DIRECTORATE OF SFURTIKhadi & Village Industries Commission

Government of India, Ministry of Micro, Small & Medium Enterprises3, Irla Road, Vile Parle (West), Mumbai – 400 056.

**********

India has a rich heritage in promoting traditional industries.

The eco-friendly products of traditional industries not only have

great potential for growth in production and export but also for

generating sustainable employment opportunities in the rural

areas of the country.

Micro Small and Medium Enterprises do play an important role

in the industrial development of our nation. This sector has

contributed 40% to its industrial output and 35% to direct exports,

out of which rural artisan based clusters producing 60% of India's

manufactured exports with significant share of employment

generation, to thirteen million people. A rural artisan cluster is

geographically concentrated household units producing

handicraft/handloom products, often belong to a traditional

community, producing the long-established products for

generations and the skill of centuries old. India is known for its

rural traditional industries clusters producing variety of items

including basketry, mat weaving, cane-bamboo articles,

earthenware, folk paintings, glass products, horn and bone,

leather, jewelry, metal wares, pottery, sea shell crafts, wood

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DRAFT SCHEME/OPERATIONAL MODALITIES

FOR MODIFIED SFURTI PROGRAMME

carvings, etc. Majority of these clusters are in the handicrafts

sector, covered with few hundred workers. Some are so specialized

in making shawls and malmal that no other part of the world

matches their skills and global competence, at the same time a

minority of such clusters is globally competitive.

Realizing the need for conserving and bringing productivity

out of the traditional skills, providing decent income for livelihood

of the artisans and facilitating their sustainable development, the

Ministry of MSME, Govt. of India has taken up this challenge and

evolved a high design of successful model - SFURTI: the Scheme

of Fund for Regeneration of Traditional Industries, that

witnessed the taste of time, with the successful implementation of

the programme under 11th Five Year Plan.

The new modified SFURTI is now devised to set up 915 SFURTI

(approx.) Khadi and Village Industries Clusters in different parts of

the country for 12th Five Year Plan.

The Implementing Agencies will have the flexibility to choose

its own basket of components as per its needs and accordingly

project size would be determined for each eligible cluster.

The Scheme will be implemented by Ministry of Small and

Medium Enterprise (MSME), through its Nodal Agency Khadi and

Village Industries Commission with the collaboration of State

Governments, State/Central Govt. undertakings/Agencies and Non-

Governmental Organizations including artisan/industry 2

associations. A sum of Rs.1000.00 Crores (approx.) has been

envisaged for establishing 915 (approx.) Khadi and Village

Industries for the 12th Five year Plan (2012-2017).

The Operational guidelines of the new Scheme of fund

for Regeneration of Traditional Industries are detailed as

under:

1. TRADITIONAL INDUSTRY AND TRADITIONAL INDUSTRY

CLUSTERS:

(i) Broadly, traditional industry means “an activity which

produces marketable products, using locally available

raw material and skills and indigenous technology”.

(ii) Traditional industry cluster, in the context of this

Scheme, refers to a geographical concentration of

around 500 beneficiary families of artisans/micro

enterprises, suppliers of raw materials, traders, service

providers, etc., located within one or two revenue sub-

divisions in one or more contiguous District(s).

(iii) No. of clusters under 12 th Five Year Plan -

Total No. of Cluster : 915

Total Fund Outlay : Rs.1000.00 Crores

Sr. No.

Type Non-NE NE Total Fund (Rs.in Cr.)Khadi V.I. Khadi V.I. Non-NE NE

1 Large 23 22 1 4 45 5 150.00

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2 Medium 46 44 2 8 90 10 200.00

3 Small 113 112 4 21 225 25 250.00

4 Micro 226 224 8 42 450 50 250.00

TOTAL (*) 0 430 470 12 75 810 850.00 (*) Projection is an indicative figures in terms of no. of clusters as well as allocation of fund.

Heritage Clusters : 15 Nos.

