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Project Work
on
Opportunities and Challenges of Small and Cottage Industry of Bangladesh

Submitted To:
Syed Maruf Reza

ASSOCIATE PROFESSOR AND HEAD

DEPARTMENT OF ENTREPRENEURSHIP

Submitted By:
Name ID

Masoud Talukder 161-45-134

Nowrin Nusrat Nishitha 161-45-135

Zohadur Rahim 161-45-140

Maruf Ahmed 161-45-133

PROGRAM: BACHELOR OF ENTREPRENEURSHIP

DAFFODIL INTERNATIONAL UNIVERSITY

Submission Date: 15 December 2016

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 Letter of Transmittal

December 15, 2016

Syed Maruf Reza

Associate Professor and Head
Department of Entrepreneurship
Daffodil International University

Subject: Submission of the project work on “Opportunities and Challenges of Small and
Cottage Industry of Bangladesh”.

Dear Sir:
With due respect, I would like to state that, we the students of Department of Entrepreneurship 4th
batch, have completed our project work on the opportunities and the challenges of Small and
Cottage Industry of Bangladesh” your supervision.

Lastly, I would be thankful once again if you please give your judicious advice on the effort.

Yours’ sincerely,

Nowrin Nusrat Nishitha _________________

ID NO: 161-45-135
Masoud Talukder _________________
ID NO: 161-45-134
Zohadur Rahim _________________
ID NO: 161-45-140
Maruf Ahmed _________________
ID NO: 161-45-133
Department of Entrepreneurship

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 Acknowledgement

I would like to thank Mr. Syed Maruf Reza, Associate Professor and Head of Department of
Entrepreneurship for being so incredibly patient with us during this long project. There were a few
bumps along the roads, but he was at every turn inspiring, understanding, positive and helpful. I
could not have asked for a better supervisor.

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 Executive of Summary

Small and cottage industry is playing an increasingly important role as engines of economic growth
in many countries including ours. Small-scale and cottage industry provides low-cost employment
opportunities and renders flexibility to the economy. Considering the importance of small and
cottage industry sector in the economy of Bangladesh and understanding the constraints under
which such enterprises operate, it is evident that policies to support the development and growth
are necessary. In the policy strategies, smooth and sustainable development all over the country
will consider as one of the vehicles for poverty alleviation and generation of more employment.
An attempt has made in this paper to identify major financing constraints faced by small and
cottage industry in Bangladesh and suggest some policy measures to overcome those constraints.
There are laws, regulations, and priorities of small and cottage industry were given, by in the
Ministry of Industry’s website. Which is essential for those who wants to start a business in this
sector. Thus, there are many challenges and barriers in small and cottage business. If the challenges
get removed from this sector, unemployment, poverty can reduce easily and increase the economic
growth. Despite challenges, there are many opportunities in small and cottage industry as well.

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TABLE OF CONTENTS
Letter of Transmittal ..................................................................................................................................... 3
Acknowledgement ........................................................................................................................................ 4
Executive of Summary .................................................................................................................................. 5
1.0 Introduction ............................................................................................................................................ 7
1.1 Background of the Study .................................................................................................................... 7
1.2 Scope of the Report ............................................................................................................................. 7
1.3 Objective of the Report ....................................................................................................................... 8
1.4 Methodology of the Report ................................................................................................................. 8
1.5 Limitations of the Report .................................................................................................................... 8
2.0 Small and Cottage Industry ................................................................................................................. 8
2.1 Historical Evolution ............................................................................................................................ 9
2.2 Small and Cottage Industry at Present .............................................................................................. 10
2.3 Small and Cottage Industry in Bangladesh ....................................................................................... 10
3.0 Opportunities of Small and Cottage Industry ....................................................................................... 12
4.0 Challenges of Small and Cottage Industry ............................................................................................ 18
5.0 Findings and Recommendations ........................................................................................................... 24
Conclusion ................................................................................................................................................... 26
References .................................................................................................................................................. 27
APPENDIX ................................................................................................................................................. 29
Appendix A ............................................................................................................................................. 29
Appendix B ............................................................................................................................................. 29
Appendix C ............................................................................................................................................. 29
Appendix D ............................................................................................................................................. 29
Appendix E ............................................................................................................................................. 29
Appendix F.............................................................................................................................................. 29
Appendix G ............................................................................................................................................. 29
Appendix H ............................................................................................................................................. 30

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1.0 Introduction
Bangladesh is predominantly agriculture base and has limited industrial output and exports. The
small and cottage industry sector in Bangladesh is a huge contributor to the country’s economic
growth. The country faces severe competition in the world market to maintain and develop its trade
and balance of payment in its favor. The economy is not strong, as the industrial infrastructure and
output are not enough diversified. The problems of ensuring primary energy services are of prime
importance to industrial consumers. The Government of Bangladesh has taken steps to facilitate
the industrialization in Bangladesh. The paper addresses the prevailing problems, prospects and
challenges of small and cottage industry in Bangladesh and some policy recommendations
highlighted. The central bank has come up with a new definition for small and medium enterprises
in line with the government's industrial policy of 2010. The move also defines the country's
growing women entrepreneurs for the first time. The new definition replaced the previous ones
formulated in May 2008, incorporating microenterprise and cottage industries. Under the new
definition, the Bangladesh Bank will deem a woman as an entrepreneur if the person is an owner
or proprietor of a privately run organization, or owns at least 51 percent of share in case of a joint
venture or company listed with the Office of the Registrar of Joint Stock Companies and Firms.

