The development of small-scale industries is hampered by a diversity of problems. Following are the main problems faced by cottage or small-scale industries :
1. Lack of Finance:-
The cottage and small-scale industry is facing the problem of capital shortage. The financial institutions are not ready to provide the credit at a low rate of interest.
2. Competition:-
There is a stiff competition between the large-scale industry and small-scale industry and usually, the small-scale industry suffers a loss.
3. Problem of Raw Material:-
The owner of the small scale industry cannot get enough raw material what he wants. Poor quality of raw material is provided at higher prices to the small industry.
4. Old Methods of Production:-
Small industries use old machines and old methods of production. Due to this, the quality of small-scale industries product is very poor. So they are helpless to sell the product at a low rate.