Clusterkraft e-Newsletter (Vol.9)

National

International

National

 

Sivakasi to develop as an Industrial Cluster Sivakasi:
This renowned Tamil Nadu Industrial has set their sights on the Planning Commission's recommendations on the setting up of 14 Industrial clusters across the country and are gearing up to be one of them.. The Entrepreneurs are also targeting the "Scheme for Integrated Textile Parks" in order to promote Sivakasi as a major south Indian industrial hub.

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SEZ to boost Industrial Clusters Calcutta :
The Government has formulated the Special Economic Zone (SEZ) Act and the notification would be issued in the next seven to 10 days. There are 25 such SEZs in the country. The act is expected to boost investments in SEZs by Rs 10,000 crore over a period.

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Malleswaram Expo highlights Artisanal Cluster products
Some lesser-known art and craft forms from across the country is being witnessed at the Handicrafts Expo being held at Malleswaram, till January 19. Artisans and craftspersons have come from Uttaranchal, Bihar and the Northeast, displaying crafts that are not generally seen in Bangalore .

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Railway Board to link Industrial Clusters in Maharashtra & Karnataka Margao :
Feasibility plans are being discussed to connect seven industrial hubs in the western coast of India . Most of these industrial clusters are located in Maharashtra and Karnataka.

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Manesar Auto Cluster to get 400 Cr Automobile testing center
An Rs 400 crore National Automotive Testing and R and D Infrastructure Project will be set up at Manesar in Gurgaon district over an area of 40 acres and catering to the Auto Components Cluster there. The Central Government is setting up this project for the promotion of the automobile industry. In Haryana, where small and medium industries predominate, the cluster approach would ensure industrialization concentrating on specific sectors where the State had a competitive advantage.

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Textile Clusters in the country needs more reforms— IMF study New Delhi :
Even as a misplaced hype is doing the rounds about the record growth of exports of Indian textiles and clothing in the post-quota regime, an IMF working paper has contrasted the performance of China and India and warned that India 's gains would be limited without stepped-up reforms and more investment to bolster the sector's competitiveness.

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SSI to promote 100 Khadi clusters in the country
The Union Ministry for Small Scale Industries, Agriculture and Village Industries said that the Khadi industry had the capability to eradicate poverty and generate employment in the country. A bill regarding promotion of Khadi was with the standing committee of Parliament and this bill would be passed during the Budget session of Parliament. The Finance Ministry is to form 100 clusters to promote Khadi, agriculture and village industries in the country.

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Technological centre to come up in Chandigarh for better networking in the Clusters Chandigarh :
The Department of Science and Industrial Research (DSIR) of the Union Science and Technology (S&T) Ministry is planning to set up a Technology Management Centre (TMC) in Chandigarh soon. The TMC would facilitate faster transfer of technology and put in place an institutional mechanism for greater channelization of new technological inputs. This centre would cater to the growing North Indian industrial clusters. The TMC is badly required in this region for the right, timely and cost-effective transfer of technology for the promotion of knowledge entrepreneurs here and for the protection of their knowledge capital.

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SME, KVIC Bills to develop the SSI and the Cluster sector Kolkatta:
The SME and KVIC Bills will have more features required for development of the SSI sector contributing to about 40 per cent of the total production in the country. The SME Development Bill, introduced in Parliament last May, had to be amended with suggestions from MPs and the revised Bill is yet to be passed. The KVIC Bill has been approved by the cabinet and Parliamentary Standing Committee and would shortly be introduced in Parliament. Meanwhile, the Finance Ministry had also taken the initiative to increase credit to the SSI sector and asked all banks, including public sector banks, to bring in 20 per cent year-on-year growth in the net outstanding over Rs 67,000 crore achieved in the last fiscal.

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New Cluster Oriented Courses at IIFT New Delhi :
The Indian Institute of Foreign Trade (IIFT) has started three short term pioneering cluster based courses. They are as below:

These courses are being started by the Centre for SME studies at IIFT. The admissions for the first batch has already taken place. More information about the courses can be found at the website of the center www.smeiift.com

 

International

Korean Group to establish automobile cluster
Hanwha Group, Korea 's 10th-largest conglomerate, announced yesterday it has reached an agreement with the municipal government of Seosan and Korea Development Bank to jointly invest 3.2 Trillion Won ($3.2 billion) to establish an automobile industrial cluster "Seosan Technopolis" in Seosan in South Chungcheong province by 2010. This is the second cluster based project of the group, the first being the 5.5 trillion-won " Daedeok Techno Valley " in Daejeon.

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UNIDO to develop Iranian industry clusters TEHRAN –
Iran 's Small Industries & Industrial Parks Organization (ISIPO) and UNIDO signed an agreement according to which three major industry clusters will be developed in the next three years. The project, which is estimated to cost 400,000 dollars totally, is aimed to encourage investments in small and medium industries, which comprise more than 90% of the total number of Iran 's industries.

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Ten Taiwanese bike manufacturing firms investing $30m in Subic Bicycle Cluster
At least 10 bicycle makers from Taiwan are set to invest as much as $30 million in Subic Bay . The firms would manufacture various parts like Shimano transmission but the output of the cluster is the whole bicycle

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Abu Dhabi bids to be logistics hub for Industrial Clusters
Abu Dhabi has thrown another punch in its fight to claim Dubai 's title as the logistics hub of the Middle East . Having already launched its own airline and announced plans to expand both its airport and seaport, the UAE capital has now passed a law allowing 100% foreign ownership of companies based in the Industrial City of Abu Dhabi (ICAD) and a number of other planned free zones. The emirate is also to expand the already massive ICAD by launching the 10 km 2 ICAD 2.

