelius Herstatt, Role of “Lead Market” Factors in Globalization of Innovation: Emerging Evidence from India & its Implications,Working Paper No. 64, Hamburg University, August 2011 [6] Amit Rathee, Randeep Singh,Impact of Globalization on Indian I.T Industries- A Survey [7] Seema Joshi, Who will be the main global IT services hub: India or China?, AsiaPacific Trade and Investment Review. Vol. 4, 2008. 35. [8] Dr. P.R. Sengupta, Information Technology and Globalization Paradigm The Case of India and South-East Asia, IILM-review-magazine-april-1998 Vol. 2 No. 2 [9] Louis Kuijs (2012), ‗Economic Growth Patterns and Strategies in China and India: Past and Future‘, Fung Global Institute, September 2012 [10] Reserve Bank of Australia Chart Pack World Economy Released on 2nd October, 2013 ( Data updated to 26th September, 2013) [11] Archibugi, D., Pietrobelli, C, (2003) The globalization of technology and its implications for developing countries - Windows of opportunity or further burden?, Technological Forecasting and Social Change, 70/9 pp 861-883

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...economically from globalisation, the impact on the world’s poorest countries has been negative. Discuss. Currently, globalization is rapidly developing and making a contribution to social progress. It is mainly manifested in politics, economics and culture. Many western industrialized nations get tremendous benefits from globalization. This is mainly displayed in the aspect of market expansion. Because of globalization, more markets for capital investment and outlets for goods are available. However, some poor countries suffer because of globalization. As a result, the economic gap between developed nations and developing nations is expanding remarkably. Nevertheless, several developing countries have seized the opportunity and created a miracle in their economy. Therefore, every country needs to recognise that it can help them and also be aware of the challenges. This essay discusses that while developed countries and some developing countries have benefited economically from globalization, most developing countries have experienced negative impacts. Hence, it is important to firstly identify what globalization is and state what benefits developed countries and some developing countries have had and the negative impacts some developing nations have experienced. After that, the essay discusses reasons for these two different results. It is argued that globalization has brought economic, financial, technological and social benefits to western industrialized nations and some developing...

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Globalization

...Globalization The numerous advances in technology haves resulted in the world becoming a much smaller place than ever before. The ability for goods and/or information to reach a destination anywhere on Earth in a relatively short period of time can be attributed to these technological advances. Additionally, there is increased trade and outsourcing among nations which basically results in these nations working like partners because they are working together in order to better their situation. Globalization has advantages as well as disadvantages. It is viewed as a cause for increasing problems and also as a way of balancing things with one another. Globalization is all around, can be seen everywhere, and effects everyone. Globalization is a continuous process through which different societies, economies, traditions, and cultures integrate with each other on a global scale. This is made possible through the various means of communication and the interchange of ideas. Globalization goes all the way back to the Silk Road. It ran across central Asia, connecting China and Europe. The Silk Road made it possible and easier for the exchange of goods between the two which would have been virtually impossible otherwise due to the great distance between them. (Mann) The extreme advances in technology, travel, and telecommunications over the past 30 years are responsible for the recent huge increase in globalization. The period from 1980 through the present is the most remarkable period...

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Globalization

...WHAT IS GLOBALIZATION? Four Possible Answers Simon Reich Working Paper #261 – December 1998 Simon Reich holds appointments as a Professor at the Graduate School of Public and International Affairs and in the Department of Political Science at the University of Pittsburgh. In fall 1997 he was a Visiting Fellow at the Kellogg Institute. His publications include The Fruits of Fascism: Postwar Prosperity in Historical Perspective and The German Predicament: Memory and Power in the New Europe (with Andrei S. Markovits) both published by Cornell University Press. His most recent coauthored book is The Myth of the Global Corporation (Princeton University Press, 1998). Reich has also published many book chapters and articles in journals such as International Organization, International Interactions, The Review of International Political Economy, and German Politics and Society. He has received fellowships from the Sloan Foundation and the Kellogg Institute and was awarded an International Affairs Fellowship from the Council on Foreign Relations. His current work is on the issue of the definitions and central propositions of globalization. This paper was written during my stay at the Kellogg Institute. I wish to express my appreciation to the fellows and staff of the Institute for all their help on this project, notably to Scott Mainwaring who is now director of the Institute. Introduction The end of the Cold War provided a major shock for scholars of politics and policy in at...

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Globalization

...POS 264 INTRODUCTION TO GLOBALIZATION EXAM #1 ANSWER ALL QUESTIONS 1. List the myths about Globalization * Globalization is new * Globalization is inevitable * Globalization is a leveler 2. What is neoliberalism? * Dominant policy making rule set that represents a return, under new global conditions. 3. What are the three different forms of fair trade? * Removing EU and US agriculture subsidies * Emphasis on balancing trade liberalization with development needs and timing * Developing fair trade commodity chains for coffee, chocolate, olive oil, and other products where producers are assured a fair price. 4. What are the three bills of rights promoted by the Alter-globalization activists? * Communities * Cities * Ecologies 5. What is a commodity chain? * Money(+labor materials)= commodity production=sale………$ 6. Name two net effects of today’s global commodity chains? * Shrinkage of distance – “time space compression” * Increase demand for free trade 7. What are the three key phases in the global development of capitalism? * Global commodity chains * Global labor consumer ties * Global money ties 8. How do TNCs organize global commodity production? * Imperialism * Keynesianism * Neoliberalism * Producer driven commodity chains…push production. 9. What is a commodity? * Something that is bought and sold for money. 10. Name three features...

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