How Cluster Development Programme provides MSMEs with infrastructure worth up to Rs 15 Cr

Initiated by the MSME Ministry, the programme aims to support the sustainability and growth of small businesses in clusters by boosting their technological capabilities, skills, market access, access to capital, etc.

31st Aug 2019
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cluster development

Micro, Small and Medium Enterprises (MSMEs) are the backbone of the Indian economy but they face several challenges in production, quality control, testing, marketing, etc. To address these issues, the Government of India and the MSME Ministry are following a cluster development approach as a key strategy for enhancing productivity and competitiveness of small businesses.


The Development Commissioner's office, Ministry of MSME, defines a cluster as "group of enterprises located within an identifiable and as far as practicable, contiguous area and producing same/similar products/services."


Further, the small businesses in a cluster are similar in their methods of production, use of technology and marketing, thereby, face common challenges.


The Cluster Development Programme (MSE-CDP) initiated by the MSME Ministry aims to support the sustainability and growth of small businesses in clusters by boosting their technological capabilities, market access, skills, access to capital, and more.


The programme also aims to build capacity of small businesses for common supportive action through the formation of self help groups, consortia, upgradation of associations, etc.


It is also focussing on creating and upgrading infrastructural facilities, flatted factory complexes and common facility centres (CFCs) for testing, training, effluent treatment, improving production processes, and more.


Nature of assistance


Common Facility Centres (CFCs)


The programme sets up tangible “assets” such as Common Facility Centers (CFCs), common production/processing centres for balancing, correcting, and improving production lines -a task that cannot be undertaken by individual units.


The tangible assets established also include design centres, testing facilities, training centres, R&D centres, effluent treatment plant, marketing display/selling centres, common logistics centres, common raw material bank, sales depot, etc.


To set up these facilities, the government grant is restricted to 70 percent of the cost of the project, up to a limit of Rs 15 crore. The grant is up to 90 percent for common facility centres in north eastern regions and hilly states. Clusters where more than 50 percent of enterprises are micro, rural, or owned by women or by SC/ST entrepreneurs receive up to 90 percent of the cost of the project from the government.


Infrastructure Development


The government provides a grant of up to Rs 10 crore for setting up infrastructural facilities like power distribution networks, water, telecommunication, drainage and pollution control facilities, roads, banks, raw material storage, marketing outlets, common service facilities and technological backup services.


However, the grant is restricted to 60 percent of the cost of the project. Clusters where more than 50 percent of enterprises are micro, rural, or owned by women or by SC/ST entrepreneurs receive up to 80 percent of the cost of the project from the government.


How to apply


Clusters, industrial associations and consortia can apply for assistance under the Cluster Development Programme.


Online applications can be filled at cluster.dcmsme.gov.in. Physical applications can be sent through State Governments or their autonomous bodies or field institutes of the Ministry of MSME, such as MSME Development Institutes. The proposals need to be approved by the Steering Committee of MSE-CDP.


Whom to contact

Director (CD), 

Office of Development Commissioner, MSME 

Ph: 011-23062561 

Email : rk.rai@nic.in


Click here for more information



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