Chemical & Pharmaceutical, Cottage & Agro-based Industries | Geography Optional for UPSC (Notes) PDF Download

Cottage Industry

• Cottage industries, also known as household, rural, or traditional industries, involve artisans using local raw materials and simple tools to create everyday goods in their homes. These goods may be for personal consumption, sale in local markets, or barter. Family members or part-time laborers often assist in the production process. Examples of cottage industries include pottery making, bamboo basket weaving, fabric production, mat and curtain making, furniture crafting, and gold or silver jewelry making.
• Small scale industries (SSI) are those where manufacturing, production, and service rendering occur on a smaller scale, with an investment limit of up to Rs. 5 crore and an annual turnover of up to Rs. 10 crore. In contrast, cottage industries are usually very small and are established in cottages or dwelling places. The Khadi and Village Industries Commission (KVIC), a statutory organization, promotes village industries and provides support to cottage industries.
• While small scale industries employ outside labor and use both modern and traditional techniques, cottage industries primarily rely on family labor and traditional production methods. The iron and steel industry has helped India progress towards modernization, while the cottage industry has contributed to balanced regional development and the pursuit of an egalitarian society.
• Cottage industries hold a unique position in India due to the country's diverse socioeconomic and geographical landscape, aligning with Gandhian philosophy for rural development. As a result, the Indian government has provided special benefits to support the growth of cottage industries over the years. However, since 1990, these industries have faced significant challenges in the context of liberalization, globalization, and privatization. Larger firms, which benefit from economies of scale, are now producing similar goods, leading to increased competition and the potential for smaller, cottage industries to struggle.

Rationale/Importance of Cottage Industry

• The significance of the cottage industry lies in its ability to create employment opportunities, which in turn helps reduce poverty and income disparities. This type of industry plays a crucial role in promoting balanced regional development in rural economies.
• Cottage industries are particularly important for women's self-reliance, as they often take on significant roles in both management and labor. This empowers women in rural communities and helps bridge the gender gap.
• In addition, cottage industries provide essential support services to larger enterprises by producing specialized items such as spare parts, small tools, and handicrafts. These large companies may not have the resources or interest to produce these items themselves.
• Cottage industries are also eco-friendly and energy-efficient, with lower emission levels than larger industrial units. This makes them more sustainable and environmentally responsible.
• By utilizing local skills and traditional techniques, cottage industries preserve and promote unique craftsmanship. This not only helps maintain cultural heritage but also adds value to their products in the global market.
• With lower capital requirements, cottage industries are more accessible to individuals and communities with limited financial resources. This allows for broader participation in the economy and supports entrepreneurship.
• Cottage industries also help alleviate the pressure on agriculture by providing alternative sources of income in rural areas. This diversification strengthens the overall rural economy and promotes sustainable development.
• Lastly, cottage industries have significant export potential. If properly tapped, the unique and environmentally friendly products created by these industries can attract global demand, thereby contributing to the growth of the country's economy.

Composition of Cottage Industry

• Handicrafts
• Khadi/Cotton
• weaving
• Match industry
• Poultry
• Silk weaving
• Bidi Making
• Glass work
• Toy making
• Lock/Knife making

Location factors
Location factors can be classified on the basis of factors given in the table below

1. Physical factors
   • Climate
   • Terrain
   • Forest/vegetation
2. Human factors
   • Historical tradition
   • Market and technology
   • Transport
   • Technology
3. Physical factors