Fund for Heritage Clusters: Rs. 150 Crores

2. OBJECTIVES OF THE SCHEME :

The objectives of the Scheme are –

(i) to develop clusters of traditional industries in various

parts of the country over a period of five years

commencing 2012-17

(ii) to make traditional industries more competitive with

more market-driven, productive, profitable and sustained

employment for traditional industry artisans and rural

entrepreneurs;

(iii) to strengthen the local governance systems of industry

clusters, with the active participation of the local

stakeholders, so that they are enabled to undertake

development initiatives by themselves; and

(iv) to build up innovated and traditional skills, improved

technologies, advanced processes, market intelligence

and new models of public-private partnerships, so as to

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gradually replicate similar models of cluster-based

regenerated traditional industries.

3. TARGET SECTORS AND POTENTIAL BENEFICIARIES :

The target sectors and potential beneficiaries will

include:

(i) Artisans, workers, artisan groups, SHGs, machinery

makers, raw material providers, entrepreneurs,

institutional and private business development service

(BDS) providers engaged in traditional industries and

working in selected clusters of Khadi, coir and village

industries, including leather pottery, Honey, Bamboo,

Wood, Metal carving and other traditional crafts and

industries.

(ii) Artisan guilds, cooperatives, consortiums, networks of

enterprises, self-help groups (SHGs), enterprise

associations, etc.

(iii) Implementing agencies, field functionaries of

Government institutions/organizations and policy

makers, directly engaged in traditional industries.

4. SELECTION OF CLUSTERS :

The selection of clusters will be based on their

geographical concentration which should be 50 to 500 or

more beneficiary families of artisans/micro enterprises,

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suppliers of raw materials, traders, service providers, etc

depending on the type of cluster, located within one or two

revenue sub-divisions in a District (or in contiguous Districts).

The clusters would be from Khadi and Village industries,

including leather and pottery Honey, Bamboo, Wood&Metal

carving and other traditional crafts and industries. The

potential for growth in production and generation of

employment opportunities will also be considered in selecting

clusters under SFURTI. The geographical distribution of the

clusters throughout the country, with at least 10 per cent

located in the North Eastern region, will also be kept in view

while selecting clusters.

Projection of modified SFURTI programme 2012-2017

(Rs. in Lakhs)Types of clusters

Proposed allocation

of fund per cluster

Coverage of artisans

Duration of the project

Projected Turnover

(*)

Expertise in terms of minimum Experienc

e1. 2. 3. 4. 5. 6.

Heritage Cluster

1000.00 Any number

5 years Between 1000 to 1200 (**)

5 years

Large 300.00 500+ 4 years Between Rs.300 to 500

5 years

Medium 200.00 250-500 3 years Between Rs.200 to 300

5 years

Small 100.00 150-250 2 years Between Rs.150 to 200

5 years

Micro 50.00 50-150 2 years Between 3 years

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Rs.75 to 150(*) That the projected turnover will be 50% for NE States and for other backward States, who

are contributing 10% towards overall project cost, as defined under 11(vi) at Page-23.

(**) Two or more institutions can join together for arriving at the projected turnover, as well as to run the project on joint venture basis.

Types of Clusters –

Heritage Clusters :- A no. of prominent activities are being

carried out traditionally in many parts of the country over the

centuries promoting certain products and related activities.

More importantly, these activities can be similar to any one of

the following –

Khadi :• Muslin of Bengal• Ponduru of Andhra Pradesh• Kanjivaram of Tamilnadu • Kotadoria of Rajasthan & many othersVillage Industries :• Phulkari of Punjab• Chikan Embroidery of UP• Wood Craft of Saharanpur• Madhubani Painting & many others• Kalankari of A.P.

