100 GIs in India

The registration of Geographical Indications has reached to 100 in the last 4 four years .  An interesting dimension observed in GI registration is that a number of government agencies specially state governments have not only started the facilitation of GI work in their respective states but also started owning some GIs on behalf of local Communities. One of the first states to play a proactive role in GIs was Himachal Pradesh. Similarly, Karanataka and WestBengal have also filed a number of GI cases.

Recently,  GOI has given mandate to APEDA to work on filling of GI for basmati rice. 

The Genesis of GI Act rest on the fact that the owner of the GI should ensure benefits of GI registration should go the producers of the product. With the rise of third party ownership of GI registration there is strong possibility that such benefits will dilute or may not accrue to the producers.

The  best model to own GI is the producers themselves. The most appropriate example of this is Darjeeling TEA, where the TEA board, which is a producers organisation, own the Darjeeling TEA GI. Needless to say that after GI TEA producers have been jointly benefited.

With 100 GIs another undesired development observed  is mad rush for GI registration. There are different kinds of arguments like in one the cases in Karnataka a particular type of banana is registered to revive its production.

It seems that there is need for more sensitisation on the significance of GI in three different contexts. Regional Context- where GI can become one of the tools to empower local economy secondly,  at the national level where  through GI  misuse of potential market may be avoided third at international level where GI  may help in better respect for our products in international markets.

The issues such as quality control, good supply chain management and traceability of GI products require special attentions by the owners of GI.

The use of Information Communication Technology specially use of web in popularising of GI products, list of producers and unique qualities may be very useful.

  

THE EXPERIENCE SHARING OF CLUSTER RELATED DEVELOPMENTS

Cluster Development Policy initiatives are increasing in number in both developed and developing countries. In the next six months two important events happening to share such experiences.
The conference on 22nd and 23rd September in Berlin presents latest achievements and new initiatives of cluster development in European countries . The focus will be on know-how on the current development of European cluster initiatives and efficient cluster management. International experts will show solutions for national and regional authorities. Representatives of cluster initiatives share their experience on management tools, transnational clusters, national programmes and the role of national authorities in regional development policies. As a communication platform this conference brings together actors of cluster management from public institutions in charge of innovation and regional development policy, research institutes, universities and the private sector

The conference brouchure is available at : http://www.europaeische-akademie.net/fileadmin/user_upload/dateien/seminare/Brochure_Cluster-Policy_PR.pdf

The second event will take place at Cape Town, South Africa. The theme of the conference is CLUSTERS: Meeting the Challenge of Globalization. The conference will during its three days programme 29-31 october will cover the following main areas:
Clear methodologies around managing cluster programmes
1. Shifting the frontiers regarding the measurement and impact of cluster initiatives
2. Fine tuning the practical tools to be applied by cluster practitioners
3. Identification of the challenges and opportunities in running cluster initiatives and programmes
More information on conference is available at :
http://www.sbs.co.za/tci2008/

Information and Communication Technology Infrastructure in Industrial Clusters

To integrate into global economy is one of the biggest challenges for MSMEs. Due to limited financial capabilities there are challenges to invest in technology which is necessary for such integration. Recently, during the discussion with one of the buying houses the doubts were raised on the logistic readiness of MSMEs to match with international retail chains. What should we do for this? Internationally Technology Centers are playing an important role to support small and medium enterprises by providing state of art ICT support. Recently, Microsoft under project Vikas has set up India’s first E-readiness centre to facilitate extensive application of ICT in Tirupur Knitwear Cluster in India. It will help more than 5000 textile units to get access to latest useful IT applications, an interesting read in todays’ THE HINDU at http://www.thehindu.com/2008/06/06/stories/2008060657360100.htm

Cluster Development Strategy

MSMEs to become Globally Competitive it requires a strategy over and above the normal production function. Michael E. Porter is arguably the best known name in the world for competitive strategy. Is it possible to use his strategy for the competitiveness of MSMEs? Porter in his work on Competitive advantage of Nations in 1998 observed that the 18th century work of Adam Smith and David Ricardo on factor comparative advantage cannot provide explanations for most of the trade that takes place today. The diamond model proposes four interrelated facets, each of which representing a determinant of regional advantage: (1) firm strategy, structure and rivalry; (2) demand conditions; (3) factor conditions; and (4) related and supporting industries. “Chance” and the “government” are two factors that influence these four determinants, but are not determinants themselves. Together these six factors form a system that differs from location to location, thus explaining why some firms (or industries) succeed in a particular location. Not all six factors need to be optimal for firms or industries to be successful.