1.1 Background of the Study

Thus, there are many opportunities in small and cottage industry field but there are some issues,
which become the barrier of it. Correction of this may allow doing business in this field and
Bangladesh can increase their economic growth as well. This study will show the opportunities
and the challenges of small and cottage industry.

1.2 Scope of the Report

Economic development generally refers to the quantitative and qualitative changes in the economy
to promote the standard of living and economic health of a specific area. This report focuses on
the role of small and cottage industry in economic development. We have identified various factors
of economic development on which the cottage industry is contributing a lot. To explain it we have
collected primary data through the structured questionnaire. This report also discusses the
opportunities and challenges associated with small and cottage industry.

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1.3 Objective of the Report
The present study focused on the current condition of small and cottage industry and the challenges
faced by them in Bangladesh as well as their policies recommendation. What kind of opportunities,
priority, and facility will they have? These are the specific objective of this report.

1.4 Methodology of the Report

The study is bases on secondary data. Data have been collected from different published materials
or articles like the ASA University Review A.K.M. Helal uz Zaman and Md. Jahirul Islam),
Industry Policy 2016, Ministry of Industry, European Journal of Business and Management, Daily
Star etc. The collected data were processed manually and paper in the present form has been
prepared in order to make the study more informative, analytical and useful for the users.

1.5 Limitations of the Report

A collection of data is from secondary sources, there is a limitation in this report. The research
work focused basically, the Small and Cottage Industry sectors and the importance of these sectors.
The study evaluated present scenario of challenges and opportunity of Small and Cottage Industry
sector in Bangladesh. This study does not use any hypothesis and model for analyzing the present
scenario and challenges.

2.0 Small and Cottage Industry

A cottage industry is a small-scale industry often operated out of a home, rather than out of a
factory. Cottage industries are defined by the amount of investment required to start, as well as the
number of people employed. They often focus on the production of labor-intensive goods. Small
Industry can be both service and manufacturing. According to the new definition, in the case of
manufacturing, a medium-size industry/enterprise will be those with assets worth Tk 10 crore to
Tk 30 crore (excluding land and factory building, but including replacement value) or 100 to 250
workers. In both services industry and businesses, the medium enterprises will be those, which
employ 50 to 100 workers and have assets worth Tk 1 crore to Tk 15 crore (excluding land and
factory building). The circular said if a business fits into one of the criteria of a large industry, it
is considered as a large industry, even if it were other yardstick features of a medium one.
In the manufacturing sector, small industries/enterprises will be those with assets worth Tk 50 lakh
to Tk 10 crore (excluding land and factory building, but including replacement value) and/or 25 to
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99 workers. In both services industry and business, small enterprises should employ 10 to 25
workers and have assets worth Tk 5 lakh to Tk 1 crore. According to Bangladesh Small and Cottage
Industries Corporation (BSCIC), Cottage industry is a small-scale industrial unit run by the
members of the same family either on full or part time basis. Its maximum number of workers
should be limited within 20; it uses indigenous technology and not run by the power. If it uses
power-run machinery, the maximum number of workers should be ten. The NATIONAL BOARD OF
REVENUE (NBR) considers the cottage industry as an industrial unit run by a maximum of 50
workers using local skills without adopting power-run mechanical equipment. The agriculture
Census Report of 1983-84 defined the cottage industry as a household level manufacturing unit
that produces goods manually. It has mentioned in the Industrial Policy-2010 that the net asset of
a unit of cottage industry without the land and the factory should be less than five hundred thousand
taka, its maximum workforce should be ten, and they would preferably be family members.

