2. DEFINITION OF A CLUSTER
A Cluster is A group of enterprises located within an identifiable and as
far as practicable, contiguous area, producing same/similar product/
services
A Cluster is defined by
a product/product range (same or similar)
and a place (name of a city, town, village)
A Cluster:
does not involve a complete industry or a sector
must not be equated to an industrial park development concept
3. Objectives of Cluster Develop
Programme
To conduct the soft activities and hard activities
under soft and hard interventions for following
objectives :
1. To enhance the productivity and
competitiveness of micro and small enterprises.
2. To facilitate economies of scale in terms of
deployment of resources.
3. To built capacity of MSEs through formation of
SHG, Mutual credit guarantee funds, BDS
development etc.
4. WHY CLUSTER DEVELOPMENT?
Enables to reach out to many units at a time
Provides environment for mutual learning
Emerging from the felt-needs of the beneficiaries
Self-sustainability for continuous support
Clusters provide unique opportunity to address specific needs with
specific solutions
Clusters provide economies of operation of scale
Increased impact and widening support from other support institutions
Satisfies the needs of foreign buyers
5. WHY CLUSTER DEVELOPMENT
REQUIRES STATE INTERVENTION?
Cluster development is a long-term phenomenon with lower gains
visible in short to medium term
Common facilities and programmes need State’s effort
Gains when they occur, are for sharing across the cluster
6. THE INDIAN SME CLUSTERS
SCENARIO
With a contribution of 40 per cent to the country’s industrial output and 35
per cent to direct exports, India’s SME (Small and Medium Enterprises)
sector is the key driver in the nation’s economic growth.
India has 388 documented industrial clusters, around 400 handloom
clusters, about 3,000 handicraft clusters and 2,800 micro-enterprise clusters
that contribute significantly to its economy and provide employment to
more than 20 million people.
3.57 million SSIs, across 7,500 products spread over the country
350 SSI and 2000 artisans clusters contribute to 60% of exports
7. Among the larger clusters,
Panipat accounting for 75 per cent of the total blankets produced in the
country.
Tirupur, which is responsible for 80 per cent of the country’s cotton
hosiery exports.
Agra with 800 registered and 6,000 unregistered small scale units making
about 150,000 pairs of shoes per day with a daily production value of $1.3
million and exports worth $60 million per year.
Ludhiana, alone contributes 95 per cent of the country’s woolen knitwear,
85 per cent of the country’s sewing machines and 60 per cent of the
nation’s bicycle and bicycle parts.
8. WHAT IS A CLUSTER?
Cluster : An agglomeration of SSI Units?
Unit Unit
Unit
Unit Unit
9. METHODOLOGY OF CLUSTER
DEVELOPMENT
Selection of a Cluster
Selection of a Cluster Development Agent
Diagnostic study
Trust building
Preparation of action plan for intervention
Approval of budget and further leveraging funds
Implementation by trust building between Cluster Actors and CDA;
Between Actor and other Actors
Monitoring and evaluation
Handing over and exit
10. CLUSTER DEVELOPMENT
INITIATIVES IN INDIA
Several institutions in India have taken up Cluster Projects besides various
government initiatives. The major ones being:
Central Government
Development Commissioner (SSI), Ministry of Small Scale Industries
National Small Industrial Corporation Ltd (NSIC)
Development Commissioner (Handicrafts), Ministry of Textile
National Support Institutions
Small Industries Development Bank of India (SIDBI) Technology
Upgradation Programme
State Bank of India (SBI) UPTECH Programme
National Bank for Agriculture & Rural Development (NABARD)
State Governments
The State governments which have started cluster development initiatives
are:
Andhra Pradesh ,Gujarat,Kerala,Madhya Pradesh,Tamil Nadu
12. UPTECH SCHEME:
THE EARLY INITIATIVE
Launched in 1998
Aimed at development of selected clusters
Initially, emphasis on Technology Upgradation
Early interventions in Clusters of Ceramic Tiles, Bulk Drugs and
Formulations, Foundry and Forging, Food Processing, Potteries etc.
