Topic 04 of 6 · Chapter 09 · Indian Economy
Globalisation — India’s Integration with World Economy
Trade liberalisation, WTO membership, FDI inflows, outsourcing boom, and India’s rise as a global economy.
📋 In This Article
1. What is Globalisation?
Globalisation is the process of integration of the Indian economy with the world economy through trade, investment, technology, and movement of people.
⭐ Three Dimensions of Globalisation:
• Trade globalisation: Increase in international trade
• Financial globalisation: Free flow of capital across borders (FDI, FPI)
• Technology globalisation: Spread of technology and knowledge globally
• Trade globalisation: Increase in international trade
• Financial globalisation: Free flow of capital across borders (FDI, FPI)
• Technology globalisation: Spread of technology and knowledge globally
2. India’s Globalisation Journey
- 1991: Trade liberalisation — reduced tariffs, removed import restrictions
- 1995: India joined WTO — committed to further trade liberalisation
- 1991-2000: FDI inflows increased from $100 million to $3 billion per year
- 2000s: IT boom — India became global IT services hub
- 2021-22: Record FDI of $83 billion
- 2023: India became 5th largest economy globally
✅ India’s Global Rise: From a country that was borrowing from IMF in 1991, India is now the 5th largest economy, a G20 member, and a major global player. This transformation was driven by globalisation and economic reforms.
3. IT and Outsourcing Boom
Globalisation enabled India’s IT revolution:
- India became the world’s largest exporter of IT services
- BPO (Business Process Outsourcing) — call centres, data processing
- KPO (Knowledge Process Outsourcing) — research, analytics, legal services
- Cities like Bengaluru, Hyderabad, Pune became global IT hubs
- IT exports: ~$200 billion per year
- Companies: Infosys, TCS, Wipro, HCL — global leaders
4. Criticism of Globalisation
- Inequality: Benefits concentrated among educated, urban population
- Jobless growth: IT sector employs few people relative to its GDP contribution
- Vulnerability: India’s economy becomes vulnerable to global shocks (2008 financial crisis)
- Cultural impact: Western culture displacing local culture
- Agriculture neglect: Globalisation benefited industry and services but not agriculture
5. Key Points for Exam
🔑 Must-Remember Facts
- Globalisation = integration of Indian economy with world economy
- India joined WTO: 1995
- India’s IT exports: ~$200 billion per year
- India = world’s largest exporter of IT services
- Record FDI: $83 billion (2021-22)
- India = 5th largest economy globally (2023)
- BPO = Business Process Outsourcing
- KPO = Knowledge Process Outsourcing
- IT hubs: Bengaluru, Hyderabad, Pune, Chennai
- Globalisation criticism: inequality, jobless growth, vulnerability