Subcontracting and Economic - Indian Institute of Public Administration
Subcontracting and Economic - Indian Institute of Public Administration
Subcontracting and Economic - Indian Institute of Public Administration
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<strong>Subcontracting</strong> And <strong>Economic</strong> Reforms In India With Special Reference To Agro-based Industries In India<br />
The subcontracting relationships in many industries are informal<br />
arrangements with mutual trust <strong>and</strong> long-term associations<br />
as the major binding principle. However, with<br />
the onset <strong>of</strong> economic reforms <strong>and</strong> the subsequent spread<br />
<strong>of</strong> globalisation, formal arrangements are becoming increasingly<br />
important. This requires a good look at the contract<br />
law <strong>of</strong> India, which has its origins in 1872. Unfortunately,<br />
there is no specific law for subcontracting <strong>and</strong> subcontract<br />
is assumed to be a subset <strong>of</strong> general law <strong>of</strong> contract.<br />
However, subcontract involves more complications<br />
from the point <strong>of</strong> economic theory <strong>and</strong> as such it needs<br />
special clauses to be explicitly addressed in the contract<br />
law.<br />
This paper will discuss the role <strong>of</strong> subcontracting in some<br />
<strong>of</strong> the major industries in India with<br />
implications for the agro-based industries, especially<br />
the food-processing industry. It will also discuss the<br />
law’s effectiveness in solving the moral hazard problems<br />
involved in case <strong>of</strong> subcontracts. The methodology<br />
used is basically borrowed from the industrial<br />
organisation literature as applied to the interface <strong>of</strong><br />
law <strong>and</strong> economics.<br />
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