2.1 Historical Evolution

Recent years a major resurgence of small business throughout the developed world. The countries
as divided Russia and Eastern Europe are pricing such skills very high. The first piece of writing
about the small business discovered was off about more than 4000 years ago. Small business
flourished in almost all ancient cultures. The Egyptians, Arabs, Babylonians, Jews, Greeks and
Romans contained a substantial population of small business. HAMMURABI, the king of Babylon
introduced the first business laws. Despite many successes, the Greek and Roman historians
virtually ignored the role of small business and talked more about the other things. Yet, it was
largely through small business that the traders by doing business in other countries spread law,
regions, and philosophy and basic sciences. In the countries that followed the same business, the
religions held small business people in low esteem. In Bangladesh, BISIC (Bangladesh Small and
Cottage Industries Corporation) is the prime mover organization in Bangladesh to promote small,
cottage and rural industries in the private sector. BSCIC became the successor organization of the
then East Pakistan Small and Cottage Industries Corporation (EPCIC). The East Pakistan Small
and Cottage Industries Corporation Act. In 1957 (EP Act XVII of 1957) was passed on 14 March
1957 following the move of the then honorable minister for Labor, Commerce and Industry of
the UNITED FRONT Government SHEIKH MUJIBUR RAHMAN. After independence, EPSIC was
renamed as BSCIC by President Order No.156 (2nd Amendment) in 1972. In October 1973, the

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government by a gazette notification No. 28 bifurcated BSCIC into two separate corporations
namely: Bangladesh Cottage Industries Corporation (BSIC) and Bangladesh Small Industries
Corporation. Later these two corporations were unedified in 1975. Later, two bodies were separate
from BSCIC. Bangladesh Handloom Board and Bangladesh Sericulture Board were established.

2.2 Small and Cottage Industry at Present

BSCIC has developed 74 industrial estates throughout the country to foster the growth of SCIs in
a balanced manner and construction works for a number of estates including special type like
Tannery, API (Active Pharmaceutical Ingredients) and Garments Park are under execution.

At present situation, our government is trying to update the system of small and cottage industry
to enrich the economic condition of Bangladesh. The government is providing help to do this kind
of business. Some of the private and governmental organization are working for the betterment of
small and cottage industry. There are- MIDAS, BRACK, PKSF, SME FOUNDATION, BISIC,
SCITI etc. MIDAS and BRACK providing funds for doing business in small scale. They are
helping people to be self-employed and reduce poverty from the country. BISIC, SCITI, SME
FOUNDATION and PKSF are governmental organization. Ministry of Industry providing rules
and laws for every sector of the industry. At present, our government is providing training
programs, seminars, and workshop to encouraging young, rural and women to become self-
employed.

2.3 Small and Cottage Industry in Bangladesh

SCITI has its own building with all facilities for holding workshops, conferences, and other
functions. It houses a library with a collection of development related books and periodicals. The
Institute maintains a lean staff with interdisciplinary expertise, particularly in project management,
entrepreneurship, and enterprise development. BSCIC has 15 Skill Development Centers, which
provide skill development training to the unemployed youth, school and college dropouts on
different trades.

BSCIC's Design Centre is a center of excellence working for the development of crafts and
craftsmanship in the country. It imparts training to the artisans and craftsmen on different trades.
It develops designs and prototypes for handicrafts and distributes these among the craftsmen and
artisans. The Human Resource Development Institutes, since their inception, have trained more

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than 4,62 thousand people. BSCIC started facilitating small industries to establish linkages with
large and medium industries since 1991. Under this arrangement, small industries have been able
to market products valued about Tk.50 thousand crore. BSCIC started implementing special
programs in the Chittagong Hill Tracts Region since 1974 through two projects: Socio-economic
Development of Chittagong Hill Tracts Region' (Original) and Special project Socio-economic
development through promotion and extension of small and cottage industries for the under
privilege inhabitant of Chittagong Hill Tracts region. A total number of 22,000 youths have so far
been imparted training on different trade under these projects. These have has created employment
opportunities for 20,500 persons. With the support of BSCIC 76,000 small industries and 6,25,000
cottage industries have been established in the country. These industries have created employment
for 32.28 lac persons.

The Small & Medium Enterprise Foundation, widely known as SME Foundation, is a limited
company licensed by the Ministry of Commerce as a not for profit organization and registered
under the Companies Act (Act XXVIII) of 1994. It is running under the guideline as stated in the
Memorandum and Articles of Association. SME Foundation established by the Government of
Bangladesh, under Ministry of Industries as an apex institution for SME development in the
country. The major activities of SME Foundation are the implementation of SME Policy Strategies
adopted by the Bangladesh Government, policy advocacy and intervention for the growth of
SMEs, facilitating financial supports for SMEs, providing skill development and capacity building
training, facilitating adaptation with appropriate technologies and access to ICT, providing
business support services, etc. It is mentionable here that the Foundation is working for the
development of enterprises and entrepreneurs who belong to micro, small and medium categories
as per Industrial Policy 2010. Besides the general supports to the development of SMEs and
entrepreneurs the Foundation is providing diversified supports to the existing and potential women
entrepreneurs in order to position them into the mainstream business community. Promote Small
and Medium Enterprises (SMEs) for alleviating poverty, generating employment and thereby
accelerating economic growth is their vision. Assist for promoting the growth of small and medium
enterprises of all the productive and service oriented enterprises of the national economy for facing
the challenges of free market economy and globalization is their mission.

