1. MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES (MSMEs),
GOVERNMENT OF INDIA
CLUSTER APPROACH FOR THE DEVELOPMENT OF MSMEs IN INDIA
Office of
Development Commissioner (MSME)

2. Micro, Small & Medium Enterprises
As per quick results of Fourth Census,
Employ million People in 26 million MSMEs
Give 45% of Manufacturing Output
Account for 40%+ of Exports
Contribute 8% to GDP
Industrial Growth Rate
MSMEs: 10.8%; Overall: % 2

3. Definition of MSMEs Manufacturing Enterprises:
Micro Enterprises - investment up to Rs.25 lakh
Small Enterprises - investment above Rs.25 lakh & up to Rs. 5 cr.
Medium Enterprises - investment above Rs.5 cr. & up to Rs.10 cr.
Service Enterprises:
Micro Enterprises – investment up to Rs.10 lakh
Small Enterprises – investment above Rs.10 lakh & up to Rs. 2 cr.
Medium Enterprises – investment above Rs.2 cr. & up to Rs.5 cr.

4. DC (MSME): Major Schemes
Credit Guarantee Scheme
Micro Finance Scheme
Skill Development Programmes
Credit Linked Capital Subsidy Scheme
Cluster Development Programme
National Manufacturing Competitiveness Programme 4 4

5. MICRO & SMALL ENTERPRISES – CLUSTER DEVELOPMENT PROGRAMME (MSE-CDP) Office of DC(MSME) Ministry of MSME Government of India

6. What is Cluster
Group of enterprises located within an identifiable contiguous area & producing same/similar products/services. Essential characteristics:
Similarity or complementarity in the methods of production, quality control and testing, energy consumption, pollution control, etc
Similar level of technology and marketing strategies/practices
Common challenges and opportunities.

7. Objectives of Cluster Development
To support sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills and quality, market access, access to capital, etc.
To build capacity of MSEs for common supportive action through formation of self help groups, consortia, upgradation of associations, etc.
To create/upgrade infrastructural facilities in the new/existing industrial areas/ clusters of MSEs.
To set up common facility centres (for testing, training centre, raw material depot, effluent treatment, complementing production processes, etc).

8. Strategy and Approach
Given the diverse nature of the MSEs, the MSE-CDP scheme aims at addressing the needs of the industries, through well defined clusters and geographical areas. This enables in
Achieving the economies of scale in terms of deployment of resources
Focusing on the specific needs of similar industries.
Capacity building of associations
Setting up of special purpose vehicles (SPVs), consortia, etc.
Leveraging the resources

9. Scope of the Scheme Overall improvement of MSE clusters by :
Diagnostic Study
Soft Interventions
Setting up of Common Facility Centres (CFCs)
Creation and upgradation of Infrastructure in industrial estates/ clusters
Development of land, Provision of water supply, drainage,
Power distribution, non- conventional sources of Energy for common captive use
Construction of roads, Common facilities such as First Aid Centre, Canteen, etc

10. Project Cost and GoI Support
Intervention
Cost (Rs. in lakh)
GoI in %
Normal cluster #
DSR 
2.50
*1.00
100
DPR for i) CFC 
ii) Infra dev
5.00
Soft interventions
**25.00 75 90
Hard Interventions 70
Infra Dev 60 80
*For MSME-DI,  50% released after the approval, 50% after acceptance of report.
** Moderated as per size/ turnover of the cluster. Max Rs lakh per cluster
# NE & Hill States, Clusters with more than 50% (a) micro/ village (b) women owned (c) SC/ST units

11. National Manufacturing Competitiveness Programme (NMCP) for MSME Sector
Objective
Focus on increasing competitiveness of MSME sector
Key for survival in domestic / international markets
Challenges
Mainly supply side initiative
Fear of disclosing data to others / Govt.
Hesitant in giving Private contribution

12. National Manufacturing Competitiveness Programme (NMCP) Summary (Rs
National Manufacturing Competitiveness Programme (NMCP) Summary (Rs. crore)
S. No.
Approval
Date
Name of the Scheme
Scheme GOI Contr.
Total cost 1.
April - 07
Marketing Support / Assistance to SMEs (Bar Coding)
1.50 2.
May – 08
Enabling Implementation of Quality Management Standards and Quality Technology Tools (QMS/QTT) for SMEs
41.10
50.00 3.
April – 08
Entrepreneurial & Management development of SMEs through Incubators
66.50
79.45 4.
Aug – 08
National Campaign for awareness in Intellectual Property Rights
55.00 5.
Setting up Mini-Tool Rooms on PPP Mode
135.00
210.00 6.
July - 09
Application of Lean Manufacturing
25.87
30.57 7.
Jan – 10
Design Clinic Scheme
49.08
73.58 8.
Technology & Quality Up gradation support for MSMEs
65.73
140.98 9.
Feb – 10
Marketing Assistance & Technology Upgradation for MSMEs
18.61
23.00
10.
Aug – 10
Promotion of ICT in Manufacturing sector
47.70
105.00
Total
501.09
769.08

