A NOTE ON INVOLVEMENT OF ENTREPRENEURSHIP DEVELOPMENT INSTITUTE OF INDIA IN CLUSTER DEVELOPMENT INITIATIVES

Intervention-1
INITIATIVES IN BRASS PARTS CLUSTER AT JAMNAGAR (GUJARAT) Background: Jamnagar is known for manufacturing brass parts worldwide. There are 4000 enterprises involved in manufacturing brass parts in this cluster and the cluster provides employment to 50000 people. However, after liberalization of the economy, the enterprises started facing increasing competition in the market. There were problems of quality and productivity. The export market was also gradually depleting because of increased competition from China, Taiwan, Germany, and Italy. As a result about 1000 entrepreneurs had to close down their factory by the turn of 2001. Objective: In order to address the above problem, EDI took up a project called brass-parts cluster development project during April 2002. The basic objective of this project was arresting decline of the cluster and ensuring holistic development of the same. The subobjectives of this project were: 1. Understanding the critical problems of the cluster and take remedial measures to address the same. 2. Technology up-gradation of the enterprises in order to improve quality and productivity. 3. Providing training on marketing and diversification 4. Exposure to international marketing through seminars and workshops 5. Training and networking with BDS providers 6. Capacity building of the cluster actors to imbibe dynamism into the cluster 7. Taking the cluster into its growth trajectory Interventions: The following interventions were carried out as part of the cluster development project in Jamnagar: 1. Conducted a Diagnostic Study in order to understand the critical problems of the cluster. The diagnostic study was carried out in 1500 enterprises. A structured interview schedule was employed in order to elicit pertinent information from the enterprises. 2. The entrepreneurs were made aware about the findings of the diagnostic study by organizing an awareness workshop. The major problems of the cluster were highlighted and a discussion with the entrepreneurs helped in finalizing the strategy and action plan for revival of the brass part cluster in Jamnagar.

3. Efforts were initiated to upgrade the technology of casting, machining, polishing and plating. Workshops were organized on various technological areas so that the entrepreneurs and their employees understand their technological problems and take remedial measures in order to address the same. Solutions were provided on various technological problems during these workshops. 4. Diversification is one of the areas, potential of which was not properly exploited by the entrepreneurs in the cluster. For example no one was manufacturing marine hardware, beryllium copper whereas, lot of such products is coming imported every year. A seminar was organized where the entrepreneurs were made aware about the potential diversification opportunities. Moreover, the technology of manufacturing these products were also provided to them. 5. It was found that some of the entrepreneurs do not reveal their enterprise specific problems in the presence of others (during workshops and seminars). Therefore, arrangements were made to provide personnel counseling to the entrepreneurs in the areas of technology, marketing, export, diversification, ISO 9000, networking, health and safety etc. Entrepreneurs showed tremendous enthusiasm in the counseling service provided by EDI faculty members. 6. A delegation of 15 entrepreneurs was taken to the brass parts cluster, China. The basic objective of this delegation was to understand the manufacturing, quality control, and marketing practices of the Chinese enterprises. The delegates visited Yuhuan, the largest brass parts manufacturing cluster in China. They visited local factories and saw the manufacturing and quality control practices there. Various trade meetings were organized with Chamber of Commerce and Industry Associations in Shanghai and Hong Kong. They came to know the importance of visual merchandising. It was a highly successful visit and the entrepreneurs were benefited in the same. 7. A databank of Business Development Service (BDS) providers was developed and given to the entrepreneurs so that they can source quality BDS as per their requirements. This databank incorporates information on names and addresses of the BDS providers, their pricing pattern and the nature of services provided by them. Moreover, a few qualified and experienced Engineers were trained and groomed to provide BDS in the area of technology. They visit individual enterprises, study manufacturing and quality control practices and suggest corrective action in order to improve quality and productivity of brass parts. 8. A compilation of frequently asked questions (FAQ) and their answers was developed and distributed to the entrepreneurs in the clusters. This FAQ has proved to be quite handy in addressing day-to-day problems of the enterprises in the cluster.

