How is “factory” defined in ASI? Are all manufacturing units covered?

How is “factory” defined in ASI? Are all manufacturing units covered?

Answer:

The definition of “factory” in ASI comes from the Factories Act, 1948:

• A “factory” is an establishment where:

  1. 10 or more workers are employed with the aid of power, OR

  2. 20 or more workers are employed without the aid of power.

• Additionally, bidi and cigar establishments (irrespective of size) are included if registered under Section 85.

• Coverage in ASI:

  • All factories registered under the Act (called the organized manufacturing sector).

  • They form the frame population for ASI.

• Not covered:

  • Small, household-based, or cottage industries that do not meet the threshold.

  • Informal/unregistered enterprises → they are studied under NSSO’s Unincorporated Enterprise Surveys (not ASI).

Cross-question:

Why is the unregistered manufacturing sector studied separately?

• Different characteristics:

  • Small, household-based, often family-run.

  • Use of unpaid labour, low capital intensity, seasonal operations.

• Statistical reasons:

  • Unregistered units are numerous (form majority of manufacturing units), but individually small.

  • Their inclusion in ASI would distort survey design and increase burden.

• Policy need:

  • Government schemes (MSME, skill development, credit facilities) need specific data on unorganized units.

• Separate surveys:

  • NSSO (now NSO) conducts Unincorporated Non-Agricultural Enterprises (UNAE) and Unorganized Manufacturing Surveys to capture them.

👉 Hence, registered (ASI) and unregistered (NSS surveys) sectors are studied separately, but together they give a complete picture of Indian manufacturing.