5.1.13

Case Study: Economic Development in India

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India's Changing Industrial Structure

The rapid development that is happening in India is resulting in changes to their industrial structure.

Illustrative background for Primary industryIllustrative background for Primary industry ?? "content

Primary industry

  • Like many LICs or NEEs, lots of India's population works in agriculture. Over half of workers work in primary industries (farming, mining etc).
  • Fuels and oil are worth 14.9% of India's exports and minerals from mining make up 12.4% of India's exports.
  • Although it employs over 50% of people, primary industries only create 12% of India's GNI.
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Secondary industry

  • Manufacturing (or secondary industries) account for 28% of India's GDP. Manufacturing is more 'labour-intensive' than software, which is good because it creates lots of jobs.
  • Exporting manufactured products is better for development than exporting commodities (raw materials) and more of the value-added stays in the country.
  • In 2018, vehicles made up 5.2% of India's exports and machinery made up 6.3% of India's exports.
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Tertiary and quaternary industries

  • Tertiary and quaternary sectors now account for 60% of Indian GDP, but they only created 22% of Indian jobs. This is because lots of these jobs are in software, which does not need as many workers as farming or mining.
  • Infosys and Tata Consulting are two of India's largest software businesses and Byju's is one of India's largest 'start-ups'.
  • Lots of Western businesses, like British Airways have outsourced their customer service and software development functions to India in recent years.

Trans-National Corporations (TNCs) in India

TNCs (Trans-National Corporations) are businesses that sell goods & services globally in lots of different countries. Unilever Hindustan and Vodafone India are TNCs operating in India.

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What are the advantages of TNCs in India?

  • In 2018, Unilever Hindustan employed 18,000 people.
  • In 2018, Vodafone India also employed 18,000 people.
  • TNCs create jobs. They also train local people in skills demanded in developed countries, allowing more value to be added in India, rather than added in developed nations.
  • Both Unilever and Vodafone make profits in India, which can be taxed by the government. The taxes can then be spent on improving India's infrastructure and public services.
Illustrative background for What are the disadvantages of TNCs in India?Illustrative background for What are the disadvantages of TNCs in India? ?? "content

What are the disadvantages of TNCs in India?

  • TNCs often take the profits made in India and give them to Western shareholders as dividends.
  • TNCs may stop new local businesses emerging; competing against Unilever and Vodafone can be hard.
  • TNCs can make developing countries compete by promising jobs in exchange for tax incentives. Ireland is a developed country. However, it offered businesses like Apple tax incentives to operate in Ireland instead of other European countries.

Jump to other topics

1The Challenge of Natural Hazards

1.1Natural Hazards

1.2Tectonic Hazards

1.3Weather Hazards

1.4Climate Change

2The Living World

3Physical Landscapes in the UK

3.1The UK Physical Landscape

3.2Coastal Landscapes in the UK

3.3River Landscapes in the UK

3.4Glacial Landscapes in the UK

4Urban Issues & Challenges

5The Changing Economic World

6The Challenge of Resource Management

6.1Resource Management

6.2Food

6.3Water

6.4Energy

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