Government Schemes Yojana


Mukesh Jindal
Written by Mukesh Jindal

The Ministry of Micro, Small and Medium Enterprises (MSME), Government of India (GoI) has adopted the cluster development approach as a key strategy for enhancing the productivity and competitiveness as well as capacity building of Micro and Small Enterprises (MSEs) and their collectives in the country.



A group of ventures located within an identifiable and practicable, contiguous area. These clusters must also produce similar products/services.

Essential characteristics of enterprises in a cluster are:
(a) Similarity in the methods of production, quality control and testing, energy consumption, pollution control, etc
(b) Similar level of technology and marketing strategies/practices
(c) Channels for communication among the members of the cluster
(d) Common challenges and opportunities.

. This Ministry has been implementing Micro and Small Enterprises Cluster Development Programme (MSE-CDP) for the benefit of clusters of Micro and Small Enterprises all over the country. The programme addresses the needs of clusters for achieving sustainable development. The cluster development initiatives include capacity building of the cluster members, technical exposure, setting up of Common Facility Centre, Infrastructure Development, etc. for holistic development of clusters. Under the process of cluster development, first and the foremost activity is to conduct a Diagnostic Study by the experienced agency.

Objective of Diagnostic Study Reports (DSRs)

• To map all the business processes of the cluster units to find out the strength, weaknesses, opportunities and threats (SWOT) of the cluster and to suggest an action plan.
• To enhance the competitive spirit of the cluster units
• To ensure their sustainable growth in terms of turnover, employment generation, exports, technological up gradation, quality up-gradation, energy efficiency, brand building etc.

Objectives of the Scheme

(i) To support the sustainability and growth of MSEs by addressing common issues such as improvement of technology, skills and quality, market access, access to capital, etc.
(ii) To build the capacity of MSEs for common supportive action through the formation of self-help groups, consortia, up gradation of associations, etc.
(iii) To create/upgrade infrastructural facilities in the new/existing industrial areas/ clusters of MSEs.

Scope of the scheme

(i) Diagnostic Study
(ii) Soft Intervention
(iii) Setting up of Common Facility Centres (CFCs)
(iv) Infrastructure Development (Upgradation / New)

The cost of Project and Govt of India Assistance:

(i) Diagnostic Study – Rs. 2.50 lakhs.z

(ii) Soft interventions – Rs. 25.00 lakh, with GoI contribution of 75%

(iii) Hard interventions i.e setting up of CFCs – Rs. 15.00 crore with GoI contribution of 70% (90% for the Special Category States and for clusters with more than 50% women / micro / village / SC / ST units).

(iv) Infrastructure Development in the new/ existing industrial estates/areas.: Rs.10.00 crore, with GoI contribution of 60% (80% for The Special Category States and for clusters with more than 50% women/micro/SC/ST units).

How to approach?

Online Applications are only considered with effect from 01-04-2012. A hard copy of Applications needs to be sent to State Govt or their autonomous bodies or field institutes of Ministry of MSME ie. MSME-DIs.


(a) Basic information about the cluster: exact location, age of the cluster, cluster product (traditional artisanal or traditional industrial or modem/ high tech product), number of micro and small units separately mentioning average investment in plant and machinery, employment, level of technology, turn over, exports, category (SC/ST/General), institutional supports available in the cluster.The Diagnostic Study must cover following points:-

The Diagnostic Study must cover following points:-
(b) The details of individual units should also be incorporated in the DSR (as per Annexed).
(c) The diagnostic study should map all the business processes of the cluster units.
(d) The Study would also give comparative benefit between two stages i.e. before and after implementation of the proposed measures. It would quantify the benefits in monetary terms, percentage, numbers, employment, export, turnover etc.
(e) The Study should focus on enhanced competitiveness, technology improvement, adoption of best manufacturing practices, marketing of products, employment generation, etc.
(f) The study should include a detailed Action Plan including budgetary provision for entire project duration separately for the development of the clusters, showing clearly the contribution from Cluster Actor! Association/another stake holder which in any case should not be less than 10% of the proposed project cost for further interventions, such as Soft interventions and CFC.
(g) The study should clearly bring out the need for setting up of CFC (if any) in the cluster.
(h) The DSR should be validated by the stakeholders.
(i) The Diagnostic Study of the clusters would be completed within three months from the date of release of funds.
(j)Three copies of Diagnostic Study Report (DSR) including soft copy should be provided.

Strategy and Approach

Given the diverse nature of the MSEs in terms of both geographical location and sectoral composition, the MSE-CDP scheme aims at addressing the needs of the industries, through well-defined clusters and geographical areas. This will enable achieving the economies of scale in terms of deployment of resources as well as focusing on the specific needs of similar industries. The capacity building of associations, setting up of special purpose vehicles (SPVs), consortia, etc. which are integral part of the scheme would enable the MSEs to leverage their resources and also to have better access to public resources, linkages to credit and enhance their marketing competitiveness.

Common Facility Centre (CFC)
This will lead to creation of tangible “assets” as Common Facility Centers (CFCs).

Infrastructure Development Centre (ID)
This will lead to creation of infrastructural facilities like power distribution network, water, telecommunication, drainage and pollution control facilities, roads, banks, raw materials, storage and marketing outlets, common service facilities and technological backup services for MSEs in the new/ existing industrial estates/areas.


We hope that this scheme goes as per the plans made on the papers. Also the scheme has a good and strong structure so all it needs now is an effective implementation . Funds are assigned for all sections but there proper utilization is also important. Widespread networks of these small scale will set an example for many others to adapt this new change .

About the author

Mukesh Jindal

Mukesh Jindal

My name is Mukesh Jindal, and I am from New Delhi, India. I am an engineer by profession. I am employed by an IT company in which I work. My topics of interest include technology, mobile, and apps.

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