We want to invest Rs 750 crore in the cluster development initiative: Satyaprakash T L

Interview with Director and Special Secretary, Industries, Govt of Haryana

In 2010, surveys conducted by Haryana's Industries Department indicated a marked growth slowdown in the state's micro, small and medium enterprise industry clusters. To counter the crisis of competitiveness, the Directorate of Industries has initiated an intensive cluster development programme, which aims to develop social capital, technology and management. The nucleus of this initiative would be Common Facility Centres. Diagnostic studies have been conducted and detailed project reports prepared to take advantage of the funding available under various government schemes. Satyaprakash T L, Director and Special Secretary, Industries, Government of Haryana, in an interview with Komal Amit Gera, explains the roadmap for change. Edited excerpts:

How was the cluster development programme initiated?
Haryana has more than 80,000 industrial units, and of these 1,650 are in large and medium sector. The rest are all micro and small units. The manufacturing sector, which is the core strength of an economy, is sluggish throughout the country. The Haryana government in its industrial policy of 2010 created an micro, small and medium enterprise (MSME) renewal fund with an unlimited corpus, which gets topped up by the Haryana State Industrial Infrastructure Corporation as and when required. The policy rolled back individual incentives but incorporated as a strategy the grants to clusters of MSMEs. Industry leaders were consulted and after a consensus among various stakeholders, consultants for specialist knowledge creation were hired.

How is this approach different from the earlier policies?

It is actually a course correction in the entire approach. No other state in the whole of north India, including the North East, has actively engaged as many clusters as we have.

We are the only state in north India to win five Common Facility Centre (CFC) projects of approximately Rs 15 crore each. The approach has shifted from individual subsidy approach to group. The CFC as an institutional arrangement is expected to provide solutions which we have so far not been able to find.

What is the investment scenario?
If we take a public-private partnership perspective, we would like to invest approximately Rs 750 crore in the cluster development initiative. We are leveraging both Central government funds and also to a certain extent the private sector. The private sector's share in the project cost will be 20 per cent, with the shares of the state and Central governments being 10 per cent and 70 per cent respectively.

What is the support from large industries?
We are expecting that in some projects, like the Industrial Infrastructure Upgradation Scheme, the large industries will pitch in. We are actively engaging with organisations like the Automotive Component Manufacturers Association.

What is the underlying philosophy?
We want to leverage the synergy between social capital, technology and management. To a large extent the SME space is a social sector. If properly perceived, this space can be a way to generate employment and improve the quality of livelihoods. This would obviously help us to leverage the demographic dividend the country is enjoying.

What is the success rate so far?

The CFCs for the Karnal print and pack cluster and the Bahadurgarh footwear cluster have been sanctioned and will be commissioned by December 2013. The ministry of MSME on June 14 sanctioned three projects worth Rs 50 crore. Three CFCs will be set up, one each for the Panipat home furnishing cluster, the Kundli stainless steel cluster and the Karnal pharma cluster. While adding the projects it was observed that the backing plant and multi-needle machines will add variety and quality to the carpets manufactured in Panipat. In order to support good laboratory practices and enable documenting of the quality of drugs produced at every stage, various testing facilities like gas light chromatography and high power liquid chromatography and other testing facilities are being added.

The stainless steel cluster at Kundli will get polishing, knife forging and circle cutting machines. The margins are expected to increase by 10 per cent, 18 per cent and 16 per cent in the Panipat, Kundli and Karnal pharma clusters respectively. Further, the ministry also gave the mandate to initiate diagnostic studies for the cotton yarn cluster in Panipat, the bright steel bar processing cluster in Faridabad, the auto fabrication cluster in Rewari and the hosiery cluster in Sirsa.

What is the timeframe for completing all these projects?
We expect to seek approval for 20 CFCs by December 2013 and approval for all 50 CFCs by December 2015.