By setting up their production plants in India, MNCs such as Ford Motors tap the advantage not only of the large markets that countries such as India provide, but also the lower costs of production. Explain the statement.
By setting up production plants in India, MNCs like Ford Motors benefit from the country's large markets. India has a large number of well-off buyers, allowing companies to sell finished products like cars domestically. For instance, Ford sold 88,000 cars in the Indian market by 2017. Simultaneously, MNCs tap into lower costs of production. India provides the advantage of being a cheap manufacturing location due to the availability of highly skilled engineers and educated English speaking youth. This can result in 50-60 per cent cost-savings for the MNC.
Additionally, India serves as a strategic base for global operations. Ford exports cars and components to other countries, utilizing local resources and labour to supply markets worldwide while keeping costs low.
Explanation
The answer draws directly from the provided context regarding Ford Motors' entry into India in 1995. It highlights two main advantages cited in the text: access to a large consumer base (exemplified by the 88,000 cars sold in India) and reduced production costs (attributed to skilled engineers and English-speaking youth leading to 50-60% savings). The context also notes that India acts as a base for exporting cars and components to other countries, integrating the local plant into the company's global operations.