A series of key ‘assets’ is highlighted within these

clusters that promote development opportunities for the

artisans and stakeholders in each of the cluster. This will

further emphasize the socio-economic characteristics and

institutional architecture of each of the respective cluster with

the embryonic agglomeration along with a dominant public

sector and high levels of collaboration. A common enterprise

will be set up, which is revealed that aids collective learning

and co-operation amongst cluster members. This ‘spirit’ has

its source in the traditional history of each of the cluster. 7

However, the role of the public sector and an altruism may be

found in many clusters. The Heritage clusters play a key role

as a catalyzing resource that provides a collective identity

and inspires cluster members to work for the greater good.

5. INTERVENTION/SUPPORT MEASURES :

These would consist of the following –

(i) Replacement of Charkhas, Looms, other tools,

implements and machineries.

(ii) Establishment of CFC.

(iii) Capacity Building Measures.

(iv) Design and Development.

(v) Market Promotion.

Activities that will be merged under SFURTI clusters are

as under :-

(vi) ‘Enhancing Productivity and Competitiveness of Khadi

Industry and Artisans’,

(vii) ‘Strengthening Infrastructure of Existing Weak Khadi

Institutions and Assistance for Marketing Infrastructure’.

(viii) ‘Product Development Design Intervention and

Packaging’,

(ix) ‘Workshed Scheme of Khadi Artisans’,

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(x) ‘Rural Industries Service Centre’,

(xi) Other small interventions like Ready Warp Units, Ready

to Wear Mission, etc. run by KVIC during XI Plan from

Khadi Grants and VI Grants.

6. PROJECTED ALLOCATION OF FUNDS UNDER DIFFERENT

CLUSTERS :

An overall projection has been given in Annexure-III

indicating the projection of funds for different types of

clusters ranging from Rs.0.50 Crore to Rs.3.00 Crore.

Looking to the various activities/interventions of the

cluster, the allocation of funds has been made under the

overall sanction of funds, wherein contribution to the tune of

25% has to be borne by the Implementing Agencies under

Non-NE States and 10% by NE States and other backward

States, as defined under 11(vi) at Page-23.

7. ELIGIBILITY CRITERION OF IMPLEMENTING AGENCY :

The nature and characteristics of Implementing Agencies

shall be as under :-

(i) Khadi Institutions affiliated to KVIC / KVIB having

requisite competence, expertise and experience. Have

the financial capacity and infrastructural base to take up

the programme.

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(ii) Registered NGO under 1860 Act or Cooperative Societies

registered under State Cooperative Acts and Rules

having relevant competence, expertise and experience.

Have the financial capacity and infrastructural base to

take up the programme.

(iii) State / Central Govt. Agencies, Registered Banking

Institutions promoting micro finance activities, Self Help

Groups having group synergy, Consortium of Small &

Micro Industries can also take up the project fulfilling the

criterion / conditional requirement for taking up SFURTI

projects.

(iv) The expertise in terms of experience as required by the

Implementing Agency as well as the projected turnover

in terms of annual production and sales has been stated

in Column No.5 & 6 in the table at Page-7.

8. MAJOR PARAMETERS IN DETERMINING SFURTI

CLUSTERS :

(a) Artisans : Different kinds of SFURTI clusters have been

visualized focusing on the coverage / involvement of

artisans fulfilling the target objectives. Artisans may

therefore be defined as the Spinner, Weavers, Skill &

Unskilled Workforce in Khadi and V.I. directly associated

to manufacturing / production of SFURTI clusters and

getting a minimum of 100 days work in a year and

getting annual wages no less than Rs.8,000/-, which may

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be verified by Bank Pass Book issued to the artisans or

otherwise from Wages Register at the level of

Implementing Agency or by other way of verification,

since many artisans particularly V.I. artisans may not be

directly associated with the Implementing Agencies in

regard to their payment of wages.

(b) Duration of the Project : Considering the various

interventions/activities to be completed in each cluster,

the timeline / duration of project period for Heritage

clusters, Large and Medium type of clusters has been

kept for 5, 4 and 3 years respectively to complete all the

interventions and to achieve the objective outcome of

the respective cluster.

