Household industry

Also called: Cottage industry, Cottage manufacturing · Topic: Secondary Activities: Manufacturing and Industrial Location · NCERT: Class 12, Ch 5 "Secondary Activities"

Meaning

Household industry (also called cottage industry or cottage manufacturing) is the smallest unit of manufacturing. Artisans make goods inside their own homes. Family members or part-time workers help them. They use local raw materials and simple tools that they make themselves. The goods are used at home, sold in the village market or bartered.

It is the lowest rung of NCERT's size ladder of industries (household → small-scale → large-scale). It shows how manufacturing began, before workshops and factories took over.

Explanation

How it works: inputs, tools and market

• Who works:
• The main worker is an artisan (a skilled craftsperson who makes things by hand).

• Family members or part-time workers help.

• Raw material: local. It is found close to the home.

• Tools: simple tools that the artisans make themselves (locally devised).
• Where the goods go:
• used at home;
• sold in the village market; or

• bartered (exchanged for other goods without using money).

• Why capital and transport matter little:

• The raw material comes from nearby.
• The buyers are also nearby.

• So there is little to buy and little to carry. Not much money is needed.

• Commercial significance is low:

• The output is small and is sold locally.
• So the trade earns little money.

Where it sits in NCERT's classification

• NCERT groups industries on four bases: size, inputs/raw materials, output/products and ownership.
• Household industry is a class under size.
• Size is measured in three ways:
• capital invested (money put into machines, land and buildings);
• number of workers employed;

• volume of production (how much is made).

• Household industry is lowest on all three. As you go up the ladder:

• the place of work moves from the home → to a workshop → to a factory;
• the tools change from hand tools → to simple power-driven machines → to advanced technology and assembly lines.

Typical products

• Foodstuffs, fabrics, mats, containers, tools and furniture.
• Figurines (small statues), shoes and leather goods.
• Pottery, bricks and baskets.
• Jewellery of gold, silver and bronze.

Historical roots: cottage to factory

• Origin of the name:

• "Cottage industry" comes from cotters. Cotters were a class of farm labourers in Europe who did this work in their cottages [4][7].

• Putting-out system (also called the domestic system):

• A merchant bought raw wool.
• He "put it out" to homes, where it was carded (combed), spun and woven.

• Workers set their own pace at home [4][7].

• Shift to the factory system:

• The factory system began in the 18th century, during the Industrial Revolution.
• It brought work together into large, specialised buildings.
• It replaced the domestic system, in which people worked in their homes or workshops [5].

Where it occurs

• India (NCERT photos, North-East):
• Nagaland: pottery (Fig. 5.2).
• Arunachal Pradesh: bamboo baskets (Fig. 5.2).

• Assam: handicrafts (Fig. 5.3).

• Europe (history):

• Cotters made goods in their cottages.

• Under the putting-out system, merchants sent raw wool to homes to be carded, spun and woven [4][7].

• United Kingdom: the factory system of the Industrial Revolution (18th century) began to replace home-based work here. Large-scale manufacturing then spread to north-eastern USA and Europe.

Don't confuse with

• Small-scale manufacturing: household industry is done inside the artisan's home with hand tools the artisan makes and family labour. Small-scale manufacturing uses a workshop outside the home, simple power-driven machines and semi-skilled labour (workers with some training).
• Large-scale manufacturing: household industry needs little capital and serves a local market. Large-scale manufacturing needs large capital, varied raw materials, enormous energy, specialised workers and assembly-line mass production for large markets.
• Micro enterprise (MSME): this is a legal category in India based on investment and turnover. After Budget 2025-26 the limits are up to ₹2.5 crore investment and ₹10 crore turnover [2]. Household industry is NCERT's descriptive size class, defined by home-based work, local raw material and simple tools.
• Factory system: this replaced the domestic (putting-out) system in the 18th century by bringing work into large, specialised buildings [5]. Household industry is the home-based system that came before it.

Prelims Hooks

• Household industry is the smallest size class of manufacturing. The ladder is household → small-scale → large-scale.
• The key features are local raw material, self-made simple tools, family or part-time labour, sale in the village market or by barter, and low commercial significance.
• NCERT photo matches: pottery → Nagaland, bamboo baskets → Arunachal Pradesh, handicrafts → Assam.
• Trap: the line between household and small-scale is the place of work and the technique. A workshop outside the home with power-driven machines is small-scale, not household.
• The term "cottage industry" comes from cotters, who were farm labourers in Europe. The putting-out system is also called the domestic system [4][7].
• The factory system began in the 18th century and replaced the domestic system [5].

Mains Points

• Decline of household industry (GS-I):
• Mass production (making goods in very large numbers at low cost, with division of labour and standardised parts) made factory goods cheap [6].
• These cheap goods undercut handmade goods.

• Since the 18th century, the factory system has steadily replaced the home-based domestic system [5].

• Survival of artisan crafts in the North-East (GS-I):

• Nagaland pottery, Arunachal bamboo work and Assam crafts use local raw materials and traditional skills.

• They survive mainly through local demand, tourism and cluster support. Under cluster support, units share facilities such as Common Facility Centres under MSE-CDP [3].

• Low capital, low returns (GS-I/GS-III):

• Household units need little capital and little transport, so they suit rural areas.
• Their low commercial significance keeps earnings low.
• To earn more, artisans need to move up the ladder to small-scale units with simple power-driven machines and wider markets.

Related concepts

• Classification of manufacturing industries
• Small-scale manufacturing
• Large-scale manufacturing

Read more

• Classifying industries by size: household, small-scale and large-scale