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A Complete Overview on Cottage Industries in India

Cottage industries are a major breadwinner for many households in India. Small scale cottage businesses have one advantage that they can be started with very low initial investments, so this type of business is ideal for people with low incomes/villagers. Plus, the raw materials to manufacture cottage industry products are available easily in their surrounding environment. Let’s dig in deeper to know more through this blog. 

Is There Any Difference Between Small Scale Industries And Cottage Industries?

There is just a slight difference between the cottage industries and small scale industries. They are almost the same, but differ in various minute ways such as the features of both the industries, where they are located, who run them, etc.

• Generally, the location of the cottage industries lie in the rural areas and villages whereas small-scale industries are situated in more urban or semi-urban areas
• The cottage industries are primarily run by members of the family, whereas small-scale industries generally employ or hire people  
• Cottage industry mainly focuses on meeting the local needs, however small scale industry focuses and covers a wider range of product and areas
• Cottage industries involve basic tools and equipment and they invest a very little amount of capital, the small-scale industries invest comparatively higher {the present limit is Rs. 60 lakhs to Rs. 3 crores} and they include heavy and fully equipped machinery run by power
• The Cottage business is generally run from the home of the artisans itself, on the other hand, small scale businesses are run from business complexes
• Cottage business is comparatively a little unorganized, on the other hand, small scale businesses are organized and run by professionals

What is Cottage Industry?

Google defines Cottage industry as “a business or manufacturing activity carried on in people’s homes”. In simple words, we can say it is industries run from people’s homes it at very low scales. It is a small-scale, unorganized/decentralized manufacturing business generally operated from home or ‘cottages^[1]’ using simple hand-operated tools. Examples of cottage industry or business include Smithy, Carpentry, Weaving, Pottery, Blanket making, Stone Carving, Textiles, Ceramics, Handmade Jewelry, etc.

Scope and Opportunities for the Cottage Industries in India

The cottage and small scale industries hold enormous potential for employment generation. Additionally, a person working in such an industry is basically a self-employed one.

Cottage and small scale industries take part in about 40% of the total industrial output in India. There are approximately around 3,50,000 units within the state of West Bengal, providing employment to over 2.2 million people.

Furthermore, it has been empirically found out that this industry has provided economic independence to the women in developing and developed countries. Moreover, the whole family involves in producing items in this industry, hence it facilitates numerous families with an employment option throughout the year.

Also, Read: Tax Benefits for Handicraft Business in India.

Types of Indian Cottage Industry

The term “cottage industry” is associated with manufacturing units that make their products mainly by hand. India is often praised and is well known for its diverse culture, handicrafts from its traditional cottage industries, variety of food items, etc. The major cottage industries in India are cotton weaving, carpet making, silk weaving, leather industry, metal handicrafts, and small food processing industry.

Cotton weaving: It is a very important cottage business sector in India. The skill dated back to ancient times as cotton clothes are widely worn across the country. Cotton clothes are known for their traditional design, vibrant color and patterns created by skillful weavers with their handlooms. The cotton industry is majorly concentrated in Maharashtra, Tamil Nadu, and Gujarat.

Silk weaving: It is another famous cottage business in India. Our country is a major producer and exporter of silk to the domestic and global markets. The major silk is Karnataka and holds about 70% of the total silk weaving industries. Mulberry, Tassore, Muga, and Eri are the type of silk produces within our country.

Carpet making: This industry was first introduced in India during the Mughal era. Although the Kashmiri carpet is known for its superior quality and texture, the durries and coir carpet are also famous. The carpet-making industry is divided throughout the country mainly found in Kashmir, Rajasthan, Punjab, Uttar Pradesh, Andhra Pradesh, and Punjab. Additionally, the Government of India has set up the Carpet export council for promoting the knotted rugs and various other types of floor coverings from across the country.

Leather works: India is a major supplier of high-quality leather to the global markets and meets around 10% of the global demands. The leather industry over 2.5 million people and is one of the major export earners for India. The regions of India producing leather are Tamil Nadu, West Bengal, and Uttar Pradesh.  

Metal works: Metal has always been used to make figurines, jewelry, utensils, etc. in India. Metal handicrafts from India are appreciated worldwide and are a major contributor to the country’s economy.  Making Metal handicrafts do not involve any hi-tech types of equipment, and are produced using tools operated by hand. 

Problems faced by the Indian Cottage Industry

Although the cottage industry has its own advantages it also faces various problems. The following issues are generally faced by the Indian Cottage Industry;

• The middlemen offer low prices to the manufacturer but take heavy chunk of money from the buyers
• The handloom weavers face heavy competition from the power looms industries
• There is a need to implement techniques that develop skills of the laborers and meet the requirements of the local market
• Government do not provide subsidies to these producers in an adequate amount
• Raw materials are limited, i.e. they are either available in specific seasons only or they are resources which decreases with time
• Easy and cheap finances are not available to these industries
• Generally, these industries are located in rural areas, they lack in implementing various marketing strategies, etc. 

Small Scale Industries Support Schemes by Indian Government

The government of India has realized the importance of cottage industries in the domestic and international grounds. Therefore, it has taken various steps to solve their problems. The steps taken by the government in favor of the cottage and small scale industries include;

• The Union Government has set-up numerous agencies to help the cottage and small scale industry. Some of them include the Small Scale Industries Board, Khadi and Village Industries Commission, All India Handicrafts Board, AH India-Handloom Board, and Central Silk Board
• The government has included it as a priority sector for the supply of institutional credit
• Additionally, the government has set-up Industrial Estates and Rural Industrial Projects and also, have organized Industrial Co-Operatives
• The government has Set-up district industries centers for providing the services and support under one roof at district levels
• The Central Government has reserved 807 items for exclusive production in the sector to encourage small scale industries
• Furthermore, the government is planning to start various nucleus plants for generating as many ancillaries and small and cottage industry as possible
• Also, the government is planning to enhance the limit of capital investments for these industries

To Conclude

Cottage industries are generally unorganized in nature and come under the small scale industries. They manufacture consumable products by employing conventional methods. Additionally, these type of industries originates where unemployment and under-employment are widespread. So, through this method, cottage industry helps the economy by engrossing a massive amount of remaining workforce of the rural areas.

However, on the flip side, the industry faces many difficulties in various ways. For that, the government is trying to solve the problems of this sector because the government knows that the sector holds a lot of potential in various areas if supported properly.  

Read More: How to Set-Up a Pottery Industry in India.