It is a well-known fact that cottage industries can play a significant role in the development of an economy like Pakistan. As it is observed that this industry is not required too much financing, imported and highly sophisticated technology. So the problems like deficit in public finance and balance of payments is not related with the growth and development of these industries. Simultaneously, high degree of female labour force participation in this sector has also been proved in the number of studies. Which seems to be helpful in the process of reduction of poverty especially in the rural areas. The Southern Punjab especially its rural areas are comparatively less prosperous than the other parts of Punjab. A number of female workers can be seen in the rural areas of Southern Punjab. The concentration of these workers is in few traditional areas and is characterised by the low technology and low production levels. These areas are typically those, which require skills that are basically the extension of household skills or which reflect a specific educational and employment experience of women. It has also been observed that women’s income of the rural areas of Southern Punjab are more likely than their male partners to go towards meeting their family’s basic needs. These women spent most of their business income on the households, food, clothing and education of their children rather than reinvesting it in their business.