Clusters and Cluster Development Clusters are geographic concentrations of interconnected companies, specialized suppliers, service providers, and associated institutions in a particular field that are present in a nation or region. Clusters arise because they increase the productivity with which companies can compete. The development and upgrading of clusters is an important agenda for governments, companies, and other institutions. Cluster development initiatives are an important new direction in economic policy, building on earlier efforts in macroeconomic stabilization, privatization, and market opening, and reducing the costs of doing business. A special focus on the linkages or externalities across industries that give rise to clusters is to be studied and details should be worked out…The role of the regional cluster composition in the economic performance of industries, clusters and regions.
On the one hand, diminishing returns to specialization in a location can result in a convergence effect: the growth rate of an industry within a region may be declining in the level of activity of that industry. At the same time, positive spillovers across complementary economic activities provide an impetus for agglomeration: the growth rate of an industry within a region may be increasing in the size and “strength” (i.e., relative presence) of related economic sectors. A systematic empirical framework to identify the role of regional clusters – groups of closely related and complementary industries operating within a particular region – in regional economic performance. Industries participating in a strong cluster register higher employment growth as well as higher growth of wages, number of establishments, and patenting. Industry and cluster level growth also increases with the strength of related clusters in the region and with the strength of similar clusters in adjacent regions. Importantly, we find evidence that new industries emerge where there is a strong cluster environment. Our analysis also suggests that the presence of strong clusters in a region enhances growth opportunities in other industries and clusters. Overall, these findings highlight the important role of cluster-based agglomeration in regional economic performance.
There is significant evidence of the positive impact of clusters on entrepreneurship. After controlling for convergence in start-up activity at the region-industry level, industries located in regions with strong clusters (i.e. a large presence of other related industries) experience higher growth in new business formation and start-up employment. Strong clusters are also associated with the formation of new establishments of existing firms, thus influencing the location decision of multi-establishment firms. Finally, strong clusters contribute to start-up firm survival. Economic geography in an era of global competition poses a paradox. In theory, location should no longer be a source of competitive advantage. Open global markets, rapid transportation, and high-speed communications should allow any company to source anything from any place at any time. But in practice, location remains central to competition.
Today’s economic map of the world is characterized by what Porter calls clusters: critical masses in one place of linked industries and institutions--from suppliers to universities to government agencies--that enjoy unusual competitive success in a particular field. The most famous examples are found in Silicon Valley and Hollywood, but clusters dot the world’s landscape. Clusters affect competition in three broad ways: first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation; and third, by stimulating the formation of new businesses within the cluster. Geographic, cultural, and institutional proximity provides companies with special access, closer relationships, better information, powerful incentives, and other advantages that are difficult to tap from a distance. The more complex, knowledge-based, and dynamic the world economy becomes, the more this is true. Competitive advantage lies increasingly in local things--knowledge, relationships, and motivation--that distant rivals cannot replicate. Even as old reasons for clustering have diminished in importance with globalization, new influences of clusters on competition have taken on growing importance in an increasingly complex, knowledge-based, and dynamic economy.
Clusters represent a new way of thinking about national, state, and local economies, and they necessitate new roles for companies, government, and other institutions in enhancing competitiveness. Chikki in Lonavala, Maharashtra - European Cluster Collaboration ... Micro & Small Enterprises Cluster Development. (Reference by Maharashtra Economic Industrial Development Association MIEDA)
Identification of Cluster
Regional setting of the cluster :
Bamboo is one of most abundant resource, available in the Kokan region. This area is very much suited for bamboo cultivation and bamboo product development. The nature of bamboo crop varies from moderately dense type to regeneration some of the backward communities depend solely on bamboo products.
Bamboo in Kokan with integrated approach could serve as means where by industry and the community can be linked profitably. Bamboo generates large scale rural employment in management of bamboo forests and in bamboo harvesting, collection, transport, storage and processing, It would only be relevant to enhance the efforts of stakeholders by promoting large-scale bamboo cultivation as also effective marketing of value added products of bamboo, generated by the rural communities.
Evolution of the cluster
In India, bamboo is used since ancient time. One can say that the use of bamboo in Sindhudurg started since the existence of human population in the district. Bamboo is processed for multiple purposes for making agricultural tools, hunting weapons, fishing tools, cooking, and storage. In Sindhudurg district this activity is other backward caste population, Mainly the Burned. This artisan population is based in all villages of the district and can be named as traditional bamboo workers.
