What Is The Meaning of Ancillarisation And Sub Contracting?

Introduction –

         Ancillarisation & Sub contracting in India, started simultaneously with the Govt. setting up enterprises almost in all the core sectors viz; manufacturing equipment for defence, railways, telecommunication, fertilizer, petroleum, petrochemical & various other engineering & processing industries.

Meaning –

         The following requirements are to be compiled by an industrial undertaking for being regarded as ancillary industrial undertaking:

1. “An industrial undertaking which is engaged or is proposed to be engaged in the manufacture or
2. production of parts, components, sub-assemblies, tooling or intermediaries or
3. the rendering of services & the undertaking supplies or renders or proposes to supply or
4. Render not less than 50% of its production or services, as the case may be, to one or more other industrial undertaking & whose investment in fixed assets in plant & machinery whether held on ownership terms or on lease or on hire purchase, does not exceed Rs 10 million.”

Example- 

          Large industries in private sector such as Telco, Escorts, Mahindra & Mahindra, Punjab tractors have also developed a chain of their ancillaries & major percentage of their components are subcontracted.

https://www.youtube.com/watch?v=r896SiPrj70