Rural industries is constrained with several problems. The growth of rural industries is not very healthy due to the following factors :
Lack of infrastructural facilities:
Rural areas are characterized by poor infrastructural farcicalities in the field of roads, electricity, street lighting, road transport etc. which hampers the smooth movement of various industrial activities. This is a major problem faced by rural entrepreneurs.
Most of the rural entrepreneurs face financial crunch in setting up rural industries because of the non-supportive attitude of financial institutions and banks which work more on papers. The procedures and conditions to avail a loan is so time consuming that its delay often disappoints the entrepreneur. Due to this, the entrepreneurs are forced to take credit from village money lenders who charges exorbitant rate of interest.
Lack of technical know-how:
As rural industries are labour intensive, they cannot afford to introduce sophisticated techniques and methods of production which is very expensive. Lack of technical know-how, appropriate technology and training create immense problem in the growth of rural industries. Without this, productivity and increased profit is a distant dream.
Marketing of rural products has not been well developed. Promotion, distribution and implementation of customer feed-back is lacking. Rural industries cannot compete with their urban counterparts. Dealers exploit the rural industries in the traditional sector. Lack of proper communication facilities and marketing information adds to the problem to large extent.
Lack of adequate knowledge and information:
Though information technology has substantially developed in the modern world and has penetrated into the rural areas through internet, rural people hardly availed its benefits. Because, rural people do not have adequate information avenues. They are not knowledgeable, trained and motivated to achieve more and more in their own sphere.
Rural industries face a tough task in procuring and storing raw materials. Since rural industries are small they procure raw materials from middlemen at higher prices. Lack of warehousing facilities in the rural sector also costs more towards storing of raw materials.
Rural industries need compliance of various legal formalities in obtaining the government’s approval and license for carrying out industrial activities. But rural entrepreneurs find it extremely difficult to comply with various legal formalities due to sometimes complex legal provisions or illiteracy and ignorance.
Besides the above problems, lack of awareness and knowledge about the importance of rural industries stand as a major problem before rural entrepreneurs. Added to this another problem crops up relates to the disinterest shown by rural people to assume rural entrepreneurship as career. The ninth plan has also sorted out the problems of rural industries as follows:
- Inadequate flow of credit
- Use of obsolete technology, machinery and equipment
- Poor quality standards
- Inadequate infrastructural facilities.