What is Loan Licensing in Ayurvedic Sector?

You have seen a number of marketing companies who don’t have own manufacturing units but use manufactured by name of own company. They pretend to do manufacturing as well as marketing by own self.

If you are confused how they can show like manufacturing company but in actually they don’t have any manufacturing plant. So, you can assume they are manufacturing their product at loan licensing basis.

In this article, we will try to understand what is loan licensing and loan licensing works?

Loan Licensing:

Loan licensing is defined as a license given to a person/company/organisation who doesn’t have any manufacturing unit but want to avail facility of manufacturing unit owned by a licensing having ayurvedic manufacturing license.

In simple words, it’s like to take a rented place in other manufacturing unit; where you can use manufacturer’s plant, machinery, competent person and other resources to manufacturer your own products.

Procedure to take Loan License:

For taking loan license, application has to be submitted to Ayush department with supporting document. Loan licensing document’s is similar to new manufacturing unit documents. General documents required for taking loan license are:

How does it work?

When a Loan License is issued, actual manufacturing having primary license has to provide working area, documents room, office and other facility to loan licenser. A new license number is issued to loan licenser by ayush department. Loan licenser pays rent/charges/commission/profit as per mutual agreement to primary licenser. After receiving manufacturing license number, loan licenser can conduct manufacturing activities in area assigned by primary manufacturer to him.

Condition of Loan License:

The manufacturing unit has adequate equipment, staff, and capacity for manufacture and facilities for testing, to undertake the manufacture on behalf of the applicant for a loan licence.

Advantage of Loan Licensing:

Loan licensing has own advantage and disadvantage but has more advantage with less disadvantage.
  • Enjoy benefits of own manufacturing unit without any huge initial investment
  • Manufactured by address of own firm at packaging of products
  • Your company will get manufacturer image in market
  • You can manufacture own products by securing own secrets and maintaining quality as per own specification
  • You can get experience of manufacturing before establishing own manufacturing unit.
  • Raw material, packaging material, die, specifications etc, all could be maintained and procured by your self

Disadvantage of Loan License:
  • As you are performing all manufacturing activity, you will be directly responsible for quality and sampling of products
  • You will also have to concentrate at both aspects of business i.e. manufacturing as well as marketing

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