India is one of the fastest developing economies in the world. The country offers a huge market for any multinational company.

The Indian economy has been growing rapidly in recent years, and every year many new multinational companies enter this booming economy to take advantage of its vast potential. These companies bring new technology, new management skills, and new ways of doing business that can open up opportunities for growth in India’s domestic market.

On the other hand, these same companies can also negatively affect the Indian economy by driving out smaller domestic businesses unable to compete with their capital resources and advanced knowledge.

What exactly are MNCs?

Multinational corporations (MNCs) are firms that, in addition to their headquarters, have resources, facilities, and subsidiaries outside of their home countries. In other words, they are major spenders and global players. Due to their scale and reach, MNCs have the potential to influence both the global economy and local trading conditions in each of the nations where they operate.

What Impact Do Multinational Corporations Have on Local Businesses?

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1. Technology advantages: 

When an MNC invests in another nation, it takes cutting-edge business practices with it.

Being a supplier to an MNC requires local businesses to be prepared with scalable technology and production methods to satisfy the demands of the MNC. Upskilled workers will boost domestic businesses since they are trained to apply new methods and technologies.

2. Added money to the economy:

The scale of multinational corporations is often substantial, and they frequently make sizable investments in other countries.

Most of the time, the gains made will be subject to local taxes, which is advantageous for the coffers of domestic governments. Indeed, in order to encourage investment in their nations, governments frequently offer tax cuts and subsidies to MNCs.

This is fantastic news for nearby businesses. MNCs frequently collaborate with local governments to improve local trade circumstances in an effort to make doing business in the host nation just a little bit simpler. Therefore, when an MNC comes to town, you can see investment in the infrastructure of the roads, trains, utilities, and communications. Local businesses profit from investment's positive effects on the region's economic development.


MNCs almost never own commercial real estate. They would rather lease office space. One of the most difficult difficulties for MNCs in India is choosing a suitable office space. They must reserve huge office spaces due to high demand before commercial developments can be fully developed and handed over.

The facility may initially be too huge for their teams, but as the firm expands, most MNCs outgrow the space. It is normally hard to find a second place near the present one. This implies restarting the cycle from the beginning.

  • Customers Who Value Price:

Indians are not afraid to spend money on luxury items, but they will bargain for ordinary goods and services. Indians' price-centric attitude is unusual, and it is frequently highlighted as one of the issues confronting MNCs. Statistics show that Indians are less brand loyal than they are price-conscious.

Even little price increases might result in consumer loss. As a result, firms must find a means to decrease expenses without sacrificing quality. Moving to a coworking space might also assist with this. MNCs who lease space in coworking units do not have to address operating expenditures such as security, office air conditioning, housekeeping, and so on. In the long term, this can result in considerable savings.

  • Culture Differentiations:

Given its vastness, it is not unexpected to find cultural variations not just between western and Indian civilizations, but even across local areas. Setting up offices across India might be difficult for an MNC. They must strike a balance between enabling employees to express themselves while also teaching everyone about cultural diversity so that no one is upset and everyone can work in harmony.

  • The initial apprehension of Indian industries due to other MNCs:

Since the authorities opened up Indian marketplaces to global competition in 1991, corporate India has made significant progress. Fears that this might herald the end of the local industry were widespread at the time. The entry of multinational corporations (MNCs) into Indian marketplaces fueled fears that the native entrepreneurial spirit would die.

With their large amount of resources, understanding of different markets, and a group of qualified executives with proven track records.

3. Local businesses against international businesses:

The local market can be doomed by the entry of an MNC.              Whereas before they may have had a monopoly on the local market, they are now forced to compete with a major multinational, and all that comes with significant financial reserves, cutting-edge technology, production economies of scale, appealing products, industry-leading marketing techniques, and strong brand identity.

Unfortunately, most won't succeed and will shut down their businesses right away. Those who survive frequently do so by taking advantage of the home advantage, rejecting the standardized items provided by MNCs, and offering customized goods in their local markets.

But not all neighbourhood businesses can adopt this tactic; many will need to review and alter course. while the MNC exerts intense pressure on costs.

Today's scenario

The scale and breadth of domestic enterprises have grown. The domestic business will benefit from rising demand and the government's greater emphasis on infrastructure development. Local enterprises have grown sufficiently to integrate their activities on a global scale. Due to this, businesses have emerged known as Indian MNCs or Indian companies with production facilities located strategically across the world.

The number of start-ups competing with international corporations has increased as a result of technical and structural developments in the country. Because of the availability of skilled labour at a reasonable cost, Indian enterprises have achieved worldwide success.


India is on the rise and is an ideal market for global firms to join. Therefore, basing strategy on what works in other nations may be a bad idea. MNCs may gain from Indian labour and the Indian market only if their specific needs are addressed

Indian companies have progressed from low-cost producers to creative enterprises with distinct solutions for their targeted international customers, and they are now more focused on producing quality products to succeed in global marketplaces.

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