Cottage Industries

The top five Indian cottage industries are cotton weaving, silk weaving, carpet making, leather industry, metal handicrafts and small food processing industries. Cotton weaving is a very important cottage industry in India. This skill dates back to ancient times as cotton clothing is widely worn around the country.


Cottage industry is considered for its enormous potential of providing employment. But, over the years, employment may have increased in this industry but the income of the people has definitely decreased as the middlemen offer low prices to the manufacturers but take heavy chunks of money from the buyers.But, it is not only the middlemen and the dealers. The new revised foreign policies, globalization is also responsible for the current condition of cottage industry. The handloom weaversare facing constant competition from the power looms. These workers have given their whole life to stitching and knitting. The skill that they possess is just unmatchable. But, still they are at the same place where they had started years ago. An industry, providing employment to a large section of our population is in such distress. With over 4 million people engaged in handloom industry, such a condition proves the adversities which these people are facing. An interesting point to note is that out of the total people engaged in this industry, around 47% are below poverty line. Also, according to the new census, the average annual household income of these people is just Rs 41,068. And given the large family size among this section of the society, the per capita income is just a little more than nothing. Cottage industries in India face dearth of capital and large quantity of labour, which force them to buy capital-saving techniques. Hence, there is an urgent need for implementation of techniques which not only enhances productivity but develops skills of the labourers and meets the requirements of the local market. Efforts should be directed towards the development of technology so that labours can enjoy a decent lifestyle. Government should also provide subsidiaries for the growth of cottage industries especially in the preliminary stages. The labourers of cottage industry often find themselves fighting against all odds at every stage of their business, be it buying the raw materials or promoting their products, arranging for capital or access to insurance covers, etc. A. Problem of Raw-materials Due to their limited resources, the owners of these industries cannot afford to purchase raw-material in bulk. That is why they get low quality materials at high rates. B. Problem of Finance Cheap and easy finance is not available to these industries. The financing system of government institutions and banks is such that these industries have to complete many formalities and there are so many complications which can be followed by these less educated entrepreneurs. C. Marketing problems These industries mainly exist in villages and due to lack of transport and communication facilities they are handicapped in finding suitable markets for their products, D. Lack of Managerial Talent Cottage and small scale industries are mostly run by the small businessmen having no training of management and organization. How these industries, therefore, can stand before the large seals industries which are managed and organized by the specialists of that field? E. Competition with large-scale industries The main problem before these industries is that they are unable to compete with large-scale industries. The economies of large-scale production are not available to them and therefore they fail to compete with large-scale industries. Cottage industries are the victims when it comes to attracting the attention of modern industry. This calls for preservation and promotion of cottage industries through formulation of public policies directed at improving the industry both in context of income of laborers and technological aspects. It is high time now that the Government took some initiatives. Though in every budget, new promises are made, new policies are made. But, so far none of them has benefitted these people much. They are almost in the same conditions as they were decades ago. Though there‟s a marginal increase in their income but if at the same time, we also notice the increase in the expenditures, then, we can say that in fact they are worse now than they were earlier.


Keeping in view the importance of cottage and small seals industries the government have taken many steps to overcome their problems. The main steps taken are: (a) The Union Government has set up a number of agencies to help the village and small industries. These include the Small Scale Industries Board the Khadi and Village Industries Commission, the All India Handicrafts Board, the AH India-Handloom Board and Central Silk Board. International Journal of Scientific and Research Publications, Volume 3, Issue 3, March 2013 3 ISSN 2250-3153 (b) Credit facilities are made available to these industries through a number of institutions. Small scale sector is included m the priority sector for the supply of institutional credit. (c) Industrial estates and rural industrial projects have been set up and industrial co-operatives have been organized. (d) To encourage the small scale sector, the Central Government has reserved 807 items for exclusive production in the sector. (e) The District Industries Centres are being established at the district level to provide under one roof, all the services and support required by small and village entrepreneurs. The Industrial Policy Resolution, 1980 has these following provisions for the development of cottage and small-scale industries (a) Introducing a scheme for building up of buffer stocks of essential materials which are often difficult to obtain. Special needs of states which rely heavily on a few essential raw-materials will receive priority. (b) To generate as many ancillaries and small and cottage suits as possible, the government will set up a few nucleus plants in each district. A nucleus plant would concentrate on assembling the products of the ancillary and small scale units falling within its orbit. (c) Enhancing the limit of capital investment for small scale and ancillary industries.


The well-known organization like Khadi and Village Industries Commission (KVIC) is working towards the development and endorsement of cottage industries in India. Other premier organizations are Central Silk Board, Coir Board, All India Handloom Board and All India Handicrafts Board, and organizations like Forest Corporations and National Small Industries Corporation are also playing an active role in the meaningful expansion of cottage industries in India. The Department of Industries and Commerce also implements a variety of programmes to provide financial assistance, technical support and guidance service to the existing as well as new industries. These programmes are implemented with an accent on the development and modernization of industries, up-gradation of technology and quality control. It operates through a network of District Industries Centers (DICs), one in each district, headed by a General Manager.

News Letter

Sign up with your email address to receive news and updates

We respect your privacy


Branch Office
Ghaziabad, India
Branch Office
Dehradun, India
Head Office
New Delhi, India
Branch Office
Mathura, India
Branch Office
Melbourne, Australia