Answer to Question #50817 in Management for Iyyappan

Question

A small country like Switzerland has more number of big multinational corporations all over the world. Why not in India? Substantiate your views with appropriate data and examples.

Answer 1

Answer on Question #50817, Management, OtherA small country like Switzerland has number of big multinational corporations all over the world. Why not in India? Substantiate your views with appropriate data and examples.Explanation:From a legal point of view multinational corporations can be considered as MNC group, which includes branches located in several countries. Nature of the relationship through which MNCs spread its influence far beyond its own branches, are very diverse: contracts for processing parts or contracting, marketing arrangements or franchise assignment of patents, etc.Due to its decisions in the field of investment and choice of location of production MNCs play an important role in the distribution of global manufacturing capacity. Their impact on international trade is proportion to their participation in this trade. According to some estimates, more than half of MNCs global foreign trade. The share of MNCs is more than 80% of trade in high technology. Forming a single network, transnational capital has one-third of all production facilities and produces almost half of planetary product.Expanding transnational activities, they create economic preconditions for the organization of international production with a single market and information space and the international capital markets, labor, science and technology, consulting and other services. Struggling for markets globally, MNC increases the level of competition that causes the need for constant innovation, changing technology and the acceleration of scientific and technical progress. Facilitating the circulation of capital, people and technology, they significantly contribute to economic growth and development.However, their economic power is a source of potential conflicts with those states on whose territory they operate. Essentially MNCs are increasingly determined by international politics.In this paper, our objective is to compare the two countries Switzerland and India in terms of number of multinational corporations, as well as to justify why in Switzerland the largest number of multinational companies around the world.First of all, we need to specify the reasons that led to the tendency of growth of multinational companies in the country of Switzerland in comparison with India.It is clear that much more effective business develops in economically favorable conditions. Let us first consider Switzerland.Switzerland is one of the most advanced countries of Central Europe and also occupies a leading position in the world in terms of per capita income.Despite the lack of minerals, Switzerland successfully competes with other countries in the world markets and thus provides a high level of economic stability and low unemployment rates.The Swiss economy is one of the most liberal and competitive in the world. The most developed industries - metalworking, machinery, machine tools, production of computer equipment, vehicles, watches, chemical, pharmaceutical and food industries. Switzerland is also one of the main financial centers of the world.The stability of the Swiss currency, political and economic stability in the country, favorable geographic location and mild climate - all these factors make Switzerland an extremely attractive place for business activities and accommodation.Another, not the last factor in the eyes of foreign investors is Swiss tax system. Taxes in Switzerland for corporate and for individuals is much lower than in many other European countries. The total amount of tax for legal entities shall not exceed, as a rule, 25%. In addition, the traditional tax system provides for certain exemptions for certain types of businesses.Subject to taxation as individuals and firms located on the territory of the country and doing business. To determine the level of corporate taxation are taken into account total income from operations in different countries. As a rule, income from real estate located abroad and foreign affiliates are not taxed in Switzerland. However, these revenues are considered in determining the tax rate.Switzerland signed an agreement on avoidance of double taxation with 69 countries. In the application of this agreement, the tax burden can be mitigated or reduced, however, en forget the increased obligations on information exchange.Taxation of companies in Switzerland, in spite of its complexity, provides significant tax benefits to international business, and if available special tax regimes company registration in Switzerland it is extremely beneficial.Also it should be note that in Switzerland was accumulated rich experience in precision engineering. Today, Switzerland is a leading technology powers the world. Like other European countries, Switzerland has moved from the resource industry to knowledge-based economy.The pharmaceutical industry has its roots in the production of textile dyes in the 19th century. In Switzerland they are base of transnational corporations, attracting a large number of managerial and professional staff from abroad. Swiss pharmaceutical industry operates worldwide. Its production capacity and research institutions scattered across several continents.Similarly, we consider the system of taxation in India. India is diverse country, whose economy is increasingly integrated with the global economy. Deployed economic reforms undertaken in the last decade have had far-reaching consequences. Operations in India occupied a central position in the global activities of these giants. A huge and growing market, developing infrastructure, sophisticated financial sector, flexible regulatory environment, benefits, steady state and a good economic outlook makes India an attractive investment. But for a quite long period of time, India had a restrictive policy in terms of foreign direct investment. As a result, there was lesser number of companies that showed interest in investing in Indian market.India has benefited from the presence of numerous educated English-speaking populations and has become a major exporter of services in the field of information technology and software development. In 2010, the Indian economy has recovered from the global financial crisis the largely due to strong domestic demand and the growth of over 8% during the year in real terms. The taxable income of non-residents and foreign companies is determined in the amount of 5% to 10% of the amount received in India for the following activities: · Exploration work related to oil;· Work related to air transport;· Navigation;· Construction work.The main problems of the Indian economy are inflation, instability of the national currency and rising external debt. However, in these areas there have been some positive developments in the ongoing economic reforms. Economic growth in large-scale economy like India to a great extent based on internal factors and focused mainly on their own needs and the domestic market, so the strategic goal of economic reform of the current period is the creation of a competitive economy in the country, i.e., reforms include a fundamental change in the whole pattern of economic growth, unleashing the stimulating effect of market forces. Currently, the government implemented a policy of broadening and deepening of the second phase of economic reforms, which aim to closer integration of India into the global system of economic relations. Thus we can conclude that the progressive development of the economy, taxation system, favorable development prospects for companies in Switzerland have created an efficient economically climate for multinational corporations. While in India, there were only the makings of economic growth and environment for multinational corporations.