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Globalisation and the Indian Economy – Class 10 Social Science notes, important questions and MCQs

NCERT Class 10 Social Science, chapter 21. Notes, key terms, important questions with answers and MCQs.

Chapter overview

Globalisation is the process of rapid integration of countries through trade, investment by multinational corporations, technology and movement of people. Liberalisation of trade and investment in India from 1991 and the WTO's rules sped it up. Globalisation has benefited some groups while others have faced greater competition.

MNCs and integration of markets

A multinational corporation (MNC) owns or controls production in more than one country, choosing places close to markets with cheap skilled labour and supportive policies.
MNCs invest by setting up factories, by joint production with local companies, by buying up local companies (Cargill Foods bought Parakh Foods) and by placing orders with small producers.
Foreign trade connects markets: buyers get more choices and producers get to compete in markets beyond their own country.

Factors that enabled globalisation

Technology: rapid improvements in transport, telecommunications, computers and the internet.
Liberalisation: from 1991 India removed many barriers on foreign trade and investment.
The World Trade Organization (WTO) aims to liberalise international trade, but developed countries have often kept unfair barriers, for example subsidies to their farmers.

Impact and fair globalisation

Consumers, especially the well-off, gained more choice and better quality at lower prices; some Indian companies such as Tata Motors, Infosys and Asian Paints became MNCs.
Special Economic Zones were set up to attract foreign investment.
Small producers and workers faced competition and job insecurity; flexible labour laws led to temporary jobs.
Fair globalisation needs government policies that protect the interests of all, including small producers and workers.

Key terms

Multinational corporation: a company that owns or controls production in more than one nation
Liberalisation: removing barriers or restrictions set by the government on trade and investment
Trade barrier: a restriction on foreign trade, such as a tax on imports
Special Economic Zone: an industrial zone with world-class facilities and tax benefits set up to attract investment

Important questions with answers

What is liberalisation?2 marks

Liberalisation means removing barriers or restrictions set by the government on foreign trade and investment, so that goods can be imported and exported easily and foreign companies can set up factories and offices. India began liberalising in 1991.

How has foreign trade integrated markets of different countries?3 marks

Foreign trade gives producers a chance to reach beyond domestic markets and sell in other countries. It allows buyers to choose from goods produced in other countries, widening their choice. As a result, goods travel from one market to another, prices of similar goods in different markets tend to become equal, and producers in different countries compete closely with each other, so markets become integrated.

What has been the impact of globalisation on India? What is fair globalisation?5 marks

Globalisation has given consumers, particularly the well-off sections in urban areas, greater choice and improved quality of goods at lower prices. MNCs have increased their investment in India in industries such as cell phones, automobiles, electronics and food products, creating new jobs, and local companies supplying raw material to them have prospered. Several top Indian companies such as Tata Motors, Infosys, Ranbaxy, Asian Paints and Sundaram Fasteners have become MNCs themselves, and service companies in IT have grown. However, small producers such as makers of batteries, capacitors, plastics, toys and tyres were hit hard by competition, and many units shut down, causing job losses. Employers now prefer flexible, temporary employment, so many workers lack job security. Fair globalisation means creating opportunities for all and ensuring that its benefits are shared better: the government should protect workers' rights through labour laws, support small producers until they become competitive, use trade and investment barriers when needed, and negotiate at the WTO for fairer rules.

Quick revision

MNCs link production across countries.
Technology + liberalisation + WTO = faster globalisation.
India liberalised trade and investment from 1991.
Fair globalisation protects small producers and workers.

Exam tips

Use the 'Ford Motors in Chennai' and 'Cargill–Parakh' examples in answers about MNC investment.
Write a balanced answer on the impact of globalisation: who gained and who lost.

Practice MCQs

A company that controls production in more than one country is a
1. public sector unit
2. self help group
3. cooperative
4. multinational corporation
Show answer
Answer: (d) multinational corporation. It is called an MNC.
India began removing barriers on foreign trade and investment from
1. 1947
2. 1969
3. 1991
4. 2005
Show answer
Answer: (c) 1991. These were the economic reforms of 1991.
The organisation that aims to liberalise international trade is the
1. WTO
2. IMF
3. UNDP
4. RBI
Show answer
Answer: (a) WTO. The World Trade Organization sets trade rules.
Cargill Foods buying Parakh Foods is an example of an MNC
1. buying a local company
2. setting up a new factory
3. placing orders with small producers
4. exporting raw material
Show answer
Answer: (a) buying a local company. Buying local firms helps expand production.
A tax on imports is an example of
1. a trade barrier
2. liberalisation
3. investment
4. globalisation
Show answer
Answer: (a) a trade barrier. It restricts foreign goods.
Which factor has stimulated globalisation the most
1. higher import duties
2. rapid improvement in technology
3. closed markets
4. barter trade
Show answer
Answer: (b) rapid improvement in technology. Transport and communication technologies made it easier.
Which statement shows that WTO rules have been unfair to developing countries
1. WTO gives loans to farmers
2. All countries have free trade
3. WTO bans MNCs
4. Developing countries must remove trade barriers while developed countries keep subsidies for their farmers
Show answer
Answer: (d) Developing countries must remove trade barriers while developed countries keep subsidies for their farmers. This puts farmers in developing countries at a disadvantage.
Who among these has gained least from globalisation
1. well-off urban consumers
2. small producers facing competition from imports
3. top Indian companies
4. MNCs
Show answer
Answer: (b) small producers facing competition from imports. Many small units like battery and toy makers shut down.

All chapters of Class 10 Social Science

Written by Kundali IQ from standard, well-established facts to help with revision. This is not an official NCERT publication; always read your textbook too.