It suggests that Carpentry activity traditionally exists in almost villages of Sindhudurg district in hamlets. Each hamlet consists of 20 to 30 families of Carpentry artisans. In Sindhudurg, more than 500 such kinds of carpenter’s networks exist. Most of the artisans are processing timber to manufacture Chairs, Tables, Bed, and Showcase etc. are the most popular items in this category.
CIBART through KONBAC & Native KONBAC, in last 12 years have promoted certain value added bamboo products like furniture based product, Eco friendly cottages for tourism, home furnishing, handicraft products etc.
Name of the Cluster
Modular Furniture Industry Development Cluster, Sindhudurg.
Furniture is the traditional household business from ancient year. First commercial establishment came in bamboo furniture from 2004. Cluster age is about 12 Years.
The proposal : The main objective of this proposal is:
To provide, at the same time advanced mechanized, facilities for producing panel based furniture thus addressing three main issues i.e. Price, Quality and Delivery which are very important for the customer. As we have learnt that the new-age material cannot be processed with the traditional carpenter tools, in a country like India, where 98 % of the wood products are still produced by traditional carpentry methods, ignoring this large tribe of carpenters and craftsmen will be a fatal mistake. Mechanization can never come at a pace rapid enough to replace the traditional craftsmen and carpenters. And even if it does, it would be a disaster, since it would not take along with it the interests of the traditional craftsmen. It is therefore necessary in any planning and program to ensure that the traditional craftsman is not missed out and he is carried along in this stream of development.
The products that could be made from this unit include – panel based furniture having straight edges like Office tables, Shelves, Computer tables, Cup boards, Wardrobes, Coffee tables, Side tables, filing cabinets etc.
Dimension of the Cluster
The Private forest cover in Sindhudurg district is near about 60%, so mainly household furniture made of timber by traditional carpenter. Every village covered one of the hamlets of carpenter artisan. In the same line the Bamboo cultivation is spread over the entire Kokan region in private forest. However the Bamboo industry in the Kokan is flourished mainly in the Sindhudurg district by the initiative of CIBART.
Location of the Cluster Kokan region lies between the Arabian Sea and the Sahyadri Mountain Range, a narrow coastal low land, barely 60 km wide and 600 km long. The region encompasses Thane, Mumbai, Raigad, Ratnagiri and Sindhudurg districts of Maharashtra. It is largely rural and the economy is largely agro-based. The cluster is situated spreading over 10 villages in Kudal Block of Sindhudurg district. The radius of the cluster is approximately 85 km.
About Sindhudurg District
Carved out of the erstwhile Ratnagiri district and second in the country to achieve 100 per cent literacy, this district has been named after the famous sea-fort Sindhudurg, construct by Chhatrapati Shivaji. Situated adjacent to Goa, this is the first district in Maharashtra to be declared as the Tourism District. Famous for its serene and beautiful beaches, temples, historical forts and folk art forms like Dashavtar, Chitrakathi, Pangul, Keertan, Dhangiri dance, Sindhudurg has a great potential for earning foreign exchange as an international tourism destination.
Sindhudurg district is spread over an area of around 5,207 Sq.kms. The population of the District is 8,68,825 as per census of 2001. The modern township of Sindhudurgnagari is the headquarters of Sindhudurg district. The district is surrounded by the Arabian Sea on the east, the Belgaum District (Karnataka state) and Goa on the South and the Ratnagiri district on the North. Sindhudurg being a coastal district, the climate is generally moist and humid and the temperature variations during the day and throughout the seasons are not large. Sindhudurg is accessible by road on the NH17 which passes through major towns of Kankavli, Kudal and Sawantwadi or by the picturesque journey on the Kokan Railway which stops at Kankavli, Sindhudurg, Kudal and Sawantwadi. The nearest airports are at Ratnagiri, Belgaum (Karnataka) and Dabolim (Goa).