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Dhaka Chamber of Commerce & Industry (DCCI) the voice of SMEs serves as the first point of
business contact for penetration into a new market and a vibrant platform putting forward facts-
based opinions, suggestions and recommendations for a brighter tomorrow in the sphere of trade,
commerce, and the overall economy. DCCI, the largest and most active Chamber of the country,
established in 1958, was incorporated under the companies Act, V11 of 1913 as a limited company
on March 10, 1959. It serves as a model of non-profit, service-oriented organization. It has
rendered more than four decades of very useful services for the development of business and
industry in Bangladesh.

Palli Karma-Sahayak Foundation (PKSF) is the Government of Bangladesh (GoB) established an

apex development organization in May 1990, for sustainable poverty reduction through
employment generation. Legally, PKSF is a “company not for profit” and registered under the
Companies Act of 1913/1994 with the registrar of Joint Stock Companies. The legal structure of
PKSF allows flexibility and authority to undertake programs in a dynamic environment,
implementing them throughout the country and manage its affairs as an independent organization.

3.0 Opportunities of Small and Cottage Industry

There are many opportunities in small and cottage industry. BISIC, and SCITI providing training
to enrich skills to do business. Because of the lacking of proper information, we face hassle when
we try to start the business and we do not know the law and regulation. In the law of industry
ministry, they specified the sectors of the industry, and give full information, how to access the
government helps, and what are their limitations. The opportunities are-

I. Women Priority:
Different types of organizations provide either direct or indirect supports to women
entrepreneurs besides the government. Among various supporting organizations, the
financial institutions are considered most important. A list of supporting organizations is
given subsequently but only government policy supports and financial institution’s
supports are illustrated broadly.
 Bangladesh Small and Cottage Industries Corporation (BSCIC)
 Bangladesh Bank
 State and private commercial banks

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  Financial institutions
 Bangladesh Rural Development Board (BRDB)
 Bangladesh Management Development Institute (BMDI)
 Directorate of Women Affairs (DWA)
 Development of Youth Development (DYD)
 Bangladesh Manpower Training Bureau (BMTB)
 Micro-industries Development and Assistance Services (MIDAS)
 Job Opportunities and Business Support (JOBS)
 NGO-MFIs MSME program
II. Training Programs:
Private and non- private organization are arranging various kind of training programs that
increase their knowledge to do business. As an example, National Mushroom Development
& Extension Centre (NAMDEC), Department of Agriculture Extension, Ministry of
Agriculture is providing free training of mushroom plantation.
III. Less Interest from Bank Loan in ICT Sector:
Nowadays our government is providing less interest rate of bank loan in Information and
Communication Technology sector to do business in this sector.
IV. Employment:
As there is lots of scope of doing business in small and cottage sector, employment of
people will increase gradually.
V. Play a Major Role in Economic Development:
Small and cottage industry is playing a vital role in economic development. Increase of
business in this sector will increase GDP.
Figure: 01, Increasing growth of economy in small and cottage industry.

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 VI. Provide a Secure Basis for a Rapid of growth of Income:
In the sector of small and cottage industry, the ministry of industry set a law, though which
rapid growth of income could be secure.
VII. Help in raising the standard of living:
If we take the small and cottage industry in international level and develop the economic
growth, our way of living will change by the change of our income.
VIII. Provide Employment, Meeting High-Income Demands:
Increase of small and cottage industries will increase the employment and their high-
income demands. As economic sector will grow with the small and cottage industry’s rise.
IX. Brings in technological progress and change in the outlook of the people:
To improve the sector of small and cottage industry, technological progress and the change
of the outlook of the people should highlighted.
X. Has Decreased the Dependency on Foreign Resources:
When we have enough resources, why would we rely on foreign resources? We just need
to utilize it in proper way, wisely.
XI. Scope of Diversified Business:
We have lots of scope of diversified business. Diversified business is a business that has
multiple, unrelated businesses. It is the expansion of business vastly.
XII. Poverty Alleviation:
When employment increases, there is no place for poverty. Small and cottage industry can
give jobs to the poor so that they can earn and live their life.

