You mention good points but mass production and cottage production are two different items and cater to different markets. former for export products and latter for local consumption. Apples and oranges.
I don't think you can compare the two because they have two very different pre-requisites and circumstances as well.
Former (mass production) has efficiency and economies of scale advantages (resulting in low cost products as you mention) but requires massive automation and of course, requisite investments, amounting to tens of millions of dollars, sometimes magnitudes more. Which means loans and bank financing which is hard to obtain in some situations.
The latter (cottage production) is not all that efficient however you start with minimal non-automated equipment. Sometimes just a pair of tin-snips and a hammer. Investments needed are minimal and you add equipment as you slowly make profit, re-investing into the business over years. I don't agree that their products is any more expensive, though lower quality it might be. in fact in taka terms, the price may be even lower than mass production items.
The neat thing is - one does not need formal training operating machinery for cottage production (CNC training etc.) which is hard to come by (especially in a country like ours, or Pakistan). One can apprentice into it, starting in the teen years. "Kaj shekha" is the main goal.
Most of the informal machine shop outfits in Dholaikhal and Jinjira in Dhaka were formed this way and if you replicate them all over Bangladesh, they will themselves form the "centers of excellence" as needed. The apparel industry certainly has.
If you have ten thousand machine shops making motorcycle parts, one thousand will be capable of producing superb above average parts, one hundred will be able to pass ISO 9001 QC maintenance standards, and will be candidates for getting investments from angel investors locally.
The point is - that while these Dholaikhal and Jinjira people need QC training from the govt. that is no longer a need in most of Pakistan. Their better shops do produce better quality products, but they did not get there in one day. It took decades upon decades of building up a skills repository, none of which we have - especially in parts making.
Pakistani shops in the Sialkot to Lahore corridor can produce locally used items profitably enough. Their quality, while sometimes less than world class is good enough to sell locally at an acceptable price. Not everything needs to be exported. Substituting imports is often good enough.
They don't need "Elahi Karbar" investments from Honda and Kawasaki because they can sell what they make locally at low rates of production, and they don't need to make huge profits because their overhead is insanely low. In fact their industry in that tools and parts sector is so thriving that the backward linkage (lathe machines. drills, grinders, shapers and all types of machine tools of many types) are all made locally. And are above average quality as well.
Their country is not beholden to price gouging by Indian Banyas.
Lest you think cottage industry did not belong to industrialized countries, I can say that of all the now industrialized countries I have visited (especially in Asia) such as Japan, China, Korea and Taiwan, all had (and even now have) cottage industries.
I have been to these countries and visited their cottage industries in a bid to learn more. Their circumstances (except Japan which had apparel and shoe industries in 1899 timeframe) was no better than ours thirty years or so ago.
All Asian tiger economies started from labor-intensive industries making apparel, toys, shoes and useless knickknacks for export just like us in Bangladesh. Capital-intensive industries came much, much later.
It is possible to industrialize Bangladesh (and easier to do so) by providing easy loans to small shop owners.
A thousand motorcycle parts makers working from small resilient shops can be the basis of a local motorcycle industry. That is how Japan developed in the turn of the last century. In fact their start was even more humble. Their workshops were their homes. They used these urban workshops to produce even guns, bullets and parts for every weapon imaginable. Starting circa 1920's-30's.
