Cottage and Small Scale Industries in Himachal Pradesh – HPAS Mains

By | February 13, 2022

Cottage industry in state

The Cottage Industry is a form of unorganized industry in which people are engaged in craftsmanship works such as handicraft, pottery, knitting, handloom, etc. 

Example- Milk-based industry, handloom and power loom industry, oilseed industry and food processing

Characteristics of a cottage industry –

  • Cotton industry is small scale industry and often operated at home.
  • Artisans use local raw material and simple tools to produce
  • Started with low investment, help in earning additional income

Example of cottage industry in state-

  • Handloom industry in HP is one of the important cottage industries which is providing gainful employment to about 45000 handloom weavers. The main area of handloom concentration are kullu, mandi, kangra, kinnaur, chamba, lahaul and spiti district.
  • The main handloom products are shawls, stoles, tweeds and dress material like choli dora, launchari (kangra), luhi (sirmaur).
  • Handloom products registered under ‘Geographical act 1999’ are
  1. GI tag to kullu shawl, 2005
  2. GI tag to chamba rumal, 2008
  3. GI tag to kinnauri shawl, 2011
  4. GI tag to lahauli socks and gloves, 2021

Significance of cottage industry-

Employment- Cottage industry is originated where widespread of unemployment is prevalent. It provide employment to large number of workforce in rural areas.

Rural economy- By providing employment to rural population, acting as a major source of rural economy.

Social development-  

  1. By providing employment to larger portion of women leading to their increased financial and decision making power.
  2. Health, education and consumption expenditure also increased which lead to increase standard of living in rural areas.

Preservation of culture – Traditional handloom and power-loom products & other products preserve culture of Indian heritage.


  1. Cottage industry provide employment at door step in rural region which reduce the migration from rural to urban for employment aspects.
  2. It also helps in dispersal of industrial activity in backward region.

Issues and challenges –

  • Lack of proper marketing facilities- Most of the product is sold through intermediaries and direct marketing is very less.
  • Lack of financial resources- Handloom weavers are poor artisans and they do not have enough resources to purchase raw materials, sell the product after manufacturing.
  • Competition from large industries– The product manufactured on the power looms are cheap and such the low end market of handloom products is being captured by these cheap products.
  • Co-operative societies– has utterly failed in selling finished products as the handloom co-operative societies is riddled with corruption and political interference.
  • Lack of modern technology– Inadequate training for upgradation of skill along with research and development activities are insufficient for the Indian handloom sector due to the poor financial condition of the weavers.

                                                         MSME in state-

The concept of MSME was first introduced by the government of India through the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006.

Micro and small medium enterprises (MSME) is labor intensive industry which involve production, manufacturing, processing of goods and commodities.

Classification of MSME-

              Size of enterprises   Investment and annual turnover
                    Micro Investment less than Rs.1 crore

Turnover up to Rs.5crore

                   Small Investment less than Rs.10 crore

Turnover up to Rs.50 crore

                 Medium Investment less than Rs. 50 crore

Turnover up to Rs. 250 crore

Prospect/status of MSME in state-

  • MSME comprising 99% industrial sector in HP.
  • 93% generation of employment from industrial sector in HP
  • Annual export more than 10000 crore.
  • Easily availability of raw materials for handloom and power-loom MSME industry.
  • HP has emerged as a pharmaceutical hub for drug manufacturing.
  • New micro, small and medium industrial policy has been designed to promote small and medium enterprises with special emphasis on encouraging women entrepreneurs, local youth.
  • The state govt. hold a ‘Global Investors Summit’ in Dharamshala in 2019 to attract investment in the state on sustainable basis.
  • Any new small industrial unit will not be charged electricity duty for first 5 years.
  • Availability of cheap labor force along with women force in HP for MSME sector.
  • It provides opportunity for entrepreneurs in the state to build creative products boosting business competition and fuels growth.


  • Infrastructural facilities-
  1. Road, railways, air service, communication services etc. are not proper and adequate.
  2. Due to the lack of railway connectivity in these areas the industry faces transportation problems.
  • Non availability of skilled and semi-skilled labor
  1. Involvement of local labor is quite negligible.
  2. Almost skilled and semi-skilled labor is imported from outside.
  • Topography – Material cost and transportation charges are higher in HP relative to other states due to harsh climatic condition and difficult topography.
  • Lack of financial resources- Most banks are reluctant to lend to MSMEs because from the perspective of bankers, inexperience of these enterprises, poor financials, lack of collaterals and infrastructure.
  • Government policy- MSME face bureaucratic hurdles and red tapism. Delay in getting power connection, water connection, permission of concerned authorities to discharge effluents, etc. are some of the issues faced.
  • Lack of modern technology
  1. Inadequate training for upgradation of skill along with research and development activities
  2. financial constraints limits the access to modern technology 
  • Lack of proper marketing facilities –

Lack of entrepreneurial, managerial and marketing skills along with ineffective marketing strategy is a major hurdle in success of MSME.

Read also: 

  1. Social, Economic and Cultural implications of Tourism in Himachal Pradesh – HPAS Mains
  2. Types of tourism: religious, adventure, heritage, Important tourist destinations in Himachal Pradesh – HPAS Mains
  3. Concept of Eco-Tourism and green tourism and their role in the sustainable development of the State of Himachal Pradesh – HPAS Mains
  4. Himachal Pradesh Industrial Investment Policy, 2019 – HPAS Mains
  5. Environmental concerns of the tourism industry, both positive and negative effects including climate change with reference to Himachal Pradesh – HPAS Mains
  6. Concept of Himachal State Wide Area Network (HIMSWAN) – HPAS Mains
  7. Concept of LokMitra Kendra in Himachal Pradesh – HPAS Mains

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