Rural industries are generally labor intensive with low investment low gestation period, decentralized production system using traditional skill and local raw materials.
The products are essential mass consumer goods or unique products of artistic and aesthetic native. Khadi and village industries have been grouped in to seven major categories, viz., mineral based industry, forest based, agro-based, polymer and chemical based, engineering and non conventional energy, textile and service industry.
Rural industry covers traditional sector and modern sector, under traditional sector and modern sector. Under traditional sector as per planning commission, come khadi, village industry, handloom, sericulture, handicraft and coir whereas modern sector includes power looms and small scale industries.
Besides the above characteristics of rural industry, rural entrepreneur has the following essential characteristics:
- Labor intensive
- Use of traditional skill
- Less Capital Investment
- Decentralized Production
- Use of local raw material.
(i) Labor Intensive:
Rural industries are labor intensive because they give more employment of labor than machines. Rural entrepreneurs are generally labor intensive because they give much stress on human capital.
(ii) Use of traditional Skill:
Rural entrepreneurs give much emphasis on use of traditional skill during the course of production. They have no capacity to apply modern skill and technology in their industry.
(iii) Less Capital:
Rural entrepreneurs generally invest less capital to produce goods and commodities in their industry. As they have no capacity to afford for much capital investment, they emphasize on less capital investment.
(iv) Decentralized Production:
As rural industries are scattered and operated in a small scale, it encourages decentralized production.
(v) Use of Local Raw Materials:
Rural entrepreneurs make better use of local raw materials during the course of production. They usually make better and effective use of local raw materials because its transportation cost is less.