Brief History of Sindhudurg District
Sindhudurg district is the southern part of the greater tract known as the 'Kokan' which is historically famous for its long coast line and safe harbors. Sindhudurg district was earlier a part of the Ratnagiri district. For administrative convenience and industrial and agricultural development Ratnagiri district was divided into Ratnagiri and Sindhudurg with effect from 1st May, 1981. Sindhudurg district now comprises of eight tahsils of Sawantwadi, Kudal, Vengurla, Malvan, Devgad, Kankavli, Vaibhavwadi and Dodamarg. The word 'Kokan' is of Indian origin and of considerable antiquity, though the origin of the name has never been sufficiently explained. The seven kingdoms of the Kokan of Hindu mythology are mentioned in the 'Hindu History of Kashmir' and are said to have included nearly the whole west coast of India. The Pandavas, are said to have passed through this region in the 13th year of their exile and had settled in this area for some time.
The Raja of this region Veerat Ray had accompanied them in the famous war at Kurukshetra with the Kauravas. In the second century A.D. The great empire of Mauryas annexed the entire Kokan coast. In the middle of the sixth century, kings of the Maurya and Nala dynasties appear to have been ruling in the Kokan. The district of Ratnagiri was under the Silahars and the capital of their kingdom was probably Goa and later it may have been transferred to a more central place in the vicinity of Ratnagiri or Kharepatan.
Demography and Growth Trends
As of 2001, Sindhudurg district has a total population of 868, 825 persons of which of which 42 per cent are males and 52 per cent are females.
As far as the cluster is concerned, for products made from bamboo, there are 2000 household units with an average 2 artisan in each unit. All these units are unregistered entities, which are commonly known as “Burud” Artisans. The turnover of the “Burud” Artisans is around 50 Lac. Since these artisans only produced traditional basket and mat based products hence the growth is stagnant. Only 10 per cent of the products are value added design based which are growing at 20-30 per cent.
|Particulars||Group 'A'||Group 'B'||Group 'C'||Group 'D'||Group 'E'||Total Yearly Turnover|
|Total Reg. Unit||13||29||30||11||6||89|
|Total Unregister Unit||0||0||3||8||0||11|
|Turnover (in Lac)||9||8.5||5||4||3|
Use of Alternative materials to Wood
Perhaps the biggest challenge for the wood and wood industry as a whole is to position the material as complementary to modern homes, were alternative materials such as metal and glass are now commonplace within shelves, storage units, tables, chairs and other furniture. Customers are including a whole range of different materials, finishes and textures within their homes, and wood and wooden 7 manufacturers and merchants need to innovate to either integrate these materials within their ranges or design wood and wood products to complement them. The wood and wood products industry in India need to understand and respond to these changing needs of it is to grow and compete with other consumer product suppliers.
A vast majority of the Indian population depends on forests for meeting basic needs. Because of its many uses-including agricultural implements, handicrafts, construction material, as food, fodder and medicine-Bamboo is in great demand throughout the country. Bamboo craft is one of the oldest of traditional cottage industries in India. The origin of this rural craft is traced from the beginning of the civilization when man started cultivation of food crops thousands of years back. People started making baskets, mats and many other products of household use with Bamboo that was abundantly available in nearby forests. Later, tribal and rural people in the vicinity of Bamboo forest took up this as a means of livelihood.
In terms of employment, the Bamboo sector currently generates 432 million workdays annually. Bamboo based handicrafts alone employ nearly 10 million people. The noteworthy aspects of this employment is that women constitute a majority of the mat weaving and Bamboo crafts work and out of 68 million tribal population, 50% depend on Non Timber Forest Produces like Bamboo for their livelihood requirement. As of now the paper and pulp industry is the only major industry to provide employment to the people.
The Bamboo sector can potentially provide in the following ways :
- Direct employment (Plantation, maintenance and extraction),
- Self-employment (Furniture Carpenter, Bamboo Cottage & Craft workers),
- Secondary employment based on forest industries.
Statistics reveal that a single hectare of Bamboo plantation with 500 clumps generates about 384 work days of unskilled labor and 48 workdays for supervisory staff over a period of 30 days (Tiwari, 1992).
Over the years not only have livelihoods of people dependent on Bamboo been threatened, the industrial enterprises too have suffered setbacks due to improper and unsustainable management of the resource. The unavailability of raw materials and the inadequate quality has lead artisans to shift away from Bamboo crafts. The change in policy while it did not bring any real benefits to the people proved to be a big blow to the industries dependent on Bamboo. The state was found unwilling to supply raw material while the private growers were in no position to do so. Thus livelihood options of the rural population as a whole have been seriously compromised due to faulty policies and half baked solutions of the government.
