Subcontracting in India’s Unorganised Manufacturing Sector

The article provides empirical evidence on the pattern and magnitude of subcontracting in micro and small manufacturing enterprises sector and across its different industry groups and analyses whether there are any sector-specific features in functions and linkages. It illustrates types, nature and extent of linkages and their implications for the micro and small enterprises. In terms of select performance indicators, a comparative analysis of enterprises that are engaged in subcontracts and those that are not has been attempted to identify factors that work for or against long term relationships between the large and micro and small firms. Subcontracting as an instrument for technological upgradation and employment expansion in micro and small manufacturing enterprises has also been discussed. The article shows that the subcontracting intensities were pronounced in very few product lines. Although the subcontracting enterprises were reported of receiving assistances in terms of marketing, technology and finance, these enterprises were operating at a lower productivity level as compared to non-subcontracting enterprises. Further comparison of employment generation capacity between subcontracting and non-subcontracting enterprises does not reveal any pattern. The article concludes with a summary of the article and suggests policies that can potentially impinge on subcontracting linkages for optimal outcomes.