Cluster Development Programme : SMEs take up the challenge

Initiated in 2003, the Cluster Development Programme (CDP) for textile clusters has made noteworthy progress. Reena Mital reports.

The cluster approach to development of textile production centres in the country is proving successful, with the small and medium enterprises (SMEs) becoming aware of the need for adopting various quality and social standards, improving working conditions and production practices, and thus reducing costs and increasing output and value.

Around 18 clusters have been identified by the Textiles Committee where it is implementing the CDP. “In the last two years, the achievements have been good. We have conducted a large number of workshops to create awareness among the SMEs, and have been successful. Even the export consortia approach is catching on very fast,” stated Mr D P Jadeja, director, CDP, Textiles Committee.

According to him, quality improvement in the clusters under the CDP is evident, over 100 SMEs have opted for ISO 9000 standard, and 21 SMEs have gone in for environmental standards and SA 8000. Brand development programmes in Cannore and Tirupur have been very successful. Over 30 consortia have been formed in the clusters, which has resulted in cost reduction of as much as 10-20 per cent for the units involved. Almost all clusters have been utilising the TUF.

The Textiles Committee has also tried to address the various other problems of the clusters - infrastructure, power, water, effluent treatment, export marketing, etc. For instance, the consortium approach is being promoted mainly to help clusters export directly. The terry towel consortium in Solapur has achieved this. Under this model, two or more manufacturers have come together to form a consortium. All activities from purchase of raw material to sale of finished goods are done collectively. Thus, the units are able to procure raw materials at a lower rate, production costs remain low, and big orders can be executed as per schedule. One single unit would not have been able to take up huge export orders, manufacture competitively and deliver on time. This model is also being followed by most of the clusters in the south.

The consortium model in Solapur has been in operation for around a year, and four consortia have been formed till now. One consortium was formed with nine firms - Classic Terry Towel Consortium India Pvt Ltd (CTTC). Another consortium, Euro Consortium Pvt Ltd was constituted by 18 units. The nine units of the Solapur Terry Towel consortium have already got export orders worth Rs 65 lakh, and negotiations are on for other orders worth Rs 5 crore. Similarly, the textile cluster of Surat has a finished goods turnover of Rs 25,000-30,000 crore, and the first export consortium was created in 2004. The Surat Textile Manufacturers Consortium comprising seven firms has already done exports worth Rs 1 crore in less than a year.

Formation of consortia is being implemented under the joint guidance of the Textiles Committee and the Textile Development Foundation (TDF). The Textiles Committee is also helping the consortia to understand the requirements of the export markets, the procedures, etc. For instance, it helped the Solapur consortia to make presentations to the president of Textile Federation of Germany and the Centre for the Promotion of Imports from Developing Countries (CBI), the Netherlands, which is how the export orders started flowing in.

Besides, consortium approach has also been adopted for infrastructure development in the clusters. Again in Surat, a private limited company under the name Palsana Environ Protection Limited (PEPL) was constituted by 105 SMEs. This is the largest consortium in the country for addressing infrastructure needs. The objective of PEPL is to create infrastructure for member units to enable them to protect and nurture the environment and to have environment-friendly production processes. Currently, it is in the process of putting up a common effluent treatment plant. Once ready, the member units can discharge their untreated effluents into the CETP through the pipeline network. The capacity of the proposed plant is 100 million litres per day and is a Rs 40 crore project.

Under the CDP, the government has also commissioned a pre-feasibility for integrated infrastructure in five textile clusters - Bhiwandi, Karur, Panipat, Salem, Surat - to remove infrastructure bottlenecks, and to identify appropriate institutional and financing mechanism for infrastructure projects for the cluster, in synergy with the various schemes available with the central and state governments. Information and data was collected regarding existing infrastructure and proposed plans from the various planning agencies in the regions, as also from the industry in the clusters. Ecosmart India, which has been entrusted with the task of conducting the study, submitted the draft final report to the Textiles Committee in March this year, which is under active consideration.

Power is another area which is being tackled under the CDP. The committee organised a workshop in collaboration with the Surat Art Silk Cloth Manufacturers’ Association (SASCMA), South Gujarat Productivity Council (SGPC), MEG Micon, INDEXtb, government of Gujarat, Textile Commissioner’s Office and Gujarat Energy Development Board, to make the industry aware of wind energy as a viable source of alternate power. Wind energy could prove useful in Surat under the TUF scheme, it was stated, as Gujarat’s power tariff is presently quite high at Rs 4.50 per unit. NEG Micon stated that wind energy, especially in Gujarat has immense potential. “All projects that have been started are running perfectly. Even bigger industries are setting up wind energy plants, and with the introduction of the national power policy, wind power production will increase. In Gujarat, the 50 MW Surajbari plant has been running successfully,” said the NEG Micon officials.

A number of units are putting up high tech machines in a bid to improve quality and returns. This has happened specially in Ichalkaranji cluster. The Textiles Committee has through its workshops, sensitised the industry about the various government subsidies available for modernisation and upgradation, and facilitated subsidies for the units which wanted to modernise. This has resulted in installation of quite a few shuttleless looms in the cluster. In 2002, only three units in Ichalkaranji had 118 shuttleless looms. In 2004, 33 units had installed 704 shuttleless looms. Sangli and Madhavnagar followed suit, and four entrepreneurs began with 16 shuttleless looms. And there are plans to install an equal number in the near future. Commenting on the progress of the CDP, Mr Jadeja stated, “The programme is a self-sustaining one, and the SMEs in the clusters have been forthcoming in accepting change. Worldover, the dynamism in cluster development takes place in three years, this will happen in India too. And we will see a lot more happening in the clusters within the next one year.”

While progress has been good, there are some in the industry who feel that the momentum in cluster development has slowed. According to sources, “Most of the development has happened in the south and west, the north has not responded too well to the CDP.” Lack of devoted manpower to the CDP is one of the constraints faced by the Textiles Committee. According to one of the textile associations in Kanpur, “For many cluster development agents, CDP is an additional duty, alongwith their regular work. CDP requires a lot of time and effort, this could be one reason for the slow progress especially in the north. Moreover, the textile associations play an important role in CDP, and there are not many strong representative bodies in the north.” Says Mr Jadeja, “Kanpur is one of the stronger clusters in the north, as also Panipat, Ludhiana, etc. But there is a lot of work that can be done in these areas. Jaipur also has a lot of potential. The good thing about the CDP is that it is a sustainable programme, and once it takes off, the industry will come forward to gain from it. The Textiles Committee, and other agencies involved will only be facilitators.”