cottage and small scale industries

1. Secondary
Industries
(processing and manufacturing)

2. Definition of industry
•Economic activity concerned with
the processing of raw materials
and manufacture of goods in
factories.

3. Types of Industry
• Industry can be divided into three main categories. Recently Tertiary industry
has been sub-divided into a fourth type.
• Primary Industries
Extract raw materials (which are natural products)
from the land or sea e.g. oil, iron ore, timber, fish.
Mining, quarrying, fishing, forestry, and farming are
all example of primary industries.

4. Secondary Industries (sometimes referred
to as Manufacturing industry)
Involve the manufacture of raw materials,
into another product by manual labor or
machines.
Secondary industries often use assembly
lines e.g. a car factory. i
Iron steel industry

5. Tertiary Industries (sometime referred to as
Services industry)
Neither produce a raw material nor make a
product.
Instead they provide services to other people
and industries.
Tertiary industries can include doctors,
dentists, refuse collection and banks.

6. Quaternary Industries
•Involve the use of high tech industries.
People who work for these companies
are often highly qualified within their
field of work.
Research and development companies
are the most common types of
businesses in this sector.
•Goods
• All of the companies are linked in one way or another. For example:
• The raw material cotton is extracted by primary industries
• The cotton may then be turned into an item of clothing in the secondary industry.
• Tertiary industries may advertise the goods in magazines and newspapers.
• The quaternary industry may involve the product being advertised or researched to check that the item of
clothing meets the standards that it claims

7. Other types
• Agro based industries : These type of industries use
plant and animal based products as their raw materials.
Food processing, vegetable oil, cotton textile, dairy
products and leather industries are examples of agro-
based industries.
• Mineral based industries : These are primary
industries that use mineral ores as their raw materials.
The products of these industries feed other industries.
Iron made from iron ore is the product of mineral
based industry. This is used as raw material for the
manufacture of a number of other products, such as
heavy machinery, building materials and railway
coaches.

8. •Marine based industries : They use
products from the sea and oceans as
raw materials. Industries processing sea
food or manufacturing fish oil are some
examples.
•Forest based industries : They utilize
forest produce as raw materials. The
industries associated with forests are
pulp and paper, pharmaceuticals,
furniture and buildings.

9. • Size: It refers to the amount of capital invested,
number of people employed and the volume of
production. Based on size, industries can be
classified into small scale and large scale
industries.
• Cottage or household industries
are a type of small scale industry where the products
are manufactured by hand, by the artisans. In
Pakistan cottage or household industries hold an
important position in rural set-up. Most villages are
self-sufficient in the basic necessities of life. They
have their own carpenters, blacksmiths, potters,
craftsmen and cotton weavers. Many families
depend on cottage industries for income.

10. Cottage industries have also gained
immense importance in cities and
towns. There is great demand for hand-
woven carpets, embroidered work,
brassware, rugs and traditional bangles.
These are also considered important
export items and are in good demand in
international markets.

11. Basket making

12. Pottery making

13. • Small scale industries use lesser amount of
capital and technology as compared to large
scale industries that produce large volumes of
products. Investment of capital is higher and the
technology used is superior in large scale
industries.
Examples:
Silk weaving and food processing industries

14. • .
There is a web of cottage and small industries. In almost every
village, there are a number of such industries depending upon
the size of the village and the demand for the products. The
establishment of such industry is closely related to the
availability of raw material, traditional skills, climatic conditions
and, in several cases, the local specialization in the organized
factory sector.
There is a large variety of handicrafts available in Pakistan. They
are not only aesthetically pleasing items, but they are also
serve the needs of local people.

15. Examples of small-scale and
cottage industries
• Carpets
Carpets are by far the most in economic terms and they make a
significant contribution to export earnings. They are generally hand-
woven and hand knotted and made of wool, silk or a mixture of the
two.
• Textiles
• Textiles are found throughout the country with a variety of design
and techniques. The most famous among them are Khaddar, Susi,
Khes, Chunri, Boski, Karandi, Shaal, and Ajrak. (Sindh) The designs
are invariably brightly colored with traditional emphasis on blue
and red.

16. • Embroidery: Embroidery has developed to a fine art with distinctive
regional designs and patterns.
• Jewelry: Gold and silversmiths are one of the largest communities of
craftsmen. Much of the jewelry made and sold in the cities is
intricately fashioned and delicate.
• Ceramics: Clay and terracotta pottery and utensils continue to be of
great practical importance. Many of the designs of urns, pitchers,
bowls, jugs, plates, and pots seen today are almost identical to those
un covered at archaeological sites around the country. Distinctive
glazed blue tiles are used to decorate many of the great mosques in
Pakistan.
• Cutlery: Wazirabad is the city of cutlery industry in Pakistan . This
industry is growing day by day and has share of 65 million US dollars
in Export for 2010. High Quality Damascus Steel ( Pattern Welded
Steel ) is manufactured in this city and 95% of world needs are
produced here.

