Cottage and small scale industry

Cottage and small scale industry

            Those industries which are labour intensive and related to country’s tradition, art and culture are called cottage industries. These industries mobilize local raw materials and skills. Likewise, the industries having fixed investment up to 10 million except cottage industries are called small scale industries.

Importance of Cottage and Small scale industries:

            The cottage and small scale industries plays an important role in the process of economic development of developing countries like Nepal. The importance of cottage and small scale industries are as follows:

• Easy to establish

Cottage and small-scale industries are easy to establish. In the sense that these industries don’t require more capital and technical knowledge. Such industries can be established and run by a single households by utilizing their own capital, raw materials and skills.

• Increase to employment opportunities:

The development of cottage and small scale industries create employment opportunities. It helps to reduce the pressure of population on agriculture. It becomes a supplementary resource of income to the farmers.

• Basis of the development of large industries:

Cottage and small scale industries are the foundation of large scale industries. People learn management techniques and skills from small industries. The development of these industries increases the income and purchasing power of people. This helps to develop large scale industries.

• Use of local resources:

In order to use the local resources we have to develop cottage and small industries. It can help in the maximum utilization of local resources.

• Preservation of art and culture:

The cottage and small scale industries play an important role in preserving traditional art culture and skills. It has helped to introduce Nepalese art and its tradition and culture in different countries of the world.

• Source of foreign exchange:

It is the major source of foreign exchange. The cottage and small industries products such as ready made garments, handicrafts, woolen carpets, etc. are Nepal’s major items of exports to third countries.

• Source of National income:

Cottage and small industries play an important role in increasing national income. This industries provide more employment opportunities which leads to increase per capital income of the people.

Problems of cottage and small-scale industries in Nepal

            There are various problems of cottage and small-scale industries which are as follows:

I.                   Lack of capital:

Majority of Nepalese people are poor. They have low capacity to save and invest. Thus, there is lack of capital for the development of cottage and small-scale industries in Nepal.

II.                Lack of raw materials:

The raw materials needed for cottage and small-scale industries aren’t timely and adequately available. The available raw materials are inferior in quality. Thus, these industries are running below their capacity and producing low quality products.

III.             Problem of transportation:

The transport facilities which are essential for the development of cottage and small-scale industries. But, there is lack of transport and communication facilities in hilly areas of Nepal.

IV.             Limited market:

The size of National market is small. The purchasing power of people is low. Thus, the market for industrial product is limited.

V.                Primitive technology:

The production techniques of cottage and small scale industries are very primitive. The entrepreneurs of these industries are uneducated, unskilled and untrained. Thus, due to this, the goods produced from these industries are of inferior quality.

VI.             Lack of protection policy:

Every country has to adopt a protection policy for the development of cottage and small scale industries. But there is lack of protection policy in Nepal. Therefore, these industries have to compete with large scale industries.