There has been a continuous step taken on small scale and cottage industries after independence on every industrial policy of India. Different incentives have also been given for the development of these industries.
An employment opportunity by employing less capital our country has more of laborers but less of capital. So if small scale industries are developed, it will help our country to use more labourers and less capital.
Equitable Distribution of National Income:
Development of small scale and cottage industries help us to distribute national income in equal manner. Large scale industries are under the ownership of a few industrialists, but development of small scale industries leads to a large number of industrialists.
A large number of labourers are employed in small scale industries in comparison to large scale industries. It means the production of small scale industries are distributed among a large number of people. So small scale industries help in equal distribution of national income.
Elimination of Regional Disparity:
Large scale industries like iron and steel and heavy industries cannot be established throughout the country. So if large scale industries are opened, these are confined to a few areas and other areas are deprived of industrialization which leads to regional disparity. But small scale industries can be established in large quantities in different areas which will help those areas of the country to industrialize and help to reduce regional disparity from industrial development point of view.
Utilisation of Locally Available Resources:
It has been stated that small scale and cottage industries can be established throughout the region. These types of industries will help to use the locally available resources. It can also use the local entrepreneurs. These types of industries are able to keep the traditional art and culture and use the locally available labourers and raw-materials. It is suitable to use locally available resources through small scale industries and cottage industries.