Empowered Group of Ministers (EGoM) on Cluster Development

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Empowered Group of Ministers(EGoM)onCluster
Development

• 1st Meeting 09.07.2007

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TERMS OF REFERENCE

1. To review the existing cluster development
   programmes/ projects/ schemes being implemented
   by the Ministries/ Departments of the Central
   Government in accordance with the ToR.
2. To specify broad policy guidelines and implement
   measures to bring about harmonization and synergy
   among these programmes/ projects/ schemes and
   enhance their outcomes in the XI Plan period
   including results in terms of promotion of
   manufacturing, renewing industrial towns and
   building new industrial townships etc. and
3. To decide any other matter considered important
   or relevant.

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MINISTRIES/ DEPARTMENTS/ COMMISSIONS/ COUNCILS
CONSULTED

• 25 consulted.
• 7 Ministries (8 Departments)
• -- MoMSME -- MoT
• -- MoFPI -- DIPP -- MoRD
  -- DoC
• --Banking -- MoPR
• 16 Schemes/ Programmes.

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Ministries Consulted
S. Ministry /Deptt. Name of Scheme
1 MSME Micro Small Enterprises Cluster Development Programme. Growth Poles Proposed by NCEUS (under consideration) Clusters for SC,ST, etc. (under consideration) Scheme of Fund for Re-generation of Traditional Industries (SFURTI)
2 DIPP Industrial Infrastructure Upgradation Scheme (IIUS). Industrial Park Scheme
3 Commerce Special Economic Zone (SEZ)
4 Textiles Scheme for Integrated Textile Parks (SITP) Integrated Handloom Cluster Development Prog. Babasaheb Ambedkar Hastshilp Vikas Yojana (BAHVY)
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Ministries Consulted
S. Ministry/ Deptt. Name of Scheme
5. FPI Scheme for Infrastructure Development.
6. RD Provision of Urban Amenities in Rural Areas (PURA)
7. Financial Services a)   Project UPTECH of SBI b) Cluster Development Programme of SIDBI. Cluster Development Programme of NABARD
8. Panchayati Raj Rural Business Hubs
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1. Micro Small Enterprises Cluster Development
Programme (MSECDP)
MoMSME

• SCOPE
• i) Holistic approach several types of
  interventions.
• ii) Soft interventions like capacity building,
  exposure, etc.
• iii) Hard interventions like technological
  improvement,
• Common Facility Centres (CFC), etc.
• iv) Creation/ up-gradation of physical
  infrastructure.
• FINANCIAL PARAMETERS
• Max. project cost Rs. 10 Cr. GOI share 30 -
  80.
• Interventions in 69 clusters, GOI cost- Rs 47.04
  Cr.
• Diagnostic study of 148 clusters.

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2. Growth Poles proposed by NCEUS
MoMSME

• SCOPE
• Integrate several clusters for expanding
  production employment in unorganised
  enterprises.
• Improve the infrastructure with PURA principles.
• I Phase Institutional strengthening
  Capacity Building
• (GOI1/3 of Rs. 12 Cr.
  Per Pole).
• II Phase Actual Pilot Pole on P.P.P. Mode
  (GOI
  Pvt. 15)
• DPRs for 6 pilot projects taken up
• - UTTARAKHAND - CHHATTISGARH,
• - WEST BENGAL - RAJASTHAN
• - ASSAM - KERALA

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3. Clusters Proposed for SC,ST, etc.
MoMSME

• TARGET
• Rural unemployed youth, esp. SC/ST minority
  etc. to take up micro enterprises in every Block
  
• Train 500 per Block / year.
• Create Industrial Sheds etc. in rural areas for
  150 per Block / Year
• FINANCING GOI 80 State 10 User
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• SCHEME
• Parameters being worked out in
  consultation with Planning Commission.
• Rs.1200 Cr. from different GOI schemes, State
  Govt. users during XI Plan.