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 XIII. Balanced Regional Growth:
Balanced regional development is an important condition for the harmonious and smooth
development of a country. It does not imply equal development of all regions of a country.
Rather it indicates utilization of development potential of all areas as per its capacity so
that, benefit of overall economic growth is shared by the inhabitants of all the different
regions of a country.
XIV. Provide Infrastructural Facilities:
The basic physical and organizational structures and facilities needed for the operation of
an enterprise is called infrastructural facilities of small and cottage industry. For running
business in small and cottage industry, basic infrastructure is essential.
XV. Provide Technical and Consultancy Services:
BSCIC, SCITI, BRACK etc. NGOs provide technical and consultancy services for
betterment of the business.
XVI. Innovation and Adaptation of Appropriate Technology:
Bangladesh is developing country and our present government take the initiative to make
our country digital. Therefore, new technologies are coming and making the business
strategy easier.
XVII. Recommendation for Exemption of Duties and Taxes:
There is a law and rules of exemption of duties and taxes for small and cottage industry in
Ministry of Industry. Our government set some rules and extra facilities for those who are
running small and cottage industry base business.
XVIII. Recommendation for Import Entitlement of Raw Materials and Packaging Materials:
The raw material and packaging material, which is using frequently, and it is imported, this
type of material should import duty free, so that the price of the product will be less. As an
example, Bangladesh’s customs bonded warehouse regime permits licensed manufacturers
to import duty free parts and materials required for their export production purposes. The
regime is heavily used by RMG producers to import fabric and components required to
manufacture garments in Bangladesh for export, and by Bangladeshi manufacturers who
produce and supply accessories and packaging to the export RMG industry (e.g.,
manufacturers of zippers, buttons, plastic hangers, packaging). The procedures are also
used to a lesser extent by leather goods, footwear, and shipbuilding industries.

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 XIX. Regulatory Functions:
A concept stating that a company with a specific business should be supervise and
reviewed by the proper regulating body. Functional regulation is there to ensure that the
most qualified and knowledgeable people are overseeing the daily functions of a
specialized field.
XX. Other Pre and Post Investment Counseling:
Pre-money/investment refers to a company's value before it receives outside financing or
the latest round of financing, while post-money/investment refers to its value after it gets
outside funds or its latest capital injection. Pre-money valuation refers to the value of a
company not including external funding or the latest round of funding. Post-money
valuation then includes outside financing or the latest injection. It is important to know
which is being referred, as they are critical concepts in valuation. This kind of counseling
based organization give the best advice for the business.
XXI. Enhancing Access of Finance:
If the amount of funds are increase, the amount of total employment, economic growth,
total GDP will increase gradually. So. It will beneficial in many ways.
XXII. Use of Modern Technology:
At present situation new business are using new technology as like web sites, mobile
application, smart phones, software, ultra intelligence machine etc. If we use modern
technology in small and cottage industry, it will boom forward to increase economic
growth.
XXIII. Organizing Trade Fairs, Symposiums, Workshops on Small and Cottage Industry on
Regular Basis:
Workshops, trade fairs on small and cottage should set up for regular basis. Because in
fairs and workshop, many people from home and abroad came for bought their products
and entrepreneurs find a new scope to do business in international level. As SME
foundation held a fair.
XXIV. Funding from NGOs and Privet Firm:
NGOs and privet firms are providing funding for small and cottage industry. They provide
funds with some terms and conditions.

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 XXV. Banks/Financial Institutions for Women:
They will accept and settle all types of loan applications of SME women entrepreneurs
with the highest priority. Banks and financial institutions shall take initiative to advertise
all the facilities for women entrepreneurs in both electronic & print media. They may
provide a maximum loan facility of Tk.25, 00,000/- against personal guarantee if the
borrower is woman or majority of the owners of the enterprise are women.
The women contribution in economy is increasing gradually.
Figure: 02, Increasing ratio of women contribution

XXVI. Special advice and service center for women entrepreneurs:

Banks/Financial Institutions shall establish special advice and service center for women
entrepreneurs in selected branches and ensure service friendly approach towards women
entrepreneurs.
XXVII. Expansion of Small and Cottage Industry:
Industrialization is a process, which happens in countries, when they start to use machines
to do work that once done by people. Industrialization changes the society as it happens.
During the industrialization of a country, people leave farming work to take higher paid
jobs in factories. As small and cottage industry is a sector of industrialization, expansion
of industrialization will help in many ways.

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XXVIII. Keeping market stability by increasing the production of sugar & salt:
Sugar and salt is one of the business related to small and cottage industry. This business
has good impact on the economic growth, and also have good opportunities for further
business investment.

These are the opportunities of small and cottage industry. If we run the small and cottage industry
business, all of the above opportunities may inflight us to be more focus on this sector.

4.0 Challenges of Small and Cottage Industry

Small and Cottage Industry is one of the sectors of Ministry of Industry. There are some reasons
for which the country has lagged behind in heavy and medium-level industries. Industrialization
in Bangladesh faces some challenges due to some structural constraints that hindered industrial
growth and there are-

I. Lack of Adequate Capital:

Insufficient of capital can cause failure to a business. Sometimes it has become very
hard to manage the capital for small and cottage business for a single person.
II. Weak Investment Base:
If the investment base is weak, it will become very hard for the business run it
properly. A weak investment base is like the weak foundation of a building.
III. Insufficient Infrastructure:
For the basic physical and structured facility, a well infrastructure is must for a
business to operate. Insufficient infrastructure can lead a business to the failure.
IV. Lack of the Technological Knowledge :
In every sector of small and cottage industry business, they need well skilled technical
employee and the knowledge of technology to take the business in the next level. If
this knowledge and skill is less known in the business, it will become hard to stand
still in the end of the market.
V. Lack of Adequate Resources:
If we establish a business in a specific area, where resources are tough to get or the
raw materials of the product is rare, there will be complication to produce the product
and may create problem as well.

