NCERT Solutions Class 10 Social Science Understanding Economic Development Chapter 4 Globalisation and the Indian Economy

Globalisation and the Indian Economy explains how foreign trade, foreign investment and MNCs connect India with world markets.
These NCERT Solutions help students answer Chapter 4 questions on liberalisation, WTO, workers, producers and fair globalisation.

Chapter 4 first explains how globalisation links countries through trade, investment, technology and MNC-led production. It then shows how Indian markets changed after liberalisation in 1991. NCERT Solutions Class 10 Social Science Understanding Economic Development Chapter 4 cover all 13 exercise questions in textbook order. Students revise Ford Motors, Chinese toys, Cargill, Bengaluru call centres, Ravi’s capacitor unit and Sushila’s garment work. These examples support clear 2026 CBSE answers on market integration, trade barriers, WTO rules and uneven benefits.

Key Takeaways

  • Globalisation: It connects countries through trade, investment, technology and MNC-led production.
  • MNCs: They spread production across countries to reduce costs and increase profits.
  • Liberalisation: India reduced many trade and investment barriers after 1991.
  • Fair globalisation: It protects workers and small producers from unequal competition.

NCERT Solutions Class 10 Social Science Understanding Economic Development Chapter 4 Structure 2026

Exercise No. Topic Question Count
1 to 5 Globalisation, trade barriers, labour laws and MNCs 5
6 to 10 Impact, liberalisation, markets and future 5
11 to 13 Fill in the blanks, matching and MCQs 3

NCERT Solutions for Class 10 Economics Chapter 4 Globalisation and the Indian Economy Exercise

The NCERT exercise has 13 questions on MNCs, trade, liberalisation, WTO and fair globalisation. These answers follow the 2026-27 NCERT textbook examples.

Q1. What do you understand by globalisation? Explain in your own words.

Answer: Globalisation means rapid integration between countries through foreign trade and foreign investment.

It connects producers, markets, consumers and companies across countries. Goods, services, technology and investments move from one country to another.

MNCs play a major role in globalisation. They set up production in different countries to reduce costs and sell goods globally.

Example:

A company may design a product in the United States. It may make parts in China and assemble them elsewhere. Customer care may be handled from India.

Q2. What were the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Answer: India put barriers on foreign trade and investment after Independence to protect domestic producers.

Indian industries were still growing in the 1950s and 1960s. Strong foreign competition could have harmed these new industries.

India allowed imports of only essential items. These included machinery, fertilisers and petroleum.

The government removed many barriers around 1991. It felt Indian producers should compete with global producers.

The aim was to improve quality, efficiency and competitiveness. This policy change is called liberalisation.

Q3. How would flexibility in labour laws help companies?

Answer: Flexibility in labour laws helps companies reduce labour costs.

Companies can hire workers for short periods during peak demand. They can avoid keeping regular workers throughout the year.

This gives companies more control over wages, work hours and employment terms. It also helps them face global competition.

However, workers may lose job security, health benefits and regular income.

Q4. What are the various ways in which MNCs set up, control or produce in other countries?

Answer: MNCs set up or control production in other countries in several ways.

  1. They set up factories and offices in countries with cheap labour.
  2. They form partnerships with local companies.
  3. They buy local companies and expand production.
  4. They place orders with small producers.
  5. They control price, quality, delivery and labour conditions.
  6. They use local suppliers for raw materials and parts.

Example:

Cargill Foods bought Parakh Foods in India. This helped Cargill control a large edible oil network.

Q5. Why do developed countries want developing countries to liberalise their trade and investment? What should developing countries demand in return?

Answer: Developed countries want developing countries to liberalise trade and investment to expand their markets.

Their MNCs can sell goods, set up factories and invest more easily. They can also use cheaper labour and resources in developing countries.

Developing countries should demand fair trade rules in return.

They should ask developed countries to remove unfair trade barriers. They should also demand reduced farm subsidies in developed countries.

Developing countries should protect small producers, farmers and workers during global competition.

Q6. “The impact of globalisation has not been uniform.” Explain this statement.

Answer: The impact of globalisation has not been the same for all groups.

