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What are the Prospect, Growth, and Limitations for Cottage Industries in India?

calendar21 Mar, 2021
timeReading Time: 4 Minutes
Cottage Industries in India

The cottage industry in India is a form of unorganized Industry in which individuals are involved with craftsmanship works such as knitting, handicraft, handloom, pottery, etc. They are typically set up at the individual’s home, and the workers use conventional tools and equipment. This category of Industry is interconnected with Community Development Programmes, Integrated Rural Development, and Poverty Alleviation Programmes. Being a small scale business, the Cottage industries can be set up with low upfront investments. This type of business is suitable for the individual confronting financial issues or reaping low incomes to meet the daily needs. The raw material required for manufacturing cottage industry products is available within the nearby environment. Let’s delve deeper to know more about this Industry.

What is the Meaning of Cottage Industry?

Cottage industry refers to a business or manufacturing task carried on in an individual’s habitat. In laymen’s terms, it is industries that run from an individual’s home at significantly lower scales. It is a small-scale, decentralized business typically operated from home or cottages using traditional equipment and tools. Examples of cottage industry include Pottery, Textiles, Handmade Jewelry, Weaving, Smithy, Blanket making, Stone Carving, Ceramics, etc. 

Read our article:What are The Government Schemes Launched by MSME?

What is the Scope of Growth for Cottage Industries in India?

The cottage industries hold great potential as far as the employment generation is concerned. In addition to that, an individual working in such an Industry is typically a self-employed one.

Cottage industries and small-scale firms accounted for 40% of the aggregate industrial output in our country. There is roughly around 3.5 lakh unit within the state of West Bengal, facilitating jobs to over 2.2 million people.

Moreover, it has been found out that this particular Industry has rendered economic freedom to the female workforce in developing & developed nations. Furthermore, the whole family participating in producing items in this Industry provides countless families with an employment option. 

What are the Types of Indian Cottage Industry?

The term “cottage industry” is linked with units that make the product primarily by hand. India is often appreciated for its diverse culture, variety of food items, and handicraft from the conventional cottage industries. The primary cottage industries in our country include carpet making, leather industry, small food processing industry, cotton weaving, and silk weaving.

Types of Indian Cottage Industry

Silk Weaving

Silk weaving is the most famous cottage industry in India. Our nation is a prominent producer as well as exporter of silk to the local and overseas market. The Karnataka silk holds about seventy percent of the total weaving industries. Mulberry, Muga, Tassore, and Eri are the different types of silk produces within our nation. 

Cotton Weaving

Cotton weaving is often considered the critical part of the cottage business sector in India. The skill dated back to old times as cotton-based apparel is widely worn nationwide. Cotton-based garments are best known for their conventional design, vivid appearance, and patterns created by the skilled workers with their handlooms. The cotton industry is majorly found in the state of Tamil Nadu, Maharashtra, and Gujarat.

 Carpet Making

This Industry came into existence during the Mughal Era. Though the Kashmir carpet is widely praised for its unique texture and quality, the durries & coir carpet also remain in high demand.

The carpet manufacturing industries are mainly located in UP, Punjab, Kashmir, Andhra Pradesh, and Rajasthan. In addition to that, GOI has established the Carpet export council to facilitate the export of knotted rugs and various other types of floor coverings. 

Metal Works

Metals have diverse applicability and are also used to produce utensils, jewelry, and figurines in India. Metal handicrafts from our country are praised globally and are a primary contributor to the nation’s economy. Making Metal handicrafts does not require any cutting-edge machinery as they can be produced using traditional tools operated by hand. 

Leather Works

Our country is a primary supplier of quality-oriented leather goods to overseas markets and caters to around 10% of the global demands. The leather industry has employed over 2.5 million people and is one of India’s prominent export earners. The states like Tamil Nadu, West Bengal, and Uttar Pradesh are the major contributors to India’s leather produce. 

Indian Cottage Industry in the Current Scenario 

Though the cotton industry has its positive sides, it has been facing some downsides as well. The problems listed below hampering the Indian cottage industry in one way or another; 

  • The mediators offer significantly lower prices to the manufactures and take maximum profit from the potential buyers. 
  • The handloom weavers are in the midst of relentless competition from the power looms industries. 
  • Absence of a platform that nurtures the skills of the laborers and helps in meeting local market demands. 
  • Raw materials aren’t available in ample volume. 
  • Non-accessibility to government-based credit schemes. 
  • Unavailability of legit marketing strategies that boost sales. 

Measures Taken by Indian Government to Support Cottage Industries

The Indian government has realized the significance of cottage industries and has taken various measures to resolve their fundamental issues. The initiative taken by the GOI includes the following:-

  • The Union government has established multiple agencies to assist the cottage & small-scale industry. Some of them include the Khadi and Village Industries Commission, All India-Handloom Board, and Central Silk Board, Small Scale Industries Board, and Central Silk Board
  • Set up Industrial Estates, Rural Industrial Projects, and industrial co-operative
  • The government launches district industries centers to facilitate services & support under one canopy at district levels. 
  • The government has ensured the reservation of 807 items for exclusive production to support the small-scale industries. 
  • Moreover, the government is looking forward to commencing various nucleus plants for generating as many ancillaries and cottage industry as possible.
  • The government[1] is planning to extend the limit of the capital investment for cottage industries. 


Cottage industries are defined by the number of people employed and the amount of investment required to start. They often emphasize the production of labor-intensive goods but confront considerable downside when competing with full-fledged units that mass-produce goods.

The cottage industry plays a pivotal role in stabilizing the country’s economy. It supports the lower strata of society by generating jobs for financially challenged individuals. The sector never touches the peak growth due to various reasons.

Also, the advent of the Covid-19 pandemic has made life difficult for them. The government is putting their best effort to stabilize their deteriorating conditions by employing various growth-centric schemes and initiatives.  

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