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SUSTAINBALE CLUSTER DEVELOPMENT – An Holistic Approach( Tentative)

25th May 2023, Chennai

Cluster development is the economic development of business clusters. The cluster concept
has rapidly attracted attention from governments, consultants, and academics since it was
first proposed in 1990. Cluster development is an important new direction in economic
policy. Building on past efforts in macroeconomic stabilization, privatization, market
opening, and reducing the costs of doing business, clusters can enhance competitiveness in
today’s increasingly complex, knowledge-based, and dynamic economy.

Cluster development is considered as an effective tool for fostering economic growth.

Industrial clusters are considered as one of the most effective mechanisms for spurring
income and employment growth especially by the micro, small and medium size enterprises.

Timely, affordable, and adequate credit is one of the most critical factors for growth and
development of MSMEs in a state. The Ministry of Micro, Small and Medium Enterprises
(MSME), Government of India (GoI) has adopted the Cluster Development approach as a key
strategy for enhancing the productivity and competitiveness as well as capacity building of
Micro and Small Enterprises (MSEs) and their collectives in the country.

Industrial cluster is equally important because it includes not only the concentration of
output producing enterprises, but also input suppliers, output buyers, various service
providers and in some cases government and non-governmental institutions. It provides a
competitive but mutually beneficial environment for the enterprises to become more
competitive and profitable. It reduces amount of investment of a particular entity, offers
different segmental inputs and output of a product’s value chain. Availability of inputs,
specialised labour and various services in a cluster helps in reducing costs of doing business
within clusters. Internal competition ensures specialisation of labours and improved quality
of products.

In the above context, ASSOCHAM Tamil Nadu State Development Council is organizing
Program on Tamil Nadu: Cluster Development on Thursday, 25th May 2023.

TOPICS OF DICUSSION

 Cluster based financing instruments.

 Role of strong Industry Association
 Technical and Physical Infra in clusters
 Cluster Based Marketing and Brand Building
 Enabling Policy environment for providing fillip to cluster led growth.
 Holistic intervention in Artisan cluster
 Evolving Agri based clusters.
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Scheme by GOI:-
 Micro Small Enterprises - Cluster Development Programme (MSE - CDP) Scheme

Objectives of the Scheme:

(1) To enhance the sustainability, competitiveness, and growth of MSEs by addressing
common issues such as improvement of technology, skills & quality, market access,
etc.
(2) To build capacity of MSEs and Startups for common supportive action through
integration of self-help groups, consortia, district Industry associations, etc.
(3) To create / upgrade infrastructural facilities in the new / existing Industrial Areas /
Clusters of MSEs.
(4) To set up Common Facility Centres in Industrial area (for testing, training centre, raw
material depot, effluent treatment, complementing production processes).
(5) Promotion of green & sustainable manufacturing technology for the clusters so as to
enable units switch to sustainable and green production processes and products.

Characteristics of the Cluster:

 A cluster is a group of enterprises located within an identifiable and contiguous area
(to a large extent) or a value chain that may go beyond a geographical area and
producing same / similar products / complementary products/ services, which can be
linked together by common physical infrastructure facilities. It must address their
common challenges which is the core reason to take up the project under this
scheme.
 The essential characteristics of enterprises in a cluster are (a) Similarity or
complementarity in the methods of production, quality control & testing, energy
consumption, pollution control, etc., (b) Similar level of technology & marketing
strategies / practices, (c) Similar channels for communication among the members of
the cluster, (d) Common market & skill needs and/ or (e) Common challenges &
opportunities that the cluster faces.

Components of the Scheme and Funding pattern under the Scheme. There are only two
components of the MSE-CDP scheme:
 Common Facility Centers (CFCs): This component consists of creation of tangible
“assets” as Common Facility Centers (CFCs) in Industrial Estate.
 Infrastructure Development (ID): This component is for development of
infrastructure in new/existing notified Industrial Estate.

Status in Tamil Nadu

 Common Facility Centres (CFCs): 46 Total Approved – 26 Completed / 20 Ongoing
 Infrastructure Development (ID) Projects: 51 Approved – 35 Completed / 16 Ongoing

Clusters formed under (MSE - CDP) Scheme in Tamil Nadu:

Starch and Sago Cluster, Saftey Match Industries Cluster, Printing Cluster, Singai Coir Cluster,
Engineering Cluster, Plastic Cluster, Rice Mill Cluster, Gold Jewellery Cluster, Gold Jewellary
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Cluster, Readymade Garments (Women) Cluster, Stainless Steel Cluster, Coir and Coir
Products Cluster, Steel Product Fabrication Cluster, Ceramic Cluster, Brick Cluster, Printing
Cluster Salem, Fabrication (Agricultural Implements) Cluster, Lorry Body Building Cluster,
Design Cluster, Wooden Furniture Cluster, Weaving Cluster, Sweater Cluster, Print and Pack
Products Cluster, Apparel Cluster, Powerloom Cluster, Textile Knitting Cluster, Safety Match
Cluster, Gate and Grill Cluster, Wet Grinder Industry Cluster.

Micro Cluster Scheme by GoTN:

Hon’ble Chief Minister of Tamil Nadu inaugurated New Micro Cluster Development
Scheme in 2022, to Support the Micro & Small Enterprises. Under the scheme the
Government will provide 90% of the project cost and the limit set for the total project cost is
7.5 Cr. Under this scheme total 20 Micro Cluster development projects were sanctioned by
Government of Tamil Nadu.