Cluster Development Programme (MSE-CDP)

24 May 2010

24 May : For a holistic and integrated development of micro and small enterprises through
interventions such as capacity building, marketing development, export promotion, skill
development, technology upgradation, exposure visits, etc., and setting up of common facilities,
the Ministry of Micro and Small Enterprises (MSME) initiated a scheme Small Industry Clusters
Development Programme (SICDP) in 2003. It was earlier called Integrated Technology
Upgradation and Management Programme (UPTECH) where by intervention in industrial
clusters were first initated in 1998.

Simultaneously, the Ministry continued to implement a separate Integrated Infrastructural

Development Scheme (IID) [started in 1994] for setting up of industrial estates and to develop
infrastructure facilities like power distribution network, water, telecommunication, drainage,
roads, storage and marketing outlets, common service facilities, etc. The IID Scheme also
provided for upgradation/ strengthening of the infrastructural facilities in the existing industrial
estates.

While approving the Package for Promotion of Micro and Small Enterprises, the Scheme was
renamed as Micro and Small Enterprises – Cluster Development Programme (MSE-CDP) and
the Integrated Infrastructural Development (IID) Scheme of the Ministry was subsumed under
MSE-CDP with its existing funding pattern, in October 2007.

Based on the recommendations emerging out of the evaluation of schemes and after consultation
with the senior functionaries of the state governments, it was felt necessary to modify the
guidelines which envisage streamlining of procedures, providing a more holistic approach to the
development of clusters and enhanced level of financial assistance. The major modifications are:

·        Enhancement of the maximum project cost for Common Facility Centre (CFC) from Rs.10
crore to Rs.15 crore, with GoI contribution of 70% (90% for Special Category States and for
clusters with more than 50% women/micro/village/SC/ST units);

·        Enhancement of the maximum project cost for Infrastructure Development from Rs.5 crore
to Rs.10 crore, with GoI contribution of 60% (80% for Special Category States and for clusters
with more than 50% women/micro/SC/ST units);

·        Enhancement of the maximum project cost for Soft interventions from Rs.10 lakh to Rs.25
lakh, with GoI contribution of 75% (90% for Special Category States and for clusters with more
than 50% women/micro/village/SC/ST units); and

·        Enhancement of the cost ceiling for preparation of Detailed Project Report (DPR) for CFC
and/or Infrastructure Development to Rs.5 lakh.

Success Story
As a micro representation of several clusters being developed under MSE-CDP, a success story
of Common Facility Centre (CFC) at Rubber Cluster, Changanassery

The Rubber Cluster at Kottayam is a typical MSME cluster dominated by the presence of small
and micro rubber based enterprises – manufacturing different types of products from adhesives
to molded goods. Turnover of cluster is Rs.500 crores per annum with direct and indirect
employment of 16000. The consortium with Government  and State Government support
established Centralized Mixing Plant, with an investment of Rs 3.5 crores for the benefit of
cluster groups to standardize their production.  This intermix is to correct prevailing line of miss
balancing among member units in terms of mixing and molding.

Sl. Particulars Results

No.
1 Turnover of the cluster before and after the 30 – 40 % increase
interventions
2 Employment in the cluster before and after 25 % increase
the interventions
3 Export of the cluster before and after the 40% increase
interventions
4 Quality Certifications/ quality improvement Able to make high quality rubber
before and after the interventions mix enabling for uniform end
product production
5 Energy consumption per unit production 30%  decrease
before and after the interventions
6 Environment compliance before and after NA
the interventions
7 Number of units  in the cluster before and Expansion of existing units made
after the interventions possible
8 Reduction in cost of production before and 25 % decrease
after the interventions