Enhancing the competitiveness of SMEs through industrial clusters: The Indian experience

The Indian economy is expected to grow by over 8 per cent per annum until 2020 and can become the second largest in the world, ahead of the United States, by 2050, and the third largest after China and the United States by 2032. The turnaround in manufacturing and other sectors, which has occurred in the face of increased global competition, is due to improved efficiency following the various policy reforms in recent years. Small and medium enterprises (SMEs) constitute 6 per cent of GDP, 34 per cent of national exports and account for the employment of more than 30 million people. SMEs have improved their performance and presence through industrial cluster approaches. In this paper, we present the experiences of three auto clusters in three major locations in India. We also highlight some of the important issues that SMEs face and conclude by suggesting suitable cluster interventions for enhancing competitiveness and sustainability of the SME sector.