India to Introduce Industrial Cluster Competitiveness Index

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Aug. 23 – The Indian Planning Commission has announced plans to create the country’s first performance index this month to rate its industrial clusters. The Cluster Competitiveness Index will benchmark each of the existing 6,000 industrial clusters in India based on several criteria, including management quality, pollution controls, cluster productivity and technological infrastructure.

By creating the new index, India’s Planning Commission is hoping to increase awareness and attract greater investment into its industrial clusters.

“Clusters have been existing in India for decades but they have failed to attract enough attention for lack of set standards, best management practices and technology,” commented a senior official in remarks given to the Economic Times.

India’s industrial clusters are the backbone of the country’s export industry and have seen large inflows of foreign investment over the last decade. Despite this, the amount of pledged FDI in India’s newest special economic zones has decreased steadily since 2009 when it totaled Rs 34,509 crore (US$ 5.3 billion).

Responding to the suggestion of several potential investors, the Cluster Competitiveness Index Planning Commission has proposed the index in order to facilitate easier comparison between industrial clusters.

“Ratings will help investors to invest in particular clusters besides improving competitiveness among various clusters. This will also help the government agencies to take steps to improve the infrastructure of a particular cluster having poor ratings,” remarked a Planning Commission official.

Dell India has been one of the biggest proponents of the country’s industrial clusters and recently held an event in New Delhi to shine a spotlight on the potential opportunities for investors and small and medium-sized enterprises (SMEs) looking to grow in India.

A public release by the company last month spoke highly of the opportunities in India.

“Dell believes that there is significant headroom for growth in these clusters,” said the release.

The president of India’s Small Industries Development Council, Harish Arora, also emphasized the importance of industrial clusters during Dell’s event.

“SME Clusters are likely to emerge as the future growth engines of the nation,” he commented.

An index pilot program is currently being structured and will include 60 of India’s industrial clusters. The index will represent a variety of industries, including leather, textiles and diamonds. Following the successful implementation of the pilot program, the Planning Commission hopes to launch the complete index in 2014.

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