Why do large scale industries depend on ancillary industries?

Answer 1

Ancillary units are small firms manufacturing and supplying intermediate goods, typically to large firms. Several

policy measures are under consideration to raise the

output of the ancillary industry to the level of 15 per

cent of the value of output of the large scale industry

by 1985. The underlying assumption appears to be that

the ancillary status enhances the prospect for the viability of the small firm. This paper examines whether

ancillary units perform better than small scale units (small

manufacturers of end products) under the conditions prevailing in India. The findings reveal no significant difference in the mean performance of the two classes of

small firms. It also draws implications for policymakers

and management from the findings.