However it is argued that Porter’s model is more effective in developed countries rather than in developing countries. There are some alternative strategies explaining the competitiveness of MSMEs in current global scenario. These are Collective efficiency by Schmitz (1995) and flexible specialization by Piore and Sabel (1984)

This week The Times of India covered a very interesting interview on M porter’s views on Strategy http://timesofindia.indiatimes.com/Business/Strategy_is_about_competitive_advantage/articleshow/3054691.cms
Also very interesting read for two alternate theories at http://www.ifama.org/tamu/iama/conferences/2001Conference/Papers/Area%20VI/Neven_David.PDF

Cluster Development Programmes and BDS Development Programmes in India

Currently, there are several approach prevalent to address the issue of local economic development especially in Industrial clusters. The most talked internationally are Cluster Development (CD) Approach and creation of Business Development Services (BDS). In one the recent workshops I attended the issues surfaced was whether these two approaches are complementary or mutually exclusive. According to UNIDO (http://www.unido.org/userfiles/RussoF/Hanoi.pdf) CD approach is based on the hypothesis that clusters
1. Give rise to external economies (e.g. specialized suppliers of raw materials, components and machinery; sector specific skills etc.);
2. favour the emergence of specialized technical, administrative and financial services; and
3. create a conducive ground for the development of inter-firm cooperation and specialization as well as of cooperation among public and private local institutions to promote local production, innovation and collective learning.\

On the other hand BDS approach primarily concentrate on the creation of BDS market for BDS services. As a part of classical cluster development approach we primarily concentrate on three macro issues external economies, market for BDS services and different types of cooperation with in the cluster.

The next logical inference is that BDS is sub set of CD approach and there is no need for BDS focused programmes. Any CD approach will automatically take care about BDS services in industrial clusters.

If we get little deeper in to CD approach implementation focus is on BDS interventions as a result of structural adjustment happening in the overall economic scenario. The audience for such services are firms rather than BDS ………..it is important to stress that UNIDO has tried to avoid, to the extent possible, the subsidization of BDS costs out of the conviction that the various cluster actors will not fail to perceive the economic viability of commercial BDS provision if they have been sufficiently sensitized to the value of such services. When subsidies were provided, they were aimed at start-ups providing innovative BDS (e.g. access to new technology cum training, quality management). On the contrary, significantly less support was available for BDS strengthening the commercial capacities of the SSEs or, more generally, to initiatives with an immediate impact upon the profitability of the latter (e.g. participation in fairs, product design). ….

Under CDP the focus remained on firms rather than BDS.

Accordingly, BDS focused programmes are necessary for the creation of a proper BDS market among MSMEs in India. The two methodologies CD approach and BDS are differ on account of timeline, focus, market orientation and to some extent on methodology.

CLUSTER DYNAMICS AND INNOVATION IN SMEs: THE ROLE OF CULTURE

When we talk of clusters in Indian context, it is very difficult to avoid Tirupur cluster reference. In all cluster related conversations Tirupur is assumed as an exception for any kind of success story. Why Tirupur is assumed to be sure success for joint actions for common benefits? There are many reasons which I have experienced in the last 10 years. One of the most important one is the culture of Tirupur. The experience of Tirupur shows that strength of a local economic system, and its capacity to grow and to innovate, are closely related to the pattern of knowledge (thus cultural) stratification, to the territory itself and to learning capacity. When we gave them a presentation on the the growing need of Tirupur SME to integrate better in globally economy, Tirupur Exporters Association instantly agreed to have their common own ICT infrastructure ( E-Readiness centre ) . This shows their cultural capacity to collectively acknowledge that ICT is an important global integration tool, thus TEA play a key role when considering the dynamics of innovation process and growth opportunities for Small and Medium Enterprises (SMEs).

Tirupur hosiery cluster in India is a live example of this. There are several factors visible in the behaviour of TEA , such as the cohesion of stakeholders for the creation of innovation, the development of new institutions in the cluster.

To know more about role of culture in cluster dynamics and innovations there is a very interesting reading CLUSTER DYNAMICS AND INNOVATION IN SMEs: THE ROLE OF CULTURE by Callegati Enrico e Silvia Grandi available on line at
http://www.eblacenter.unito.it/WP/2005/3_WP_Ebla.pdf

Understanding Indian Clusters

Understanding of industrial clusters in Indian context especially by Indian authors can be counted on fingers. A systematic work to my knowledge started by SIDBI and SBI in late 80s. The nineties saw a sudden spurt in cluster related activities and focus on cluster related work mainly by international agencies and authors. In the last five years a lot of consolidation happened in terms of understanding of industrial cluster issues in India.