13. Quality Mgt. Systems/Tools (QMS/QTT)
MSMED - INDIAN SCENARIO
Quality Mgt. Systems/Tools (QMS/QTT)
Scheme to support knowhow & implementation of Quality Systems Tools in MSME sector
Conforming to International Standards, 5S, S-sigma, TQM, TPM
ISO 9000, ISO 14000, ISO18000, ISO etc.
Major activities to propagate Quality Management in MSMEs are:
Compulsory Courses in 1800 ITIs / Polytechnics
Awareness Programmes in Clusters on QMS / QTT
Implement Quality Mgt Techniques among MSMEs
Special Studies for Threatened Products
Assist International Study Missions for SME groups 13 13 13

14. Incubators 14 14 Objective: Assist Incubation of Innovative Ideas
MSMED - INDIAN SCENARIO
Incubators
Objective:
Assist Incubation of Innovative Ideas
Promote Emerging Technological & Knowledge-based Innovative Ventures
Encourage Ideas to Become MSMEs
100 BIs to be Located in engineering colleges, management institutions and R&D 25 p.a in 4 yrs.
Govt. Grant (Max. 85%) = Rs lakh per Idea
Each BI to Assist 10 Ideas / Units – Max. Rs.62.5 lakh
BIs to support and Nurture ideas for commercialization in a year 14 14 14

15. IPR Campaign 15 IPR Tools :
MSMED - INDIAN SCENARIO
IPR Campaign
IPR Tools :
 Patents  Trademark  Indl. Design
 Copyrights  G.I  Trade Secret
Most MSMEs are unaware of IPR Benefits / Norms
Focused Activities
Awareness & Sensitization Programmes
Pilot Study
Interactive Seminars / Workshops
Short / Long Term Training
IP Facilitation Centre
Assistance for Grant on Patent / GI Registration 15 15

16. Lean Manufacturing Scheme
Lean Manufacturing (LM) is Better Production of Goods by
Eliminating Non-value Added Activities / Wastes
Helping to Produce More with Same Resources
LM is very important of Quality and Cost Management tools
Scheme is under operation on pilot basis for 100 mini clusters
NPC is working as monitoring & Implementing Nodal Agency
Initially cluster units to be made aware regarding lean techniques
‘Mini Clusters’ of 10 units (appx.) to be created
SPV to be formed by ‘Mini Cluster’.
GOI : Private Share – 80:20 (1st year only) 16 16

17. SRIVARI INDUSTRIES
Before
After

18. SA INDUSTRIES
Before
After

19. AASHISH AUTO COMPONENTS
BEFORE
AFTER

20. SHIVAKRISHNA INDUSTRIES
BEFORE
AFTER

21. Design Clinics Scheme
Bring the industrial design fraternity closure to the MSME sector
Increase the competitiveness of local products and services through design
Develop an institutional base for the industry’s design requirement
Major activities :
Setting up of design clinic centre - HQ
Regional Centres – 4 Nos.
Awareness seminars and workshops – 200 Clusters.
Design projects for individual MSME or a group of MSMEs
Students Projects
Orientation Programme for Designers
NID to work as a nodal agency 21 21

22. Technology and Quality Upgradation Support
MSMED - INDIAN SCENARIO
Technology and Quality Upgradation Support
Objective:
Focuses on Energy Conservation, CDM and Product Certification
Activities Proposed:
Capacity Building of 30 Clusters in Energy Efficient Technology
Credit Linked subsidy for EET Projects
Cluster level CDM initiatives
Encourage MSMEs through subsidy to acquire National as well as International Certification of Products 22 22

23. Marketing Assistance and Technology Upgradation Scheme for MSMEs
Major activities:
Technology upgradation in packaging
Skill upgradation /development for Modern marketing techniques
Special component for NER clusters
State/District level local exhibitions
Corporate governance practices
Marketing hubs for B2B meets
Reimbursement to ISO 18000/22000/27000 certification 23 23

24. Promotion of ICT in SMEs
Demonstrative Programme for 100 clusters
Implementation in following areas:
Components of scheme :
ICT Awareness, through IT Cos.
Preparation of Cluster DPRs on ICT interventions
E-readiness centres
Cluster based local ICT Solutions
E-Marketing – through E-Catalogues / cluster websites
Skill Development of Workforce on IT application for MSMEs
Setting up national portal for integration 24 24

25. Thank You 25 25