Ease of Doing Business for MSMEs: Overall, the number of approved clusters increased from 30 in FY16 to 68 in FY19 while the number of clusters inaugurated or commission grew from one in FY16 to 14 in FY19.
Ease of Doing Business for MSMEs: The government’s Scheme of Funds for Regeneration of Traditional Industries (SFURTI) to organise traditional industries and artisans into clusters to make them competitive and boost their income has approved 433 clusters since 2014. According to the data provided by the MSME Minister Narayan Rane in the Rajya Sabha on Monday, around 2.5 lakh artisans have benefited through these approved clusters. However, as per the available online data by the Ministry of MSME, while the number of clusters approved declined from 157 in FY20 to 107 in FY21, the number of clusters inaugurated or commissioned grew 5.5X from 17 in FY20 to 94 in FY21. Overall, the number of approved clusters increased from 30 in FY16 to 68 in FY19 and the clusters inaugurated or commission grew from one in FY16 to 14 in FY19.
“A major chunk of the activity under the scheme is in the construction of common facility centres (CFCs). So, while Covid tried its best to cut down the speed, the enthusiasm of the entire team overcame it successfully and in fact reduced the period of CFC creation from over one year to six-nine months. One good indicator of success is how many CFCs have been commissioned. That has increased significantly,” Tamal Sarkar, Executive Director of MSME cluster development body Foundation for MSME Clusters had told Financial Express Online.
Rane informed the Parliament that the amount spent during the last three years increased from Rs 86.03 crore in FY19 to Rs 181.82 crore in FY20, and Rs 349.11 crore in FY21. As of July 31, 2021, Rs 82.02 crore was spent. Moreover, the number of artisans benefitted on an annual basis had also increased from 28,270 in FY16 to 84,171 in FY20 before it dipped to 62,408 in FY21. The clusters included coir, bamboo craft, stitching and embroidery, handloom, garments, khadi, pottery, furniture, etc.
Importantly, the government’s Cluster Development Programme (CDP), which focuses on enhancing capacity building for MSEs through setting up of projects including CFCs and Infrastructure Development (ID) centers, had witnessed the lowest number of annual projects completed in FY21 since FY18. The data shared earlier by Rane in the Lok Sabha showed that total projects completed in FY21 had declined to 20 from 22 in FY20, 28 in FY19, and 24 in FY18.
According to Rane, a study was conducted by IIM Lucknow in FY21 to evaluate the scheme so far. The major findings of the scheme including artisans’ shareholding in the Special Purpose Vehicle (SPV) constituted in the cluster needed to be enhanced and suitable measures were required to be initiated to ensure that funds are released to the clusters in a timely manner and they are made functional within the stipulated timelines avoiding delay. Moreover, it noted that turnover and profitability of enterprises has not significantly increased when compared to the investment made. Hence, necessary forward and backward linkages and marketing connect is needed to ensure higher income of the cluster and artisans. The study also suggested convergence of the scheme with other similar government schemes.