COTTAGE AND SMALL SCALE INDUSTRIES:
Cottage industries are also called Household Industries. They are carried on by
craftsmen in their own houses with the help of family members and apprentices (persons
who want to learn the craft). They are mainly concentrated in villages. Wood and stone
carving, basket making, toy making, handloom, pottery, carpentry, rope making, smithy,
painting etc. are the examples of cottage industries. Some of these occupations are
hereditary in nature. They produce goods mainly for the local market.
Small-scale industries are organized on a small scale in a particular building or
shed. They may use electric power. e.g. instead of hand crushing of oil, electric crushers
are used. They employ labourers. Modern techniques are also adopted to produce
goods. Some of the examples of small-scale industries are chemicals, engineering
goods, shoes, bicycles, radios, sewing machines, garments, soaps, electrical fans etc.
Many of the products manufactured here are exported.
ROLE OF SMALL-SCALE AND COTTAGE INDUSTRIES IN THE ECONOMIC
DEVELOPMENT OF INDIA:
1. They provide employment to a large number of unemployed and under-employed
people of rural areas and thus help to solve rural unemployment problems.
2. They provide alternative jobs to rural masses and reduce the pressure of population
3. They do not require huge capital to start with.
4. They can be started with indigenous resources.
5. They provide opportunity to the people of rural areas for the utilization of their
6. They are not exposed to many problems like strikes or lockouts that are common
in manufacturing industries.
7. They do not require large power supply.
8. They help in decentralization of industries and thus prevent air and other types of
pollutions and formation of slums. They also help in fair distribution of population.
9. They provide self-employment to many.
10. They are feeders to many large-scale industries.
11. They help to improve the standard of living of the people by providing occupation
12. They avoid concentration of wealth instead help in the distribution of wealth.
13. They provide alternate job opportunities to farmers when their crops fail, due to
14. The handicrafts bring out the hidden talents of the people and goods are produced
according to the taste of the people.
Problems of cottage and small-scale industries:
1. Inadequate supply of raw materials: These industries do not get adequate raw
materials regularly at reasonable prices. Often they are forced to use inferior raw
materials. This has resulted in the production of sub-standard goods.
2. Lack of suitable machines: These industries are not able to use suitable machines
and tools. The machines and tools are costly and the people are unable to buy
3. Irregular supply of electricity: Small-scale industries require regular supply of
electricity, but they face the problem of shortage of power and frequent power cuts.
So, it is very difficult to make progress.
4. Old and out-dated techniques: They are still following old and out dated
techniques. So, they produce low quality and sub-standard goods.
5. Lack of adequate finance: It is one of the most serious problems faced by small
scale and cottage industries. They do not have proper sources of finance and also
they do not have proper knowledge about the sources of capital.
6. Poor marketing conditions: The marketing arrangements and transport facilities
are poor. In the towns, they do not get proper price. Many a times, they are cheated
by the middlemen.
7. Competition from large-scale industries: Many goods that are produced in
cottage and small-scale industries are also produced in manufacturing industries.
These industries cannot escape from the competition from large-scale industries.
Development of cottage and small-scale industries is one of the policies of our
National Government. Many industrial policies have been announced and priority has
been given to the development of cottage and small-scale industries.
Our Five-Year Plans have spent about 3,000 crore rupees from First Plan to Sixth
Plan for the development of small-scale and cottage industries. The important measures
required to improve cottage and small scale industries are a) Organizational help, b)
Financial assistance, c) Technical help, d) Training to workers, e) Supply of raw materials
and power and f) Helpin marketing
a) Organizational help: The Central Government has set up many institutions to
help our small-scale and cottage industries. The important ones are :
1. Central small industries organization: It was set up to provide guidance to
craftsmen and small producers in the organization of cottage and small-scale
2. National small industries corporation: It was established by the central
government to provide assistance for the organization of industrial estates to
house small scale industries.
3. All India Boards: Several all India boards, such as Khadi and Village Industries
Board, Cottage Industries Board, Small Scale Industries Board, Silk Board, All
India Coir Board, etc., have been set up for promoting cottage and small scale
b) Financial help:
1. “State aid to Industries Act” has been passed to enable the state governments to
provide medium term loans at low rate of interest to small producers.
2. Every state has set up State Finance Corporation to provide medium term loans to
3. The Central Government has set up the National Small Industries Corporation to
enable the small producers to purchase machinery.
4. The State Bank of India and other nationalised banks also advance money to
5. Industrial Development Bank of India has been directed to provide loans to
cottage and small-scale industries.
6. The craftsmen in the villages have been encouraged to organize industrial cooperative
c) Technical help:
Central Small Industries Organizations has been started to provide technical help
to small-scale and cottage industries. This organization has so far set up 16 small
industries service institutions and 65 extension centres to provide technical
guidance to plan the production, remove the defects, fuel economy, provide raw
materials, improve the quality of finished products, provide information regarding
production types etc.,
Industrial Design Centres have been setup for designing and adopting machines
suitable to Indian conditions. The small inventions development board has been
set up for the purpose of assisting the inventions in small-scale industries and to
provide appropriate technology to small industries.
d) Training to workers:
Government has set up a number of production-cum-training centres to give
training to workers. Mobile vans are being operated throughout the country to
impart training to workers working in small-scale and cottage industries.
e) Establishment of industrial estates:
A number of industrial estates have been set up all over the country by State
Governments. They provide the infra structure and other facilities like buildings,
roads, water supply, electricity etc. They also help in the establishment of smallscale
industries in such estates. Today there are about 585 industrial estates in our
f) Marketing help:
National Small-Scale industries Corporation has been set up by the Central
Government. It helps to market the products produced in small-scale industries.
This corporation has made it possible to get a market from the government itself for
the products of small-scale industries. Many exhibitions are organized to get
demand for exports and liberal policy has been formulated to get export orders for
In recent years, the government has followed a preferential treatment to smallscale
and cottage industries. Excess cess has been levied on large-scale industries
and it is utilized for the promotion and development of small-scale industries.
Production of some goods is allocated to only small-scale industries. Small-scale
industries are included in priority sector for the purpose of supply of power, raw
materials, finance etc. As a result of various steps taken by the central and state
governments, they have made satisfactory progress during the last three decades.
I. Answer the following questions in a sentence each.
1. How are cottage industries managed?
2. How are small-scale industries organized?
3. Give two examples of small-scale industries?
II. Answer the following questions:
1. How do industries help in the increase of agricultural products?
2. How does agriculture help in the progress of industries?
3. How are small-scale industries helpful to rural areas?
III. Answer the following questions in about ten sentences each:
1. How are small-scale and cottage industries helpful for the economic development of India?
2. Explain the problems of small-scale industries.
3. What are the steps taken to provide technical help to cottage and small-scale industries?
4. What are the steps taken to provide financial help to small scale and cottage industries?
1. List out the cottage industries in your neighbourhood.
2. Visit a small-scale industry near your place and list out their problems.