13. ASSOCIATION WITH UNIDO FOCAL
POINT
Ministry of SSI: the official counterpart agency in India
To provide a platform for sharing mutual learning & best practices
To design SME Cluster Development policies & Tools
National Level Steering Committee headed by AS&DC(SSI)
Interventions: Direct as well as through State Govts. & national
institutions.
Intervention in 4 Clusters completed, 3 nearing completion and 17
under implementation
Assisting Ministry of SSI to set up a comprehensive CDP
14. SECTORAL NATIONAL
PROGRAMMES
IN COLLABORATION WITH UNIDO
Industry & demand driven programmes
Active contribution in financing and implementation by UNIDO, State
Govts, FI’s, Industry Associations.
Comprehensive support services in technology upgradation, market
development, capacity building & sustainability
New interventions planned for knitwear, bicycle & parts
15. SMALL INDUSTRY CLUSTER
DEVELOPMENT PROGRAMME (SSI-CDP)
Ministry’s own programme
Envisages comprehensive coverage of the whole country
Adopts a holistic approach
Capable partner institutions welcome to join
Stakeholders’ contribution & participation encouraged
16. PARAMETERS FOR SELECTION OF
CLUSTERS UNDER SSI-CDP
Distinct Technology & product
Potential for growth
Contribution to employment
Local leadership & support
Basic infrastructure
Presence of capable institutions
Recommended by other agencies
Need for socio-environ interventions
17. NEED FOR EXPERIENCE SHARING
Mutual learning among implementing agencies in India
Learning from clusters outside the country
Repository of experiences and observation necessary at the national
level
18.
19.
20. Based upon 2 digit classification of NIC, distribution of clusters
among important industry groups has been presented
21.
22. MICRO & SMALL ENTERPRISES - CLUSTER
DEVELOPMENT PROGRAMME (MSE-CDP)
Contribution of Ministry of MSME (Govt. of India) will not exceed
80% of the total project cost. Subject to a ceiling of Rs. 10 crore per
project including Rs. 10 lakh for soft activities under soft interventions.
Scheme expects at least 10% contribution from stake holders/
beneficiaries of the cluster projects.
23. AN OVERVIEW OF ARTISAN BASED
RURAL CLUSTERS IN INDIA
India had initiated the program for rural industrialization in 1957 by
starting the Khadi and Village
Industries Program followed by Rural Industries program in 1962
However, in reality several units that came up attracted by these
incentives and subsidies did not last long because of limited markets,
lack of raw material, inappropriate skills and above all inadequate
infrastructure
According to an estimate there are about 2000 rural clusters in India.
These are mainly skill based
24. KEY CONSTRAINTS IN DEVELOPMENT OF
CLUSTERS IN RURAL AREAS
(i) Lack of education and awareness among the rural entrepreneurs and
artisans,
(ii) Lack of organization among the entrepreneurs ,
(iii) Lack of marketing skills,
(iv) Dependency proneness on Government,
(v) Limited reach and effectiveness of the development assistance
(vi) Lack of infrastructure facilities such as electricity and roads
25. The consortium initiatives are much more effective and sustainable if they
involve the entire range of actors with whom the SMEs commonly interact.
Among such actors are :
Suppliers of raw materials, plant & machinery
❖ Consumers of goods and services from the SMEs testing
laboratories (both private and public)
❖ Research and development institutions
❖ Industrial associations
❖ Technical, marketing and management consultancy organisations
❖ Training institutions
❖ Regulatory bodies enforcing/monitoring rules and regulations
❖ Local government
❖ Financial institutions For banks and financial institutions, the cluster
approach may be beneficial as
❖ Separate packages/services can be developed for each cluster
❖ Products/services so developed can provide better yields
26. The ultimate result due to cluster
projects
1. Increased income, investment, capacity
utilisation, cost deduction, community
empowerment, energy conservation, pollution
control.
2. Infrastructure creation and linkage through
govt. scheme.
3. Enhance collective economic efficiency
4. Developing culture of co-operation and team
work
5. Strengthened local governance strength.
6. Creation of competitive market.