According to Compact Oxford English Dictionary, cottage industry means a business or manufacturing activity carried on in people’s homes. It refers to family based/owned small sized production units with small amount of capital whose production process is based mostly on local raw materials, inherited artistic skills and simple indigenous technology. These small-scale units operate in both rural and urban areas. The maximum number of workers in a cottage industry unit is 20, if it uses indigenous technology and is not run by power, and not more than 10, if it uses power-run machinery.
Cottage industries provide economic opportunities for the poor or the middle-income section of people through employment and income generation schemes all over the world, and especially in low income and technologically underdeveloped and developing countries such as Pakistan and Bangladesh. Traditionally, cottage industries have been rural-based, but in course of time and with technological advancements, they spread to urban areas to avail of transport and marketing facilities and financial support from institutional sources. The area of cottage industries has now broadened remarkably from simple indigenous technology based and home-made produces to sophisticated handicrafts wide varieties.
Following the Partition of Bengal in 1947, the government of Pakistan took some measures to revive and reinvigorate the declined and damaged cottage industry sector. The government recognized cottage industry as a special sector and established a Directorate of Cottage and Small Industries under the Ministry of Industries. To provide financial assistance to them, a network of branches of the Small Industries Development Corporation was established.
EXAMPLES OF COTTAGE INDUSTRIES
During Pakistan period, capital investment in cottage industries was negligible and was restricted to simple implements. Both rural and urban cottage industries needed short-term credit. Cottage industries in rural areas were closely allied to agriculture, and included activities like poultry, apiculture, sericulture, paddy husking and manufacture of molasses. An estimated 3 million agriculturists were engaged in cottage industries. The main cottage industries in urban areas included handicrafts like iron work, cane-work, gold and silver ornaments and embroidery, hides tanning and leather goods, musical instruments, sports goods and brass and glass bangles. Persons employed in these industries were agriculturists as well as about 1.60 million artisans. Handloom, the most significant cottage industry of Pakistan, employed about 400,000 persons. Until 1954, the cottage industry met the bulk of the country's requirements of cloth. In the Second Five-Year Plan, the central government allocated Rs 284 million for promotion of cottage and small-scale industries.
Multifarious cottage industries under the next group were paper and packaging, processing of wastage papers and making goods therefrom, playing cards, paper-made stationery, book binding, paper-made flowers, printing block making, paper-made bags and pots and other paper-based cottage industries and handicrafts. A few of the fifth (chemical, petroleum and rubber) group of cottage industries were allopathic medicines, printing and dying industries, tar/pitch, pesticides, color and burnish, auger and candles, cosmetics and scents, hair oil, soap factories, boot polishing, glue making, tire and tube repairing, rubber-made shoes and other goods, comb and button making, porcelain, polytheine bags and other plastic goods, glass-mirrors, optical glasses, brick, tally and sanitary wares, cement-based goods, chalk making, state and pencils, pencil bags, shopping bags, plastic toys and flowers, plastic containers, rubber mixed foam, choir and earth/clay industry.
Worth mentioning among the next group of cottage industry products (non-metallic items) are sand collection, limestone and snail-based lime, chalk and colour chalk, buttons and bracelets. The metallic products and other machinery and equipment produced in cottage industries of Pakistan include steel plate and printing, steel furniture, electroplating, cooking burners, lighting equipment, steel/iron-made nets, strainer making, spades, knives of different types and other agricultural and domestically usable weapons, lantern, hair clips, bolt and nuts, sanitary wares, lock and keys, light engineering, electrical equipment, bicycles and other two and three wheeler vehicles, blacksmiths, goldsmiths, repairing of radio, watch, television and other mechanical items, electric and electronic equipment, carpenters, painters, etc. The last group includes various types of handicraft products and other cottage industries.
Pakistan's gems and jewelry sector is often described as a cottage industry, with four- to five-person workshops crafting pieces by hand or with outdated machinery. Most manufacturers cannot cater to international markets, which prefer 14 to 18 karat gold, not the 22 or 24 karats popular domestically. Three-quarters of the $28 million in industry exports in 2004 were rough stones: despite the country's abundant mineral reserves, processors lack the expertise to cut stones to global standards. Manufacturers usually attended global trade fairs as individuals, failing to garner much buyer attention. Unleashing the industry's tremendous potential would increase export revenues, entrepreneurship and employment, and reduce the level of poverty.
While there is no accurate data as to their output, most economists agree that the activity that these units generate play a vital part in the country's economic life. For one, these small units, which usually operate out of houses and comprise family members who perform different tasks in producing an item, create employment for people who would otherwise have no source of income.
More important, many of those who work in these enterprises are women, who would otherwise not have the opportunity to engage in economic activity outside their homes or in a larger setting owing to religious and social taboos.
While the government has set up organizations that fund and advise on how to run small businesses, not enough is being done to support this economic sector. Partly to blame are the cottage industries themselves as they shy away from any interaction with officialdom in the fear that this would lead to some restrictions or taxation on their work.
On the other hand, the potential that these cottage industries have is enormous. Before us we have the example of Italy, which capitalized on its small business houses to turn around the country's economy.
Some of the products that these small industries produce are world class. Owing to the benefits that arise from this economic activity, the government should focus on ways to promote and develop these industries so that they are able to produce goods that are increasingly in demand within the country and abroad.