10/06/2019 - Indian economy

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June 10, 2019
8 months

India needs a comprehensive policy on cluster based modern industries for better growth trajectory in the manufacturing sector. Explain (200 Words)

Refer - Business Line

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IAS Parliament 8 months


·        The contribution of manufacturing to GDP in 2017 was only about 16 per cent, stagnating since the economic reforms began in 1991.

·        If India is to create manufacturing jobs for the 5-7 million joining the labour force each year, India needs a serious policy for modern industry clusters, with a focus on brownfield (not just greenfield) sites.

Stimulation cell

·        For this purpose, the Planning Commission (2013), in the 12th Plan, made an excellent recommendation to set up a Cluster Stimulation Cell at the apex level in the MSME Ministry, that will work to promote cluster associations.

·        This requires funds. Effective cluster development has been very important to China’s industrial development (as well as in late-industrialiser Italy). There are as many as 100 clusters in China only producing socks!

·        Poor infrastructure in these urban locations has to be addressed.

Credit availability

·        In other words, focus AMRUT funds to towns with manufacturing clusters. This should include digital infrastructure, which can help small firms eliminate intermediaries, thus raising firms’ revenues.

·        The modern industry clusters will need much greater access to institutional sources of credit. The limited resources of the Small Industries Development Bank of India (SIDBI) cannot suffice.

·        But government needs to employ blockchain technology to help SMEs in such clusters in financing.

·        Thus Mahindra Finance, currently uses blockchain in SME financing  by connecting suppliers, OEMs, and financiers  for sharing data securely over the network chain to request and approve transactions.

The skills factor

·        Raising cluster productivity requires skills. At local cluster level there are few vocational or training centres available. If new vocational education/training were focussed at cluster level, newly educated youth will get employment at cluster level, close to their homes.

·        Gender parity at secondary level with GER at 80 per cent now requires a new focus on vocational training at cluster level to make these boys and girls employable.

Online trade

·        Brownfield clusters could benefit hugely from the spread of internet and online sales to utilise the educated youth in rural/semi-urban areas.

·        Online trade is an example of how technology shapes the geography of jobs. Technology can enable clusters of business to form in under-developed and rural areas.

·        India’s smartphone users are upwards of 350 million at present, and e-commerce can enable MSMEs to access larger markets and source cheaper inputs.


K. V. A 8 months

Pls review 

IAS Parliament 8 months

Try to include about online trading, narrowing digital dividend, existing schemes about skills upgradation, credit availability. Keep Writing.

Anisha Sahu 8 months

Please review it. Suggestions are very helpful. Thank you.

IAS Parliament 8 months

Good answer. Keep Writing.

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