Well-off urban consumers have gained from more choice, better quality and lower prices. Large Indian companies have improved technology and production standards.

Some Indian companies became MNCs. Examples include Tata Motors, Infosys, Ranbaxy, Asian Paints and Sundaram Fasteners.

Small producers and workers faced serious challenges. Many small units in toys, tyres, batteries and capacitors suffered due to cheaper imports.

Workers also faced uncertain employment. Sushila’s example shows how garment workers lost security and benefits.

Q7. How has liberalisation of trade and investment policies helped the globalisation process?

Answer: Liberalisation helped globalisation by removing barriers on trade and investment.

Before liberalisation, the government controlled imports and foreign investment. After 1991, many restrictions were reduced.

Goods could be imported and exported more easily. Foreign companies could set up factories and offices in India.

This increased competition between Indian and foreign producers. It also increased foreign investment by MNCs.

Liberalisation made India more connected with global production and markets.

Q8. How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Answer: Foreign trade connects markets by allowing goods to move between countries.

Producers can sell beyond domestic markets. Buyers also get more choice from goods made in other countries.

Example:

If India imports smartphones from South Korea, Indian buyers get more brands and features. Indian companies must improve quality and pricing.

South Korean companies also get access to Indian buyers. Prices and product standards begin to influence both markets.

This is called integration of markets.

Q9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.

Answer: The world may become more connected through digital trade, services, technology and global production.

Companies may produce goods across many countries. More services may be delivered online from countries like India.

Artificial intelligence, automation and faster transport may reduce production time. Online platforms may increase global buying and selling.

However, competition may also become stronger. Workers and small producers may need better skills, credit and technology.

Future globalisation should be fairer and more inclusive.

Q10. Supposing you find two people arguing: One is saying globalisation has hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these arguments?

Answer: Both arguments are partly correct because globalisation has mixed effects.

Globalisation has helped consumers get more choice and better quality. It has also helped large companies, skilled workers and IT services.

It has created new opportunities in automobiles, electronics, banking, software and call centres.

However, many small producers faced losses due to cheaper imports. Workers in some industries faced temporary jobs, low wages and long hours.

India needs fair globalisation. It should protect workers and small producers while using global opportunities.

Q11. Fill in the blanks.

Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of ______________. Markets in India are selling goods produced in many other countries. This means there is increasing ______________ with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because _____________. While consumers have more choices in the market, the effect of rising ______________ and ______________ has meant greater ______________ among the producers.

Answer:

Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of globalisation.

Markets in India are selling goods produced in many other countries. This means there is increasing trade with other countries.

Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India.

MNCs are investing in India because India has a large market, cheap labour and skilled workers.

While consumers have more choices in the market, the effect of rising foreign trade and foreign investment has meant greater competition among the producers.

Q12. Match the following.

Column I Correct Match
MNCs buy at cheap rates from small producers Garments, footwear, sports items
Quotas and taxes on imports are used to regulate trade Trade barriers
Indian companies who have invested abroad Tata Motors, Infosys, Ranbaxy
IT has helped in spreading of production of services Call centres
Several MNCs have invested in setting up factories in India Automobiles

Q13. Choose the most appropriate option.

(i) The past two decades of globalisation has seen rapid movements in

(a) goods, services and people between countries
(b) goods, services and investments between countries
(c) goods, investments and people between countries

Answer: The correct option is (b) goods, services and investments between countries.

Globalisation has mainly increased movement of goods, services and investments. Movement of people remains restricted in many countries.

(ii) The most common route for investments by MNCs in countries around the world is to

(a) set up new factories
(b) buy existing local companies
(c) form partnerships with local companies

Answer: The correct option is (b) buy existing local companies.

MNCs often buy local companies because they already have factories, workers, markets and distribution networks.

(iii) Globalisation has led to improvement in living conditions

(a) of all the people
(b) of people in the developed countries
(c) of workers in the developing countries
(d) none of the above

Answer: The correct option is (d) none of the above.

Globalisation has not improved living conditions for all people equally. Its benefits have been uneven across consumers, producers and workers.

Globalisation Class 10 NCERT Solutions: Key Concepts

Class 10 Economics Chapter 4 Globalisation and the Indian Economy is built around trade, MNCs and liberalisation. These concepts help students explain how Indian markets became globally connected.

