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SFURTI Scheme: What is govt’s MSME cluster development scheme and how it benefits artisans

MSME SFURTI Scheme: Importance, Benefits & Eligibility: SFURTI enables assistance up to Rs 2.5 crore for the development of ‘regular’ clusters with 500 artisans or less and up to Rs 5 crore for the development of ‘major’ clusters with more than 500 artisans. The assistance includes coverage of hard, soft and thematic interventions.

SFURTI Scheme MSME: The government had launched the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) back in 2005 which was last revamped in September 2022 to promote cluster development for MSMEs in traditional industries. The scheme intends to bring together enterprises in the khadi industry, village industry (such as cottage industry, medicinal plants Industry, bee-keeping, agro based & food processing industry, polymer and chemical based industry, fiber industry, textile industry, etc) and coir industry as collectives or clusters and give required support for growth. Here’s how the scheme benefits clusters and eventually artisans through multiple levels of support:

How does the scheme benefit clusters?
The scheme aims to benefit clusters through a focus on physical infrastructure creation, technology upgradation, training, product development, innovation, design interventions, marketability, improved packaging and marketing infrastructure of the business with the aim to improve artisanal income, according to the latest scheme guidelines. 

SFURTI enables assistance up to Rs 2.5 crore for the development of ‘regular’ clusters with 500 artisans or less and up to Rs 5 crore for the development of ‘major’ clusters with more than 500 artisans. The assistance includes coverage of hard, soft and thematic interventions.

What are hard, soft and thematic interventions?
Hard interventions are referred to the creation of common facility centres (CFCs) and worksheds, procurement of machineries, working capital and raw material bank, tools and technological up-gradation such as charkha upgradation, tool-kit distribution, etc., warehousing facility and training centre. 

Likewise, activities considered as soft interventions for developing a cluster are general awareness, counselling, motivation and trust building; skill development and capacity building; machine handling and maintenance training; exposure visits; market promotion initiatives; design and product development; participation in seminars, workshops, etc. 

Lastly, thematic interventions are provided at a sector level which includes several clusters belonging to that cluster. These interventions are brand building and promotion campaigns, new media marketing; e-commerce initiatives, research & development initiatives and technological upgradation of similar group of clusters based on performance, etc. 

How cluster development is undertaken?
The cluster development is undertaken by implementing agencies (IAs) which could be NGOs, institutions of the central and state governments and semi-government institutions, field functionaries of state and central governments, panchayati raj institutions, etc., with expertise in cluster development.  

One IA is assigned for only one cluster usually. However, in case IA proposes to set up more clusters, nodal agencies (NAs) are responsible for assessing the capability of the IA to set up additional clusters. The selection of lAs, based on their regional reputation and experience of working at the grass-roots level, is done by NAs. For example, Khadi & Village Industries Commission (KVIC) is the NA for khadi and village industry clusters while Coir Board (CB) is the NA for coir based clusters. 

The proposal to set up a cluster under the scheme has to be submitted online to a NA through a form available on the scheme’s portal.  

Any IA interested in submitting a proposal under the scheme has to submit a concept note along with the required documents on the SFURTI portal. Once the proposal meets the basic criteria, it would be submitted to the NA chosen by the IA. The NA would then examine the proposal concept and accept it for the development of a Detailed Project Report (DPR). NA will then verify the presence of artisans given in the concept note along with the representative of MSMEs through physical visits. 

NA will engage an appropriate technical agency (TA) to work with the IA to develop the DPR in the prescribed format which contains profiles of the cluster and all the agencies involved, project concept and strategy framework, details of various interventions, project cost and timeline, expected impact and more. 

The MSME representative will then validate the feasibility of the proposed cluster as per the DPR and submit a report to NA. The NA’s Project Screening Committee (PSC) will examine the report. If the proposal meets the benchmark indicators of a good SFURTI proposal, it will be forwarded to the ministry with its recommendation. 

What are the indicators of a good project under the scheme’s guidelines?
The indicators of a good SFURTI proposal, according to the scheme’s guidelines, include the project must be from traditional industry, at least 75 per cent of artisans must reside in a radius of 10 kilometres of the project location, there should be a substantial increase in income of artisans and cluster’s turnover, the engagement of every artisan in cluster development must be systematically planned, the cost-benefit ratio of the project should preferably be around Rs 50,000 per artisan, there should be a detailed marketing plan, and more.

How funds are released for cluster development?
For the release of funds under the scheme, a proposal for the same has to be submitted by NAs cluster-wise to the MSME ministry. The release of funds to NAs will be based on the approved Plan of Action (PoA), the progress of expenditure and as per the funding pattern. 

The funding pattern involves 50 per cent of the cost for soft interventions, 50 per cent of the cost for hard interventions, 50 per cent of the IA cost and 50 per cent of the TA cost. On utilising the 2/3rd of the released amount, the remaining 50 per cent to all stakeholders is released by NAs. 

Importantly, funds to NAs will be disbursed under two heads – SFURTI Programme Fund and SFURTI Administrative Fund and NAs have to maintain two separate accounts for each of them. All expenses relating to monitoring and management of the scheme and national level activities are met out of SFURTI Administrative Fund and rest from SFURTI Programme Fund. 

How many clusters are developed so far?
As of June 11, 2023, 513 clusters were approved for development since FY16 with the total funds amounting to Rs 1,336 crore extended and employing 2.98 lakh artisans, according to the data from MSME Dashboard. Out of total clusters approved, 313 were inaugurated or commissioned so far, with the highest number of clusters – 106 commissioned in FY22 followed by 96 clusters in FY21 and 62 clusters in FY23. In the current fiscal so far, 15 clusters were approved with the grant of Rs 40 crore and employing 8,875 artisans. However, no cluster has been commissioned yet in the current fiscal.