2. WELCOME TO A PRESENTATION ON CLUSTER DEVELOPMENT

3. 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

4. SECTION- I INDUSTRIAL CLUSTERS & THE PERSPECTIVE FOR THEIR DEVELOPMENT

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

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

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

8. 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

9. 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

10. 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

11. 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

12. 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

13. SECTION-II Achievements and new initiatives in cluster development by the Ministry of SSI

14. 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.

15. 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

16. SECTORAL NATIONAL PROGRAMMES IN 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

17. 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 Leveraging of funds aimed at Stakeholders’ contribution & participation encouraged

18. 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

19. 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

20. 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

21. 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

22. SELECTION OF CLUSTER 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

23. TRAINING OF CLUSTER 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

24. 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

25. CLUSTER DEVELOPMENT THE 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

26. PROPOSED BILATERAL PROJECT WITH GOVT OF ITALY Pilot project launched on mutual credit guarantee by CGTSI Mutual Credit Guarantee Cluster TwinningInvestment & Technology Promotion

27. 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

28. 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

29. 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

30. SECTION-III EMERGING ISSUES

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

32. 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

33. STRENGTHENING INDUSTRY ASSOCIATIONS ASSOCIATIONS LISTINGRATING RECOGNITION AWARDS

34. 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

35. 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

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