FAQ's About Cluster

1. What is Cluster?

Denotes concentration of enterprises engaged in manufacture of same or similar products in a specific area. They are all linked by commonalities & complementarities and having proximity to each other. They have common opportunities and threats.

2. What are the advantages of cluster approach?

Enables to reach out to many units at a time Provides environment for mutual learning Emerging from the felt-needs of the beneficiaries Self-sustainability for continuous support Unique opportunity to address specific needs with specific solutions Provides economies of operation of scale Increased impact and widening support from other support institutions Satisfies the needs of foreign buyers

3. What is SPV?

Special Purpose Vehicle (SPV) is an officially approved functional agency empowered to implement the project. Under the MSE-CDP guidelines, a minimum of 20 members is required to form an SPV. Normally a 30-50 active members is good strength in a SPV. Where the consortium is weak or not mature enough to undertake the task or execute such business plan professionally, the product specific association , NGO, State level Agency, Leading Business Corporate, etc can act as SPV at the behest of the target group.

4. Who are the stakeholders in Cluster Development Process?

A stakeholder is anyone who has an interest in the project. Stakeholders are logistic partners and supporters. They may be Central, State government, NGO, Service providers, Academician, Research institutions, Financial institutions, etc,. They are partnering with Consortia with specific objectives to undertake various cluster developmental initiatives for common benefits.

5. Who is CDE and what is his role?

Cluster Development Executive (CDE) is a nominated person and will act as an agent between SPV and other stakeholders. He coordinates all the Developmental Works within the cluster. CDE should act as catalyst and take care in the process of cluster development. He should act as a mentor and advisor. He should not influence the cluster groups any business ideas or business plan

6. What is a Consortium?

It is a legally floated entity promoted by a group of members within the cluster with the objective of participating in a common activity or pooling their resources for achieving a common goal.

7. What are the common activities / goals for which a Consortium can be formed?

following are the common activities / goals for which consortia are formed: Creation of Common Raw material Bank Creation of Common Marketing Creation of Common Facility Center Facilitation of Credit Technology intervention Quality up-gradation HRD development Infrastructure

8. Who can form a consortium?

Two or more individuals, companies, organizations or governments (or any combination of these entities) in a cluster can form a Consortium with the objective of participating in a common activity or pooling their resources for achieving a common goal.

9. What are types of legal entities in which a consortium can be formed?

A consortium can be formed as a Trust, Co-operative society, Partnership entity, Limited Company, etc.

10. How many such consortia can be created within a cluster?

Any number of consortia can be created for specific purpose in a cluster. All the consortia created in a cluster can be integrated by forming a federation of consortia.

11. Who is NDA and what is his role?

Network Development Agent (NDA) is the fulltime paid employee of Consortia or SPV. He will integrate the cluster with other cluster actors. He will represent the group and he will also act as a programme manager.

12. Who are the beneficiaries?

The Group of Micro and Small enterprises.

13. What is the maximum project cost allowed under MSE-CDP?

Rs.15 .Crore for Hard Intervention and Rs.25 lakh for soft Intervention for each cluster.

14. What is the financial contribution by Govt. of India & SPV towards soft Intervention?

Under this scheme at present GoI sanctions maximum of Rs.25 lakhs for soft intervention for the period of 3 years. Normally GoI sanctions 70% to 90% financial assistance for the proposal submitted by the SPV for soft interventions. The rest 10 % to 10 % of the proposal will be contributed by SPV. For SPVâ??s formed by Micro industries and Women entrepreneurs, Central Govt. contributes 90% of the fund requirements.

15. What are the stages involved in implementation of Soft intervention?

Preparation and submission of â??Soft Interventionâ?? action plan to Central Govt. Receipt of financial sanction from Central Govt. by implementing agency. Mobilisation of 10%-30% of SPV contribution for the sanction received from Central Govt. Implementation of soft intervention activities in a phased manner.Submission of bills for settlement for each activity separately.

16. What is the financial support available from Govt. of India and State govt. for setting up of CFC? (Under revision)

The Common Facility Centre (CFC) that is set up by the SPV as a Hard Intervention is entitled to get the different levels of financial assistance (as a proportion of the total project cost) from the Ministry of MSME under MSE-CDP based on the type of the facility to be created and the nature of the beneficiaries. The project covers the cost of machinery, plant, equipment, laboratory, other tangible assets, pre-operative / contingency expenses etc. The balance of the project cost, including the entire cost of land and building, would have to be contributed by the SPV or by the State Government or the Local Government or by some other agency.

17. Whether cost of land includes in the project cost?

Yes. But the assistance is restricted to Machinery component alone.

18. To whom should the beneficiary submit the proposal/Project

The beneficiaries are cluster groups. They should submit the proposal to the GM, District Industries Centres or Directorate of Industries & Commerce.

19. Whether non memebers of SPV/Consortium can avail the benefit of the CFCs?

Yes. The non members can avail the facilities by paying service charges.

20. Whether the facility can be set up away from the cluster?

Not far- away. The reach and accrued benefits are the major factors deciding the distance.

21. Can project be financed jointly from two different sources (Bank / Financial Institutions)?

Yes. The SPV can mobile the assistance from State, Financial institutions and other stakeholders to bridge the gap

22. What is the minimum contribution from the SPV?

Minimum 10% contribution is mandatory for the SPV to avail the assistance under this scheme

23. What is the assistance extended for Infrastructure Development?

The maximum eligible project cost is Rs.15.00 crore, with GoI contribution of 60% (80% for Special Category States and for clusters with more than 50% women/micro/SC/ST units. It is available for development of infrastructural facilities like Development of land, provision of water supply, drainage, Power distribution, non- conventional sources of Energy for common captive use, construction of roads, common facilities such as First Aid Centre, Canteen, other need based infrastructural facilities in new industrial (multi- product) areas/estates or existing industrial areas/estates/clusters.