No doubt, India is having a benefit of having huge domestic market. It is also true that due to various other factors, India is acting as a magnet to attract FDI..........but in spite of all these, why it is necessary that India should invite MNCs to set up their manufacturing facilities here.
Inviting MNCs to set up manufacturing facilities in India is beneficial for the following reasons as follows,
Technology Transfer, MNCs bring advanced technology and know-how, which can help upgrade domestic industries and improve production processes, leading to the increased efficiency and competitiveness.
Job Creation,also the establishment of MNC manufacturing units generates employment opportunities to the people, reducing unemployment rates and contributing to the country's economic growth and development as well.
Well, it's really important not only for India but all developing countries to do so.
In short terms there's the transference of technology, income generation, raising foreign capital and improving monetary exchange conditions, a great opportunity to a possible greater participation in world trade. In addition to lowering the cost of goods that were previously imported.
I believe that history demonstrates well why development is only possible within this protectionist framework. However, it is worth remembering that protectionism alone does not guarantee anything, even the country can go through processes of deindustrialization, as was the case in Brazil, when in the 50s the GDP was composed almost in its half by the industrial sector, today, this corresponds to a small portion and the country has a large export sector of commodities and services, resulting in a small income for a large part of the population, if compared to the so-called 1st world countries.
Within the ECLAC (or CEPAL as it's known in spanish/portuguese) developmentalist school, Celso Furtado, in his book The hegemony of the United States and the underdevelopment of Latin America, perfectly highlights that China, the USA, Russia, all had different processes for their industrialization, that is, in the cases Brazil or India, it will not be different, there will be some unique process with characteristics similar to developed countries, but never 100% the same.
I hope to help with this answer.
Developing countries like India invite foreign companies to set up their manufacturing units there to promote economic growth and development. Foreign direct investment (FDI) can bring in new technologies, create jobs, and increase exports. It can also help improve infrastructure and provide access to global markets.
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