Human factors

Problems of cottage industry

1. Thank the incentives and encouragement given by the govt, the cottage industries sector has made substantial progress during the last three decades. But the development has not been commensurate with their potentialities or with the need of Cottage industries. Cottage industries are facing many problems today which are hindering their growth.
2. Due to competition from large factories, many artisans have abandoned their traditional occupation and become landless agriculture labourers. This is leading to the extinction of traditional knowledge-based industries.
3. Cottage industries are unable to compete with other sectors due to many reasons prevailing at the input, processing and output stage discussed below:
4. Input stage
   • Lack of availability of credit and finance: There is no timely, adequate and low-cost credit available to Cottage industries. Cottage industries have not been able to raise capital like large industries from Banks and financial institutions.
   • Infrastructural bottlenecks, especially power hampers productivity and efficiency of Cottage industries.
   • Procurement of raw material due to the inadequacy of funds hampers raw material availability to Cottage industries in India. This is accentuated by the reluctance of government agencies which is favouring large scale industries.
5. Processing stage
   • Traditional and obsolete technology hampers the cost competitiveness and productivity of industries. This prevents further expansion of the industry.
   • Under-utilization of potential due to various financial, technological and marketing constraints is hampering the growth of Cottage industries in India.
6. Output stage
   • Absence of marketing, availability of readymade markets and lack of brand names hamper their further growth.
   • Proper quality up-gradation, monitoring and facilitation by the government are not there for Cottage industries due to which the quality products are not available in the market with respect to Cottage industries which is hampering their growth.
   • Besides, the high incidence of sickness and non-recovery of dues hamper their operation and development.

Measures

• Modern Techniques: There is an urgent need for implementation of techniques which not only enhances productivity but develops skills of the laborers and meets the requirements of the local market.
• Banking Facilities: Rural Co-operatives and Rural Banks should be established and stabilized by the Government for advancing short-term loans on nominal interest.
• Marketing Facilities: The adequate marketing facilities should be arranged for them, as sale of goods has now-a-days become as complicated an affair as production itself. The platform of e-commerce should be utilized which can expand market across all boundaries.
• The artisans must be helped to get the best price of their goods. Frequent exhibitions should be organized to enable the artisans to show their art and industry.
• Some of the schemes and measures taken by the Government for improving the condition of Cottage industries in India are discussed below:
  • Khadi & Village Industries Commission (KVIC):
    (i) The Khadi and Village Industries Commission (KVIC) is a statutory body established by an Act of Parliament (Khadi and Village Industries Commission Act of 1956). In April 1957, it took over the work of the former All India Khadi and Village Industries Board.
    (ii) Functions: It is an apex organization under the Ministry of Micro, Small and Medium Enterprises, with regard to khadi and village industries within India, which seeks to – “plan, promote, facilitate, organise and assist in the establishment and development of khadi and village industries in the rural areas in coordination with other agencies engaged in rural development wherever necessary.”
  • Credit-related schemes
    (i) Pradhan Mantri Mudra Yojana: Launched in April 2015 by the Prime Minister, the Mudra Yojana aims to enable Micro Finance Institutions (MFIs), Non-Banking financial institutions/Companies (NBFCs), Small Finance Banks, RBRs, Commercial Banks, Cooperative Banks, etc. to provide Low Rate Loans to eligible entities.
    (ii) Priority Sector Lending: Sectors which the Government of India and Reserve Bank of India consider as important for the development of the basic needs of the country and are to be given priority over other sectors. The banks are mandated to encourage the growth of such sectors with adequate and timely credit through Priority Sector Lending. Sectors under Priority Sector Lending includes
    (i) Agriculture
    (ii) Micro, Small and Medium Enterprises
    (iii) Export Credit
    (iv) Education
    (v) Housing
    (vi) Social Infrastructure
    (vii) Renewable Energy
    (viii) Others.
  • Stand-up India scheme: Prime Minister Narendra Modi had launched the Stand-up India scheme in April 2016. This scheme is aimed at providing credit to Scheduled Caste (SC), Scheduled Tribe (ST), and women borrowers in the non-farm sector. The scheme is intended to promote entrepreneurship among SC/ST and women and further give a push to the government’s financial inclusion programme.
  • Skill development and Training related programs
    (i) Skill India Mission: Skill India Mission is a government scheme launched in 2015. It is an umbrella scheme that has many skilling schemes and programmes under it. The chief objective is to empower the youth of the country with adequate skill sets that will enable their employment in relevant sectors and also improve productivity. The chief objective of the Skill India Mission is to provide market-relevant skills training to more than 40 crore young people in the country by the year 2022.
    (ii) Management Training Programmes: The basic objective of the Management Development Programme is to improve the productivity/profitability of existing entrepreneurs by upgrading their managerial decision-making capabilities and providing them with an insight into the latest developments in the area of industrial management, marketing management, financial management, inventory control, human resource development, information technology, and e-commerce, etc. to make them aware about emerging practices in the field of industrial management. Keeping in view the heterogeneity of their academic awareness the need for the inputs of scientific management various from place to place and person to person. Hence the orientation to management principles and practices becomes necessary.

