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Factory within Factory
The basic concept of factory within factory (FWF) model, as the name suggests, is that a Supporting manufacturer will have his factory within the factory of the Principal manufacturer. This thought paper has been designed to explore varied factors of this concept and highlight its benefits.
This thought paper discusses the concept, prerequisites, advantages including the tax and commercial benefits, methodology and challenges. While specific advantages may differ from industry to industry and from transaction to transaction, certain advantages for all those using this model are:
- Dedicated supplies
- Quasi Just-In-Time benefits
- Benefits available under Indirect tax regime and opportunity for saving
- Economies of scale and opportunity to save owing to bulk/ continuous purchasing