One the works done is Development of Industrial Cluster ( 2005) by Sudesh Kumar.
The paper gives an interesting insight into some of the work done by UNIDO under Cluster Development programme in India. The complete text of the book may be accessed at http://mpra.ub.uni-muenchen.de/171/1/MPRA_paper_171.pdf

Poverty Alleviation and Cluster Development

Under cluster development programme of UNIDO one of the POC ( Proof of Concept ) initiated was to explore the link between clusters focused interventions and poverty levels. Initially, it was very difficult to establish that clusters and poverty were connected. Dr Khalid from University of Manchester, UK tried to answer some these questions in his recent presentation in USA in Oct, 2007 (http://idbdocs.iadb.org/wsdocs/256,1,Competitiveness of Small Enterprises: Clusters, Business Environment and Local Development ‘Clusters, Territorial Competitiveness, Poverty and Social Sector Integration’ ) Among the three evidences one of the evidence of his presentation was work done by UNIDO in Chanderi, Madhya Pradesh, India. He primarily looked into characteristics, dynamics, poverty nodes in the cluster to explain the relationship. As consequence of UNIDO’s intervention one of the important things happened is corporatisation of artisans specially in Chanderi, an interesting story in todays's Economic Times( http://economictimes.indiatimes.com/News/News_By_Industry/Cons_Products/Weavers_to_become_shareholders_of_Fab_India_subsidiaries/articleshow/3013640.cms )

Strategic Management of Industrial Clusters- Garbage in Garbage out

The last decade has seen mushrooming of cluster development implementing agencies in India. The majority of these agencies are with in government or semi government kind of environment. The massive scaling up of CDP has created a major challenge for CD methodology to produce the desired results as claimed by advocates of CD approach. Surprisingly, there is no strategic management exist to professionally manage implementation work in more than 1000 clusters involving 1000 crores of rupees.

There is need to define key performance indicators, and a right framework to convert strategic direction in to action. Currently, most of CDA/ CDMs and implementing agencies are not trained/ accredited to a critical threshold cluster methodology related actions, resulting into a complete marginalization of CD approach as such.
The major leveraging points of the approach are general not the central point of implementation.

There is visible polarization on soft and hard inputs without understanding that both are complementary to each other. The best utilization of any hard infrastructure happens in best networked and trust based clusters viz Tirupur hosiery cluster in India.

There is need to better exploit the industrial cluster concept and to review all CDPs in the light of Strategic management of these programmes with proper performance indicators and cluster experts.

Power of Knowledge Networking

The Internet has provided a lot of opportunities for knowledge based networking. For cluster practitioners the following five portal are must to visit:



http://www.nextbillion.net/
NextBillion.net brings together the community of business leaders, social entrepreneurs, NGOs, policy makers, and academics who want to explore the connection between development and enterprise.


http://www.iked.org/
IKED is an independent non-profit association, think tank and international network which address the issues of the evolving knowledge-based economy. The organisation focuses on policy analysis and participates in forums devoted to concrete action at local, national and international levels, in collaboration with key stakeholders such as government, industry, academia and civil society.

http://www.isc.hbs.edu/

The Institute for Strategy and Competitiveness, led by Michael E. Porter, Bishop William Lawrence University Professor, studies competition and its implications for company strategy; the competitiveness of nations, regions and cities; and solutions to social problems. Based at Harvard Business School, the Institute is dedicated to extending the research pioneered by Professor Porter and disseminating it to scholars and practitioners on a global basis

http://www.weforum.org/

The World Economic Forum is an independent, international organization incorporated as a Swiss not-for-profit foundation. Works towards a world-class corporate governance system where values are as important a basis as rules. The portal is based on the assumption that economic progress without social development is not sustainable, while social development without economic progress is not feasible

http://www.competitiveness.org/
The Competitiveness Institute offers information on clusters and competitive regions worldwide. We use multiple arenas in real life and on the net for exchange of ideas, knowledge and experiences on methodologies for economic growth. We work on clusters, innovation systems, promotion of entrepreneurship and regional branding

Local Organisations and Clusters

Organisation plays an important role in almost all facets of life and clusters are not untouched by it. My experience of working in the clusters for the last 10 years suggest that any irreversible successful intervention is backed by some kind of institutionalisation of efforts in the form of organisation. Amiya Kumar Bagchi in his book on INDIAN ECONOMIC ORGANISATIONS (1999) , classify evolution of such organisation on three parameters. First, labour intensive firms ( capitalist),second, historical evolution of firms and the last is socio-economic ecosytem. The above three factors have historically impacted differently on the evolution of local organisation in clusters.

