Welcome To Rajkot Engineering Cluster
A TERI - SIDBI Engineering Cluster for Foundry & Pumps Industries
Project Overview
The contribution of small and medium enterprises (SMEs) to the Indian economy is very significant in terms of employment, industrial output and exports. Indeed, there is now widespread recognition in India that a vibrant SME sector is potentially a key engine of economic growth, job creation and greater prosperity.
One of the characteristics of the SME sector is the clustering of units that produce related products in identified geographical locations. Such clustering provides critical mass for the customization of services and collaboration on mutually beneficial business operations, and thereby leveraging the advantages of economies of scale
Given the importance of the SME sector and the location of SMEs in clusters, the Small Industries Development Bank of India (SIDBI) is implementing a World Bank-led multi-agency /multi-activity project titled ‘Small and Medium Enterprises (SME) Financing & Development Project’. The nodal agency for the project is the Banking Division, Ministry of Finance, Government of India; the international partners are the World Bank; Department for International Development (DFID), UK; KfW, Germany; and GTZ, Germany. The project aims to improve SME access to finance and business development services (BDS). This is being done with the support of Technical Assistance for strengthening the credit information system, credit rating, credit scoring, structuring of innovative products, capacity building of the participating banks, policy and regulatory issues, and promotion of market-oriented BDS for the sector. The outcome will be to make SME lending an attractive and viable financing option for banks, as also to facilitate increased turnover and employment in the SME sector.
Cluster Overview
Rajkot is centrally located in Saurashtra region in the state of Gujarat (
see Map) in India. The geographical spread of the cluster includes Aji Vasahat, Bhaktinagar Industrial Area, Mavdi Plot, Samrat Industrial Area and Atika Industrial Area areas in Rajkot. In addition, a large number of engineering units are located in fast-expanding industrial neighbourhoods such as Metoda GIDC and Sapar-Veraval. While Aji Vasahat is only about 3 km from the city centre, Sapar-Veraval and Metoda GIDC are at a distance of about 18 km and 20 km from the city centre, respectively.
Selection of sectors for intervention
Interactions with MSMEs and cluster stakeholders revealed that there have been a few interventions by external agencies aimed at BDS development and promotion and setting up of common facilities at the cluster level in selected sectors: for instance, in the machine tool sector by United Nations Industrial Development Organization (UNIDO), in the bearings sector by MSME Development Institute, and in the diesel engines sector by Entrepreneurship Development Institute of India (EDI). However, some of the other sectors like automotive components are too diversified in terms of the products they manufacture and the markets they cater to. Discussions with BDS development experts during the course of diagnostic studies revealed that it is better to focus on a few sectors (ideally two) rather than target all the six or so industry segments present in the cluster.
Based on focused discussions with stakeholders, two sectors have been selected for BDS interventions in the Rajkot cluster: (1) foundries and (2) pump sets. These two sectors were found to be the most promising, in terms of their potential to improve/modernize and the scope for making maximum impact within the limited project timeframe.
