Q1. [1] straightforward initial-understanding
⚠ Globalisation and the Indian Economy › IMPACT OF GLOBALISATION IN INDIA — Internal project only — not in the Board exam (per CBSE 2026-27 curriculum)
Only 'What is Globalisation?' and 'Factors that have enabled Globalisation' are in the Board exam; the remaining sub-topics are the internally-assessed interdisciplinary project. [source: Course Structure — Economics, Chapter 4 (Subtopics evaluated in Board)][mcq] Why are multinational companies (MNCs) attracted to invest in a developing country like India?
Options: (A) To reduce competition among themselves (B) To take advantage of cheap labour, large markets, and lower production costs (C) To avoid paying taxes in their home countries (D) To gain control over the Indian government's policies
- A These sectors had cheap labour and no competition from local producers.
- B These sectors had a large number of well-off buyers in urban areas.
- C The Indian government offered permanent tax exemptions in these sectors.
- D These sectors required very little foreign investment to set up production.
Generated by claude-sonnet-4-6 · 2026-06-26 13:23 · grounding rag
Model Answer
(B) To take advantage of cheap labour, large markets, and lower production costs.
MNCs set up production where cheap labour and other resources are available so that production costs are low and they can earn greater profits.
Source: Chapter 4, "Production Across Countries" and "Interlinking Production Across Countries"
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Explanation
- The textbook explicitly states MNCs look for cheap labour, low production costs, and large markets (e.g., MNCs interested in India for its well-off urban buyers and cost savings of 50–60%).
- Options A, C, and D are not supported by the chapter — tax exemptions in SEZs are time-limited (not permanent), and controlling government policy is not mentioned as a motive.
- Always link your MCQ choice to the textbook reasoning, even in 1-mark answers, for full credit.