This category of industries mainly uses traditional skills and is related with tradition, art and I culture. These industries utilize specific skills and locally available raw materials. Examples of cottage industries include units producing agriculture and forest-based goods, nurseries, and tree farms, value-added wood products (carvings and furniture). Cottage industries also include small-scale production of textiles, hand woven carpets, handicrafts (wood and metal), alcohol, household appliances, consumer durables, knitted wear, hosiery, jute products, livestock processing etc. Tourism and recreational agencies, such as outdoor guide services are also included in this category.
Rural cottage industries: Rural cottage industries are small scale industrial (manufacturing), commercial and business units that operate in rural areas and are set up in a dwelling or on the property where the residence is situated. Such units are primarily dependent on local resources and raw materials and cater to regional and local markets.
The development of cottage industries is essential for growth with equality and economic justice for all citizens. It is an informal sector and the products from home-based production and cottage industries need to achieve high growth with sound policy and institutional support. The contribution of these sectors to any economy cannot be ignored. This is especially true for countries of the SAARC region as they are important sources of employment and income for many families. In India they have 40 percent share in the total industrial output, 35 percent in exports, and over 80 percent in employment. These ventures, in spite of being based in rural or small areas, through proper marketing can attract export market tremendously due to their traditional and ethnic nature and use of natural resources which do not degrade the environment.
The employment opportunities in individual units are meager and are mainly catered to by small groups or within the family. However, clusters of such groups are now linked through government or non-governmental organizations to the market, thus spreading their industrial nature.