Similarly, Small and Micro type of clusters shall be

having a project period of 2 years in completing specific

interventions as well as in achieving the objective

outcome of the respective cluster.

(c) Projected Turnover : A basic minimum turnover (as

annual total of production and sales) shall be required for

the Implementing Agencies to submit proposals for

different types of clusters. The detail has been stated in

the table at Page-7 at Column No.5.

(d) Expertise in terms of experience :

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Years of experience has been stated in the table at

Page-7 at Column No.6.

9. DETERMINING THE MERIT OF IMPLEMENTING AGENCY:

Already a proposal under progress for approval of the

Commission in regard to determining credit rating of the KVI

institutions by the reputed Credit Rating Agencies of the

country such as CRISIL, ICRA etc.

A suitable framework will be developed for determining

the merit of implementing agency by Credit Rating yardstick,

so that the ultimate outcome for the SFURTI clusters do

become achievable in terms of physical and financial

progress.

Implementing Agency taking up SFURTI project shall

ensure credit rating in regard to their institution during

implementation of SFURTI projects, if not already done with.

10. INCURRING FUNDS FOR MAJOR INTERVENTIONS :

(a) Replacement of Charkhas and Looms / Machineries

& Equipments :-

This is one of the major components under SFURTI

programme. Based upon the DSR, the concerned

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implementing agency shall determine the Charkhas and

Looms or the Machineries and equipments that may be

necessary for replacement considering the size of the

unit and the involvement of artisans thereupon.

The DPR should clearly indicate the total no. of

charkhas, looms, machineries and equipments that will

be replaced/additionally procured under the SFURTI

proposal, besides indicating the total plant and

machinery to be installed at the CFC.

Implementing Agency will however, provide

appropriate land having connectivity of water and

electricity and road, so that a workshed for CFC could be

established. The cost for the workshed may be taken up

under the DPR, excluding the cost of land.

(b) Common Facility Centre(s) :-

This is equally a major intervention for achieving

success of SFURTI programme. This intervention will be

required for all types of clusters including Heritage

cluster. The implementation of CFC(s) will act as a

backward and forward linkages for product development,

product identification, product promotion including brand

building, product positioning and marketing of the

product.

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The Implementing Agency shall submit a proper

sketch and design showing the installation of

machineries in the cluster, names of the machineries,

indicative cost and the capacity utilization of the entire

CFC by the artisan group as a whole.

The Implementing Agency may take help of the

premium technical institutions in the country particularly

IITs, NITs, CFTRI etc. for the purpose for designing the

CFCs in a most appropriate manner,

It has to be kept in mind that CFC(s) shall act as a

vulnerable focal point(s) to improve access / enhance

the productivity, earnings of artisans, reducing real time

inventory as well as reducing per capita investment,

besides improving quality control, standardization etc.

The Programme Directors shall become associated

in approving the design of CFC(s) as prepared by the

Technical Agencies and thereby vetting the machineries,

the cost etc. considering the aspect of capacity

utilization.

The implementing agency shall however provide

land and infrastructure, as may be necessary including

connectivity of roads, electricity, water, etc. for allowing

the CFC(s) to become operational. In this context, it may

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be stated that, a provision of fund has been kept for

construction of workshed for CFC(s) in the scheme itself,

excluding cost of land.

(c) Capacity Building :

This is a very prime link in improving the HR and

training quality aspects of the stakeholders in a cluster

including the artisans through a systematic training

schedule during the project period organizing various

types of training of different categories of personnel in

the cluster.

The Directorate of HRD of KVIC shall act as a pivotal

link in organizing the various training programme as may

be necessary through the existing training institutes of

KVIC as well as creating linkages with established

organizations, training houses, academic institutions etc.

This will help facilitate organizing training in a timely

manner for all the clusters across the country

irrespective of Khadi and V.I. programme. Directorate of

SFURTI shall jointly plan it out with the Directorate of

HRD to ensure compliance within a given time line.

