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

31 million persons spread over 12.8 million enterprises and the labour intensity in theMSE sector is estimated to be almost 4 times higher than the large enterprises. Thereare about 388 documented SME clusters in India.1.3 Need for a Cluster Development ApproachSSE clusters constitute ideal targets for a SSE support agency (Mead & Liedholm 1998,OECD 1998). The concentration of largely homogenous enterprises within a relativelylimited geographical area facilitates the intervention because of their similarity of needsand support requirements, speeds up the dissemination of best practices because of thepervasiveness of demonstration effects, and allows for a distribution of the fixed costs ofinterventions among a large number of beneficiaries. This is true for under-achievingclusters as well as for the best performing ones.However, underachieving clusters are characterized by environments where informationdoes not flow easily and where the various actors are not accustomed to talking with oneanother. In stark contrast with their counterparts in the more successful well-performingclusters, especially in developed countries, entrepreneurs in under-performing clustersrarely if ever meet one another, do not usually have on-going relationships with BDSproviders and are not accustomed to presenting articulated calls for actions to the localpolicy makers. On the contrary, these clusters are more often than not characterized byextremely fragmented knowledge, latent conflicts, and an absence of a discussion forum.The SSEs in these clusters therefore have a very poor perception about the feasibility ofjoint actions.1.4 Cluster Development in IndiaThe Ministry of Micro, Small & Medium Enterprises laid special emphasis for developmentof clusters and launched a scheme for technology up-gradation and management calledUPTECH in 1998. Although it was having a cluster based approach for development ofMSEs, it was mainly technology-focused comprising of a diagnostic study, setting-up of ademonstration plant and organising workshops, seminars, etc. for quicker diffusion oftechnology across the cluster of small enterprises.In August 2003, the scheme of the Ministry of Micro Small and Medium Enterprises wasrenamed as Small Industry Cluster Development Programme (SICDP) and made broadbased by adopting a holistic pattern of development of the cluster encompassingmarketing, exports, skill development, setting up of common facility centres, includingtechnology upgradation of the enterprises, etc. SICDP guidelines were comprehensivelyrevised in March, 2006 making the cluster programme more broad-based by facilitatingsubstantial economies of scale in terms of deployment of available resources in themedium to long term. The Government of India’s assistance under the scheme wasenhanced upto Rs.8 crore per selected cluster to support soft as well as hardintervention, including setting up of a common facility centre.As per the Promotional Package announced by the Government, SICDP was renamed asMicro & Small Enterprises - Cluster Development Programme (MSE-CDP) to make it moreattractive, though the basic features of this scheme have been retained as such. The13