The exchange of goods among people, states and countries is referred to as trade.
Importance of International Trade:
(i) International trade of a country is an index to its economic prosperity.
(ii) It is considered the economic barometer for a country. If the balance of international trade is favourable, a country will be able to earn more foreign exchange.
(iii) As no country is self-sufficient in all resources it cannot survive without international trade.
(iv) Countries have trade relations with the major trading blocks.
(v) Exchange of commodities and goods have been superseded by the exchange of information and knowledge.

Globalisation has led to integration of markets across countries. The Indian markets are now flooded with a wide ranging choice of goods. Import from other countries has led to an expanding choice of goods beyond what is domestically produced:
(1) We have a wide variety of goods and services before us in the market.
(2) The latest models of digital cameras, mobile phones and televisions made by leading manufacturers of the world like Sony, Samsung etc. are available in the market.
(3) Every season, new models of automobile can be seen on Indian roads. Today Indians are buying cars produced by nearly all the top companies in the world.
(4) A similar explosion of brands can be seen for many other goods like footwear. For example, Adidas, Nike, Reebok, Puma and many more.

Globalisation is the process of rapid integration or inter-connection among countries. Over the last 20-30 years, these has been a tremendous increase in globalisation with the increase in the number of MNCs. Role of MNCs in promoting globalisation process:
(1) MNCs set up production centres worldwide where cheap labour is available, markets are near and government policies are favourable
(2) They supply produced goods to different countries.
(3) Countries of the world have come closer due to increased movement of people between countries.
(4) MNCs provide money for additional investments for faster production.
(5) MNCs bring with them the latest technology and know-how for enhancing and improving the production process. 

(i) Greater competition among producers (both local and foreign), has been advantageous to consumers, particularly the well-off section. There is greater choice before the consumers who now enjoy improved quality and lower prices of several products.
(ii) Globalisation has led to a higher standard of living especially in urban areas.
(iii) MNCs have increased their investments in India in industries such as electronics, automobiles, cellphones, soft drinks, fast food, banking services etc. leading to more job opportunities in these industries and services.
(iv) Globalisation has enabled some large Indian companies to emerge as MNCs themselves like Tata Motors, Infosys, Ranbaxy, Asian Paints, etc. 
(v) Globalisation has also created new opportunities for companies providing services particularly those involving IT (Information Technology). For example, call centres.
(vi) Local companies supply raw materials to foreign industries and have prospered. However, for a large number of producers and workers the impact has not been uniform and globalisation has posed major challenges. 

(1) People with education, skill and wealth have benefitted by globalization.
(i) Greater competition among producers (both local and foreign) has been advantageous to consumers, particularly the well-off section. Rich people enjoy improved quality at lower prices for several products and enjoy a higher standard of living.
(ii) MNCs have increased their investments in India over the past 20 years in industries such as cell phones, automobiles, electronics, soft drinks, fast food and services such as banking.
(iii) New jobs have been created in all these industries and services.
(iv) Top Indian companies have benefitted from the increased competition. They have invested in newer technology and production methods.
(v) Some Indian companies have gained from successful collaborations with foreign companies. Globalization has enabled some companies to emerge as multinationals.
(2) However, globalization has not been uniform among producers and workers.
(i) Globalization has posed a major challenge for a large number of small producers and workers. Small manufacturers have been hit hard due to competition causing many industrial units to shut down, rendering many workers jobless in small industries. (The small industries in India employ 20 million workers.).
(ii) Due to pressure of competition, most employers do not employ workers on a permanent basis; to avoid paying for the whole year.
(iii) Worker's jobs are not secure any more, wages are low and they are forced to work overtime to earn adequate money.
(iv) In order to cut costs of products for the benefit of MNCs, employers in industries such as garment exports, pay very low wages to workers.
Hence, there is a need for 'fair globalization' which will ensure that the benefits of globalisation are shared better in a more equitable manner. 

(a) A Multi-National Corporation (MNC) is a company that owns or controls production in more than one nation. The goods and services are produced globally. They production process is divided into small parts and spread out across the globe.
(b) Tata Motors (automobiles), Infosys (IT), Ranbaxy (medicines), Asian Paints (Paints), Sundaram Fasteners (nuts and bolts), etc. are some of the Indian companies which are spreading their operations worldwide as MNCs. Harmful effects of MNCs to a host country:
(1) Small producers compete or perish: MNCs have posed major challenges for a large number of small producers and workers. The small manufacturers have been hit hard due to competitions. Several of the units have shut down rendering many workers jobless. Batteries, taps, tyres, dairy-products, vegetable oil are some of the industries that are badly affected due to stiff competition from MNCs.
(2) Uncertain employment: In order to maximize the profit MNCs look for a location with minimum labour costs. Faced with competition, most employers these days prefer to employ workers on temporary basis so that they do not have to pay workers these days prefer to employe workers on temporary basis so that they do not have to pay workers for the whole year. This has changed the lives of workers and their jobs are no longer secure.
(3) The Condition of employment: Workers also have to put in very long working hours and work night shifts on a regular basis during the peak season. Wages are low and workers are forced to work overtime to make both ends meet. The workers are denied their fair share of benefits and no longer get the protection that they enjoyed earlier, for example, the Indian garment export industry often deny their workers their fair share of benefits. 

(i) More choice for consumers : Globalisation and competition among producers has enabled the consumer to have a wide range of choice available in market. For example, Chinese toys and Indian toys both are available. Consumer can compare quality, price, suitability and safety for both types of toys. So consumer is ultimately benefitted.
(ii) Better job opportunities: Globalisation and competition among producers have given rise to better job opportunities for skilled persons. People can get better salary and facilities for the specialised skills in other countries.
(iii) Expansion of information and communication technology: Globalisation has facilitated improvement in information and communication technology like computers, internet, telephone including mobile phones etc.

The multinational corporations have spread their production and interaction with local producers in the following ways :
(i) Setting up production jointly with local companies. They provide money for additional investments like buying new machines for faster production. For example : Cargill Foods, a very large MNC (USA), has bought smaller Indian companies such as Parekh Foods. 
(ii) The MNCs provide efficient managerial and advanced technology for faster production and efficient use of resources.
(iii) They have increased their investments over the past 15 years. They provide employment opportunities to the masses. The local companies supplying raw material to these industries have prospered.
(iv) Many food processing multinational companies such as Pepsi, Coca-Cola have taken over Indian markets in cold drinks and food products. This helps in greater choice for consumers with a variety of goods at cheap prices. 

(a) Foreign trade is integration of markets in different countries. For example, export and import of goods and services from one country to another. But foreign investments are investments made by MNCs. For example, investment in land, machines, building etc. to earn profit.
(b) Role of MNCs in foreign trade and foreign investments:
(i) MNCs can provide money for additional investments like buying new machines for faster production to small companies.
(ii) MNCs can provide efficient managerial and advanced technology for faster production and efficient use of resources. So MNCs play an important role in foreign investment.
(iii) MNCs facilitate movement of goods and services between various countries. Movement of people across the globe also creates better job opportunities and better income. So MNCs promote foreign trade also. 

(i) Effect of Functioning of WTO on Indian Economy:
The developing countries like India feel cheated as they are forced to open up their markets for the developed countries but are not allowed access to the markets of developed countries.
(ii) Favourable Impacts of WTO:
WTO creates environment such as international trade among member countries in an open, uniform and non-discriminatory manner.
(iii) Unfavourable Impacts of WTO :
WTO is dominated by the developed countries, especially by America, European Union and Japan etc. Developing and poor countries are seldom consulted until the rich nations complete their negotiations.