Accordingly, the Directorate of HRD shall plan out

the various courses for different clusters on yearly basis

and the requirement of funds thereupon, which will be

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placed to HRD directly through State/Divisional Directors

or by Directorate of SFURTI.

(d) Design & Development :

Activities proposed in Design & Development will

highlight proper inputs from established Designer

Houses, improved packaging, CAD, CAM, product

development, design development etc. befitting to the

need of consumers in local or domestic market.

Bigger clusters can plan out associations with

reputed and premier institutions like NID, NIFT, IICD etc.

in a regular basis in getting various design interventions,

product mix and product development for the various

target groups based on their demography (identification

of a customer based on age, educational qualification,

income, sex, cultural quotient and similar other factors).

Small and Micro cluster may however select designers

from the empanelled list of designers of PRODIP

programme available with State/Divisional Director,

already.

On the contrary, appointment of new designers in

the cluster should be made through an appropriate

selection process inviting applications through tendering

process observing the Rules, Regulations and Guidelines

in this regard.

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(e) Market Promotion :

Marketing is the ultimate success gradient for any

programme including selling and promotion of products

manufactured / produced under SFURTI programme.

Two specific interventions will qualify for the following

activities :-

(i) Renovation of existing outlet.

AND / OR

(ii) Construction of a new outlet.

The scheme provides support for construction as

well as renovation of sales outlets with exclusive

interiors decoration, air-conditioning, signage,

computerization, furnishing and improving the overall

ambience of the sales outlets. This also speaks of

advertisement, publicity, participation in National and

International Exhibitions, Sales promotion, branding,

product positioning in a bigger way to achieve target

annual sales.

This also includes e-marketing, Website

developments, Quality standardization, besides other

marketing interventions, so that growth line in terms of

sales is achieved.

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Under marketing interventions, the Implementing

Agencies shall plan out primarily for the following :-

Construction of new outlets :-

Any type of cluster can go for the construction of

new outlet at the rate as prescribed under, particularly

considering local PWD / Panchayat / Local Bodies.

However, such rates shall not exceed the following :-

For cities and town falling under ‘A1’, ‘A’ & ‘B’

category, the rate per sq.ft. of construction shall not

exceed Rs.3,000/- per sq.ft. for a maximum of 250, 300

and 400 sq.ft. for clusters of Micro and Small, Medium

and Large Category and such construction shall be taken

up from plinth level to completion / finishing of the outlet

in all respects. Completion includes exclusive interior

decoration, air-conditioning, computerization, signage,

furnishing and improving the overall ambience of the

sales outlets.

For Cities falling under other categories can go for

construction, for which rate per sq.ft. of construction

shall not exceed Rs.2,000/- per sq.ft. for the prescribed

areas as specified in the previous paras for different

types of outlets, keeping all other conditions intact as

per above.

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But, the Implementing Agency shall provide the

land along with appropriate infrastructural facilities with

connectivity of road, electricity and water in taking up

construction of sales outlets under SFURTI programme.

At the same time, the plan of such construction activities

needs to be submitted in the DSR with specific allocation

of area and requirement of funds.

(f) Renovation of Sales Outlets :

Renovation of the existing sales outlet shall be

considered @ Rs.1,000/- per sqw.ft. which should include

interior decoration, computerization, furnishing, signage,

air-conditioning and improving the overall ambience of

the sales outlet irrespective of the location, e.g. cities,

towns, semi-towns, villages etc.

However, the overall outlay for renovation or

of construction of sales outlets shall be restricted

to the fund sanctioned under the head of

respective cluster.

11. IDENTIFICATION OF CLUSTERS :

(i) Nodal Agencies (NA): Khadi and Village Industries

Commission will act as Nodal Agency of the Scheme and

have to identify potential Implementing Agencies (IAs)

for implementation of SFURTI with due approval of the

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Steering Committee. The Nodal Agency is wholly

responsible for holding and disbursement of funds to the

identified IAs and monitoring of the Scheme under the

overall supervision of the Steering Committees.

