The government is fully aware of the potential of cottage and small-scale industries for industrial development. In Punjab, Punjab Small Industries Corporation (PSIC) have been established to develop this sector of economy. Cottage and small-scale industries are labor-intensive and provide employment to 80% of the industrial labor force. This reduces the unemployment and offers opportunities for self-employment. Cottage or small-scale industries like carpet-weaving, candle-making and handicrafts can be established in houses and women can be gainfully employed. These industries increases the active labor force, also meet the local demands for industrial goods, and save foreign exchange spent in imports. There is a great demand for rugs, carpets, brassware, handicrafts and embroidered work in the International market representing 30% of the export receipts of the manufacturing sector.
Punjab has more than 48,000 industrial units out of which 39,033 small and cottage size industrial units. The number of textile units is 11,820, the ginning industries are 6,778 and there are 6,355 units for processing of agricultural raw materials including food and feed industries. There are different pockets of industrial clusters spread across Punjab. The SME Clusters in Punjab have huge potential for development that is critical to industrial growth of the province.