Cottage industry of Pakistan or household industries hold an important position in rural set-ups. Most villages are self-sufficient in the basics necessities of life. They have their own carpenters, blacksmiths, potters, craftsmen and cotton weavers. Many families depend on their cottage industries for income to survive.
Cottage industries have also gained much immense importance in cities and towns. There is a great demand market for hand-woven carpets, embroidered work, brass ware, rugs and the traditional bangles. These are also considered important export items and are in good in market demand at international markets.

 Cottage and the small scale industries have played and are destined to be play, an important role in a country like Pakistan where the majority of the people live in rural areas. Pakistan’s economy continued to face many challenges like energy shortages, floods and rains, poor law and order situation, and a host of other structural impediments that have held back investment and growth in the country.  Cottage and small scale industries provide employment to and more than 80 percent (80%) of the industrial labor force.

                                           
                                                
 Pakistan has an advantage of skill its people had in many fields of small and cottage industry. Its people are very famous for hand crafted products whether in metal or woolen or cotton and wood. But this comparative advantage over time fritted away and was not exploited and much developed. There was a no  tradition of  building a insitution. No guilds and associations that would foster that the skills and pass it on to their next generation. There is no law for  requiring the skill or recognition of skill, hence national industrial development is suffered. The real development that did take place was in 1960 but owing to the nationalization phase in the 1970 and it died away. During this period the manufacturing growth rate recorded it  was about 8% but then it again there was no diversification from textile. The industrial development has been  destroyed by its low level of productivity and importing substitution strategy.This situation is further compounded by the fact that Pakistan ranks relatively low among other Asian countries in such areas by no innovation in work and low on R&D
                                                              

Pakistan is ranks at number 44 among of the worldwide in nominal GDP, 26th in GDP with the purchasing power parity and number 55th in the world in factory output. Cotton textile production and apparel manufacturing are Pakistan's largest industries, accounting for about 66% of the handicrafts exports and it is almost 40% of the employed labor force. Cotton-based products account for 61% of export earnings of Pakistan. The consumption of cotton has been increased by  the 5.7% over the past five years while the economic growth was only 7%. in 2010 the spinning capacity was increased to 15 million spindles and textile exports hit the $15.5 billion and the Other major industries included as  cement, fertilizer, edible oil, sugar, steel, tobacco, chemicals, machinery and  the food processing.
In international market, India, Japan, Taiwan and South Korea are the main leading competitors of cottage industry of Pakistan. They are supplying their products at the lower prices. While India has taken an advantage of its cheap labour and raw material by Taiwan, Japan, and South Korea have mechanized units and are always engage to introduce a cheap sports goods such as metal rackets and the cricket bats etching order to encouraging the export of sports goods, the Government has taken many positive steps and has offered various incentives to the producer. Customs and duty, sales tax, excise duty rebates on f.o.b. value of exported various types of sports goods are available.


                                                           

         
As it is the whole net exports of Pakistan depends, Government is responsible to make new and better strartigies in the favour of the producers and avoid the failures led to increase in the economy of Pakistan.