Globalisation

Globalisation means rapid integration between countries.

It happens through trade, investment, technology and movement of goods and services.

MNCs

MNCs own or control production in more than one country.

They divide production across countries to reduce costs and reach larger markets.

Foreign Trade

Foreign trade connects markets across countries.

It gives buyers more choice and makes producers compete beyond domestic markets.

Foreign Investment

Foreign investment is money spent by MNCs on assets in another country.

These assets include land, buildings, machines, factories and offices.

Liberalisation

Liberalisation means removing government restrictions on trade and investment.

India reduced many such barriers after 1991.

WTO

WTO aims to liberalise international trade.

The chapter shows that trade rules are often unequal for developing countries.

Fair Globalisation

Fair globalisation means the benefits of globalisation are shared better.

It protects workers, small producers and weaker groups from unfair competition.

Globalisation and the Indian Economy Class 10: Chapter Examples

Globalisation and the Indian Economy Class 10 questions and answers need textbook examples as evidence. These case points help students support 3-mark and 5-mark answers.

Example What It Shows Answer Use
Ford Motors in India Foreign investment by an MNC Use in MNC and investment answers
Cargill and Parakh Foods MNCs buying local companies Use in production-control answers
Chinese toys in India Foreign trade and market integration Use in competition answers
Bengaluru call centres IT-enabled global services Use in technology answers
Ravi’s capacitor unit Small producers facing imports Use in impact answers
Sushila’s garment work Workers facing insecure jobs Use in fair globalisation answers
WTO and farmers Unequal trade rules Use in WTO answers

Ford Motors in India

Ford Motors came to India in 1995.

It invested Rs 1700 crore near Chennai. This shows foreign investment and interlinking of production.

Chinese Toys in India

Chinese toys entered Indian markets at lower prices.

Indian buyers gained more choice. Indian toy makers lost sales because competition increased.

Ravi’s Capacitor Unit

Ravi’s capacitor unit suffered after import restrictions were removed.

Cheaper imported capacitors reduced his production. His workers also lost regular employment.

Sushila’s Garment Work

Sushila became a temporary garment worker after her earlier factory closed.

Her example shows lower wages, longer working hours and fewer worker benefits.

WTO and Farmers

Developed countries continue to support their farmers.

This creates unfair competition for farmers in developing countries.

Useful Links for NCERT Solutions Class 10 Social Science Understanding Economic Development

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Economics Revision Notes CBSE Class 10 Social Science Economics Revision Notes
Class 10 Social Science Syllabus CBSE Class 10 Social Science Syllabus

Q.1 What do you understand by globalisation? Explain in your own words.

Ans-

Globalisation is a process of integrating the economy of the country with other economies of the world through trade in goods and services, capital flows and technology. Besides the movement of goods and services, investments and technology, globalisation also results from the movement of people between countries in search of better income, quality education or better jobs. Globalisation results in integration of markets in different countries.

Q.2 What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Ans-

(1) After independence, Indian government had to put barriers to foreign trade and foreign investment in order to protect the domestic producer from foreign competition.

(2) At that time new industries were starting up in India and immense competition from foreign imports at that stage would have hampered them badly and also may not even let them to come up.

(3) Thus, Indian government allowed imports of only essential goods such as petroleum, machinery, etc. and provided protection to the domestic producers through various means.

Reasons to remove these barriers are:

(1) The barriers on foreign trade and foreign investment have been removed to a large extent by the Indian government in the process of liberalisation.

(2) With the beginning of 1991, some major changes in the India’s policies were made. The Indian government felt that the time has come for Indian producers to compete and produce globally.

(3) This was done with the objective to improve the performance of producers within the country as they would face huge foreign competition and they would have to improve their quality.

(4) This decision was supported by powerful international organisations.

(5) Now, the goods can be imported and exported easily and also foreign companies could set up their offices and factories in India.

Q.3 How would flexibility in labour laws help companies?