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Cluster Edge
The value chain approach, a growing topic of debate in development research and development policy in recent years, looks at the issue of how production and trade chains are structured and how they can be regulated and managed specially in case of industrial and artisanal clusters. The concept is comparatively new in case of India . There are attempts made by international organization like ILO, UNIDO and USAID to incorporate the methodology in their cluster development programmes in India .

What is value Chain?
It is usually defined as the chain of activities that transform raw materials into something that can be purchased by a final consumer. It includes the full range of activities that are required to bring a product from its conception, through its design, its sourced raw materials and intermediate inputs, its marketing, its distribution and its support to the final consumer. In other words, the chain can be seen as incorporating production, exchange, distribution and consumption from the cradle to the grave of a given product or service

Why is value chain analysis important for cluster development?
Analysts charting a path of development for mineral-exporting economies used the concept of the value chain in the 1960s and the 1970s. In the course of the 1990s, clusters became a target for state and central government initiatives to promote competitiveness. What played an important role in putting clusters onto the policy agenda was a 1990 book by management guru Michael Porter, The Competitive Advantage of Nations.

Value chain implications are easy at cluster level. However, things become very complicated when we talk of global value chain. International companies normally dominate global value chain. These companies are normally not interested in local development.

Recently we visited a location Udaipuria, Rajasthan a leather cluster manufacturing Juttis (leather local shoes). The cluster did very well during the last 5 years and marketed successfully to the niche tourist buyers at Jaipur. To increase the market of the cluster, the development agency linked cluster to Delhi market ( Karol Bagh)which resulted in to stiff competition. The local producer to compete with Delhi market started working to decrease the prices which ultimately lowered the quality of the product. They started using cheap material (non leather material) in the production. The increase in chain beyond local to national resulted into the decline in the higher end product to lower end product. They are gradually loosing the niche local tourist market of Jaipur also.

Let us take the case of Chanderi sari cluster. The weavers for years sold their saris to local traders. Interestingly, UNIDO cluster programme stared in 2000. The diagnostic study of the cluster suggested that the average wages of the weavers were very low in comparison to other clusters like Kanchipuram and Varanasi . It was suggested that weavers should diversify their production from saries to home furnishing. The initiative brought new buyers from niche segment and resulted into high niche product category. The initiative helped in increasing the wage rate of the weavers in the cluster.

It is clear form the above two examples that extended value chain based cluster development is not neutral. It is harming in case of Udaipuria where as it has helped in case of Chanderi. This is particularly relevant when it involves activities which are spread across a wide range of different locations.

The above analysis of value chains identifies those areas of production which are subject to intensifying competition, and hence declining terms of trade. Simultaneously, it exposes those processes which allow poor clusters and poor producers to upgrade their activities in a manner which can provide for sustainable income growth. The judicious use of concept can help cluster development in the following way:

 

Do you know Tripura Clusters?

Tripura Artisanal Clusters
The state with its hilly frontiers and tough terrain presents an exceptional range of arts and crafts. Being a part of seven sisters among other Northeastern states, it acts as a home to a lot ethnic tribes hailing from different parts with inimitable forms of cultural expressions .

 

Above Pie Diagram represents the Sectoral distribution of the Artisanal Clusters in India

Textile Clusters form around 42% of the total artisanal clusters in the state. Handlooms being perhaps the oldest and single largest art implemented. The Indian government here has encouraged small- scale industries in handloom dealing in weaving, carpentry, pottery and basket making in the last 10 years.

Tribal people in the state, produce their own cloth in elegant designs, unique color combinations and lasting texture. There are 1,15,236 weavers in Tripura (Commercial & Non-Commercial etc.) as per the National Handloom Census conducted in the year 1987. The weavers are scattered in large numbers all over the Tripura and making textile a core sector.

Cane and Bamboo Clusters constitute the next most important sector in the state after Textiles. A variety of items are produced from in this sector, such as cane tablemats, attractive furniture, floor mats, decorated wall panels, baskets, trays and various other ethnic products made by different tribes that have gained popularity. Many of these exquisite products are also exported from the state. Currently this craft alone employs more than 10,000 skilled workers and is one of the most thriving industries in the state but still remains largely unorganized.

Woodwork Clusters constitute for around 11% of the total artisanal sectors in the state. The art is mostly practiced by the tribals and the products vary from human statutes, to animal figures, flower vase, ashtrays, fruit bowls, divinities, bowls, trays, incense-sticks stands, etc. Also, why the craft is widely in use is because the state is rich in local resources and easy availability of basic raw material that is timber.

Earthenware Clusters forms around 10% of the total artisanal clusters in the state. Main concentration being in the regions such as Sadar, Soonamurah and Kailasahar rest spread unevenly in the state. Products such as toys, dolls, etc are available from this cluster.

Paintings, leather and metalware clusters form small but important portion of the total sectors and jointly forms 12% of the total artisanal sectors here. The state is known to be producing Brass and Bell Metal articles mainly crafted in Nalchar, Melagarh, Agartala, Kailasahar and Radhakisorpur.

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