Cottage and Small Scale Industry,

Importance, SMEDA, Objectives and

Problems
Instructor’s name: Asim Yasin Randhawa
“Pakistan Economics”
BBA 4TH SEMESTER (B)
 Introduction
 It includes all industries which are run by
small capital (e.g.; sports, leather goods and
garments etc)
 It is treated as important part of manufacturing

sector
 It is very important for development of

country like Pakistan

 Introduction
Small Scale Industry:
 Firm employing less than 10 labours
 Its fixed assets do not exceed Rs. 2 millions in

Pakistan
 For Example: Manufacturing in sports and

leather goods, garments, silver and gold

ornaments, furniture etc
 Introduction
 Cottage or Micro Industry:
 Generally carried on at home of artisan
 Family member will assist his work
 Job may be whole time or part time
 No power used
 Very simple use of implements
 For Example: Wood work, handloom products,

toy making etc

Types of Small Scale and Cottage Industries
Rural area industries Urban area industries
Carpet industry Power loom Industries
Poultry farming Embroidery &
Forestry Tailoring
Livestock Making of silver and
Sericulture gold
Rice husking Spice industry
Raw sugar Furniture and fixture
Bee keeping
 Division of Industries

Industry

Small Scale Medium Scale Large Scale

Industries Industries Industries
Contributions to Labor Force, GDP and Exports

Small Scale & Cottage

Industries (2018-2019)

GDP 2.0 %
Labour Force
Growth Rate Exports 25%
10 % 8.2%
Importance of Small Scale and Cottage Industries in Pakistan

 Source of employment
 By-product industries
 Development of Agriculture sector
 Personal interest
 Growth of per capita income
 Quick yielding
 Favourable balance of payment
 Development of large scale industries
 Reduction in unemployment
 Part time employment
Importance of Small Scale and Cottage Industries in Pakistan

 Supply of indigenous goods

 Reduction in income disparities
 Reduction in regional disparities
 Better living standards
 Reduction in pressure on land
 Growth of industrial sector
 Extension of home market
Importance of Small Scale and Cottage Industries in Pakistan

 Reduction in rural urban migration

 Balanced growth
 Source of foreign exchange earnings
 Problems with Small Scale & Cottage Industries

 Shortage of capital
 High cost of production
 Use of backward techniques
 Less government interest
 Lack of standardization
 In efficient labour
 Lack of coordination
 Improper marketing facilities
 Irregular supply of electricity
Problems with Small Scale & Cottage Industries

 Scarcity of rapid transport and communication

 Scarcity of raw material
 Absence of technical training
 Import of consumer goods
 Lack of storing facilities
 Modern life style
 Lack of subsidies
 Subsistence level of production
 Lack of division and specialization
 Government and Small Scale Industries
 Industrial Estate
 Mini Industrial Estate
 Technological Services
 Handicraft development centers
 Carpet centers
 Marketing facilities
 Consultative services
 Financial assistance
 Credit facilities
 Government and Small Scale Industries
 Publicity
 Facility of raw material
 Purchase of cottage industrial products
 Allocation in development plans
 Protection policy
 Employ modern machinery
 Trade fairs and exhibitions
 Latest situation
 Standardization
 Small scale industrial corporation
 SMEDA
 Small and Medium Enterprises Development
Authority
 Innovative approach and professional

management
 Policy advisor to Government
 Facilitator to stakeholders
 Presidential Ordinance 2002 for SMEDA
 Important role in development of any country
 Strong economic growth
 SMEDA
 Established in October 1998
 Development of SMEs in Pakistan
 Institution of Govt. of Pakistan
 SBP Criteria for SMEs
 SMEs are organizations which fulfill one of
the following criteria
i. A trade with total assets cost of Rs. 50
Million with out land and building
ii. Manufacturing with total cost Rs. 100
million with out land and building
iii. Sale not exceeding Rs. 300 million
 SMEDA Objectives
 Encourage the growth of SMEs
 Advisor to Government and Donor assistance
 Advisor of Fiscal and Monetary issues
 Facilitation of Business Development Services of

SMEs
 Set up advisor of suppliers of machinery to SMEs
 Conducting development strategies
 Facilitation of SMEs financing
 Strengthening of SMEs training programs
 SMEDA Structure
 FederalMinistry of Industries and Production
 Headed by CEO
 Four Divisions

1. Central Support Division

2. Policy and Planning Division
3. Out Reach Division
4. Business and Sector Development Services
Division
 Role of SMEDA
 Training services
 Business plans division
 Financial services
 Information Resource Centre
 Policy and Planning
 Intellectual property for business success
 Legal services
 High role in rural development
 Labour intensive employment
 Curb monopoly of few firms
 Backbone of National Economy
 Conclusions
 Industries are playing important role in
development and growth of any country
 Industries are facing lots of problems also but

its role cannot be ignored at any stage

 Government should provide the credit and

consultancy services which will help to

development of industries
 Assignment No. 3
Assessing the food security situation among the rural
households of District Faisalabad of Pakistan
By

Asim Yasin Randhawa and Dr. Khalid Bashir

Institute of Agricultural and Resource Economics,
Faculty of Social Sciences, University of Agriculture, Faisalabad