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The multinationals have affected the Indian economy, society and ecology favourably and adversely. Some of the important impacts of multinationals have been presented here:
1. Replacement of Technology: The obsolete and outdated technology performing below the capacity has been replaced by the latest and more efficient technology by the multinationals.
2. Damage to Cottage and Small Scale Industries: The traditional cottage industries as well as small scale industries are not able to compete with the large-scale production of the multinationals. These industries may disappear completely, unless special steps are taken to promote their interest.
3. Heavy Remittance Abroad: According to the Reserve Bank of India, the average rate of profit to the multinationals varies between 20 to 25 per cent. This is a huge profit remitted outside of the country.
4. Low Foreign Investment: Most of the foreign subsidiaries have raised financial resources from within India, and the transfer of capital from the parent company has been marginal.
5. Change in the Initial Activities of the Multinational Corporation: A number of foreign companies in India are acquiring the character of multi- product and multi-industry enterprises. For example, the Imperial (now India) Tobacco Company (ITC) has diversified its activities to hotel industry, constructing a chain of hotels all over India.
6. Transfer of Technology—A Myth: The assumption that the entry of multinational corporation would ensure transfer of latest sophisticated technology to developing countries has not been found valid in practice.