Some of the cottage industries and their location

Chemical and Allied industries

• Chemical industries constitute one of the most vital and essential components of the country’s economy. This industry has undergone a great change during the last 3 decades and this change has become more perceptible after the liberalization of industrial policy in 1991. This sector constitutes the 4th largest set of industries after textiles, Iron and Steel, and Engineering industries.
• The rate of growth of this sector has been higher than the average growth rate of the Indian industry
• The chemical industry is central to the modern world economy, concentrating raw materials like oil, Natural Gas, water, minerals into thousands of products.
• The chemical industry uses chemical processes, reactions, and refining methods to produce a variety of products.
• Use of the products from the chemical industry is given in the table below:
  
• During the last decade the industry has been growing at the rate of 10% per annum
• Chemical industry in India is the 3rd largest producer in Asia and 6th largest in world. Indian Chemical industry is expected to double its share in global Chemical industry to 6% by 2021.
• Although Indian Chemical industry is a net importer with imports of US$ 19 billion compared to exports of $12.7 billion in 2015. Indian Chemical industry is expected to surge to US$ 226 billion by 2020 from US$ 147 billion in 2015.
• Chemical industry is studied under two heads
  (i) Heavy inorganic chemical industry
  (ii) Heavy organic chemical industry

Heavy inorganic chemical industry

• Sulphuric acid
  (i) It is an important ingredient for manufacturing fertilizer, synthetic fiber, plastics, paints, and dyestuff. Apart from these, it is also used in metallurgy, leather tanning, and oil refining.
  (ii) It is manufactured from sulfur which is not available in India in large quantity so 90% of sulphur has to be imported.
  (iii) About 80% of the production of Sulphuric Acid comes from Kerala, Tamil Nadu, Maharashtra, Gujarat, Madhya Pradesh, and Chhattisgarh, and West Bengal
• Nitric acid: The use and production of nitric acid is associated with fertilizer plants and explosives. Trombay unit of Fertilizer Corporation of India is the main producer.
• Alkalis industry
  (i) The manufacturing of alkalis requires heavy and weight-losing raw materials like common salt, limestone, and coal.
  (ii) This industry also requires cheap electricity in abundance, so the plants manufacturing alkalis tend to be located near the source of raw material, electricity, and market.
  (iii) This industry comprises soda ash, Caustic soda, Liquid chlorine, Calcium carbide, etc.
• Soda ash
  (i) It is used in the manufacturing of glass, paper, soaps, and detergents.
  (ii) The two chief raw materials used in the manufacturing of soda ash are sodium chloride and limestone, which are abundant in Gujarat.
  (iii) Okha and Mithapur are important centers of manufacturing soda ash.
• Caustic soda
  (i) The caustic soda industry has grown steadily since the first plant, with a capacity of five tonnes a day. The first caustic soda factory was set up in Mettur in 1936.
  (ii) It meets the needs of industries like soap, detergents, textiles, and alumina. It’s a by-product, chlorine is an important chemical used in water treatment, paper, and pulp, soap, detergent, textile, etc.
  (iii) The basic raw material used for manufacturing caustic soda is a common salt. It is a highly power-intensive industry and the cost of power constitutes more than 2/3rd of the total cost of production of caustic soda. Major centers of production are Porbander, Mithapu, Thane, Kalyan, and Titagarh.