9. Special attention was given to ensure that the entrepreneurs implement the suggestions provided by EDI faculties, which can lead to improvement in quality and productivity and adoption of better marketing and management practices. These implementations were properly documented in order to facilitate demonstration effect. 10. Seminars were organized on ISO 9000 and health and safety. The entrepreneurs were made aware about the importance of ISO certification. As a result, several entrepreneurs started applying for ISO registration. The seminar on health and safety was organized by inviting expert from National Institute of Occupational Health, Ahmedabad. 11. Proper attention was given on networking. Four consortia were formed to inculcate the habit of joint initiatives on the part of the cluster actors. The consortium members are working together for mutual benefit. Networking with other institutions like Netherlands Management Co-operation Programme (NMCP), Indian Institute of Foundry, Indian Institute of Packaging was also established. Experts from these institutes have visited Jamnagar and provided solution to different enterprise-specific problems. Moreover, visits to National Metallurgical Laboratory, Jamshedpur and Indian Institute of Technology, Kharagpur were organized to explore the possibility of linking these institutes with the cluster. Outcome: As a result of these interventions following results have been achieved: 1. The technological awareness of the Entrepreneurs has improved and they became quality conscious. 2. Quality and productivity of the enterprises in the cluster have improved about 20-25%. 3. Average rejection rate has come down from 20% to 2%. 4. Entrepreneurs started diversifying in manufacturing marine hardware and beryllium copper. 5. Turn over of the cluster has increased from Rs.300 crore in the year 2001-02 to Rs.480 crore in the year 2002-03. 6. Export has increased from Rs.150 crore in the year 2001-02 to Rs.200 crore in the year 2002-03. 7. 19 enterprises have obtained ISO registration. 15 enterprises adopted new technologies leading to improvement in quality and productivity.

8.

Four consortia have been formed and they started working together for mutual benefit.

9. The BDS databank and FAQ have proved to be quite handy for the entrepreneurs in the cluster. 10. The website of the association was developed. 11. The Backward and forward linkages have strengthened. 12. The process of capacity building of the cluster actors and strengthening local industry association are going on in order to ensure long-term sustainability of the cluster. 13. The entrepreneurs are working towards the cluster vision.

Intervention-2
CLUSTER DEVELOPMENT PROGRAMME IN THE ENGINEERING CLUSTER, RAJKOT Background: The industrial city of Rajkot is known for manufacturing diesel engine, machine tools, bearing, agricultural implements, kitchenware, pumps etc. There are 6000 enterprises in this cluster and it provides employment to 70000 people. A cluster development programme has been initiated in this cluster during October 2003. The basic objective of this programme is to ensure holistic development of the cluster through intervention in various strategic areas. The Development Commissioner, Small Scale Industries, Govt. of India and ICICI supported the programme. Interventions: The following activities were carried out as part of this programme: 1. A proper diagnostic was conducted by visiting 1000 enterprises to understand the current status of the cluster and delineate the scope of improvement. During the course of the diagnostic study Industries Structure Analysis and SWOT analysis were carried out in order to gauge the resilience of the cluster and understand its growth potential. 2. An awareness workshop was organized to disseminate the findings of the diagnostic study and chalk out an action plan in association with the cluster actors. 3. During the course of the diagnostic study, it was found that there was dearth of business development services especially in the area of technology. In order to address this problem a group of engineers were trained on various technological areas. They have been groomed to provide business development services to take care of the technology upgradation requirement of the enterprises in the cluster. 4. Seminars were organized in the areas of technology, diversification, marketing etc. The entrepreneurs were made aware about the utility of adopting `best practices so as to improve the performance of their enterprises. These seminars were designed in order to address cluster generic problems. Six such seminars were organized where entrepreneurs showed great interest in participating the same.

5. Buyer-seller meets were organized in order to strengthen backward linkage for the cluster. This meet provided a platform where the buyers were exposed about the product offers of the suppliers and the suppliers came to know the requirements of the buyers. During this meet the suppliers made presentations on application of their products in the engineering industry. 6. A databank of BDS providers was developed with the purpose of helping entrepreneurs in sourcing quality BDS. This databank incorporates information on the names and addresses of BDS providers, types of services provided by them, their pricing pattern and nature of BDS. 7. The cluster map was developed where all the stakeholders in the cluster and their linkages were depicted. The current institutional matrix gave an idea about the degree of strength of networking among all the cluster actors. Therefore, one can get an idea about the intervention areas so as to improve networking among cluster actors. 8. Arrangements were made to provide personnel counseling to the entrepreneurs in order to solve enterprise specific problems. Several entrepreneurs and their employees showed deep enthusiasm in getting personnel counseling from EDI faculty members. On an average 2-3 hours are spent in providing personnel counseling to the entrepreneurs. 9. Special attention was given to ensure that the entrepreneurs are able to implement the suggestion provided by EDI faculties. About 67 such technological implementations have taken place leading to improvement in quality and productivity of the final products. 10. Networking has been one of the important areas of intervention in the cluster. Five consortia have been formed and the members started working together for mutual benefit. Joint initiatives of this nature can improve the competitiveness of the enterprises and sharpen their resilience in meeting external challenges in the era of liberalization and globalization. Future course of action: The project will continue till October 2005 and the following activities will be carried out in the next phase of the project. 1. Organizing workshops in the areas of technology, marketing, export, ISO 9000 etc. 2. Organizing buyer-seller meet to strengthen forward linkage for the cluster.