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 VI. Shortage of Energy:
Market failure is possible when monopoly manipulation of markets occurs. A shortage
can develop due to industrial actions like union organization strikes and government
embargoes. The cause may be over-consumption, aging infrastructure, choke point
disruption or bottlenecks (limited number of component or resources) at oil refineries
adoption facilities that restrict fuel supply.
VII. Unskilled Human Resources:
As our country is not that much literate, the amount of skilled employee is very few.
For running, a business technical and educational skill is necessary.
VIII. Political Instability:
In political instability, doing business is very tough. Political unrest and political
pressure into the business may kill the existence of the business.
IX. Labor Unrest:
Sometimes labor unrest occur when they demand something that may increase cost of
the organization and the organization do not agree on their demand. Thus, labor do
strike and raise the conflict between the owners and the labor.
X. Limited Access of Credit from Bank:
Bank do have some limitation of giving access of credit. They have some rules and
regulation, which has set by the Bangladesh Bank, the mother bank of Bangladesh.
Other bank do not have the permit of braking their laws.
XI. Competition from Dumped and Smuggled Imports:
Exporting goods at prices lower than the home-market prices. In price-to-price
dumping, the exporter uses higher home-prices to supplement the reduced revenue
from lower export prices. In price-cost dumping, the exporter is subsidize by the local
government with duty drawbacks, cash incentives, etc. Smuggled means,
to import or export goods secretly, in violation of the law, especially without the
payment of legal duty. This type of product have low price instate of other product,
which is become competitively tough for the business.
XII. Lack of Adequate Law and Order Condition:
Small and cottage industry have their own laws and order condition but many of the
business owners do not know the laws, which has to be maintain strictly.

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 XIII. Growing Incidents of Crime and Extortion:
The vast level of increasing crime and extortion can bring problem into the business.
This one kind of challenge for the business to stand still.
XIV. Absence of Effective and Transparent Legal System:
Our business legal system is very poor and less effective. Breaking of the laws in the
business should be punish but in our country because of the corruption, legal system
is not effective for all.
XV. Financial Constraints:
Restriction of the finance is another challenge of the small and cottage industry
business. Without finance, we cannot do business accurately.
XVI. Rigid Collateral Requirements:
Rigid means, which is not flexible and collateral, is a property or other asset that a
borrower offers as a way for a lender to secure the loan. If the borrower stops making
the promised loan payments, the lender can seize the collateral to recoup its losses.
Since collateral offers some security to the lender should the borrower fail to pay back
the loan, loans that are secured by collateral typically have lower interest rates
than unsecured loans. This requirements occurs when someone need funding for
business. As it is not that much easy, it is a challenge for small and cottage industry
business.
XVII. High Interest Rate for Bank Loans:
The high interest rate of bank loans, increase the cost of the business and if they fail
to gibe instalment of the interest rate of the loan in the due date, extra charge will add
with the interest.
XVIII. Export and Import Delays in Ports and Customs:
For some internal and external issues, the delivery of the exported or the imported
goods faces delay in ports and customs and it is a big challenge for the small and
cottage industry business, in the case of deadline projects.
XIX. Below Capacity Utilization:
Capacity utilization is a measure of the extent to which the productive capacity of a
business is being use. It can be defined as, the percentage of total capacity that is
actually being achieved in a given period.

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 XX. Lack of Appropriate Production Facilities:
The reason of unappropriated facilities of production is unskilled human resources and
the lack of technological knowledge.
XXI. Lack of Modern Technology and Information:
Lack of modern technology and information can drag the business strategies
ineffective.
XXII. Lack of adequate Investment in Small and Cottage Industry Entrepreneurs
Development:
Insufficient investment will discourage the entrepreneurs to do business in the small
and cottage industry. Investment in business is like giving life to the business.
XXIII. Non-availability of Raw Materials and Trade Information:
Doing business in the small and cottage industry will become challenge if the
availability of the raw materials are rare. Lack of the knowledge of trade information
is like walking in the road blindly.
Production and operation of business will get unorganized and production level will
goes downward because of the lack of skilled technicians and workers.
XXIV. Lack of Knowledge about Marketing Technique:
Marketing technique is a process, which increase the amount of sell as well as profits
and lack of this technique will decrease the sell and profits.
XXV. Lack of Research and Development Facilities:
There is a huge lack of research and development facilities, in small and cottage
industry. If there is enough research and development facility, we will able to find the
gap between the market and the consumers.
XXVI. Inadequate Human resource Development Program:
Human resources development program is not sufficient for the small and cottage
industry sector.

