Small scale industry can enjoy the status of an ancillary small industry, if it supplies not less than 50 percent of its production to another industrial unit, referred to as the parent unit. The ancillary small industrial unit can manufacture parts, components, sub-assemblies, tools or intermediate products for the parent unit. Apart from catering to the needs of the parent unit, it can do business on its own. Ancillary units have the advantages of assured demand from parent units. Normally, the parent unit assists the ancillary units by giving technical guidance as well as financial support.
A tiny unit is defined as an industrial enterprise whose investment in plant and machinery does not exceed Rs. 25 lakhs.