Background Micro, Small, and Medium Enterprises (MSMEs) are the backbone of India’s industrial economy, contributing over 30% to the national GDP, 45% of manufacturing output, and nearly 50% of India’s total exports. The sector also provides employment for over 11 crore people, making it the second-largest source of jobs after agriculture. In line with the Hon’ble Prime Minister’s vision of Atma nirbhar Bharat, strengthening MSMEs through innovation, technology adoption, digital transformation, and collaborative growth models has become a national priority. The Cluster Approach in MSMEs refers to the sharing of common infrastructure, services, and knowledge by enterprises operating in related sectors in a geographical area. This approach has emerged globally as a proven strategy to boost productivity and competitiveness in the manufacturing sector. India today has more than 7,000 industrial clusters, including traditional, sectoral, and geographic clusters, contributing a major share to regional manufacturing output. Despite their strategic importance, MSMEs face multiple challenges — including limited access to advanced technologies, skilled manpower, modern manufacturing 1 systems, finance, and common infrastructure. For instance, the sector continues to struggle with a large credit shortfall: estimates put the MSME credit-gap at around ₹30 lakh crore, or roughly 24% of total credit demand. Meanwhile, only a small fraction of enterprises is able to access formal credit — for many, financing remains inaccessible or too costly.
The Hindu Business Line. (2025, May 13). MSME sector faces ₹30-lakh crore credit gap; alternative finance gathers pace. https://www.thehindubusinessline.com/money-and-banking/msme-sectorfaces-30-lakh-crore-credit-gap-alternative-finance-gathers-pa... 5
SIDBI Cluster Initiatives
https://www.sidbi.in/en/msme-cluster-development-initiatives
https://www.linkedin.com/posts/icicidirect_industry-investment-finance-activity-7413810244000292864-OQK8/
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