XXVII. Absence/Insufficient of Capital Support :

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 Insufficient of capital support can kill the opportunity of the small and cottage industry
business.
XXVIII. Inadequate Policy Reforms and Illegal Imports & Non-Tariff Barriers:
Non-tariff measures include a very diverse array of policies that countries apply to
imported and exported goods. Thus, it has some barriers, which is tough for business
strategies. Inadequate policy reforms does not have market-oriented positive payoffs
and policy circles and illegal imports means, the import of goods without duty fee or
tax.
XXIX. Lack of Appropriate Infrastructure Facilities:
It means the shortage of power resources facilities, as most of the company needs
water, electricity and gas as a raw material and these are the essential component of
products as well as important element for companies. Lack of these infrastructures can
harm the small and cottage industry business.
XXX. High Employee Turnover:
Employee turnover has a direct impact on company revenue and profitability. For
example, according to the "Organization Science" magazine, the estimated cost of a
lost employee earning $8 per hour at a retail chain store is $3,500 to $25,000. Aspects
contributing to this include hiring expenses, training labor, lost sales and productivity.
XXXI. Lack of Information:
Lack of information about small and cottage industry can bring complexity to
understand this sector.
XXXII. Lack of Entrepreneurial Skill:
An entrepreneur have many skills to develop a business and if the entrepreneur is not
skilled enough, the business will face problems.
XXXIII. Access to Market and Lack of Awareness:
Getting the access of market is not so easy for new entrance of business and they are
not aware of the barriers of new entrance.

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 XXXIV. Importance of marketing tool:
The lack of the knowledge of marketing tool is like body without soul. The success of
the business come with the marketing strategies.
Figure: 03, Process of marketing tool

XXXV. Lack of quality assurance:

The consumers and the market can captured through maintain the quality of the
product. If the quality of the product become poor, the sell and the market conditon
will decrease.
XXXVI. Lack of commitment to innovation and customer satisfaction:
Lack of product innovation and customer satisfaction is a challenge for small and
cottage industry base business. If we want to survive in the existing market, we need
innovative version of the product to satisfy the customer need.
XXXVII. Fierce competition with the cheaper foreign goods:
When foreign goods are available in cheaper rate it become a challenge to compete
with the foreign company, thus satisfaction of customer get complex.
XXXVIII. Insufficient Training Academy:
Insufficient training academy also a challenge in small and cottage industry to skilled
up the employee.
XXXIX. Lack of Women Participation:
Women are the 50% of the population of our country but still the contribution of
women are less in small and cottage industry. As women, have some internal barrier

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 and lack of proper knowledge about laws of small and cottage industry. Therefore, it
is another challenge of this sector as they can contribute in the economic growth.
XL. Borrowers are Less Skilled:
Most of the entrepreneur who invested in small and cottage industry have less
knowledge about the laws of interest upon bank loans and that hampers their business.

These are the challenges, which needs to solve as early as possible. There are many opportunities
to increase economic growth and reduction of poverty but we have barriers.

5.0 Findings and Recommendations

Industry sector is one of the major sectors for income source in Bangladesh. There were many flaws in
this sector but Bangladesh could come up with phenomenal results for the enrolment of people and can
come out Bangladesh from poverty though this Industry sector. Small and Cottage Industry will
continue to be the major driving force for income and employment generation in Bangladesh. The
future for entrepreneurship appears to be very bright. We are living in the age of the entrepreneur,
with entrepreneurship endorsed by government, business community, educational institutions,
society, and corporations. Development of small and cottage industry in Bangladesh is the need of
the hour to raise the standard of living of the people of our country. The modest suggestions and
recommendations are given below:

 Through enhancing access of finance, the challenge of making finds or capital can
reduce.
 Development of infrastructure can build up a strong base of business, which can
operate nicely through the proper infrastructure.
 The good quality of products can capture the market of demand, which will increase
the economic growth.
 Training Facilities for small and cottage industry workers and entrepreneurship can
bring skilled employee for the organization.
 Setting help desks in banks and business promotion bodies with internet facilities
can help to inflight the opportunities and the facilities.
 Necessary support to the entrepreneurs should give by both GOs and NGOs
especially in the deprived areas.

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  Small and Cottage industries producing handicrafts for International Trade Fairs
should give proper support by the govt.
 Cooperation and coordination among a specific artisan group is required.
 Disguised laborers in the agriculture sector should shifted to the Small and Cottage
industries.
 To remove the scarcity of credit, adequate credit facilities should provide. For this
purpose, a special credit department, BSCIC, should be active immediately in the
city. Moreover, the terms and conditions should be easy for the entrepreneurs.
 Modernization is needed to produce better qualitative products so that the demand
for the products may increase. For this, modern machinery should use for better
finishing of the products. Division and categorization of the products should
introduced according to the quality.
 For the development of the cottage industry, research is need. The research should
be on the basis of consumer's choice, taste, quality of produced products, how to
improve the quality, present condition,
 The knowledge of enter into the foreign market and capturing the domestic market
will lead the small and cottage industry base business into the international level.
 Easy loan access should arranged to the entrepreneur for encouraging doing business
in small and cottage industry sector.
 The wage level of the labors must increase so that employees feel comfortable with
their salary.