Ans-

  1. The flexibility in labour laws helps in attracting foreign investment and help companies in becoming more competitive and progressive.
  2. With flexible labour laws, instead of hiring workers on a regular basis, companies can hire workers ‘flexibly’ for short periods when there is pressure of work.
  3. Further companies can negotiate on terms of employment, wages and can terminate employment, depending on market conditions.
  4. This will reduce the cost of labour for the company and helps in increasing its competitiveness.

Q.4 What are the various ways in which MNCs set up, or control, production in other countries?

Ans-

  • The multinational companies play a major role in the process of globalisation. They have spread their production in various countries.
  • MNCs set up offices in regions where they can get cheap labour and other resources to carry the operations.
  • They set up the production units in those places which are quite close to the market and labours are easily available. This is done so that the cost of production can be reduced and they can earn greater profits. MNCs also set up production units jointly with some of the local companies of other countries.
  • MNC’s might also look for government policies that look after their interests.
  • Also at time, MNC’s place orders for production with small producers in different countries. The products are then supplied to the MNCs, which then sell these under their own brand to end consumers. Footwear, sport items industries are examples of industries where production is carried out by a large number of small producers around the world.

Q.5 Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

Ans-

Developed countries want developing countries to liberalise their trade and investment so that they can expand their markets in other countries. With liberalized trade and investment policies MNCs belonging to developed countries can set up their production units in developing countries where production can take place at low cost, thereby increase their profits.

The developing countries should ask the same favour in return from the developed countries. Also they should ask for some sort of protection for their domestic producers from unfair competition from imports.

Q.6 “The impact of globalisation has not been uniform”. Explain the statement.

Ans-

  1. Critics of the new economic policy say that globalisation is a strategy of the developed nations to expand their markets in other countries.
  2. It has compromised the welfare and identity of people belonging to poor countries.
  3. Market driven globalisation has widened the disparities amongst nations.
  4. Globalisation has posed major challenges for a large number of small producers and workers of developing nations.
  5. Due to intense competition, these days most employers prefer to employ workers on temporary basis. This means job insecurity for the workers.
  6. With increasing imports and tough competition from MNCs, the small manufacturers in industries like batteries, plastic, toys etc. are suffering badly.

Q.7 How has liberalisation of trade and investment policies helped the globalisation process?

Ans-

Liberalisation of foreign trade and foreign investment policy has stimulated globalisation during the last two decades. When the government of a country removes barriers upon international trade, this process is known as liberalisation of foreign trade. Liberalisation of foreign investment means removing several restrictions on the inflow of foreign capital in domestic economy.

Liberalisation of trade in service indicates removing several restrictions on international trade in various services. Example: Vodafone, which is UK’s company, has entered into the telecommunication sector of India for providing mobile phone services.

With liberalisation of trade businesses are free to make decisions about what they wish to import or export. Liberalisation of investment meant that foreign companies could now set up factories and offices more freely. Thus, liberalisation of trade and investment policies has helped the globalisation process by making foreign trade and investment much easier.

Q.8 How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.

Ans-

With the opening of trade, goods travel from one market to another.

It creates an opportunity for the producers to reach beyond the domestic market.

Producers can sell their products not only within the country but also in the markets of other countries.

When foreign goods enter into a market, they have to compete against local products. If they happen to be inferior they will not gain a market. If they happen to be comparatively expensive they may not readily find consumer acceptance.

These products will have to adjust, according to the prevailing prices and quality. If the imported product is better than local product, the local producers will try to improve the quality of their products. In either case the price will adjust and finally become equal or near equal or competitive in the two markets.

This phenomenon is known as integration of market.

For example:

Mobile phones and laptops manufactured by the top multinational companies are available in all the markets are of same quality and almost of same price.

Q.9 Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.

Ans-

Twenty years from now, if the globalisation process continues in a fair and equitable manner, the entire world will be integrated into one international market. There will be better living conditions, greater access to modern technology and information, increased volume of outputs, more trade and capital flows along with the mobility of labour. The reasons behind the views given above are the positive effects of globalisation which includes:

  • Increase in availability of quality products and services at competitive prices to the consumers due to globalisation.
  • Increase in productivity due to investments in new technologies with liberalisation policies at place.
  • Changes in consumption pattern leading to high standard of living, etc.

Q.10 Supposing you find two people arguing: One is saying globalisation hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these arguments?

