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

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