Heavy organic chemical industry

Petrochemicals are chemicals derived from crude petroleum during the refining process. They serve as the foundation for manufacturing synthetic fibers, synthetic rubber, plastics, insecticides, drugs, and pharmaceuticals. Mumbai is considered the central hub of the petrochemical industry in India, with additional cracker units located in various regions across the country.
The petrochemical industry can be divided into four sub-groups:

• Polymers: These provide the essential raw materials for the plastic industry and are obtained during the refining of crude oil. Polymers, such as polyethylene, are widely used thermoplastics. India has become a major exporter of polymers, with the National Organic Chemical Industry Limited (NOCIL) establishing the first naphtha-based chemical plant in Mumbai. Several other companies have since been formed, leading to a significant growth in polymer production.
• Synthetic fibers: These fibers are extensively used for manufacturing a wide variety of fabrics due to their unique properties such as dye-ability, workability, wash-ability, and resistance to wrinkles and shrinkage. Manufacturing units for nylon and polyester filament yarns are located in various cities across India, while acrylic staple fiber production takes place in Thane, Ghaziabad, Kota, and Vadodara.
• Elastomers: These are polymers that exhibit both viscosity and elasticity, hence the term visco-elasticity. Elastomers are characterized by weak intermolecular forces, low Young's modulus, and high yield strength or failure strain. These properties enable elastomers to regain their original shape and size after being stretched extensively. Examples of elastomers include natural rubber, polyurethanes, and neoprene.
• Surfactant intermediates: Surfactants, or surface-active agents, are substances that reduce the surface tension of a liquid when added to it. This increases the liquid's spreading and wetting properties, making surfactants highly useful in various applications. For instance, they help dyes penetrate fabrics evenly during textile dyeing and are used to disperse aqueous suspensions of insoluble dyes and perfumes.

In summary, the heavy organic chemical industry is a vital sector that contributes to the production of a vast array of products, ranging from synthetic materials to pharmaceuticals. With its various sub-groups, including petrochemicals, polymers, synthetic fibers, elastomers, and surfactant intermediates, this industry plays a significant role in various aspects of daily life.

Conclusion

Frequently Asked Questions (FAQs) of Chemical & Pharmaceutical, Cottage & Agro-based Industries

What is the difference between cottage industries and small-scale industries?

Cottage industries are small businesses that operate from the artisan's home, using local raw materials and simple tools to produce everyday goods. These industries usually involve family labor and traditional techniques of production. On the other hand, small-scale industries are businesses that engage in manufacturing, production, and service rendering on a small scale, with an investment limit of up to Rs.5 crore and an annual turnover of up to Rs.10 crores.

What are some examples of cottage industries in India?

Some examples of cottage industries in India include pottery making, bamboo basket weaving, fabric production, mat and curtain making, furniture making, and jewelry making with gold or silver.

What are the main problems faced by cottage industries in India?

Some of the main problems faced by cottage industries in India include lack of availability of credit and finance, infrastructural bottlenecks, lack of access to raw materials, traditional and obsolete technology, under-utilization of potential, absence of proper marketing, and high incidence of sickness and non-recovery of dues.

What are some measures taken by the Indian government to support cottage industries?

Some measures taken by the Indian government to support cottage industries include the establishment of the Khadi & Village Industries Commission (KVIC), the implementation of credit-related schemes like Pradhan Mantri Mudra Yojana and Priority Sector Lending, and the launch of skill development and training programs like the Skill India Mission and Management Training Programs.

What are the main sectors of the chemical industry in India?

The main sectors of the chemical industry in India are heavy inorganic chemical industry (including sulfuric acid, nitric acid, and alkalis) and heavy organic chemical industry (including petrochemicals, polymers, synthetic fibers, elastomers, and surfactant intermediates).