3. Strengthening industry association and capacity building of the cluster actors. 4. Organizing cluster visits to learn the functioning of dynamic clusters. 5. International benchmarking. facilitate

6. Documenting best practices in order to demonstration effect for other pro-active entrepreneurs.

7. Technological Implementations leading to improvement in quality and productivity. 8. Improving market linkages for the enterprises. Efforts will be initiated to explore the possibility of establishing direct export linkage. Outcome: The following results have been observed during the course of implementation of cluster development programme at Rajkot. 1. Quality enterprises. and productivity have improved in several

2. The entrepreneurs and their employees became quality conscious and catering to the requirements of high-end customers. 3. About 67 technological implementations led to improvement in quality and productivity. 4. The databank of BDS providers entrepreneurs in sourcing quality BDS. 5. has helped the

Networking established among enterprises in the cluster. and forward linkages have been

6. The backward strengthened.

Intervention-3
Enterprise Development and Productivity Improvement in Metal Handicrafts Cluster at Moradabad, U.P. Moradabad is known since Mogul period for designing and manufacturing brass metal handicrafts. 15000 enterprises are engaged in this business and there are 250 enterprises exclusively concentrating on overseas market. However, in the regime of globalization and WTO, the metal handicraft manufacturers were facing severe competition from countries like China, Taiwan, Thailand, Indonesia, etc. Total export of the cluster declined from 1800 crore in the year 1997 to Rs.1200 crore in the year 2000. Moreover, there was hardly any technology up gradation took place in the cluster and efforts like joint marketing, brand building, participating in international exhibition were non-existent. To help the entrepreneurs in this cluster overcoming competition, EDI took up the above-mentioned project in the year 2001. The following achievements were obtained during the said project: 1. Awareness created among entrepreneurs about the importance of technology up gradation, marketing, export, networking, etc. 2. Entrepreneurs were trained in various facets of technology, and marketing. 3. Better health and safety measures were adopted by the entrepreneurs for pollution free working environment and reducing health hazards. 4. Efforts were made to reduce fatigue of the workers. 5. They were trained on how to do direct export. 6. Training was provided to make the cluster actors more entrepreneurial. 7. Opportunities for diversification were provided to the entrepreneurs. 8. They started participating in overseas exhibition. 9. Capacity building of the cluster actors was carried out. Growth Programme for Small & Medium Enterprises in Scientific and Medical Instrument Cluster at Ambala, Punjab Ambala is synonymous with the production of scientific and medical instruments. Small and Medium Enterprises (SME), managed largely by qualified technocrats, are the basic constituents of this cluster. This 100 year old cluster has about 1000 SMEs, employing, directly or indirectly, about 30000 persons. Export from the Ambala cluster is estimated at US$ 20 million and major export destinations are E.U., USA, Middle East, Africa and Latin America. As part of economic liberalization, import restriction was completely abolished in this sector leading to fierce competition from large multinationals. The sub-contracting

relationship was not optimally exploited and there was hardly any inter-firm linkages and network with support institutions and BDS. To overcome this problem, EDI initiated the above-mentioned programme and some of the achievements are as under: 1. Business Development Services were roped in for the cluster 2. Capacity building of the association was done to take full advantage of cluster development intervention. 3. Shared vision was developed and network among cluster actors was established. 4. Consortium was formed 5. Developing common product catalogue, promotion, collective participation in international fair, were pursued by hiring BDS. 6. Joint procurement of raw materials and inputs was explored.

Intervention-4
Growth Programme for Established Entrepreneurs in the Machine Tool Cluster, Bangalore to Promote Exports Machine tool industry in India was in very bad shape. The Bangalore machine tool cluster was also not an exception. India started importing machine tools and entrepreneurs engaged in manufacturing (machine tools) business found it difficult to sell their products. The problem became more severe because of the fact that there was hardly any technology up gradation took place in the sector and efforts like joint marketing, brand building, networking were also limited. To overcome these problems and help the entrepreneurs exploit their growth potential EDI took up the above-mentioned project in the year 2000. This project has
1) Helped the participants to take an objective look into their enterprise and understand

as to how their business is not performing well.

2) Helped the participants understand their growth potential and exploit the possibilities

of overseas marketing to the maximum possible extent.

