The main objective of this study is to analyze the performance indicators of manufacturing and the agro based small scale industries with regard to the Business Development Services (BDS), and to obtain a comprehensive view of the impact and the practices of BDS. To achieve these objectives, the analysis was conducted in terms of establishments, output and number of employment. Further to find out the economic development with regard to the business development services was analyzed in terms of labour productivity and output per worker in respective industries. Latest data for this purpose was collected from a series of Annual Survey of Industries (ASI) Reports from 1995 to 2002, which are the 11th to 18th of the ASI Series. The situation analysis of the BDS market was conducted through various publications especially published by the donor funded agencies the NGO’s. We have found that there is a rapid expansion in the number of BDS providers and most of the donor funded agencies and government organizations more frequently work with micro and small industries, though the commercial providers limit to the metropolis areas. The enhancement of BDS market have supported the small sector to achieve expected goals in terms of employment, output and output per worker. But labour productivity has recorded a decreasing trend due to the turn down of the real value of value addition in the small industrial sector.