Unit 3: Technological and international environment

Technology changes products, processes and business models: automation, digital payments (UPI), e-commerce, AI, cloud computing and data analytics. Businesses must invest in R&D, adopt new technology quickly and manage risks such as cyber-security and obsolescence.

• Technology policy: Science, Technology and Innovation Policy; Digital India, National Policy on Electronics, semiconductors mission (2021), AI mission (2024), PLI schemes for technology manufacturing.
• IPR: Patents Act 1970, Copyright Act 1957, Trade Marks Act 1999, Designs Act 2000, GI Act 1999; TRIPS compliance (product patents from 2005); National IPR Policy 2016.

• Modes: licensing, joint ventures, FDI, turnkey projects, technical collaboration, imports of capital goods, R&D partnerships.
• Problems: high cost and royalties, restrictive clauses (export bans, tie-in purchases), obsolete technology, poor absorptive capacity (skills, R&D), dependence on foreign suppliers, unsuitable technology for local conditions, IPR disputes.

The New Economic Policy, 1991, introduced during a foreign exchange crisis, rests on three pillars:

Effects: faster GDP growth, foreign investment, a booming services sector, more consumer choice — but also concerns about inequality, agrarian distress and job quality.

• FDI regulation: automatic and government routes; sectoral caps; prohibited sectors (lottery, gambling, atomic energy, real estate business); Press Note 3 (2020) — approval for investments from land-bordering countries.

An MNC is a company with operations in many countries, managed from a home-country headquarters (Unilever, Samsung, Coca-Cola, Tata).

The World Trade Organization (1995) replaced GATT. It sets rules for international trade, settles trade disputes and works to reduce trade barriers.

Consequences for India: lower tariffs and wider market access, stronger patent laws (product patents from 2005), competition for domestic industry, and debates over agricultural subsidies and food security.

International Monetary Fund (IMF, 1945): promotes international monetary cooperation and exchange-rate stability, provides short-term loans to countries with balance-of-payments problems, and offers policy advice and surveillance. India borrowed from the IMF during the 1991 crisis.

• EPZs (from 1965, Kandla): enclaves for export production with duty-free imports — converted into SEZs.
• SEZs (SEZ Act, 2005): deemed foreign territory for trade — duty-free imports, single-window clearance, tax benefits (sunset for new units after 2020); about 270+ operational SEZs.
• EOUs (1981): units committing to export their entire production, located anywhere; duty-free inputs.
• Dumping: exporting goods at a price lower than the normal value in the home market, causing injury to the importing country's industry.
• Anti-dumping measures: DGTR investigates; anti-dumping duty imposed under the Customs Tariff Act (Section 9A); also safeguard duties and countervailing duties; WTO Anti-Dumping Agreement; India is among the largest users (e.g., duties on Chinese steel, chemicals, solar glass).

Sectoral structure (share in Gross Value Added, approximate)

• Structural change: share of agriculture in output has fallen sharply since 1950–51 (from over 50%), but employment has moved slowly — India skipped a large manufacturing phase and moved to services.
• India is among the world's five largest economies in nominal terms and the third-largest in purchasing-power parity (mid-2020s).

• India moved from stage 2 (1951–1981, "population explosion") into stage 3; total fertility rate is now around 2.0 — at or below replacement level (NFHS-5).

Demographic features (Census 2011 and later estimates)

• Causes of rapid growth: high birth rate (early marriage, illiteracy, preference for sons, poverty), sharp fall in death rate (medical facilities).
• Effects: pressure on land, food and housing, unemployment, low per capita income, strain on education and health, environmental degradation.
• Demographic dividend: a large working-age population can boost growth if it is educated, healthy and employed.

• Rural–urban migration: push factors (low farm incomes, disguised unemployment, lack of services) and pull factors (jobs, wages, education, health); effects — urban slums, informal jobs, remittances to villages, strain on infrastructure; COVID-19 reverse migration (2020) exposed vulnerability; One Nation One Ration Card, e-Shram registration.

Poverty

• Absolute poverty: inability to meet minimum needs; measured by a poverty line (Tendulkar, Rangarajan committees).
• Relative poverty: poverty compared with others' incomes.
• Multidimensional Poverty Index (NITI Aayog/UNDP): health, education and living standards — the share of multidimensionally poor fell from about 25% (2015–16) to about 15% (2019–21) and further later.
• Causes: low growth in agriculture, unemployment, population growth, inequality, inflation, illiteracy, social factors.
• Measures: MGNREGA (100 days of wage employment), PM-KISAN, PMAY (housing), NFSA and PM Garib Kalyan Anna Yojana, DAY-NRLM (self-help groups), Ayushman Bharat.

Unemployment

• Measurement (PLFS): usual status, current weekly status; unemployment rate around 3–5% (usual status) but high among educated youth; large informal sector.
• Measures: Skill India, Startup India, Make in India, PMEGP, MGNREGA, PLI schemes, Mudra loans.