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4. Scheme of Fund for Re-generation of
TraditionalIndustries (SFURTI)
MoMSME

• SCOPE
• Establishment of competitive traditional
  industries in KVI Coir.
• Building innovative traditional skills,
  improved technologies, etc.
• Charkha-replacement , CFCs, Product Development
  Design Intervention, Market Promotion, Capacity
  Building, Training, etc.
• Interventions in 104 clusters (29 Khadi, 50 V I
  25 Coir).
• FINANCIAL PARAMETERS
• GOI assistance between 75 and 100.( Rs.1 to 2
  Cr.)
• Minimum 25 contribution from Implementing
  Agencies.

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DIPP
1. Industrial Infrastructure Up-gradation Scheme
(IIUS)

• SCOPE
• To enhance competitiveness of the industry by
  providing quality infrastructure through P P P in
  functional clusters.
• FINANCIAL PARAMETERS
• GOI assistance - 75 subject to ceiling of Rs 50
  Cr per project.
• User industries - minimum of 15
• PURPOSE AND NATURE OF GOI ASSISTANCE
• One time Central assistance for physical
  infrastructure.
• So far 26 clusters have been taken up under IIUS.
• Rs 579.10 Cr released so far.
• Proposed XI Plan outlay Rs. 1200 Cr.

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DIPP
2. Industrial Park Scheme

• SCOPE
• Encourage investment in development of
  industrial parks, etc., in which high quality
  infrastructure is made available in a centralized
  manner, so that the units operating from such
  parks can have the benefit of lower transaction
  cost and shorter start up time.
• FINANCIAL PARAMETERS
• Tax incentives Developer eligible for 100
  deduction of profits and gains from the
  industrial park for a period of 10 consecutive
  years in a block of 15 assessment years. 
• PHYSICAL AND FINANCIAL ACHIEVEMENTS
• So far 270 approvals given under the Scheme for
  claiming tax benefit u/s 80 IA of IT Act.

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3. Special Economic Zones
DoC

• SCOPE
• For economic development, export promotion
  boost manufacturing
• Provide industrial townships, so that increased
  economic activity does not create pressure on the
  existing infrastructure.
• SEZ Developer responsible for all civic amenities
  / infrastructure in SEZ.
• FINANCIALS No Govt. grant , only Incentives.
• Developers get -
• I-Tax exemption for 10(of 15) yrs. U/s 80/1AB
  of IT- Act .
• Custom, Excise exempt. MAT, DDT, CST,ST
  exempt.
• Exporters get -
• Duty free imports MAT, CST,ST etc.
  exempt.
• I-Tax exempt u/s 10AA 100 5 yrs 50 next 5
  yrs

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• Special Economic Zones (Contd)
• CONTRIBUTION OF OTHER STAKEHOLDERS
• Delegation of powers to enable single point
  handling of land use, labour regulations,
  environmental issues, etc., through DC (SEZ),
• To exempt the SEZ area from levies like Octroi,
  Sales Tax, etc.
• ACHIEVEMENTS
• Total 101 SEZs / 32,578 employed.
• Rs.35,145 Cr. Private Investment
• SEZ Exports in 2006-07 Rs 34,787 Cr.(52
  growth).
• Projected exports for 2007-08 Rs. 67,300 Cr.
• Of 1298 functional units in SEZs, 1107 (85) are
  MSMEs.

DoC
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MoTex
1. Scheme for Integrated Textile Parks (SITP)

• SCOPE
• Provide world class infrastructure facilities
  by setting up Textile Parks through PPP mode for
  the textile units.
• FINANCIAL PARAMETERS
• Grant or Equity based assistance provided.
• 40 of the project cost (infrastructure) up to
  Rs. 40 Cr.
• Total state / Central Govt. / PSU equity up to
  49.
• X PLAN OUTLAY -
• 30 projects (Rs.88.27 Cr.) sanctioned.
• XI PLAN (Proposed)
• Rs.2000 Cr. for 50 ITPs proposed
• BE 2007-08 Rs.435 Cr to complete 30 ITPs

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MoTex
2. Integrated Handloom Cluster Development
Programme

• SCOPE
• Holistic development of handloom clusters.
• FINANCIAL ASSISTANCE
• Recurring and non-recurring grant up to 4
  years.
• 100 of project cost (infrastructure) up to Rs.2
  Cr.
• CFCs to be on PPP Mode 8020.
• X Plan - 20 Clusters developed, 100 under study.
• XI Plan - Rs. 173 Cr. (300 clusters) proposed .