(ii) Selection of a Cluster: The selection of clusters will be

based on their geographical concentration of beneficiary

families of artisans/micro enterprises, suppliers of raw

materials, traders, service providers, etc., located within

one or two revenue sub-divisions in a district (or in

continuous districts). The clusters are divided in to five

different types based on the artisan availability which is

as under:

(iii) Types of Clusters:

TYPE OF CLUSTERS Availability of beneficiaries DURATION

Heritage Clusters Any numbers 5 YEARS

Large Cluster 500+ 4 YEARS

Medium Cluster 250 + 3 YEARS

Small Cluster 100+ 2 YEARS

Micro Cluster 50+ 2 YEARS

The clusters would be from Khadi, Village

Industries. The potential for growth and generation of

sustainable employment opportunities being prime

consideration in selecting clusters. The geographical

distribution of the clusters throughout the country, with

20

at least 10 per cent located in the North Eastern region,

has also be kept in view while selecting clusters.

Detailed study of social and environmental status,

gender inequalities, poverty conditions, need for

employment generation, level of pollution etc lead to the

selection of a cluster. Other features such as existence

of critical gaps in technology, product quality, common

facilities, skill up gradation, availability of raw material,

marketing support, etc are also considered. Primary data

collection and its analysis are important to build-up

significant knowledge about decision-making in the

planning, appraisal and evaluation of Cluster

Development Programmes.

A Common Proforma (Template-I) will be devised

in the primary stage of selection and DPR of the cluster

is made before the proposal placed in the Steering

Committee for approval of cluster.

(iv) Implementing Agency: It shall be a clear legal entity,

with evidence of prior experience of positive

collaboration among its members, whether formally or

otherwise, as the applicant of the proposed cluster

development initiative assures sound management. The

proposed IA for cluster development seeking assistance

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under the SFURTI must emanate from special purpose

vehicles (SPV), consisting of the actual/likely cluster

beneficiaries/ enterprises organized in any legally

recognized form like a KVI institution, State Board,

MS&ME organizations, institutions associated with

Central/State governments, Co-operative society, NGO,

Trust, Entrepreneur Associations, Artisan Associations,

SHGs etc.

(v) Consent of State Government for Clusters:

It is a mandatory provision by the Govt. of India,

that all SFURTI clusters shall receive the consent of

concerned State Govt. as a prerequisite. The Secretary,

Department of Industries and Commerce of the State

Govt. is the competent authority to issue the consent.

This shall ensure the involvement of local administration

for the smooth implementation of the SFURTI CDP at

cluster level and helps in dovetailing of the schemes of

the state and central governments to strengthen the

local governance system at the cluster. Through this

process the legal entity, constitution and existence of the

IA are being confirmed by the government machinery

(vi) Consent towards IA contribution: The Implementing

Agency has to contribute 25% funds on Replacement of

Tools, CFC, Product Development Design development

etc. The same to be agreed and executed by entering

into an Agreement/ MoU between NA and IA. 22

However, implementing agency located in North

Eastern State, J&K, Hill & Border/inaccessible areas, LWE

affected areas and clusters dominated by SC/ST

communities, women, minorities, etc. constituting a

minimum of 60%, shall contribute 10% towards the

contribution of IA for organizing modified SFURTI in their

respective areas.

A suitable agreement/MoU according to the New

SFURTI interventions would be devised in consultation

with Legal experts/Directorate of Legal.

(vii) Direct listing of IA implementing SFURTI CDP with

KVIC:

Direct listing of all the Implementing Agencies

selected for implementation of SFURTI under KVIC is

mandatory.

Direct listing shall be made by Zonal Dy. CEOs

based on the specific proposal and recommendation of

State/Divisional Offices, concerning SFURTI

implementation.

The purpose of direct listing is to safeguard its

interest, safety and security of funds released for the

programme.

