role of multinational company in Indian Economy

India is one of the fastest growing economies in the world. After a slow gradual process of opening up its markets to foreign competition, India is starting to boom. With MNC (Multi national companies) opening increasing number of offices to out source work, India's youth now have opportunities that their parents never did. These youths along with their parents are driving the Indian economy by purchasing foreign brands and spending on other luxury items.

Many of these youth's are in their mid 20's and still live at. They have little or no bills to pay for and in most cases spend about 60%-70% of their income shopping (Source Wall Street Journal, Wallets crack open in India, January 3rd, 2006). Majority of these youths are working for call centers or other technology firms, and increasing living a more western life style of consumption.

India currently has about 17 million households or 90 million people that belong to the country's middle class, with earnings between $4,500 and $22,000 according to the National Council For Applied Economic Research. The same organization has classified an additional 287 million individuals as "aspirers" those that hope to join the middle class. These aspirers are making any where between $2000 - $4000. It is predicted that by the year 2010 these individuals will join the ranks of the middle class to make a total of 561 million according to the economic council.

Despite the bright prospects, many foreign companies are still struggling to enter the Indian market. Stores like Wall-Mart have been prevented to invest in operating their own stores in India. Many of the foreign brands have now entered India through franchise agreements, which require companies to cede a lot of control to local operators.

What ever the case, the Indian economy is growing in size at a rapid pace, and the year 2006 will bring new consumers to the market at an increasing growing rate. The challenge most companies face is how to sell products to brand conscious consumers at a price they can afford and how to keep up with the growth rate which in most cases is about 30%-50% a year compared to 3%-5% on average in the developed world.