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Indian Institute of Entrepreneurship

An Organisation of the Ministry Of Micro, Small and Medium Enterprises(MSME),
Govt.of India
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Cluster Initiative In NER Through RRC

The NER of India comprising of eight states- Assam, Arunachal Pradesh, Meghalaya, Mizoram, Nagaland, Tripura, Manipur and Sikkim is almost ten years behind the rest of India. The region is blessed with plenty of natural resources like forest and oil, tea, water (which is very scarce in most parts of India) etc, and there exists enough scope for utilisation of these resources.

It is often said that the north east offers immense potential for growth of MSMEs. The geographical location which has so far been regarded as the bane of northeast has become a boon for the region with the changing policies of the government and emphasis on look east policy. The market is likely to experience considerable expansion when this materialises and therefore it is necessary that the region gears itself up to face the challenge and grab the opportunity .There is therefore need to identify areas where the region has the potential for growth.

A closer look at the status of MSMEs in NE reveals that there has been a slow but steady growth of the MSME sector and along with this there has been a high incidence of sickness. Therefore, determining the factors that have held back the growth becomes important. The problems that are being experienced by the MSME units of the region include problems related to availability of credit, high cost of operation, erratic power supply, lack of infrastructure, inadequate market linkage etc.

The focus therefore needs to be on minimisation of problems if not their elimination and optimisation of the positive environment so that the growth of the sector becomes possible. To prop up the economic growth of the north-eastern region the small scale industries need to traverse a defined path that takes into its fold the diverse form of resources and demand that exist in the region. In the present day economic equations, the development of the different sectors are interdependent and so the MSME growth process in the northeast also need to take cognizance of this fact. Therefore when the growth prospect of MSME is looked into, it cannot be considered in isolation and it is seen that when development in the comprehensive manner is considered, the region offers vast opportunities for the sustenance of the MSME sector. The need is to optimally utilise this growth potential. As such it can be emphasised that such a comprehensive growth process is not only going to aid the MSME sector to flourish but at the same time bring about multidimensional effect on the economic front.

The growth and development of the MSME sector can emanate from:

  • The rich natural resources and diverse agro horticultural unexplored areas of the demand of the bulk purchasers
  • The ancillarisation opportunity in the region.
  • The existing and prospective clusters of the region
  • The traditional skill of the people of the region
  • Resources of the region and scope of resource based MSMEs

The size of the MSME units and the operational problem experienced by them shows that cluster development can play a significant role in working out a viable solution to these problems and expand the operation of the SME units. The region offers ample opportunity for cluster development and these opportunities need to be exploited to the optimum. The process of cluster development however has to concentrate on the following:

  • The fragmented skill is to be unified to ensure profitability
  • The marketing problems by the MSME units have to be minimised through proper network

In the present scenario, MSMEs on the one hand have access to far greater market and better technology and resources, while on the other hand globalisation has resulted in an environment of highly competitive local markets with imports from other countries flooding local markets and threatening the very existence of local MSMEs by offering better quality products, sometimes at cheaper rates. Clustering is a powerful tool that MSMEs may use to combat the challenges of globalisation. The need of the hour is to develop sustainable MSME clusters that can help in upscaling the household units into micro enterprises.

Cluster Development in NE India through Regional Resource Centre on Cluster Development of IIE, the office of DC (MSME) and the Ministry of MSME, through the Micro and Small Enterprises Cluster Development Programme (MSECDP), has adopted a holistic approach for development of clusters of Micro and Small Enterprises (MSEs). The programme envisages measures for capacity building, skill development, technology upgradation of the enterprises, improved credit delivery, marketing support, setting up of common facility centres etc., based on diagnostic studies carried out in consultation with cluster units and their collectives and management of cluster-wide facilities by the cluster collectives. Keeping in sync with the initiatives of the office of DC (MSME), IIE, Guwahati adopted the first cluster on the Cane and Bamboo selected for the State of Nagaland in Dimapur in the year 2006. Since its implementation, IIE took up yet another cluster, the Imphal East Handloom cluster under DC-Handloom, Ministry of Textiles, and Government of India in the year 2007. Since then, it has been a learning experience for IIE in implementing, experimenting, converging and experiencing the cluster based approach for development of the MSME sector across the North Eastern Region.

IIE was designated as a Technical Agency for handholding and monitoring the clusters under the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) for the Khadi & Village Industries Commission and Coir Board. In the year 2008, IIE was mandated to start a Regional Resource Centre (RRC) on cluster development with its nodal office in Guwahati and sub centers in all the seven other States of NER. Through the office of DC(MSME) under the MSE-CDP Scheme, soft intervention has been carried out in 315 clusters in India. Out of the total, in the NER, soft intervention has been taken up in 35 clusters till July 2014. IIE has taken up implementation of soft intervention in clusters.

The various activities carried out by IIE through the Regional Resource Centre for cluster implementation in the North Eastern Region of India are highlighted below:

  1. Identification of Clusters through a participatory approach by organising sensitisation workshops involving different stakeholders and discussions with Industries Department.
  2. Conducting pre-diagnostic studies for identifying MSME clusters. Till date 107 such pre-diagnostic studies have been carried out to identify different pockets of possible MSME clusters across the North Eastern Region.
  3. Conducting Diagnostic Studies for the MSME, SFURTI and Handloom clusters. Thus far, IIE has completed 44 diagnostic studies for MSME clusters, including clusters under SFURTI and Ministry of Textiles.
  4. Implementing MSME clusters through soft interventions in 21 MSME clusters and through hard interventions like completing the Common Facility Centre (CFC) in the Imphal East Handloom cluster, completing the DPR for two other MSME clusters and continuing with another DPR for the Jewellery cluster in Manipur.
  5. Implementation of the Design Clinic Scheme of the Ministry of MSME.
  6. Monitoring and handholding clusters.
  7. Documentation of Clusters.