Enhancing competitiveness of MSME sector through cluster development

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PIB Features | 01 Nov, 2012
The need of the hour is a cluster based approach. Clusters are defined as a sectoral and geographical concentration of micro, small and medium enterprises with inter-connected production system leading to firm/unit level specialisation and developing local suppliers of material inputs and human resources. Availability of the local market, inter-mediaries for the produce of the cluster is also a general characteristics of the cluster.

As a whole, cluster facilitates to face market challenges, quicker dissemination of information, sharing of knowledge and best practices and better cost effectiveness due to distribution of common costs. It also provides an effective and dynamic path for inducing competitiveness by ensuring inter-firm cooperation through networking and trust. The geographic proximity of the enterprises with similarity of products, interventions can be made for a large number of units that leads to higher gains at a lower cost, which in turn helps in their sustainability. The cluster approach thus aims at a holistic development covering areas like infrastructure, common facility, testing, technology & skill upgradation, marketing, export promotion.

The Cluster Development approach has played an important role in enhancing the competitiveness of the MSE sector. Apart from the benefits of deployment of resources and economy of scales, the cluster development approach helps in weaving the fabric of networking, cooperation and togetherness in the industry, and thus enabling the industry to achieve competitiveness in the long run. Cluster Development Approach is the answer of the Micro and Small Enterprises to the large scale sector of the country and the world and should be part of the business strategy.

The Micro and Small units are generally not in a position to install costly machinery for their critical operations, accept large orders, or infuse large capital due to their limited capital base and limited domain expertise. However, collectively through cluster development approach, the micro and small enterprises can attain the desired goal of being competitive in the present global scenario. The Ministry has adopted cluster development approach as a key strategy for development of micro and small enterprises in various clusters. The Ministry is administering two cluster development programmes, namely, Micro and Small Enterprises â Custer Development Programme (MSE-CDP) and Scheme for Upgradation of Rural and Traditional Industries (SFURTI).

The objectives of the scheme is to support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills and quality, market access, access to capital, etc.; to build capacity of MSEs for common supportive action through formation of self help groups, consortia, upgradation of associations, etc., and to create and upgrade infrastructural facilities in the new and existing industrial clusters of MSEs.

The cluster development initiatives in various clusters have reportedly delivered remarkable results. The guidelines of the MSE Cluster Development Programme (MSE-CDP) have been comprehensively prepared to provide higher support to the MSMEs. With this, more than 500 clusters spread over across the country have so far been taken up for diagnostic study, soft interventions and setting up of CFCs under the programme. The efforts under the scheme are focused on covering more and more clusters across the country.

(Inputs from the Ministry of Micro, Small and Medium Enterprises)