Ancillary unit
Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Beyond NCERT
Meaning
An ancillary unit is a small firm that supplies parts, components or services mainly to one large parent firm. It connects small industry with big industry. The small firm gets a steady buyer, and the large firm gets cheaper and more flexible supply.
Example
A small workshop that makes brake parts or wiring sets mainly for one big car maker is an ancillary unit of that car maker.
Don't confuse with
- Contract manufacturing: here a brand outsources the making of its whole product to another company, often a large one, which builds it to the brand's design. Examples are Foxconn and Tata Electronics making phones for Apple. An ancillary unit supplies only parts or services to its parent firm.
Related concepts
- Small-scale industry
- Reservation for small-scale industry
- Cottage industry
- Industrial estate
- Micro, small and medium enterprises
- MSME classification