MSME plans to devlop one cluster in each block

Thiruvananthapuram, July 21 (UNI) The Micro Small and Medium Enterprises (MSME) Ministry is planning to develop a ''cluster-based'' approach to finance MSEs, as it offered considerable possibilities of reduction of transaction costs and mitigation of risks.

Addressing a media conference here last night, Union Ministry of MSME Secretry Dr Chandrapal said more than 350 SME clusters and over 1,000 traditional clusters had been identified in the country.

He also added that the clustering of enterprises was very important for development as each individual enterprise was finding it difficult to withstand the global challenges.

Dr Chandrapal said the cluster development approach, found to be an effective form of intervention in the promotion of the MSMEs, would be vigorously pursued by the Ministry. The Ministry would provide 80 per cent financial support for the formation of clusters, he said.

Stating that availability of adequate and timely credit was another important factor, he said a policy package for stepping up credit to MSMEs had already been announced by the government with a view to doubling the credit flow to the sector within a period of five years.

The Ministry would take measures to promote credit rating as it would help SMEs to access finance easily at cheaper rates.

The banks must provide loan at least up to Rs five lakh without collateral guarantee and efforts were on to convince RBI and the banks to ensure this, he added.

As the percentage of population undergoing vocational training in India was much lower than in other developing countries, MSMEs would give special emphasis on technical and vocational education, besides skill development.

The MSMEs were also targeting that in each block one product should be identified and 50-100 boys and girls be given training, including youngsters from the minorities, SC and ST.

Dr Chandrapal also said the number of enterprises in the MSE had swelled from about 0.4 million in the early 70s to over 12 million in recent years, while the employment provided by this sector had gone up from four million to 30 million during the same period.

UNI