With a contribution of 40% to the country's industrial output and 35% to direct exports, the Small-Scale Industry (SSI) sector has achieved significant milestones for the industrial development of India. Within the SSI sector, an important role is played by the numerous clusters that have been in existence for decades and sometimes even for centuries. According to a UNIDO survey of Indian SSI clusters undertaken in 1996 (later updated in 1998), there are 350 SSI clusters. Also, there are approximately 2000 rural and artisan based clusters in India. It is estimated that these clusters contribute 60% of the manufactured exports from India. The SSI clusters in India are estimated to have a significantly high share in employment generation.
Some Indian SSE clusters are so big that they account for 90 per cent of India's total production output in selected products. As for example, the knitwear cluster of Ludhiana. Almost the entire Gems and Jewellery exports are from the clusters of Surat and Mumbai. Similarly, the clusters of Chennai, Agra and Kolkata are well known for leather and leather products.
However, the majority of Indian clusters, especially in the handicrafts sector, are very small with no more than hundred workers, so specialised that no other place in the world matches their skills and the quality of their output. This is the case, for example, of the Paithani sarees cluster in Maharashtra. However, onlv a tiny minority of such artisan clusters are globally competitive.
The formidable challenges created for the SSE sector bv the liberalisation of the Indian economy, as well as its closer integration within the global economy, have generated a great deal of interest within India on novel approaches to SSE development. As a result, both private and public sector institutions at the Central as well as the State levels are increasingly undertaking cluster development initiatives.
CHALLENGES FOR INDIAN INDUSTRY
- Becoming More Competitive in the global market by cost-cutting, productivity improvement and efficient management of supply chains, greater public and private investment in infrastructure.
- Enhancing Access to Global Markets by greater policy coordination within the Indian Government for a coherent approach to emerging trade policy issues, an institutional partnership between the private sector and the Government in devising specific marketing strategies.
- Safeguarding Intellectual Property by effectively administering copyright and patent legislation, encouraging more innovations and patenting them.
- Promoting Small-Scale and Cottage Industries, and Regional Cluster Development by removing policy impediments; financial support; technology, skills and quality upgrading; market support and improving links between small and large firms.
- Increasing Exports