The importance of local organisation theoretically based on the assumption that each cluster is unique in its requirements. being in proximity cluster gives an opportunity to evolve new norms to dialogue and network, it gives an opportunity to institutionalise the networking among local stakeholders in the form of trust. This process is embeded in the culture of the cluster and very beautifully captured by Marshall



the mysteries of trade become no mysteries:but are as it were in air , and children learn many of them unconsciously. Good work is rightly appreciated , inventions and improvements in machinery , in process and general organisation of business have their merits promptly discussed ; if one man starts a new idea , it is taken up by others and combined with suggestions of their own ; and thus it becomes source of new ideas.



the local factors in economic thinking has become so important that an article by TT RAM MOHAN ( based on a paper published in HARVARD BUSINESS REVIEW, MARCH 2008 ) in todays Economic Times, suggest that how local firms are giving MNC a run for money. In many market MNCs has been coming face to face with high quality local talent. A very interesting read for today http://economictimes.indiatimes.com/Columnists/T_T_Ram_Mohan_MNCs_at_bay/articleshow/2999915.cms

IPR MSMEs and Innovations

The move towards a well knowledge networked society may happen through pro patent ecosystem. MSME clusters are the perfect place for innovations to happen. There are number of studies showing that there is direct relationship between IPR, innovations and MSME survival. Recently a number initiatives on geographical indications (GI) have been initiated in India. Such GI registration may prove helpful if some kind of enforcement system is put in place.

Unfortunately the most of MSME, enterprises are not in a position to take advantage of their Intellectual Property due to their size constraints. The current market situation is not very conducive for MSME innovation to happen. It is therefore necessary to provide a strong policy support for such initiatives. Austrian Institute of SME research has come out with avery interesting piece of work on " Benchmarking National and Regional Support Services for SMEs in the Field of Intellectual and Industrial Property" highlighting theoretical issues on SME patenting and case studies. The full report is available at http://www.proinno-europe.eu/admin/uploaded_documents/Benchmarking-Report-SME.pdf

Cluster approach necessary for SMEs development’

There are areas such as leather and footwear, textile and garments, auto components and electronics, CD approach is very useful. Most of these verticals are driven by high degree of subcontracting, to reduce the transaction cost of subcontracting CD approach can help in - improved networking among different sub contractors and manufacturers, learning of best practices/ benchmarks, leveraging on common hard and soft infrastructure especially for sub contractors. Dr V. Krishnamurthy, while delivering the keynote address at the first Cluster Summit in Chennai, organised by the Confederation of Indian Industry (CII) and United Nations Industrial Development Organisation, he said NMCC is giving importance to cluster development.
http://www.thehindubusinessline.com/2008/04/24/stories/2008042451911200.htm

Policy and Status Paper on Cluster Development in India

Recently, MSME Foundation has published a book on Policy Status on Cluster Development in India. The purpose of the book is take stock of the last 10 years experience of cluster development approach and its impact on the local economy especially in industrial and artisan clusters. Cluster Development Program (CDP) has become very popular in the last 10 years especially CDP of UNIDO, which started in 1996 with pilot interventions in four clusters ( Tirupur, Ludhiana, Pune and Jaipur). In the last 10 years the approach has roped in 1358 industrial and artisan clusters and till 2007 more than Rs 700 crore have been spend on different cluster based interventions.
There is no doubt that the CD approach has become very popular during this period.
The book highlights that how more than 22 countries in the world evolved their local industrial development around clusters. The approach is now believed to be used in more than 50 countries to help MSMEs in artisans and industrial clusters. It says that there is strong cluster effect in terms of higher efficiency of the firm situated in clusters.
The book suggest that on policy level there are two major challenges these are the right definition of the cluster and mapping of clusters. It suggested accessibility a main criteria for definition however local government may have their own definition of clusters. The focus of for cluster development policy should remain around inclusiveness, equity and competitiveness. The Book harp on the fact that to implement cluster development programme both soft and hard interventions are equally important. It has given 16 policy suggestions for optimum cluster development. The complete book is available at http://www.msmefoundation.org/pdf/cluster%20policy%20and%20status.pdf