The pottery industry is an eminent segment of the cottage sector, recognised for its environmentally sustainable nature and cultural and traditional significance. It entails skill and labour-intensive procedures. However, globalisation and technological advancement have resulted in numerous competitive items affecting pottery businesses worldwide. It affected the livelihood sustainability of artisans within this sector. Understanding the challenges pottery entrepreneurs encounter within the manufacturing value chain is crucial to safeguard this sector. This research identifies, classifies, and evaluates the barriers faced by cottage entrepreneurs through multi-criteria decision-making techniques. Out of thirty barriers identified from the field visits to artisans in the Jalaun and Sonbhadra districts of Uttar Pradesh and the national capital region of India, this study finalises twenty-five barriers following expert consultation. This study groups these barriers into eight categories based on experts’ assessments using Kappa statistics. Then, it employs the Fuzzy Analytical Hierarchy Process (FAHP) to assign relative weights to barriers. This study utilises the Decision-Making Trial and Evaluation Laboratory (DEMATEL) methodology to uncover the causal and effect linkages among the identified barriers. This study integrates quantitative methods to bridge the gap left by qualitative assessment studies. This study contributes to the literature by offering a quantitative framework that managers and policymakers can employ to prioritize critical challenges in the value chain of different sectors. It provides insights into the hidden causal relationships among barriers, assisting decision-makers in formulating targeted interventions to boost cottage industry sustainability.