Question

What is the role of ancillary industries in the growth of heavy engineering industries?

Answer 1

Hint: The term ancillary industry refers to that industry which supports the main industrial activity in a given region or city. Ancillary industries are referred to as those industries which invest in plant and machinery with a capital not exceeding rupees 1 crore.

Complete answer:
> Ancillary industries do the work of making parts and components used by heavy engineering industries to shape their final product for ultimate consumption. In this way the heavy industries get freed from the pressure of making every part and component and in this way the capital is also saved by them so that they can make investment somewhere else. 

Some characteristics of ancillary industries are as follows:
- They supply a minimum 50 % of their production to heavy industries also known as parent industries. The maximum capital they can invest is Rs. 1 Crore.
- The various segments which use ancillary units are for ex: - textile machinery, agriculture machinery, railways, automobile industry, shipbuilding industry, aircraft industry etc. 

The advantages that heavy industries have due to ancillary industries are as follows:
> Innovation: Due to the existence of ancillary units the heavy industries save much time for doing innovation in their products rather than simply making smaller units.
> Specialization: When parts or components are made by ancillary units, they are specialized in that product but if this part is to be made in the parent company it will be only its sideline operation.
> No storage needed: The storage problem is solved as it is in the hands of heavy industries to order only when they require.
> Suppliers can be changed easily: Heavy industries can easily change the suppliers (ancillary industries or units) of components or small parts if quality of product decreases which is not easy in case they are made on their own. Also, if there is a need to change their requirement, they can easily change their suppliers.
> Capital diversification: Heavy industries can use capital saved from while taking off small parts from ancillary industries to research work in their product and thus make more profit as that product will not be available in scarcity as compared to smaller units.

Note: Ancillary industry manufactures parts, components, sub-assemblies, tools, intermediates, machines etc. Industries which manufacture automobiles, railway engines, tractors, etc. are ancillary industries. Some of the prominent examples of the industries are Aditya Gears Limited, Brakes India Limited etc.