CBSE Class 10 SST: Globalisation and Economy — Economics Notes 2026

What is Globalisation

• Globalisation: integration of countries through trade, investment, technology, movement of people
• Driven by: reduction of trade barriers, faster transport and communication, MNCs, WTO
• Started accelerating post-1991 when India liberalised its economy under LPG reforms (Liberalisation, Privatisation, Globalisation)

Multinational Corporations

• MNC: company operating in more than one country; headquarters in home country, subsidiaries/factories in host countries
• Why MNCs invest abroad: cheap labour, natural resources, large consumer markets, tax benefits
• Examples: Coca-Cola, Nokia, Ford (manufacturing in India); MNCs account for 25% of world GDP

How MNCs Operate in India

• Joint ventures: MNC + Indian company; e.g., Honda + Hero (now separated)
• Contract manufacturing: MNCs place orders with local manufacturers who make to MNC specifications (e.g., garment industry)
• Setting up production units directly: Samsung, Hyundai, Maruti-Suzuki plants in India

Trade Barriers

• Historically: tariffs (taxes on imports), import quotas, licencing requirements — protected domestic industries
• 1991 reforms: India reduced tariffs, removed quotas under IMF/World Bank conditions
• Current tariffs: India's average MFN tariff ~15%; USA ~3.5%; developed countries lower barriers but demand same from developing

World Trade Organisation (WTO)

• WTO (est. 1995): promotes free trade; sets rules for international trade; 164 member countries
• Dispute resolution: countries can challenge unfair trade practices; USA and India in dispute over steel tariffs
• Criticism: developed countries protect agriculture (subsidies) but demand developing countries remove barriers

Impact of Globalisation on India

• Positive: FDI inflows, job creation in IT/BPO/manufacturing, cheaper consumer goods, technology transfer
• Negative: traditional industries (textiles, small-scale) face competition; farmer income threatened by cheap imports
• Inequality: skilled workers and urban businesses benefited more than unskilled workers and farmers

CBSE Exam Tips

• Globalisation: 3–5 marks; MNC definition and example is always asked
• Impact on India: write both positive and negative; 4-mark balanced answer
• Trade barriers: define tariff; explain why governments use them; impact of their removal