New Delhi, Nov. 29: The government is likely to introduce a Rs 675-crore scheme to promote traditional local entrepreneurship under what will be called the ‘Industrial Cluster Development Scheme’ (ICDS).

Unlike existing programmes to develop industrial enclaves, the ICDS will lay emphasis on upgrading existing infrastructure instead of the development of virgin areas and relocating the clusters elsewhere. The scheme will focus on clusters that have developed naturally on account of local initiatives and thus is different from other schemes like growth centres, SEZs, apparel parks and food parks.

An industrial cluster is basically a local agglomeration of enterprises—small, medium as well as large ones—which produce and sell a range of related and complementary products and services.

For instance, a cluster in Punjab contributes to 95 per cent of woollen knitwear production, 90 per cent of sewing machines and 60 per cent of bicycles and bicycle parts.

The scheme aims to select industrial clusters with high growth potential like Ludhiana which is famous for its bicycle parts and knitwear, Surat and Mumbai for gems and jewellery, Tirupur for cotton knitwear, and Chennai and Bangalore for software exports and leather products.

“Initially, only 30 clusters were proposed to be taken up for development during the Tenth Five Year Plan with an outlay of Rs 1,500 crore. But it was reduced to Rs 675 crore due to financial constraints. Priority would be given to those sectoral clusters which have greater potential for development and where the stake holders participation is more pronounced,” sources said.

The emphasis of the scheme will be on strategic intervention to convert this static, local efficiency into dynamic competitiveness.

The ICDS has been proposed by the department of industrial policy and promotion’s integrated finance wing under the commerce and industry ministry. Both the Planning Commission and the finance ministry have given in-principle approval to the scheme.

“The government proposes that under this new scheme, the Centre will provide 75 per cent assistance of the project cost subject to a ceiling of Rs 50 crore. The stakeholders of the respective clusters will provide the remaining 25 per cent. Central support will be on a one-time basis and the clusters will be self-sustaining in terms of financial viability,” sources said.

“To achieve this, a special purpose vehicle would be encouraged with the participation of industry associations, to ensure that facilities created under the scheme are demand-driven,” they added.