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Conclusion
Now it is obvious that the present status of small and cottage industry in the whole country is not
so good. At the same time, it is clear that it has a great role in our economy. Therefore, it is very
necessary to improve the present condition of cottage industry. If the market for small and cottage
products is expand, this will improve our own culture. Small and cottage industries provide
economic opportunities to the poor or the middle-income section of people through employment
in Bangladesh. Small and cottage industries have already achieved its own tradition, but it was
mainly rural-based. Because of modern technological development, this sector finds it is spreading
in urban areas and is making more attractive and highly finished exportable products. Nowadays
due to pressure of large industry and less government intervention as well as various problems
associated with credit program etc., impede the dynamic growth of small and cottage industries.
The contribution of this sector is satisfactory as there is huge opportunity of employment
generation, it helps the people to be self-employed, and it fulfils not only our local demand but
also the demand outside the country.

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References

1. PKSF http://pksf-bd.org/portal/web/?page_id=85
2. Ministry of Industry http://www.moind.gov.bd/
3. SME Foundation http://www.smef.org.bd/v2/index.php?popup_anywhere_preview=true
4. Global Journal of Management and Business Research, Md. Alauddin & Mustafa Manir
Chowdhuryhttps://globaljournals.org/GJMBR_Volume15/1-Small-and-Medium-
Enterprise.pdf
5. Banglapedia
http://en.banglapedia.org/index.php?title=Bangladesh_Small_and_Cottage_Industries_Co
rporation
6. ASEF culture360 http://culture360.asef.org/organisation/bangladesh-small-and-cotage-
industry-corporation/
7. SME & Special Programs Department Bangladesh Bank
https://www.bb.org.bd/sme/smepolicye.pdf
8. World Journal of Social Sciences Vol. 6. No. 2. July 2016 Special Issue. Pp. 39 – 50
http://wjsspapers.com/static/documents/July/2016/4.%20Rabaya.pdf
9. Md Fazlur Rahman, Daily Star http://www.thedailystar.net/news-detail-191829
10. SME https://wifibd.wordpress.com/2014/01/31/sme/
11. M. A. Rashid Sarkar file:///E:/MSME%202.pdf
12. ASA University Review, Vol. 5 No. 1, January–June, 2011, A.K.M. Helal uz Zaman and
Md. Jahirul Islam file:///E:/MSME%201.pdf
13. European Journal of Business and Management, Sadia Tasneem, Md. Rouf Biswas,
Department of Business Administration, Northern University Bangladesh
14. African Journal of Business Management Vol. 6(11), pp. 3862-3871, 21 March, 2012 Available
online at http://www.academicjournals.org/AJBM DOI: 10.5897/AJBM11.2858 ISSN 1993-8233
©2012 Academic Journals
http://www.academicjournals.org/article/article1380877510_Parvin%20et%20al.pdf
15. http://mushroomtotal.blogspot.com/2014/06/mushroom-training-center-in-
bangladesh.html

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 16. http://bea-bd.org/site/images/pdf/078.pdf
17. http://www.economicsdiscussion.net/india/balanced-regional-development-meaning-and-
considerations/19022
18. http://rangpurvat.gov.bd/files/publication_content/4381455771080t.pdf
19. What's the difference between pre-money and post-money? |
Investopedia http://www.investopedia.com/ask/answers/114.asp#ixzz4Spe3L2Uy
20. http://www.businessdictionary.com/definition/dumping.html

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APPENDIX

Appendix A
Executive summary, page: 5

Appendix B
Small and Cottage Industry, page: 10

Appendix C
Opportunities of Small and Cottage Industry, page: 15

Appendix D
Challenges of Small and cottage Industry, page: 21

Appendix E
Figure: 01 shows that, the ratio of women contribution is increased 90% in last calculation.
Bangladesh is on 1st position throughout the south Asia.

Appendix F
The figure: 02 shows the ratio of the economic growth of small and cottage industry and the figure:
03 about marketing tool for business.

Appendix G
Findings and Recommendations:

Industry sector is one of the major sectors for income source in Bangladesh. There were many flaws in
this sector but Bangladesh could come up with phenomenal results for the enrolment of people and can
come out Bangladesh from poverty though this Industry sector. Small and Cottage Industry will
continue to be the major driving force for income and employment generation in Bangladesh. The
future for entrepreneurship appears to be very bright. We are living in the age of the entrepreneur,
with entrepreneurship endorsed by government, business community, educational institutions,
society, and corporations. Development of small and cottage industry in Bangladesh is the need of
the hour to raise the standard of living of the people of our country.

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Appendix H
Conclusion, page: 30

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