WELCOME TO A PRESENTATION ON CLUSTER DEVELOPMENT

1. WELCOME TOA PRESENTATION ONCLUSTER DEVELOPMENT

2. ROADMAP FOR THE PRESENTATION • Section I: Concept of Industrial Clusters & the perspective for their development • Section II: Achievements and new initiatives in Cluster Development by the Ministry of SSI • Section III: Emerging issues

3. SECTION- IINDUSTRIALCLUSTERS & THE PERSPECTIVE FOR THEIR DEVELOPMENT

4. WHAT IS A CLUSTER? Cluster : An agglomeration of SSI Units? Unit Unit Unit Unit Unit

5. Cluster : A FORWARD AND BACKWARD LINKED Production System? Unit Unit Backward linkages Forward linkages Raw Material Suppliers Selling Agent Unit Unit Machinery Suppliers Unit Direct Customers Unit Unit

6. Or does a Cluster have more to it…..? POLICY ENVIRONMENT Commercial Service Providers (Designer, Testing Laboratory, Transporter, Financier, Import Agents etc.) Production System Forward linkages Backward linkages Unit Unit Raw Material Suppliers Selling Agents Unit Unit Direct Consumers Machinery Suppliers Unit Unit Unit (Public & Private) Support and Service Institution INTERNATIONAL ENVIRONMENT

7. DEFINITION OF A CLUSTER • A Cluster is a geographic concentration of firms and their various service providers • 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

8. THE INDIAN SSI CLUSTERS SCENARIO • 3.57 million SSIs, across 7,500 products spread over the country • 350 SSI and 2000 artisans clusters contribute to 60% of exports • Clusters provide natural agglomeration for wholesaling of support in the diversified panorama of individual needs, individual market pools and specific socio-economic context for the SSIs

9. 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

10. 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

11. 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

12. SECTION-IIAchievements and new initiatives in cluster development by the Ministry of SSI

13. 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.

14. 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

15. SECTORAL NATIONAL PROGRAMMESIN COLLABORATION WITH UNIDO • Industry & demand driven programmes • Cover Stone, Machine Tools, Toys and Lock Industry Clusters • 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 • Visible Impact, leading to demand from new sectors • New interventions planned for knitwear, bicycle & parts

16. SMALL INDUSTRY CLUSTERDEVELOPMENT PROGRAMME (SSI-CDP) • Ministry’s own programme • Envisages comprehensive coverage of the whole country • Adopts a holistic approach • Capable partner institutions welcome to join • Leveraging of funds aimed at • Stakeholders’ contribution & participation encouraged

17. ELEMENTS OF THE MINISTRY OF SSI’s HOLISTIC APPROACH • Focus on building overall competitiveness of the clusters (rather than intervention on individual themes like credit/technology / export promotion • Intermediaries also covered: e.g. Business Development Services providers, raw material suppliers, machinery suppliers, selling agents • Flexible : covering wide variety of themes, actors/ideas as per cluster profile • Dynamic : responsive to changing needs

18. STRENGTHS OF SSI-CDP • Large Reservoir of Technical Manpower • Valuable Experience of Hand Holding and BDS Providing • Network Spread All Over the Country • Inputs from UNIDO CDP • Close Co-ordination with Stakeholders, State Govts. and Other Developmental Organisations

19. SSI-CDP : SELECTION OF CLUSTERS • 21 clusters selected recently in consultation with State Govts, Industry Associations, etc • Balanced coverage of sectors/products and backward areas • Based on rating of clusters on essential parameters

20. 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

21. SELECTION OFCLUSTER DEVELOPMENT AGENTS • Selected from large reservoir of experienced technical manpower available within SIDO • Assessment of personality done on the desirable traits • Ability to work diligently • A flexible mindset • Knowledge about the tools • Experience in functional areas • Exposure to other clusters • Ability to be a follower

22. TRAINING OFCLUSTER DEVELOPMENT AGENTS • Training-cum-Resource Centre at NISIET • In-house expertise being developed • Other agencies running CDP may also benefit from our training facility • Includes field work for conduct of diagnostic study & preparation of Action Plan

23. CLUSTER BASED CREDIT PLANNING:THE LATEST INITIATIVE • 60 SSI Clusters selected spread all over India with regional balance • Comprehensive Credit Planning • Monitoring by SLBC • Ministry of SSI and State Governments involved for focused development

24. CLUSTER DEVELOPMENTTHE e-APPROACH [www.smallindustryindia.com] & [www.laghu-udyog.com] • Sub-sites to host: • list of SSI and rural artisan Clusters in the country • comprehensive information on Clusters in India • Preliminary/Diagnostic Reports and detailed maps • “e-Cluster News” to be hosted • list of reading material • hyperlinks to other international sites and events on Clusters • Expected to go on-line by the 1st week of Oct. 2003 at Clusters.smallindustry.com

25. PROPOSED BILATERAL PROJECTWITH GOVT OF ITALY Mutual Credit Guarantee Cluster Twinning Investment & Technology Promotion • Pilot project launched on mutual credit guarantee by CGTSI

26. PROJECT FOR DEVELOPMENT OF DIESEL ENGINES AND ENGINEERING INDUSTRY CLUSTER • Objectives: Technology upgradation, improvement in quality and productivity, developing data base on BDS providers, networking and formation of consortia, improved marketability • Activities: diagnostic study, awareness seminars, developing resource persons, enterprises upgradation programmes, technological workshop, individual counselling etc. • Financial support: DC(SSI), ICICI, Industry Association • Implementation: EDII, Ahmedabad

27. PROJECT ON PROMOTING ENERGY EFFICIENCY IN HAND-TOOLS SSI SECTOR • Contributing & implementing partners: Ministry of SSI, UNIDO, SIDBI and Industry Associations • Budget: US$ 7,50,000 • Aims at strengthening the competitiveness of energy intensive and export oriented forging/hand-tools SSI sector in India • Strategy : • Adoption and promotion of energy efficiency and clean technologies, strengthening policy and institutional structure, supporting capacity building, developing and international marketing • Jallandhar and Nagaur to be the key Clusters, experiences to be disseminated to Tumkur cluster and elsewhere

28. PROPOSED PROGRAMME FOR TECHNOLOGY UPGRADATION AND GHG EMISSION ABATEMENT IN FEROZABAD GLASS INDUSTRY CLUSTER • Aims at strengthening technological and manufacturing capacity through adaptation and demonstration of energy efficient technologies for • reduction of Green House Gases Emission • improvement in working environment and health of workers • ensuring sustainability in the context of globalization

29. SECTION-IIIEMERGING ISSUES

30. RAPID GROWTH IN THE NUMBER OF AGENCIES WORKING FOR CLUSTER DEVELOPMENT Interventions in 162 clusters

31. HOLISTIC PERSPECTIVE IS NECESSARY • Must cover hardware as well as software • Units as well as groups of SSI’s need to be vitalized • Divergent themes (as per need of the cluster) must be covered

32. STRENGTHENINGINDUSTRY ASSOCIATIONS LISTING RATING ASSOCIATIONS RECOGNITION AWARDS

33. 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

34. NEED FOR DOCUMENTATION OF INFORMATION • About clusters and status of socio-economic environment within clusters • Highly useful for programme implementing agencies as well as BDS providers • A spin offs possible on credit technology, quality, infrastructure etc.by customizing services to the cluster need • e-Management of information

35. BDS DEVELOPMENT • Business Development Services (BDS) providers need and deserve recognition, support & linkages • Include private BDS providers also

36. THANK YOU