17. • Woodwork
The Swat Valley is perhaps the most famous for its
intricately carved architectural woodwork and furniture,
although wood-carving is common throughout the
northern mountains.

18. • Surgical Instruments
Sialkot and Lahore are also noted for the
manufacture and export of surgical instruments.
The most important raw material is stainless
steel which has to be imported. In this industry,
also, medium scale factories contract work out
to small scale and cottage concerns. Also like the
sports goods industry, most of the output is
exported.

19. •Sports Goods
• Sports goods earn about 3.7% of our total exports. The
main raw material for the sports goods industry are
leather and mulberry wood that are available in
Punjab, but also use imported PVC. (Polyvinyl chloride, more
correctly but unusually poly(vinyl chloride), commonly abbreviated PVC, is the world's third-most
widely produced synthetic plastic polymer, after polyethylene and polypropylen )Football,
hockey ball, hockey sticks, cricket bats and rackets are
mostly manufactured by hand. The skilled workers are
available in Sialkot and Lahore.

20. Importance of cottage and
small scale industries

21. Problems of cottage and small-scale industries
Cottage and small-scale industries contribution to
the GDP is only 5%. There are certain problems
associated with these industries that are
mentioned below.
1.Profits are limited and they are mostly spent on
the daily expenses of the owners. They do not
have extra capital for expansion of these
industrial units.
2.Economies of scale are not available so
production cost is higher. Goods produced in
small-scale industries cannot compete in open
market if the same goods are manufactured on a

22. 3.There is a lack of standardization and quality control.
In some cases they do not meet the standards of
foreign markets. A lack of coordination between
different industries also creates differences in prices.
4.Production methods and machinery are outdated
because the investors in small-scale industry are
illiterate and poor.
5.The wholesaler, who takes most of the profits,
exploits the owners of the small-scale industry. In some
cases goods are sold to wholesalers at cost price, which
discourages the owners and they reduce the quality and
quantity the produced.

23. 6.In rural areas, where the electricity is not
provided, small-scale industries are difficult to
set up. Even the great fluctuation in voltage and
power break-downs cause damage to the
electric motors. The commercial rates of
electricity have also increased significantly
which hinders the growth.
7.The craftsman and artisans learns their skills
and production methods from their elders. The
provision of technical advice and further
training is limited.

24. Government Policy towards Small-scale and cottage
industries
The government is fully aware of the potential of cottage
and small-scale industries for industrial development.
The following organizations have been established to
develop this sector of economy.
Pakistan Small Industries Corporation (PSIC)
Punjab Small Industries Corporation (PSIC)
Sindh Small Industries Corporation (SSIC)
The Small Industries Development Board NWFP (SIDB)
The Directorate of Small Industries Baluchistan (DSIB)

25. The above organizations are taking the following
measures:
 Establishment of industrial estates.
 Providing marketing facilities.
 Setting up of technical service centers.
 Establishing handicraft development centers
and carpet centers.
 Providing pre-investment counseling and
guidance to newcomers.
 Providing local and foreign loans to small
industry owners on easy installments.

26. The informal sector, informal economy, or
grey economy is the part of an economy that is neither taxed,
nor monitored by any form of government. Unlike the formal
economy, activities of the informal economy are not included in
the gross national product (GNP) and gross domestic product
(GDP) of a country. Sector which encompasses all jobs which are
not recognized as normal income sources, and on which taxes
are not paid. The term is sometimes used to refer to only illegal
activity, such as an individual who earns wages but does not
claim them on his or her income taxes, or a cruel situation where
people are forced to work without pay. However, the informal
sector could also be interpreted to include legal activities, such
as jobs that are performed in exchange for something other than
money. Opposite of formal sector. People working as small
farmers, street vendors, hawkers, small traders, micro-
entrepreneurs, home-based workers, cobblers, rag-pickers,
porters,, artisans, etc…all belong to the Informal Sector

27. The formal sector
(1) has an organised system of employment with clear written
rules of recruitment, agreement and job responsibilities.
(2) has a standardised relationship between the employer and
the employee is maintained through a formal contract.
(3) the employee is expected to work for fixed hours and receives
fixed salaries in addition to incentives and perks. He works under a
decent work environment and is entitled to benefits such as leave,
savings, loans etc. He has an organised association or union where
his official grievances are addressed. Besides, he is covered under
social protection benefits such as life insurance, health insurance,
pension, gratuity etc.
People working in civil service, public sector units, government
service, defence, multi-national/national/private companies,
schools, colleges, research institutes, management organizations,
banks etc.…all belong to the Formal Sector

28. Terms to remember
• 1.Raw material
• 2.Waste material
• 3. By product
• 4.Processed goods
• 5.Value added goods
• 6.Manufactured goods
• 7.Capital goods
• 8.Consumer goods
• 9.Semi –processed goods
• 10.Export Processing Zones(EPZ)