The local and regional developmental role that Bamboo has played over the centuries of local exploitation in the Bamboo growing regions of India is however well documented. In many regions of India the Bamboo resource has been used by the local inhabitants as a vital raw material on which their material culture is centrally dependent. The centuries of use and experience are embedded in the local knowledge systems that we are just now beginning to appreciate and adopt for contemporary applications. However the beneficial role of Bamboo in the social and economic development of these communities is not fully understood by the general population and needs to be promoted by suitable communication efforts to enhance the status of this resource in the minds of the modern Indian. Myths associated with this resource too need to be explained before a broader acceptance of the full potential of Bamboo as a tool for human development can be realized in India. There is a need to address the wrong notion that Bamboo is inferior to timber in applications such as furniture and housing.
Social trends & Domestic Market Scenario
Social trends changes public opinions, attitudes and lifestyles that occur when income rises. For example, as income increases, people move beyond basic needs and start to seek new products and services that will improve their quality of life, according to their tastes and preferences. Other wealth related factors also affect consumption, such as increases in home ownership (including second homes), trends towards larger homes and greater leisure time, as well as changes in the amount of time spent at home. This creates an additional demand for the domestic market & thus the surplus available for the export reduces. There is lots of pressure on forest land & resources as demand for construction for new homes increases.
Secondly, India is experiencing a rapid phase of urbanization with a change in lifestyles, a growing demand for engineered wood panel products, and a high infrastructure, industry sources expect positive growth for wood products such as plywood, particleboard, medium density fiberboard, oriented-strand board and laminated veneer lumber in near future. Therefore manufacturers are not really willing to export when they have readymade domestic market to cater. There is huge 8 young population aging between 18 – 40 years in India adopting high quality of life standards with high income group & having more spending power. Therefore, the domestic market is quite strong & housing sector & other relevant industries are booming.
Human Development Aspects
Increasing labour costs and Automation
In India, both wood raw materials and skilled labour are now in short supply. Because labour was cheap in India the wood and wood industry developed using labour intensive production processes. Today however, the situation is different and because of low cost labour is no longer readily available many factories are running at around only 60% of their capacity. To overcome this persistent problem the industry now prefers to have as much automation as possible and is retooling production plant accordingly. This change is driving up demand for high tech wood processing equipment.
The rural artisans are involved in bamboo & timber base craftsmanship for decades and despite the promising market opportunity and large-scale benefits that bamboo & timber now offers, there are several constraints noted which influence the rural communities from gaining from existing and growing market demand for eco friendly bamboo products. These are:
- Inadequate quantity and inconsistent quality of bamboo resources owing to poor or no management of forest resources, lack of proper harvesting and age and location classification of culms/poles to enable standardization and commoditization.
- Absence of appropriate pro-people government policies or apathy for proper implementation by the machinery or absence of required institutional linkages.
- Lack of appropriate technology, tools and machinery adaptation and development, especially for rural areas with limited or no access to basic infrastructure .
- Extremely low risk taking capacities of the rural artisans to innovate on the traditional product ranges despite the demand in an upper end market.
- Absence of treatment facilities and lack of production of quality dimensioned intermediary commoditized products to ensure quality final products, so that reproducibility and replace ability is possible and the material becomes standard in nature.
- Inadequate production systems which result in an inability to produce in volume with quality.
- Regulatory and policy constraints, including lack of conversion of policy opportunities for market development and price support.
- Inequitable supply chains linking rural producers to their markets, causing low value share realization and poor product quality.
- Lack of community-friendly working and risk/venture capital finance and marketing support (including product design).
- No enabling and dependable institutional arrangements that deliver community services and technical support locally.
In summary, the informal nature of the bamboo sector could do much better if it was to be organized with backward and forward linkages while being integrated into the entire value chain.
Most of the artisans are traditional and require minimum infrastructure for bamboo & timber processing. The CIBART, KONBAC (Kokan Bamboo and Cane Development Centre) a nonprofit organization has enough infrastructure for all kinds of advanced bamboo processing. It provides Common Facility Centre, training, common facility for furniture and construction purpose in bamboo processing at Kudal. Through this centre, training for common facility for furniture and construction purpose in bamboo processing at Kudal. The centers are well equipped with bamboo pressure treatment plant, Bamboo cutting, splitting, sizing, knot removing machineries and other bamboo processing tools.