The cluster development approach has been adopted by the Ministry of Micro, Small and Medium Enterprises (MSME), Government of India (GoI), as a key strategy for boosting the productivity and competitiveness as well as capacity building of Micro and Small Enterprises (MSEs) and their collectives in the nation. A cluster is a collection of businesses that are manufacturing the same or comparable goods and services and are situated in a recognisable and, to the best of their ability, contiguous area. The crucial traits of businesses in a cluster include similarity or complementarity in their production processes, quality assurance and testing procedures, energy usage, pollution prevention techniques, etc. Communication channels among cluster members, similar levels of technology and marketing strategies/practices, and common possibilities and problems.
Requirement for the Initiative
The MSME sector makes a significant contribution to the economic and employment prospects of the country. Although the words “micro, small, and medium” may be used, its function does not fit this definition at all. According to statistics, India is home to 26 million msme development (and counting), employing 60 million people, with an estimated 70 percent of them concentrated in roughly 1086 urban industrial clusters. These clusters must be properly upgraded if they are to prosper. Through this programme, it is hoped to provide such an upgrade.
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Objectives
- To address common concerns including the advancement of technology, skills, and quality, market access, access to funding, etc. in order to assist the sustainability and expansion of MSEs.
- To increase MSEs’ potential for collectively supportive action by creating self-help organisations, consortia, upgrading associations, etc.
- To build or improve infrastructure facilities in MSE clusters and new or existing industrial zones.
- Establishing common facility centres (for testing, training centre, raw material depot, effluent treatment, complementing production processes, etc).
Approach and Plan
The MSE-CDP system seeks to meet the demands of the industries through clearly defined clusters and geographic areas, given the diversity of the MSEs in terms of both geographical location and sectoral makeup. This will make it possible to focus on the unique requirements of related businesses while also attaining economies of scale in terms of resource deployment. The MSEs would be able to better utilise their resources and have better access to public resources, connections to credit, and marketing competitiveness thanks to the capacity building of associations, the establishment of special purpose vehicles (SPVs), consortia, etc. that is a key component of the scheme.
Gentle Interventions
This will result in increased public awareness, counselling, motivation, and trust building, as well as exposure visits, market expansion, including exports, participation in seminars, workshops, and training programmes on technology advancement, among other things.
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Common Facility Centre (CFC)
As a result, Common Facility Centers (CFCs) will be developed, including Common Production/Processing Centers (for balancing, correcting, and improving production lines that cannot be done by individual units), Design Centers, Testing Facilities, Training Centers, R&D Centers, Effluent Treatment Plants, Marketing Display/Selling Centers, Common Logistics Centers, Common Raw Material Bank/Sales Depots, etc.
Infrastructure Development Centre (ID)
In the new or existing industrial estates/areas, this will result in the construction of infrastructure facilities such as a power distribution network, water and telecommunications infrastructure, drainage and pollution control infrastructure, roads, banks, raw material storage and marketing outlets, common service facilities, and technological backup services for MSEs.
Financial assistance under the scheme
The following financial assistances are provided for various interventions: I Diagnostic Study Report Preparation with a maximum Government of India (GoI) grant of Rs 2.50 lakh. The Ministry of msme development would provide Rs 1 lakh in financial support to the field organisations (MSME-DIs).
(ii) Soft Interventions, with a GoI grant of 75% of the maximum project cost of Rs. 25.00 lakh per cluster, which has been approved. The GoI funding will be 90% for clusters in the NE and Hill States that include more than 50% (a) micro/village, (b) women-owned, (c) SC/ST units.
(iii) Detailed Project Report (DPR) with a maximum GoI grant of Rs 5.00 lakh for the creation of a project report on technical viability.
(iv) Hard Interventions in the form of concrete assets, such as Common Facility Centers with machinery and equipment for essential processes, research and development, testing, etc., with GoI funding up to 70% of the project cost, with a maximum grant of Rs 15.00 crore. The GoI funding will be 90% for clusters in the NE and Hill States that include more than 50% (a) micro/village, (b) women-owned, (c) SC/ST units.
(v) Infrastructure Development: The Government of India will contribute up to 60% of a project’s total cost of Rs. 10,000 crore, excluding land costs. For projects in the NE and Hill States, industrial areas/estates with more than 50% (a) micro (b) women owned (c) SC/ST units, GoI grant will be at 80%.