Many years ago Parle drinks was bought by Coca Cola as Parle’s annual turnover was 250 crores, while Coca Cola’s advertising budget alone was 400 crores. What policy shift allowed this process?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Liberalisation
Option (1) Globalisation — Incorrect. Globalisation is the growing interlinking of the world, economically, culturally and politically. India’s globalisation came about mainly because of liberalisation; the policy shift that let a multinational buy an Indian company was liberalisation itself.
Option (2) Industrialisation — Incorrect. Industrialisation is the growth of machine production in factories. It is a long process of change, not a policy shift, and it does not explain why a foreign company could take over an Indian one.
Option (3) Liberalisation — Correct. Since the 1990s the government has followed a policy of liberalisation: private and especially foreign firms are encouraged to invest, licences are no longer needed and foreign products are easily available. As a result, many Indian companies have been bought over by multinationals, and the purchase of Parle drinks by Coca Cola is one such case.
Option (4) Disinvestment — Incorrect. Disinvestment is the government selling its share in public sector companies, as with Modern Foods. Parle was a private company, so its sale to Coca Cola had nothing to do with the government selling its own share.
NCERT (2025-26): “Globalisation, Liberalisation and Changes in Indian Industry … Since the 1990s, the government has followed a policy of liberalisation. Private companies, especially foreign firms, are encouraged to invest in sectors earlier reserved for the government, including telecom, civil aviation, power, etc. Licenses are no longer required to open industries. Foreign products are now easily available in Indian shops. As a result of liberalisation, many Indian companies— small and large, have been bought over by multinationals. At the same time some Indian companies are becoming multinational companies. An instance of the first is when, Parle drinks was bought by Coca Cola.…” |