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The Weak Nexus between Small and Medium Factories and Large Factories in India's Assembly Industries

Shuji Uchikawa and Takahiro Sato
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Shuji Uchikawa: School of Econimics, Senshu University, JAPAN

No DP2021-08, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This article focuses on the present structure of supply chain in the four assembly industries in which multi-tier subcontracting systems have developed after economic reforms. Factories are classified into three sizes—large, medium and small—depending on the average number of workers. The nexus between small and medium factories is strong. While growth in production of small factories depends on the input consumed by medium factories in the same state, the former contributes to the growth of production of medium factories. Interdependence between the two is observed. However, small factories are outcompeted by large factories. As large factories grow, small factories lose their market share. The nexus between small and large factories is weak. At present, a large portion of small factories are not engaged in the supply chain of assemblers. Only some medium factories are involved. Moreover, discontinuity exists between large factories and micro, small and medium enterprises.

Keywords: Subcontracting; Assembly industries; MSMEs; Supply chain; Subcontractor; Assembler; Procurement (search for similar items in EconPapers)
Pages: 27 pages
Date: 2021-03
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