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Comprehensive Handicrafts Cluster Development Scheme (CHCDS)

Handicrafts Cluster Development

Comprehensive Handicrafts Cluster Development Scheme (CHCDS)

The Ministry of Textiles has launched the Comprehensive Handicrafts Cluster Development Scheme (CHCDS) under the guidance of Mega cluster scheme. This scheme was initiated with the object of setting up of new cluster to assist artisans and entrepreneurs in setting up world-class units with modern infrastructure, latest technology and adequate training. In this article, we look at the Comprehensive Handicrafts Cluster Development Scheme (CHCDS) in detail.

Also, read about Comprehensive Powerloom Cluster Development Scheme (MCPCDS) 


The objectives of the Comprehensive Handicrafts Cluster Development Scheme (CHCDS) are listed below:

  • To provide requisite support in terms of infrastructure, technology, product diversification, design development, marketing and promotion, social security and other components that are necessary for the sustainability of craftsmen/artisans engaged in the Handicrafts sector.
  • To create additional livelihood opportunities to the people through specific intervention in the industry and to increase the income of the craftsmen/artisans engaged in this sector.

Scope of the Scheme

The small handicrafts units and poor artisans are inadequate to undertake the initiatives on their own due to non-availability of proper infrastructure and common facilities such as trade and marketing facilities, Computer-Aided Design centre, Communication network, etc. In order to overcome the above challenges, it is necessary to form a Public-Private Partnership (PPP) model to create clusters with infrastructure facilities required to meet the industry needs.

Project Components

The proposed project would cover the following components that are necessary for meeting the objectives as stated above.

Technology Upgradation

  • Upgradation/modernization of machinery, processing and other methods of manufacturing.
  • To support entrepreneurs in setting up world-class units with the latest technology by obtaining one-time assistance in the ratio of 30:70 from the government.

Margin Money for Working Capital

Under Margin Money for Working Capital, the artisans will be provided with margin money of Rs.4000 per artisan to complete one cycle of production-cum-marketing within three months.

Export & Marketing

Provision of Trade Center, Exhibition hall, Customs office and Clearing facility, etc. will be provided.

Product Diversification

Diversifying and upgrading the product range to meet the needs of contemporary market requirements through quality improvement, design development, etc.

Raw Material Bank

The proposal for the establishment of a raw material bank for the continuous availability of quality and the graded raw material is performed.

Common Facility Centre (CFC)

Common Facility Centre (CFC) comprises of the state of art machines in which the individual is unable to afford for this facility. Under this incentive, the individual can access the high tech facility at a reasonable price as the beneficiary has to afford only for operating expenses.

Resource Centre

The proposal for the establishment of resource centre as one point information centre which acts as an arsenal in the hands of artisans is performed.

Market Development

To improve the share of the cluster products in domestic as well as export markets through exhibitions, brand promotion, buyer-seller meets, retail space, warehouses, e-commerce etc.

Forward & Backward Linkages

Provision of need-based infrastructure in the form of common facility centres, handicrafts parks, testing labs, design studios, TQM, Research and Development,etc. will be provided.

Skill Development

To improve productivity and quality, the training will be provided on technical skills apart from coverage under soft skills and other entrepreneurship development programs.

Social Security

The artisans in the cluster will be covered under social security schemes, which includes small savings, group insurance, financial institutions, etc.

Physical Infrastructure

Proposal for land development, water treatment and supply, roads connectivity, power supply, telecommunication network, housing-cum-work sheds and other common buildings, sewerage, solid waste management and effluent treatment plant will be performed.

Funding Pattern

The assistance to the extent of 3% of the total project cost would be provided for establishing baseline data against which performance can be compared at the end of the project.

The funds would be released in three instalments as given below:

1st Installment: The 1st Installment of 40% as an advance on Special Purpose Vehicle (SPV) acquiring land.

2nd Installment: The 2nd Installment of another 40% on the utilisation of the first instalment will be provided on submitting utilisation certificate.

3rd Installment: The 3rd Installment of balance amount will be reimbursed on completion of the project.

S. No Activity Government Contribution Financial Limit of Government (in Rs) Share of SPV
1. Soft skills such as Product Development workshop, skill development training, etc.

First Year – 100% Second Year – 90%

Third year – 75% Final year – 75%

Rs.10 crores per project





2. Common production-related Infrastructure which is artisan centric such as Workshed, CFC, etc 100% Rs.20 crores per project Land and recurring expenditure
3. Other commercial infrastructure such as Gas pipeline, etc 75% Rs.20 crores per project 25% and recurring expenditure
4. Facility Centers for entrepreneurs/Exporters/ 30% Rs.20 crores per entrepreneur 70%

Project Management Cost

The Project Management Cost will be reimbursed to the Cluster Management &Technical Agency (CMTA) for managing the activities of the cluster. CTMA will be selected for the clusters through a competitive bidding process.

Eligible Agencies

The Special Purpose Vehicle (SPV) will act as the implementing agency with the participation of stakeholders, leading manufacturers, suppliers, buyers and Self Help Groups (SHGs). The SPV would be selected through the open competitive bidding process. However, the selection of SPV would depend upon the profile of the project, activities related implementation. Therefore the selection of eligible SPV will be performed after the approval of the Project Approval Monitoring Committee (PAMC).

Implementation of the Scheme

The following would be the process through which the project is implemented:

  • Undertaking a detailed study of the cluster in order to identify the gaps, needs and also developing baseline reference data.
  • Preparing Detailed Project Report (DPR) which covers financial, technical, institutional and implementation aspects, based on the study. This DPR would clarify the expected outcomes of each of the measurable interventions.
  • Validation of the DPR by the stakeholders of the cluster including representative associations of the artisans, support institutions, service providers, Central Government and State Government agencies.
  • Establishing a Special Purpose Vehicle (SPV) at the cluster level with the representation of stakeholders.
  • Approval of DPR by PAMC under the Ministry of Textiles.
  • Acquisition of land needed for any of the interventions of the DPR, by the SPV.
  • Implementation of the interventions, as mentioned in the DPR.
  • Monitoring and valuation of the implementation of the interventions against the outcomes specified in the DPR.

Project Deliverables

The following are the deliverables of the project, as notified by the Ministry:

  • Generation of employment opportunities.
  • Better living standards for the existing artisans.
  • Increase in the business of small entrepreneurs.
  • Foreign exchange earnings by export.
  • Savings in the cost by manufactures in the cluster.
  • Generation of revenue to local bodies, Central and State Government.
  • Increase in quality and value-added production.