Sometimes we fail to distinguish between cottage and small scale industries. Let us understand their meaning and distinction.
Meaning of Cottage Industries
They are the industries which are carried on largely by the members of the family in their own households. That is why they are termed as household industries also. These industries have two main characteristics which distinguish them from modem industrial mode of production : (a) workers are not required to leave their home; and (b) labourers do not sell their labour to some other capitalists.
In India cottage industries are found both in rural sector and urban sector. Rural industries can be of two types: (i) the industries which provide supplementary jobs to the farmers such as handloom, basket manufacturing, bidi-manufacturing etc., and (ii) the industries which provide full time jobs to the rural people. Most of such industries are related with rural handicrafts for example, mud pottery, carpentry and of blacksmith, weaver, ghani oil etc. Urban industries are: works of gold, silver, jewellery, metal-wares, Kashmiri shawls, dyeing, printing etc. They can also be of both types part time and full time industries.
Importance of Cottage Industries
Cottages industries are very important to our economy especially to the agricultural and village sector. This can be explained on the following grounds
(i) Cottage industries can retain the agriculturists in agriculture.
(ii) They can be helpful in removing disguised and seasonal unemployment from the agricultural sector. Thus cottage industry can become complementary occupation to agriculture.
(iii) They do not require hired factors and much capital and can be managed through family members.
Raw material is arranged through local sources.
Role of Cottage Industries In the Rural Sector
As far as India’s rural and agricultural sector is concerned, cottage industries are more appropriate. In India’s agricultural sector there is a large number of small and marginal farmers. They cannot run their family merely with the income from farming. Besides this, they do not get full time job in agriculture. That is why a number of people are migrating to cities in search of employment. But there also, all of them are not getting full time jobs. If we want that these farmers should remain on their farms, we have to provide some jobs to them during their off-season. In this regard cottage industries can be more helpful. If our farmers are provided with some capital, raw material and preliminary training, they can develop different types of handicrafts. These will prove complementary and helpful in their work of farming also. It will solve the problem of disguised unemployment and also increase the level of living and income of the poor class of our society. Thus, cottage industries are more important for the rural sector of our economy. Our Constitution has also accepted the importance of these industries and stressed the need of their development in its guiding principles.
Problems Faced by Cottage Industries
Cottage industries in our country are facing number of problems. Some of them are as follows:
(i) Competition with the products of modem industries. For example mill-made cloth has replaced handloom cloth and glass and stainless steel has replaced brassware utensils.
(ii) Insufficient financial resources.
(iii) Lack of modern techniques, business methods, skills, marketing and advertising techniques.
Because of all these reasons cottage industries have languished in our country. It has created a contradictory situation. On the one hand, we find that cottage industries have the potential of reducing unemployment and poverty but on the other they cannot compete with the factory—based industries. Hence we have to revive and strengthen them.
Recognizing the importance of cottage industries Government of India had set up the Khadi and Village Industries Commission to look after their special requirements. But inspite of this the performance of Khadi and village industries is not satisfactory.
Small Scale Industries
In India the official definition of small scale industry has changed from time to time. At present small scale industry has been defined as an industrial unit with a fixed investment (in plant and machinery) of not more than Rs. I crores. And for tiny industry the investment limit is Rs. 25 lakhs. These small industries use mo4ern machines and implements and also employ hired labourers.
Examples of small scale industries are : Bicycle industry, Sewing machine industry, Sports goods industry, Hosiery industry, Readymade garments industry, Leather industry, Footwear industry, Electrical goods industry, Electronic goods industry, Brassware industry etc.
Features of Cottage Industries
1. These industries are largely carried on by the members of the artisans family.
2. Capital investment is very small and it is generally arranged from the household’s own resources.
3. They use traditional techniques and implements.
4. They generally use locally available resources.
5. They mainly cater local needs, hence they operate in local and small markets.