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Virtual Clusters - An initiative by Ministry of MSME

The Virtual Clusters concept consists of a dedicated Web portal to be hosted by the Ministry of Micro Small and Medium Enterprises (MSME). 
Link: www.msmevirtualclusters.in

It provides an opportunity for the following stakeholders to register and join.

  • MSME's and their business units.

  • Academic institutions (engineering colleges, polytechnics, ITI's as well as MBA colleges and design institutes).

  • Various experts, consultants and trainers who can provide sector specific help to MSME's.

  • Banks and other financial institutions who are interested in providing financing to MSME's.



  • Various governmental organizations, NGO's, and volunteering executives who have a special interest in the MSME sector.


The main stakeholders in this initiative are the small business units. The role of the other stakeholders is to help the business units grow rapidly in the areas of increasing the sales and the profitability.

The Virtual Cluster concept is being conceived such that small businesses belonging to different sectors can coexist with their fellow enterprises on a web portal and realize the benefits of focused and targeted networking. Web based Virtual Clusters for different sectors can be created rapidly thereby responding to the needs of the stakeholders quickly.

What is the difference between current physical clusters and virtual clusters?

The current "physical clusters" scheme requires the MSME units to be physically located in one geographic area. It also requires time and significant resources to build and maintain the physical infrastructure. Virtual Clusters on the other hand remove the need to maintain a physical presence in these regions. Small Businesses/ Enterprises can be located anywhere in India and yet be able to realize all the benefits that units in the physical clusters now realize.

What are the Benefits to various stakeholders?

Business enterprises

  • Awareness of various opportunities such as government tenders and export opportunities.
  • Training in new technologies that will improve their operations and reduce costs.
  • New product development opportunities.
  • Help from students and faculty from nearby academic institutions without having to pay for such help. Such help can be in areas such as quality improvement, cost reduction, new product designs, etc.
  • Targeted help from consultants and experts specific to particular business sectors.


Studies have shown that a large number of students are not able to get meaningful jobs after completing their studies since they lack the exposure to solving real life problems. Through the Virtual Clusters web site and other associated activities we are aiming to address this problem by linking various academic institutions to businesses. As a part of their industry internship program students can help implement a number of systems at the business units without these businesses having to employ outside experts to provide such services.

Consultants and other practicing professionals

Professionals who have expertise in specific business sectors will be able to quickly reach businesses in that sector who are registered through the Virtual Clusters web portal. This will make the process far more efficient for both the parties.

Banks and other financial institutions

Many banks and other financial institutions offer special funding packages to small businesses. Through the Virtual Clusters initiative they will be able to offer sector specific funding packages rather than a standard offering in which the small businesses have to fit in. This will enable banks to specialize in sectoral funding and simultaneously spread their risks across a larger number of companies in a given sector. Businesses will benefit by saving time and having ready access to better suited funding options.

Central and State Government organizations

A number of central and state level organizations offer many programs targeted at the small business community. The Virtual Clusters portal will make it easier for policy makers and other implementing agencies to reach these businesses quickly and more efficiently.

NGO's and Volunteer advisors

As in case of governmental organizations many regional NGO's and volunteer advisors can reach MSMEs that are registered in the Virtual Clusters web site more effectively.

Pilot Project

Virtual Clusters model is being tested through a pilot that will first focus on businesses involved in the Food Processing Industry. This includes companies that make food products and those that make equipment used in food processing. The concept will then be readily and rapidly extended to a number of other sectors.

Examples of food products

  • Packaged honey and various honey based products

  • Dry fruits

  • Saffron Spices

  • Various types of nuts: cashews, peanuts, walnuts, etc.

  • Juices

  • Herbs

  • Biscuits and other baked products Etc.

Examples of food processing machinery

  • Pasteurizing machinery

  • Baking ovens

  • Spice grinders

  • Packaging machinery

  • Juice making machinery etc.

After getting some experience with the pilot project for a few months the Virtual Clusters web site will be opened up to a number of other sectors.

How will the Virtual Clusters website and the initiative be administered?

NIESBUD, a training arm of MSME Ministry will administer the Virtual Clusters web site and will pro actively perform the following activities:

  • Work with bankers and various stakeholders within the government in the best interest of the MSME's.

  • Survey the needs of the Food processing sector and organizing the availability of required technologies and

  • facilitating specialized training in the application of such technologies.

  • Work with the purchasing arms of the various government departments and PSU's to assess their purchase requirements that have been reserved for purchasing from the MSME's.

  • Work with the academic institutions to review their experiences and help fine tune the process as needed.

  • Monitor web site usage and suggest any changes that might be necessary to enhance overall user experience.

  • Anything else that needs to be done to make the initiative a strong success at an early date.

  • Organize a package of software applications that will be of benefit to MSME's.

  • Train academic institutions and MSME's in the use of such software applications.