The Potential Of Cottage Industry Trade

IBEFbeforTHEPOTENTIALOFCOTTAGE INDUSTRY TRADEINTRODUCTIONA cottage industry is a small business engaged in manufacturing and operatedfrom the owner's homes. Cottage industries form an important part of the Indianopportunities and drive incomes, preserve local customs and traditions andpopularise them by producing unique local products, allow flexibility to owners andworkers, and so on. This industry caters to multiple sectors such as handloom,handicrafts and textiles. Starting and operating a cottage industry businessrequires low capital and other resources, which allows many families to start suchbusinesses. However, given the lower capital Investment, these industries operateusing cheap and outdated technology. This may lead to higher costs as well asmore time to produce a single unit. Due to this cottage industries face competitionfrom larger firms using modern technology and efficient means of production.Nonetheless, many cottage industries still stand strong. Products made by popularcottage industry businesses are recognised as a brand and known for their qualityAdditionally, products made by machines and similar modern technology may lackthe exquisiteness of some cottage industry products such as Banarasi saree, apopular cottage industry product in Varanasi. This leads to sustainability ofdemand, enabling growth in the industry. IBEFAs of 2020, around 65% of Indians wereliving in rural areas; of these, majority havelow incomes and resources. Cottageindustries are an important source ofearning for them. These industriessupport many Indians, lifting them frompoverty. Cottage industries also increaseIndia's export potential. Due to mainlythese factors, the cottage industry iscalled the backbone of India's economy.FEATURESOF COTTAGEINDUSTRIESworkers. This is a major differencebetween the two types of businesses.A cottage industry is structured as a smallhome-based business run by the ownerCottage industry businesses may be runand their family. Some features of suchas a Hindu Undivided Family (HUF) wherebusinesses are given below.all the family members have a stake in thebusiness. A home-based business allowsflexible schedules for family members asthey may work on the production, dosome household chores and thencontinue with the business work. Outsideworkers may or may not be hired,depending on the scale on which thebusiness is being run, This also helps inkeeping the money in the family.> Cater to Local Markets: Cottageindustries, being small, generally cater tothe local or regional markets. Given thesignificant time and resources needed toproduce a single unit, production islimited. Additionally, many businessowners are reluctant to take the effortsHome-Based: Cottage industryneeded to market their products outsidebusinesses are generally operated fromtheir local territory and thus do not needthe owner's home itself, without anyto develop complex supply chains.separate office or factory. This is especiallyHowever, this is changing. Many cottagedue to the low availability of resources atindustries are exporting their productsthe owner's disposal while setting up theand serving global markets, Thebusiness. This work-from-home modelincreasing use of the internet and socialhelps reduce costs by saving on rent,media is helping improve marketing andbesides increasing the flexibility to work.expanding the reach of products. ManyLow Cost: The cost required forcottage industry businesses now boast astarting a cottage industry unit is low.global customer base.Such businesses make use of simple toolsLow Technology Usage: Cottageand conventional means of productionindustries are known for handmadeinvolving significant human labour. Thisgoods. The use of technology amongalso helps in keeping the costs ofcottage industries is limited. Also, theoperations low.technology used is generally indigenous>InvolvementofFamilyMembers:and may be obsolete. Overall, cottageCottage industries are generally run byindustries are labour-driven. Thethe owner's family members; On the othergovernment is encouraging cottagehand, small-scale businesses may hireindustries to increase the usage of2 IBEFtechnology as it reduces cost andtimings, goods to produce as well asincreases efficiency. As part of this, themethods of production, as the owner hasgovernment has announced multiplecomplete control over the business.schemes to provide cottage industriesFurthermore, the owner has the flexibilitywith easier access to loans; training onto work from home.entrepreneurship, marketing and otherEase of Commencement: Cottagefields of business; subsidies and so on.industries require low capital outlay whichSkilled Labour: The goods producedenables families with low incomes also toby cottage industries require skilledstart a business. Generally, the toolslabour and a high level of specialisation.required for production and the rawMany products, as well as the designs,materials are simple and available locally,created by these industries, are highlywhic