The Hindu Business Line : Kerala SSIs urged to form clusters to achieve economies of scale

CLUSTERING experiences abroad as well as in India have indicated that various scale of economies, efficiency linkages and information sharing advantages are secured in geographically agglomerated units as against those existing as clusters.

Presenting a paper at the SSI Day Seminar before the B2B meet in Kochi, Mr P.H. Kurian and Mr V. Padmanand pointed out that in Kerala there was a dearth of critical mass of sector-specific units in one location. Hence, the development of specialised infrastructure and existence of private and public service providers is relatively poor in the State.

This has also led to a situation where sector-specific associations in different clusters also have a relatively low membership base. Consequently, while major enterprises located elsewhere in India, such as knitwear, have been known to relocate their manufacturing base to a dynamic cluster like Tirupur, Kerala does not have much by way of similar experiences in the recent past.

Speakers at the seminar said that it was time for small clusters like Kudumbasree units of the State to grow and assume the role of larger enterprises to assimilate the benefits of economies of scale, creation of specialised infrastructure and to tap the facilities of common service providers. It is due to the relative dearth of critical mass in many clusters in Kerala that the B2B meet is being organised in Kerala to benefit the clusters in different sectors such as handlooms, rubber, coir and food products and processes.

The objective of cluster development related agencies and institutions in Kerala range from those striving to promote competitiveness of a cluster to those primarily targeting the employment or poverty alleviation front. But these units are not sufficient to kindle a boom in manufacturing sectors. Interventions are required on all segments along the supply chain to promote efficiency linkages, the seminar was told.

Small enterprises in Kerala have been following the Italian model of behaviour in terms of cooperating in some fronts such as in moving towards establishing Common Facility Centres such as the rubber cluster in Kottayam, coir clusters in Alleppey and plywood cluster in Perumbavoor. They have also established raw material bank, such as in rubber cluster in Kottayam, the proposed handlooms cluster in Kannur. Creation of mutual credit guarantee fund models and common marketing efforts are some of the other examples cited at the seminar.

While cooperation might exist to build specific markets, to build common facility centres and raw material bank, there is fierce competition for capturing the domestic markets as well as in keeping the production costs under rein. The Government of Kerala and the Industries Department have been vital players in disseminating this model across the State.

Now the Kerala model has begun to get wider acceptance and Mr Mukesh Gulati, Programme Manager, Focal Point, UNIDO Cluster Development Programme in India, has appreciated the interventions in Kerala and has recommended that the essential features of this model be replicated in other States as well.