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MoTex
3. Babasaheb Ambedkar Hastshilp Vikas Yojana
(BAHVY)

• SCOPE
• i) Develop Handicrafts clusters for empowering
  artisans
• ii) Organize artisans into community-based
  enterprises
• FINANCIAL PARAMETERS
• Need based assistance (usually Rs.75-125 lakhs,
  as 75 grant).
• CFCs etc. to be on PPP Mode 8020.
• ACHIEVEMENTS
• 701 projects (Rs.98.5 Cr.) taken up in the
  last 6 years.
• PROPOSED XI PLAN OUTLAY Rs. 496 Cr.

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MoFPI
Scheme for Infrastructural Development

• SCOPE To provide infrastructure common
  facilities for food processing, packaging,
  marketing, providing intelligence platform to
  SMEs and setting up of testing laboratories for
  quality assurance quality control through
  initiatives for Food Parks, Packaging Centres,
  Integrated Cold chain facilities, etc.
• PURPOSE AND NATURE OF GOI ASSISTANCE
  Grant-in-aid for provision of common facilities
  like cold storage, food testing and analysis
  laboratory, effluent treatment plant, common
  processing facilities, power, water supply, etc.,
  on one time basis.

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MoFPI

• Scheme for Infrastructural Development (Contd)
• CONTRIBUTION OF OTHER STAKEHOLDERS Assistance is
  restricted to 33.33 of the project cost in
  difficult areas and 25 in General areas subject
  to a ceiling for different interventions.
• PHYSICAL / FINANCIAL ACHIEVEMENTS
• Till 2006-07 - 54 FOOD PARKS / Rs.203.5 Cr.
• X Plan outlay Rs. 180 Cr.
• XI Plan outlay (proposed) Rs. 3160 Cr.
• Mega Food Parks on PPP/SPV model proposed

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MoRD
Provision of Urban Amenities in Rural Areas
(PURA)

• SCOPE To bridge the rural-urban divide and
  achieve balanced socio-economic development by
  providing physical and social infrastructure in
  the identified rural clusters to further their
  growth potential.
• FINANCIAL PARAMETERS Viability gap funding as
  per the needs. Concerned States are expected to
  source additional funds or meet requirements by
  convergence from other programmes run by Central/
  State Governments.
• PURPOSE AND NATURE OF GOI ASSISTANCE
  Grant-in-aid on one time basis for providing
  physical and social infrastructure in identified
  rural clusters to bridge critical gaps and
  further their growth potential.

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MoRD

• Provision of Urban Amenities in Rural Areas
  (PURA) ( Contd.)
• CONTRIBUTION OF OTHER STAKEHOLDERS
• 100 centrally sponsored. The States were
  supposed to converge funds from existing schemes
  into selected clusters.
• X PLAN OUTLAY
• Rs. 20 Cr. ( 7 clusters) during 2004-05
  2005-06.
• Rs. 10 Cr. Provision in 2006-07.
• XI PLAN (Proposed)
• Rs. 5950 Cr.

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1. Project UPTECH of SBI
MoF

• SCOPE Upgradation of technology of SMEs in the
  cluster for making them more competitive quality
  and cost wise.
• FINANCIAL PARAMETERS Implemented with the Banks
  funds only, no GOI assistance.
• CONTRIBUTION OF OTHER STAKEHOLDERS Sporadic
  contribution Detailed guidelines not available.
• PHYSICAL AND FINANCIAL ACHIEVEMENTS Rs 3 Cr.
  incurred on development of 24 clusters.

