Cluster development should be part of business strategy: Vayalar Ravi | SupportBiz

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Cluster development should be part of business strategy: Vayalar Ravi

India’s minister for micro, small and medium enterprises, Vayalar Ravi, spoke to SupportBiz on the side-lines of a conference in the National Capital Region on Thursday. Edited excerpts:

He highlighted the opportunities for MSMEs; the importance of cluster development; and spoke of his ministry’s focus areas, all aimed at enabling the country’s smaller enterprises match global standards. The minister was in Gurgaon on Thursday where he inaugurated the 5th CII National Cluster Summit.

On the relevance of cluster development for MSMEs…

Cluster development is the most effective way for MSMEs to tackle the challenges they face. The cluster development approach allows MSMEs to work in a collaborative environment; allows them to network; and could also help them compete better. Cluster development should be the part of business strategy.

Initiatives taken by the ministry towards cluster development…

The ministry has adopted cluster development as the key strategy for development of MSMEs. The ministry is administering two cluster development programs, the Micro and Small Enterprise Cluster Development Program (MSE-CDP) and the Scheme for Upgradation of Rural and Traditional Industries (SFURTI). These initiatives have shown great results so far and we have prepared a comprehensive list of guidelines to provide more support to MSMEs.

More than 500 clusters across the country have been covered in this program. It is a journey and I would like to urge all MSMEs to come forward and join this movement.

On manufacturing units becoming more competitive…

Today, companies can target the global market. The ministry of MSME’s schemes are aimed at enhancing the competitiveness of MSMEs in areas such as technology; quality upgradation; marketing; entrepreneurial and managerial development.

We are aggressively working towards enhancing the competitiveness of the manufacturing industry. For this, we have the National Manufacturing Competitiveness Program, which is running successfully. We have identified ten areas under which the competitiveness of a manufacturer should be enhanced -- these areas are covered by different schemes such as the Lean Manufacturing Competiveness Scheme; promotion of ICT in MSMEs; and the setting up of new mini tool rooms through the PPP route. Also, we have identified quality management standards and quality technology tools for the manufacturing sector.

On credit availability…

For entrepreneurs (today), borrowing funds from banks and NBFCs is a challenge as the cost of finance is high and is not easily available. To deal with this problem, the government has a credit guarantee scheme. This scheme provides collateral free credit of up to 85 percent of a project’s cost., disbursed  by lending institutions to new and existing MSMEs. The amount disbursed to a firm through this scheme is capped at rupees one crore. As of now, more than eight lakh proposals have been approved .

NSIC is implementing a credit rating mechanism on behalf of the ministry. Ratings highlight an industry’s strengths and weaknesses, enhancing their credit worthiness. Under this scheme, a reimbursement of up to 75 percent of the fee charge by the rating agency is provided. This scheme is getting great response from micro and small enterprises.