Ans-

Every policy has two sides to it, so is with the globalisation.

The negative impacts of globalisation are:

  1. Large MNCs by their power to influence price, raw material and labour, they can wipe out local competitors.
  2. Big corporations take advantage of weak regulatory rules and exploit consumers and make huge profits.
  3. By virtue of their very large economic capacity and influence, MNCs can exert influence on a country’s policies and its international relations.

The positive impacts of globalisation in India are as follow:

  1. Increased availability of quality products and services at competitive prices to the consumers.
  2. Increased productivity due to investments in new technologies.
  3. Changed consumption pattern leading to high standard of living.

Q.11 Fill in the blanks.

Indian Buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of _______. Markets in India are selling goods produced in many other countries. This means there is increasing ________ with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because ______________________. While consumers have more choices in the market, the effect of rising__________ and _________ has meant greater___________ among the producers.

Ans-

Indian Buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of globalisation. Markets in India are selling goods produced in many other countries. This means there is increasing trade with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because of less or cheaper production costs. While consumers have more choices in the market, the effect of rising demand and purchasing power has meant greater competition among the producers.

Q.12 Match the following.

  1. MNCs buy at cheap rates from small producers
 (a) Automobiles
  1. Quotas and taxes on imports are used to regulate trade
 (b) Garments, footwear, sports items
  1. Indian companies who have invested abroad
 (c) call centres
  1. IT has helped in spreading of production of services
 (d) Tata motors, Infosys, Ranbaxy
  1. Several MNCs have invested in setting up factories in India for production
 (e) Trade barriers

Ans-

  1. MNCs buy at cheap rates from small producers
 (b) Garments, footwear, sports items
  1. Quotas and taxes on imports are used to regulate trade
 (e) Trade barriers
  1. Indian companies who have invested abroad
 (d) Tata motors, Infosys, Ranbaxy
  1. IT has helped in spreading of production of services
 (c) call centres
  1. Several MNCs have invested in setting up factories in India for production
 (a) Automobiles

Q.13 Choose the most appropriate option.
(i) The past two decades of globalisation has seen rapid movements in
(a) goods, services and people between countries.
(b) goods, services and investments between countries.
(c) goods, investments and people between countries.

(ii) The most common route for investments by MNCs in countries around the world is to
(a) set up new factories.
(b) buy existing local companies.
(c) form partnerships with local companies.

(iii) Globalisation has led to improvement in living conditions
(a) of all the people
(b) of people in the developed countries
(c) of workers in the developing countries
(d) none of the above

Ans-

(i) (a) Goods, services and people between countries.

Explanation: Globalisation is a process of integrating the economy of the country with other economies of the world through trade in goods and services, capital flows and technology. Besides the movement of goods and services, investments and technology globalisation also results from the movement of people between countries in search of better income, quality education or better jobs.

(ii) (b) Buy existing local companies

Explanation: The most common route for MNC investment is to buy local companies and then to expand production. For example: Cargill foods an American MNC, has bought over Parakh Foods, a smaller Indian company.

(iii) (d) none of the above

Explanation: Not everyone in a country has benefited from the globalisation. On one hand we have people with education, skills and wealth who have made best use of the new opportunities, on the other hand we have people who have not benefited by globalisation and are even worse off.

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NCERT Class 10 Social Science Chapter-wise Solutions

Chapter 1 - Development

Chapter 2 - Sectors of the Indian Economy

Chapter 3 - Money and Credit

Chapter 5 - Consumer Rights

FAQs (Frequently Asked Questions)

Globalisation means countries are becoming closely connected through trade, investment and production. In Chapter 4, this is explained through MNCs, foreign trade, liberalisation, technology and Indian market examples.

MNCs divide production across countries to reduce costs and increase profits. They may design products in one country, make parts in another and serve customers from India.

Trade barriers were removed after 1991 to allow Indian producers to compete globally. The government expected competition to improve quality, efficiency and foreign investment.

Chinese toys became popular because they were cheaper and had new designs. Indian buyers got more choice, but Indian toy makers faced losses.

Globalisation is called uneven because all groups did not benefit equally. Well-off consumers gained, while many small producers and workers suffered.