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MoF
2. Cluster Development Programme of SIDBI

• SCOPE
• Upgrade Technology, Skills, Market etc.
• RESULT
• 48 Clusters intervened, 50 clusters identified
  for intervention.
• No specific scheme on cluster development. Mainly
  functioning as implementing agency of the
  Government run schemes for cluster development
  and also doing part funding.
• FINANCIALS No Govt. assistance, Partly from
  World Bank Fund.
• NB - SIDBI (term loan), Bank (WC) have
  coordination problem
• - SIDBI does not lend below Rs. 10 lakhs/ Most
  Micro units
• can not benefit.

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MoF
3. Cluster Development Programme of NABARD

• SCOPE Holistic development of clusters.
• FINANCIAL PARAMETERS
• No GOI assistance extended. 2 modes
• A. On participative mode - Rs.15 lakhs for
  Cluster.
• B. In intensive development mode 100 grant up
  to Rs.1.00 Cr.
• ACHIEVEMENTS
• X Plan- 65 Clusters (Rs.1.82 Cr.)
• XI Plan (Proposed)- 46 Clusters (Rs.21.9 Cr.)
  9 more Clusters (Rs. 12.5 Cr.)
• SPECIAL FEATURES-Focuses on clusters based on
  agro allied activities, food processing, small
  and micro enterprises in rural areas, traditional
  arts, such as handicrafts and handlooms.

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MoPR
Rural Business Hubs

• SCOPE
• It is envisaged as Public-Private-Panchayat
  Partnership for combining latent skills at local
  community level production and marketing networks
  of CII member companies to reach larger markets
  by developing latent livelihood skills for
  additional financial returns to local craftsmen,
  farmers and entrepreneurs. Joint initiative of
  Ministry of Panchayati Raj and CII.
• PURPOSE AND NATURE OF GOI ASSISTANCE
• GoI and State Governments to facilitate the
  signing of MoUs between Panchayati Raj
  Institutions and Private Companies. No
  financial assistance by GOI.

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MoPR

• Rural Business Hubs ( Contd.)
• CONTRIBUTION OF OTHER STAKEHOLDERS
• The financing of RBHs is envisaged as a
  business proposition on the public-private-panchay
  at-partnership principle which could be supported
  by such top-up funds as may be available for
  the purpose. It is also expected that PRIs will
  converge Centrally Sponsored Schemes and State
  Government Schemes for funding RBH in rural
  areas. Support is also envisaged from
  institutions like NABARD, KVIC, etc.
• ACHIEVEMENTS
• 846 RBHs identified 97 MOUs signed.
• Marketing Links Established.

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Observations

• There are differences in the perception as to
  what constitutes a cluster from scheme to scheme,
  even within the same Ministry.
• The relevant schemes (overlapping, at times)
  could also be categorized as under -
• Schemes assisting the technical upgradation,
  etc., of enterprises in existing small clusters.
• Schemes promoting infrastructure development in
  existing clusters.
• Schemes assisting establishment of new
  estates/clusters.
• There are both (a) specific-sector or
  product-specific group-oriented schemes, like
  those of Handicrafts, Handlooms, Textiles, SFURTI
  and Food Processing and (b) schemes applicable
  for different sectors like IIUS, MSECDP, etc.

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• Observations ( Contd.)
• Cluster schemes could also be categorized as-
• Those involving direct government assistance (by
  way of budgetary allocation), and
• Those involving exemptions/tax incentive-oriented
  benefits for developers.
• So far, cluster development schemes are designed
  only for manufacturing enterprises and not for
  service enterprises.
• Almost schemes (current form) introduced 2-4
  years ago.
• All of them went through Learning Curves
• 8. Unanimity Focus on Cluster-rather than
  dispersed Scatteredassistance.

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• Thanks You