MSME Cluster Development Programme

MSME Cluster Development Programme

MSME Cluster Development Programme

The Ministry of Micro, Small and Medium Enterprises (MSMEs) has adopted the MSME Cluster Development Programme with the objective of enhancing the productivity, competitiveness, collectiveness, and capacity building of Micro and Small Enterprises (MSEs) in the country. In this article, we look at the MSME Cluster Development Programme in detail.

What are Clusters?

The term ‘cluster’ in this context refers to a group of enterprises located within an identifiable and mostly practicable, contagious area, producing similar products or services. Enterprises in a cluster are essentially similar or complementary in their methods of production, quality control and testing, energy consumption, pollution control, etc. They use similar levels of technology and marketing strategies/practices, similar channels for communication, and follow common challenges and opportunities among the members of the cluster.

Need for the Initiative

The MSME sector contributes substantially to the Nation’s economical and employment prospects. Micro, Small, and Medium may be the term, but the role it plays is in sharp contrast to this description. Statistics suggest that India is home to 26 million (and increasing) MSMEs, employing 60 million people, of which 70% are estimated to be concentrated in around 1086 urban industrial clusters. For these clusters to flourish, they need to be appropriately upgraded. Such upgradation is sought to be rendered through this programme.

Also Read About – MSME Samadhaan

Objectives of the Programme

This programme is envisioned to:

  • Support the sustainability and growth of MSEs by enhancing the technology, skills and quality, market access, access to capital, and other related aspects.
  • Build the capacity of MSEs for common supportive action through the formation of self-help groups, consortia, upgradation of associations, etc.
  • Create or upgrade infrastructural facilities in new or existing industrial areas/clusters of MSEs, including the setting up of Flatted Factory Complexes.
  • Form common facility centres to serve the purposes of testing, training centre, effluent treatment, complementing production processes, etc.

Components Proposed

The programme would be implemented on the basis of the following target components:

Setting up of CFCs

This component involves the creation of tangible assets as Common Facility Centres (CFCs), the likes of which include Common Production/Processing Centre, Design Centres, Testing Facilities, Training Centre, R&D Centres, Effluent Treatment Plan, Marketing Display/Selling Centre, Common Logistics Centre, Common Sales Depot, etc. For this purpose, the Government of India would sponsor a maximum of 70% of the cost of the project, (for projects costing up to Rs. 15 crores). A grant of up to 90% could be availed by Northeastern and Hilly States, and clusters which are majorly (more than 50%) owned by:

  • Microenterprises
  • Women
  • SC/ST units

Development of Infrastructure

This component comprises of projects for upgradation of infrastructural facilities such as power distribution network, telecommunication, drainage and pollution control facilities, roads, banks, marketing outlets, common service facilities and technological backup services for MSEs located in new/existing industrial estates/areas. For this purpose, the Government of India would grant as high as 60% of the cost of the project (for projects of Rs 10 crores). An 80% grant would be provided for projects in North Eastern and Hilly States, as well as for the industrial areas/estates which comprises of units majorly owned by:

  • Microenterprises
  • Women
  • People associated with SC/ST community

Project Deliverables

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

  • Skills training in the nature of familiarization to end users.
  • A study on the status of technology and the needs of it
  • Kits for the purpose of demonstration in the nature of benign catalyst.
  • The setting up of common facility centre/demonstration plants.
  • Provision of escort services to the end users for availing loans and arranging funds.
  • Provision of user manual and guides for specific purposes.
  • Project documentation.
  • Provision of auxiliary benefits in the form of market and product assessment.

Application for Enrollment

MSME Clusters can partake in the initiative by filing an application through online or offline means. While physical applications can be addressed through any of the State Governments/their autonomous bodies/field institutes of the Ministry of MSME-Dis, online applications can be filed by furnishing their details on the online application form of the website created for this programme.

Post by Sreeram Viswanath

IndiaFilings is India's largest online compliance services platform dedicated to helping people start and grow their business, at an affordable cost. We were started in 2014 with the mission of making it easier for Entrepreneurs to start their business. We have since helped start and operate tens of thousands of businesses by offering a range of business services. Our aim is to help the entrepreneur on the legal and regulatory requirements, and be a partner throughout the business lifecycle, offering support at every stage to ensure the business remains compliant and continually growing.