3) Facilitated in chalking out enterprise growth plan and striving towards the

achievement. 4) Brought about changes in the management practices of the enterprises. 5) Helped in establishing enterprise-BDS/ counsellor network. 6) Made the cluster actors more pro-active.

Intervention-5
Enterprise Modernisation and Growth Counselling Programme for Leather Industry Cluster at Chennai, Tamil Nadu The leather cluster in Chennai was facing competition because of low level of technology upgradation, inability to achieve economies of scale, limited linkage among cluster actors and no joint effort for marketing and export. In the era of liberalization imports became cheaper and entrepreneurs were not able to compete with large multinationals. As a result, some of the entrepreneurs started looking for alternative business opportunities. To help the entrepreneurs in overcoming their problems, EDI took up the abovementioned project in the Chennai leather cluster. This project, which mainly focused on training entrepreneurs, capacity building of the cluster actors and establishing enterprise-BDS/ Counsellor network has achieved the following objectives: 1. It helped the entrepreneurs in overcoming competition and taking their business to new heights in a planned and purposeful manner. 2. Enabled the entrepreneurs in understanding the problem areas and overcoming those. 3. Helped them in chalking out growth plans and work out strategies for achieving the same. 4. Trained them in various facets of technology, marketing, diversification, etc. 5. Established enterprise-BDS/ counsellor network 6. Ensured overall growth of the cluster.

Intervention-6
EDIS INVOLVEMENT IN HANDICRAFTS CLUSTER DEVELOPMENT PROGRAMME Background These are over 2000 artisan clusters in the country with many operating in the craft sector. The artisans in the craft sector face several problems viz.; lack of technology up gradation, inadequate capacity to source the requisite raw materials as well as marketing of products, inability to avail institutional credit, poor linkages with support institutions, absence of product innovation and diversification and inadequacies in infrastructure. Artisans in relative isolation are not able to address these problems on their own. Therefore, a cluster-oriented approach under AHVY (Baba Saheb Ambedkar Hastshilp Vikas Yojana) programme of Ministry of Textiles, office of development Commissioner (Handicrafts) has been initiated by EDI. About the Programme Handicraft Cluster Development Programme under AHVY aims at promoting artisans clusters into professionally managed and self-reliant community enterprises on the principles of effective member participation and mutual cooperation. The thrust of the scheme is on a projected need based integrated approach for sustainable handicrafts development through participation of craftspersons to their empowerment. Objectives EDI aims to carry out a study cum action plan that is based on a micro level approach to fulfill the aims enumerated below. The reason for this approach is to ensure that the plan of action is based on the initial study appropriate to the given problems and the unique advantages of the clusters under study. Specific Objectives To organize rural artisans into an appropriate organizational form (a self-help group or a co-operative) and spread awareness about group entrepreneurship, better business practices and markets for their products etc. To equip artisans with a road map of the technical alterations that can expand market and / or lower costs without compromising the basic nature of their products as well as make arrangements to upgrade technical skills for the purpose. To enable artisans to build a marketing network to sell their products or negotiate a fair bargain while entering into an existing one.

 To support setting up of a production center appropriate for local and international conditions and, to help promote inter sectoral linkages. Project Areas The location, name of the craft along with the number of artisans associated are: Alappuzha (Kayamkulam Screw Pine Mat Municipality), Kerala Weaving Binka Tarabha (Dist- Sonepur) Brass metal wares Orissa Gwalior, MP Carpet weaving Jodhpur, Rajasthan Wood Carving Proposed Interventions: The project will follow following main stages for a period of three years: Stage I Base Line cum Need Assessment Study The study provides plan of action and details about the strengths, weakness, opportunities and threats in the cluster. In order to delve into design perspective designers visit is being undertaken to furnish an independent report on the possible areas of scaling up and skill up gradation. Stage II Trust Building Activities This activity will have major three activities: - Awareness Camp: - Formation of Self-Help Groups / Cooperatives / Associations: - Training of SHG members on thrift & Micro credit and Savings: Stage III Quality Improvement & Product diversification The activities to be undertaken in this stage will involve: Awareness on quality improvement, skill up gradation training, Product diversification workshop, design development workshop etc. 400 400 200 300

