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Micro and Small Clusters

Why MSMEs should be given importance?

1. There is a popular culture of simultaneous cooperation and competition among firms.

2. Co-operation is greater in the context of Micro, Small and Medium Enterprises (MSMEs).

3. This sector contributes to the Indian economy in terms of GDP, exports and employment generation.

4. The micro sector like handloom, handicrafts keeps growing due to compulsion either to generate livelihood and income.

5. MSMEs are facing challenges as technological cost and technological complexity is increasing.

6. These include rising research and development costs, high risk and uncertainty in technological development and lack of resources to pursue large scale innovation projects.

7. MSMEs in an industry need to collaborate with competitors to create economies of scale, mitigate risk and leverage resources together.

What is the significance of cluster development?

1. Clustering helps MSMEs to handle the challenges of globalization and liberalization.

2. Cluster policies encourage strengthening of inter-firm collaboration, business networking and building up of organizations for technology transfer.

3. Many countries are relying on cluster approach as it stresses ensuring networks among smaller firms in their external environment.

4. After globalization, MSMEs have been given financial assistance in the form of loans, credit guarantees and promotion of venture capital through commercial banks and specialized counters/branches of nationalized banks.

5. Cluster helps in poverty alleviation, generation of sustainable employment, fostering innovation, infusing technology, enabling better credit flow and sustenance of environmental issues effectively.

6. Obsolete technology, inefficiency in cost production, limited market, etc., are some of the challenges faced by MSME sector.

7. So, traditional industries are making a natural exit due to stiff competition from national and international players.

8. Lesser developed pockets and regions of India mostly focus on craft and agriculture, handloom which is traditional and livelihood clusters.

9. Such clusters transform the household units into micro-enterprises and give structure to the unorganized sector.

10. Enterprises can improve their competitiveness due to the presence of specialized suppliers of raw materials, parts and components, machinery, skills, technology and other supporting devices.

Which initiatives focus on cluster development?

1. Scheme of Fund for Regeneration of Traditional Industries (SFURTI) (Ministry of Micro, Small and Medium Enterprises)

2. Solar Charkha Clusters (Ministry of Micro, Small and Medium Enterprises)

3. Micro and Small Enterprises-Cluster Development Programme (MSE-CDP) (Development Commissioner Ministry of Micro, Small, and Medium Enterprises)

4. Agro Processing Cluster Scheme (Ministry of Food Processing Industries)

5. Comprehensive Handloom Cluster Development Scheme (Ministry of Textiles)

6. Cluster Development Programme for Pharma Sector (CDP-PS) (Ministry of Chemicals and Fertilizers)

7. Mega Leather Cluster (Ministry of Commerce and Industry)

8. Ambedkar Hastshilp Vikas Yojana (AHVY) (Ministry of Textiles)

9. Research and Development Schemes (cluster) (Industries of Mines Department, Government of Gujarat)

10. Industrial Infrastructure Up-gradation Scheme (Ministry of Commerce and Industry)

11. AYUSH Clusters (Ministry of Health)

12. Craft Cluster (Ministry of Textiles)

13. Shyama Prasad Mukherji Rurban Mission (SPMRM) (Union Ministry of Rural Development)

How is cluster development beneficial?

1. Formation of new business

2. Network formation with supporting institutions

3. Women empowerment

4. Market development

5. Product development

6. Easy availability of finance

7. Increase in sales, up gradation of workers and employment opportunities

Where the focus should be?

1. Holistic cluster development approach is needed for a sustainable and inclusive economy.

2. It will act as a catalyst for enterprise development and will provide a conducive ecosystem for their sustenance.

3. Focus on the unexplored sector and geographies is the need of the hour.

4. For example, there is a huge scope of work in agriculture sector as a large percentage of vegetable and fruits produce gets wasted.

5. Farm level aggregation, sorting, storage, value addition can economically benefit the farmers in a huge way.

6. This will transform local and national economy on the whole.