Modifications in the guidelines of Micro & Small Enterprises – Cluster Development Programme (MSE-CDP)

The Cabinet Committee on Economic Affairs approved the modifications in the guidelines of Micro and Small Enterprises – Cluster Development Programme (MSE-CDP).

The major modifications approved the CCEA include:

(i) Enhancement of the maximum project cost for Common Facility Centre (CFC) from Rs. 10 crore to Rs 15 crore, with Government of India contribution of 70% (90% for Special Category States and for clusters with more than 50% women/micro/village/SC/ST units);

(ii) Enhancement of the maximum project cost for Infrastructure Development from Rs 5 crore to Rs 10 crore, with Government of India contribution of 60% (80% for Special Category States and for clusters with more than 50% women/micro/SC/ST units);

(iii) Enhancement of the maximum project cost for Soft interventions from Rs 10 lakh to Rs 25 lakh, with Government of India contribution of 75% (90% for Special Category States and for clusters with more than 50% women/micro/village/SC/ST units); and

(iv) Enhancement of the cost ceiling for preparation of Detailed Project Report (DPR) for CFC and/or Infrastructure Development to Rs 5 lakh.

An amount of Rs. 303.63 crore has been allocated during the 11th Five Year Plan.

The implementation of modified MSE-CDP will facilitate in enhancing the sustainability, productivity and competitiveness of micro and small enterprises. The outcomes of cluster development initiatives would be in the form of: (a) coverage of more number of enterprises for developmental interventions; (b) increased production/turnover; (c) increased employment; and/or (d) enhanced exports.

MSE-CDP envisages, at the outset, a diagnostic study of individual clusters. Based on the diagnostic study, providing appropriate soft interventions (such as for capacity building, exposure visits, design inputs etc) and hard interventions (such as setting up of common facility centres) will be undertaken. With the merger of the infrastructure development component in MSE-CDP, the modified guidelines would also include development of existing or new industrial estates for the clusters. The implementation modalities, which involve contribution from the beneficiary units, are targeted to be completed in a time frame specified in the modified guidelines (18 months for soft interventions and 24 months for common facility centre and / or infrastructure development).

Background:

As per the quick results of the 4th All India Census of Micro, Small and Medium Enterprises (reference year 2006-07), there are nearly 26 million Micro and Small Enterprises (MSEs) spread across the country. MSEs’ contribution to the economy from the stand point of GDP, manufacturing output, and inclusively is well recognized.

The Ministry of Micro, Small and Medium Enterprises initiated selected interventions in industrial clusters first in 1998 through its scheme ‘Integrated Technology Upgradation and Management Programme’ (UPTECH). In August 2003, the Scheme was renamed as Small Industry Clusters Development Programme (SICDP) and was broad-based for holistic and integrated development of micro and small enterprises through interventions such as capacity building, marketing development, export promotion, skill development, technology upgradation, exposure visits, etc. and setting up of common facilities. Simultaneously, the Ministry continued to implement a separate Integrated Infrastructural Development Scheme (IID) [started in 1994] for setting up of industrial estates and to develop infrastructure facilities like power distribution network, water telecommunication, drainage, roads storage an marketing outlets, common service facilities, etc. The IID Scheme also provided for upgradation / strengthening of the infrastructural facilities in the existing industrial estates. In accordance with the decision of the CCEA while approving the Package for Promotion of Micro and Small Enterprises, the Scheme was renamed as Micro and Small Enterprises – Cluster Development Programme (MSE-CDP) and the Integrated Infrastructural Development (IID) Scheme of the Ministry was subsumed under MSE-CDP with its existing funding pattern, in October 2007.

Based on the recommendations emerging out of the evaluation of schemes and after consultation with the senior functionaries of the state governments, it was felt necessary to modify the guidelines which envisage streamlining of procedures, providing a more holistic approach to the development of clusters and enhanced level of financial assistance