Evaluation Study MSE Cluster Development - Ministry of Micro ...

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Chapter No: 6 – Hard Interventions in Sampled ClustersCHAPTER6HARD INTERVENTIONS IN THESAMPLED CLUSTERS6.1 IntroductionHard Interventions are so termed in any cluster development industrial strategy becausethey unlike soft interventions are expected to produce concrete results by way ofcollectively reducing costs, improve productivity, maintain quality and standards ofindividual units. Hard interventions thereby enhance competitiveness in globalisedmarkets and create a level playing field, especially for a large cluster or group of smalland micro-enterprises who in their individual capacities are unable to undertake the largeinvestments required for the purpose.One of the main objectives of our evaluation study was to study the status and impact ofhard interventions in the sample clusters that are being assisted under the MSE-CDP.Hard interventions involve a series of distinct processes arranged in pre-determinedstages. Each stage has to be successfully implemented before the next stage is takenup. The end result of the successful implementation of these essential stages is thesetting up of a common facility that can be utilized by all cluster actors while they pursuetheir individual enterprise activities. This common facility should be operated, managed,sustained, and even expanded independently and needs to adopt a legitimateorganizational form like any industrial enterprise or firm. It thus needs a regular andprofessional management structure, and a work force to run and maintain its facilities.While the status of hard interventions can be judged by the specific stage that has beenachieved in each case, the impact of hard interventions emerge and can only beassessed after each of these essential stages has been successfully completed and thecommon facility built, tested and commissioned.As seen in the previous chapter there are only eleven clusters out of the 22 clusterssampled for this study that have started to implement hard interventions each of theseclusters are at different stages of implementing hard interventions and only two of theseeleven clusters have been able to successfully set up and commission common facilities.Even in these two cases the common facility has been commissioned recently and haveonly functioned for a limited period. In such a situation the impact is limited and unlessthese facilities stabilize and overcome various ‘teething’ problems a full assessment oftheir impact may not be possible at this early stage. Nevertheless their presentfunctioning provides early and useful indicators that help in streamlining policies andprocedures and thereby incorporating corrective features to strengthen and sustain theMSE-CDP programme in the days to come.In this chapter we shall therefore emphasize the justification for hard interventions, therationale and objectives of hard interventions, the necessary stages that have to besuccessfully negotiated and the specific constraints that emerge in each of these stages104
Chapter No: 6 – Hard Interventions in Sampled Clustersthat need to be removed, the current status of hard interventions in the sampledclusters, and the impact of these hard interventions which are reflected in the functioningof the CFCs.6.2 The Justification for Hard InterventionsHard interventions are those measures implemented by legally constituted group ororganizations called SPVs that are involved in different common functional areascollectively serving a cluster or agglomeration of small and micro enterprises involved inthe processing and manufacture of largely similar goods or services.These Special Purpose Vehicles or “Hard Networks” are constituted for the followingreasons:• To enable individual cluster actors to access markets for goods and required inputs,often with the intention of eliminating intermediaries along the supply chain.• To enable the exploitation of the economies of scale in functional areas such aspurchase of essential and common inputs, procuring finance, production andmarketing.• To increase bargaining strength vis-à-vis input suppliers or customers or distributors.• To collectively bear the risks and costs involved in undertaking large projectsinvolving high investments and possible risks.• To avail the benefits of support schemes and special assistance by the state, financialinstitutions, and development agencies, which often requires the benefits to betransferred to legally constituted and accountable entities that function under specificregulatory statutes and rules.• To effectively demonstrate the power and concrete benefits of collective action andcooperation and also to provide a ‘safety net’ in a highly predatory and aggressivelycompetitive industrial system dominated by large national and multinationalenterprises.Hard interventions can be implemented on a Public-Private Partnership basis, and thebenefits derived from these initiatives in such a context may have greater justification asa long-term strategic measure rather than for short term commercial gain. It is alsoseen that some of these hard networks are created entirely on the basis of privateinitiatives, while others may be led by the State and State Agencies.It should be emphasized that with the advent of liberalization and “reforms”, theprotection and support provided to small and micro enterprises have undergone a greatdeal of change. The very definition of small enterprises has been considerably altered by‘de-reservation’ and increasing the limits of investments and turnover that were earlierused for defining a small enterprise. Many fear and have been often proved right aboutthe adverse effects of “opening up” the manufacturing sector in response to the call forfree multilateral trade. These adverse effects impact the developing countries moreseriously than they do, in the case of developed nations. The need for “safety nets” isnow universally justified perhaps fearing a major economic disaster that may have itsown political consequences. The Cluster Development Programme can also be visualizedas an effective industrial safety net in this era liberalization and ‘reforms’.105
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EVALUATION STUDY OF MICRO & SMALLEN
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2.12 PROGRESS AND PRESENT STATUS OF
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INDEX OF TABLESTable No.- 1.1: CLUS
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COMMONLY USED ABBREVIATIONSBDSBusin
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31 million persons spread over 12.8
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Nevertheless, it is expected that t
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4. Role of the schemes in bringing
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Table No. - 1.1 (contd.)East/ North
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ANNEXURE - 1.1 Guidelines for Clust
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• Approval of budget and leveragi
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14. Contribution of the Ministry of
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Chapter No:2 - The General Profile
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