The commodities that are being produced by these industries are basically consumable ones and are produced through the utilization of the traditional techniques. Cottage Industry especially started its function in the country sides of a country where unemployment along with under-employment are prevalent. Thus, this industry helps the economy by absorbing a huge amount of surplus labor of the rural economy. Another glaring feature of Cottage Industry is that it is not a mass producer of commodities.
The main risk that is being faced by this industry is from the factory based medium or large industries which are again capital intensive in nature. This is because of the fact that these large industries utilize all sorts of cost effective technologies which enable them to supply the products at low price. On the other hand, the Cottage Industry is basically labor intensive and utilizes traditional techniques in production process which are generally not cost effective in nature which escalates the price of their product. The products supplied by the Cottage Industry thus face risk of extinction if they don't receive enough financial or other form of support from the government.