Cottage Industries in India - Overview

The Cottage Industry is a small-scale industry often operated out of a home and often focuses on the production of labor-intensive goods.The artisans use local raw materials and simple tools to produce everyday goods in their homes with the help of their family members or part-time labour. Finished products may be for consumption in the same household or, for sale in local (village) markets, or, for barter.

The significance of cottage industry to India is:

1.Rural Economy: Cottage Industries support a large portion of the rural population of India acting as one of the major sources of its economy. It provides work to village population during the period in which they remain idle and unengaged’.
2.Employment: The cottage industries are labor intensive in nature and originate in the country sides where unemployment and under-employment are widespread. In this way, cottage industries help the economy by engrossing a massive amount of remaining workforce of the rural areas.
3.Social Development: The cottage industries provide employment to women leading to their increased financial and decision making powers. Further, education, health and consumption levels are also increased.
4.Preservation of Indian cultural heritage
5.The dispersal of industrial activity into the backward regions.

The problems faced by cottage industries in India are:

1.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.
2.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.
3.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,
4.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.
5.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.

The measures required to improve the current state of cottage industries in India:

1.Modern Techniques: There is an urgent need for implementation of techniques which not only enhances productivity but develops skills of the laborers and meets the requirements of the local market.
2.Banking Facilities: Rural Co-operatives and Rural Banks should be established and stabilized by the Government for advancing short-term loans on nominal interest.
3.Marketing Facilities: The adequate marketing facilities should be arranged for them, as sale of goods has now-a-days become as complicated an affair as production itself. The platform of e-commerce should be utilized which can expand market across all boundaries.
4.The artisans must be helped to get the best price of their goods. Frequent exhibitions should be organized to enable the artisans to show their art and industry.
5.Government Policies: 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.

Cottage Industries can successfully compete with machine made goods, if they are run on modern lines. So care must be taken and policies should be aligned to focus more infrastructure development, encouraging co-operative system which can help in solving the problems of capital, raw material and marketing, then they would easily withstand the competition large scale factory production.Cottage industries can become an alternative means of employment for the people living in the rural areas.Cottage industries will be of benefit for our villages, which form the back bone of the nation.

By: Harman Sandhu