Stage IV Market linkages In order to address the above concern market survey, exposure visits, buyer seller meet, promote participation of cluster actors in exhibitions and also organize exhibition at National level. Stage V Credit Facilitation At this stage information sharing in the form of intervention such as awareness camps, sensitization workshops involving financial institutions and government departments etc. will be undertaken with vigorous follow up for implementation. Stage VI Infrastructure Development The rural artisans have poor infrastructure coupled with poor unhygienic atmosphere. This affects the quality of the product & also the working atmosphere. This can well be addressed by interventions such as providing separate work shed area, common facility center, etc. Expected Outcome The clusters mentioned above have enough potential for growth. As a result of the proposed interventions the expected outcome of the project envisaged under the project are: Identification of right development partners. Value addition in the products Export potential enhancement. Capacity building of artisans Introduction of Micro Finance: access to institutional credit and thereby increase the bargaining capacity. Net working and collaboration with various institutions/departments engaged in implementation/financing of schemes for development of handicrafts sector like KVIC, SIDBI, NABARD, Department of Rural Development etc., Status EDI has completed the stage I of the programme and has submitted proposal for the subsequent stages to Ministry of Textiles, Office of Development Commissioner, Handicraft, Government of India.

INTERVENTION IN KNOWLEDGE GENERATION AND CAPACITY BUILDING OF THE CLUSTER STAKEHOLDERS The institute not only engaged itself in actual implementation of cluster development programmes but also played an important role in knowledge generation and capacity building of the cluster stakeholders. The Institute, in collaboration with United Nations Industrial Development Organization UNIDO, has developed training manuals to provide a road map to agencies engaged in cluster development activities. The methodology of conducting diagnostic study, industry structure analysis, cluster mapping, SWOT analysis, trust building, networking, developing cluster vision and action plan, etc. have been presented in these manuals. Various government and nongovernment organizations involved in cluster development programmes are extensively using these manuals. EDI, in collaboration with UNIDO, has also been conducting Cluster Development Agents (CDA) Programmes for capacity building of the officials from DIC, NSIC, SISI and Textile Committee. These programmes are conducted in three phases. Phase-I The first phase is designed to train the officials in understanding a cluster and its growth potential, approaches to cluster development, importance of developing cluster vision and strategy, networking and trust building. Information is provided on the methodology of conducting the cluster diagnostic study. Phase-II In the second phase of the programme the participants are sent to their respective clusters to conduct a diagnostic study. They visit selected enterprises, industry associations, chamber of commerce, R&D and testing laboratories and financial institutions. Information is collected from theses stakeholders through structured interview schedules. Moreover, interaction with other members in the supply chain, BDS providers is also organized to elicit pertinent information about the cluster. Then the colleted information is analyzed and cluster vision is developed in association with all the cluster actors. Moreover the strategy and action plan to accomplish the vision are also decided. Phase-III In the third phase of the programme the participants make detailed presentation on the findings of the diagnostic study, cluster vision, strategy and action plan. After the presentation the participants are trained about the implementation procedure and approaches to monitoring and evaluation of cluster development programme.

About 300 cluster development agents have been trained by EDI till date. Research on Industrial Clusters: The institute has also got involved in research on industrial clusters. A comprehensive study on the Dynamics of Industrial Clusters in India was carried out under the ages of the institute. The study was conducted in brass-parts cluster, Jamnagar (Gujarat), diesel engine cluster, Rajkot (Gujarat), brass metal handicrafts clusters, Moradabad and Meerut (U.P.), knitwear cluster in Tirupur (Tamilnadu). A comparative analysis of these clusters was done and policy implications were highlighted through this study. It was one of the pioneering studies on industrial clusters in India and it had wide ramification on industrial policy and future research on Indian clusters. The study was supported by Small Industries Development Bank of India (SIDBI). Recently a study namely Dynamics of growth and stagnation of industrial cluster in India: Emerging issues and policy imperatives was conducted by EDI. There are examples of decline in one cluster whereas growth on another cluster in the same product line but in a different location. One such pair of clusters selected for the study was hand tools cluster, Nagaur (Rajasthan) and Jalandhar (Punjab). While the hand tools cluster in Nagaur has entered the decline phase, its counterpart in Jalandhar is still experiencing growth. Through this study an attempt was made to understand the dynamics of such phenomenon. The significance of cluster life cycle was also studied here. Based on the findings of the study, a report was prepared and submitted to the Development Commissioner, Small Scale Industries, Govt. of India. The critical issues and policy implications were also presented in this report. Another study which evoked deep interest among academicians and policy makers has highlighted the importance of cluster development mode in inducing industrial growth in Madhya Pradesh. Nine industrial and ten artisan cluster in M.P. have covered under the purview of the study. The road map for cluster based intervention and the advantages of such intervention were delineated in the study report submitted to the Govt. of Madhya Pradesh. It also emphasized the importance of evolving a comprehensive state cluster development policy. The scope of developing new tourist circuits by establishing linkage between tourism and craft cluster was also explored in the study. The study also emphasized the role of the stakeholders and requirement of synergized initiative in implementing the proposed action plan.