The difference among the industries is defined on the basic of use of capital equipment according to instruction of the Government.
According to instruction of the Government of 1985, industries whose investment on fixed capital like machineries and equipments is less than Rs. 35 lakhs is known as Small Scale Industries. For large scale industries, promoter or entrepreneur as one person or two persons are not able to provide capital for construction of large scale industries.
So the entrepreneurs or promoters of large scale industries collect the required capital through the shares of small values. They also get loan from the market through different ways. But small scale industries are not able to get the required capital through all these sources.
As large scale industries produce more than small scale industries, the extent of market is more for large scale industries. Small scale industries can manage themselves with their local market but large scale industries cannot. Large scale industries cannot function if they do not get adequate market.
Cottage industries are also known as small scale industries because of the investment. Still then there are some differences between small scale industries and cottage industries.
According to Fiscal Commission, 1950, a cottage industry is one which is carried on wholly or primarily with the members of the family either as a whole or as a part-time occupation. According to Fiscal Commission, 1950, a small scale industry is one which employs hired labour from 10 to 50. In cottage industry, there is an owner but no hired labourers but in small scale industries both owner and hired labour are present.
Cottage industries mainly use traditional techniques of production or simple methods of production but small scale industries use power, new techniques of production and new machineries etc.
Khadi and Gramodyog, handlooms, ornamental products of silver and gold and small industries are the examples of cottage industries. TVs, radios, electronic products and other consumer goods are examples of small scale industries.