Small and cottage industries have an important place in a developing economy like India. These industries not only play an important role in providing more employment opportunities at minimum cost than big industries but also help in industrialization of rural and backward areas. Due to which regional imbalance is reduced and equitable distribution of national income and wealth is ensured. Cottage industry can be defined as an industry which is run wholly or partially by the members of the family. Many small industries come under the category of cottage industry which the farmer starts for his subsidiary income, for example handloom weaving cloth making porridge or making rope. In the second category of cottage industry we can put those occupations which a particular caste has traditionally been doing for centuries such as blacksmith work, carpentry ghani oil potters work leather industry weaving clothes, carpeting shoes etc. Includes construction. The third category of cottage enterprise can include those occupations which are chosen by people especially in urban areas for full time employment such as wood stone, gemstone carving or embroidery work, toys making, gold and silver wire steel and other industries. Manufacture of brass utensils etc. Small and cottage industries as ancillary units are complementary to large industries and contribute significantly to the socio-economic development of the country. According to Gandhiji, India's salvation lies in its cottage businesses. According to Morarji Desai, rural people who remain unemployed for most of the time, get full or part time employment from such industries. Small and cottage industries fulfill the basic needs of the large rural area of the country. Large scale industries can be established only in some industrial centers because special conditions and facilities are required for them. But cottage industries can be established in villages and small towns, so cottage and small scale industries help in decentralization of industries in the country. The burden of population on agriculture is increasing continuously in India. Every year about 30 lakh persons increase to become dependent on agriculture. Due to which there is subdivision and fragmentation of agriculture. Small scale industries are very useful in solving this problem. Establishment of cottage industries requires less capital as well as less technical knowledge and can be run by giving less amount of training to the employees, thus it is best for the Indian economy. These are such industries whose production can be obtained only after some time of establishment. That is why they are also called quick producing industries. There is a difference of years between the establishment of large industries and the time of production, whereas in cottage industries, production can be started in a few months, somewhere in a few days.