Pakistan Studies

Importance of Cottage and Small Scale Industries in Pakistan

Cottage and small-scale industries play an important part in meeting the basic necessities of life, both in the rural and urban areas. Goods manufactured in these industries are in high demand in the international market which can help earn much-needed foreign exchange.

This article discusses the importance of cottage and small-scale manufacturing in the context of Pakistan. 

1. The largest source of the industrial labor force

In Pakistan, cottage and small-scale industries are the largest sources of industrial employment. Their contribution to the total industrial workforce is 80%. They also help create opportunities for self-employment for many people thus reducing the unemployment rate in the country.

2. Productive involvement of women

The traditional male-dominated society, especially in rural areas, does not encourage women to work outside the home.  As a result, women remain confined to home chores or remain idle and unproductive most of the time. Setting up the cottage and small-scale industries at homes can provide gainful employment for these women. Thus women can earn huge economic benefits with productive involvement in something they themselves control and lead. 

3. Utilization of local resources

The natural resources in rural areas or at the local level go wasted or remain underutilized in the absence of industries. These resources can be put to maximum use with the establishment of the cottage and small-scale industries. The use of local raw materials provides economic benefits to both the owner of the resources and the industrialist.

4. Source of foreign exchange earnings

Handicrafts, handmade carpets, rugs, brassware, sports goods, etc. manufactured in Pakistan are in high demand in the international market.  According to some estimates, Pakistan receives 30% of its total Foreign Exchange Earning of manufacturing sector only through the export of cottage and small scale industries.

5. Reduction in regional disparity

In Pakistan, regions are unevenly developed. Some areas are very much developed whereas many areas are underdeveloped. This uneven development is the prime reason for the economic disparity among different regions within the country. It is not possible to establish medium or large-scale industries in all parts of areas but it is pretty possible for the government to help people build small-scale and cottage industry thereby creating job opportunities. Thus these industries can help reduce regional economic disparity in Pakistan.

6. Reduction in Rural-Urban Migration

The employment opportunity and economic activities created as a result of these industries in rural areas will also help reduce rural-urban migration. People move to cities for jobs. If they will have jobs near their homes why would they come to cities? Consequently, it will help reduce the acute problems of urbanization, e.g. housing, sanitation, pollution, crimes, etc.  

7. Fulfillment of needs at the local level

Small Scale and cottage industries help meet different needs of people in the locality and country. Locally manufactured goods are also cost-effective compared to the same items bought from another region or imported from another country. Thus, cottage and small-scale industries help decrease the import burden and save much-needed foreign exchange.

8. Cost-effectiveness

Majority of rural areas people are poor and poverty-stricken. They do not have a large amount of money to invest in the setting of large-scale industries requiring huge capital investment. In contrast, the setting of the cottage and small-scale industries best suits our traditional economic setup as they do not require a high investment of capital and the use of sophisticated machinery or technology.

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  1. Thank you so much for your efforts you are helping a lot in understanding concepts like always you did.

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