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(viii)Execution of EM/Hypothecation:

It will be an avowed responsibility on the part of

State/ Divisional Directors to go for execution of

Equitable Mortgage/Hypothecation Deed of the IA in

regard to the assets created in the cluster within one

year from the date of release of first instalment of funds.

Accordingly, appropriate and necessary action

should be initiated by the State/Divisional Directors for

execution of EM/Hypothecation Deed and to report the

same within the timeline prescribed.

12. STEERING COMMITTEE :

The Ministry of Small and Medium Industry (MSME) will

be the coordinating Ministry providing overall policy,

coordination and management support to the Scheme. The

Scheme is implemented through Khadi and Village Industries

Commission

Steering Committee will make intra-sectoral adjustments

of activities and sanctioning funds without affecting the basic

objectives and thrust of the Scheme. It is the apex body

wrested with power for approving, planning and monitoring

SFURTI Cluster Development Programme activities.

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a. deciding CDP deliverables, making policy decisions,

resolving issues, monitoring and providing necessary

guidance and directions to the SFURTI programme.

b. The Steering Committee is also instrumental in providing

resources, assisting in fund sourcing, involving various

state governments in SFURTI interventions etc

The Steering Committees proposed for the clusters

having the financial outlay of Rs.3.00 to Rs. 10.00 Crores

(Steering Committee–I) is placed at Annexure–I and the

Clusters having the financial outlay of Rs. 0.50 lakh to Rs.3.00

Crores (Steering Committee–II) is placed at Annexure-II.

Convening meeting of Steering Committee :

Steering Committee meetings will be organized in a year

depending upon the need and requirement of such meeting

as determined by KVIC from time to time. Normally, the

Steering Committee meeting should be organized giving due

notice to the members no less than 2 weeks to help them to

participate. Steering Committee meeting can also be

organized in a short notice giving one week time on account

of expressed urgency for convening such meeting.

13. SANCTIONING MECHANISM :

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Considering the huge no. of clusters in a given year

during 12th Five Year Plan, the mechanism may be considered

quite simple, responsive and development friendly meeting to

the ultimate target objective of the project.

(i) Submission of proposal –

State/Divisional Directors shall convene a meeting

of the Institutions, KVI Boards apprising the various

inputs of modified SFURTI programme for 12th Five Year

Plan explaining thereupon the role, functions and

objective of the implementing agencies in taking up the

SFURTI projects for the benefit, the enhancement of the

artisan wages as well as in achieving the target

production/turnover of the institution concerned.

State/Divisional Director shall apprise SLBC of the

modified SFURTI programme seeking participation of

State/Central Govt. Agencies, Nationalized Banks, other

financial institutions and State Govt. for implementation

of such project in a broad based manner. Accordingly,

formal State/Divisional Director shall look for special slot

and timings for briefing over the subject.

In addition to organizing such meeting, the

State/Divisional Directors shall advertise locally seeking

proposals of SFURTI clusters inviting attention of NGOs,

institutions under Central/State Govt., Semi Govt.

26

institutions, institutions funded by local bodies, having

expertise and competency for carrying out cluster

project, preferably in Rural area within the overall ambit

of KVI programme. Two other advertisements will also

required to be published locally calling participation of

Technical Agencies and Cluster Development Executives

(ii) Screening of applications –

All these applications for selection of clusters,

Technical Agency and CDE will be screened on the basis

of eligibility criteria, techno economic viability,

availability of no. of artisans, and other relevant

economic, financial, administrative, environmental

factors etc., by a Committee headed by Zonal Dy.CEO,

CEO, KVIB, Representative of lead Bank, Technical

Expert (officials of State Govt. Dept. promoting similar

programmes under State Govt.), Representative from

Prominent Academic/Managerial/Rural

Department/Institutions of the concerned State and the

concerned State/Divisional Director shall be the member

convenor.

The Committee based on the template (Template-

II) to be provided by Directorate of SFURTI and following

the guidelines issued for the SFURTI programme as well

as looking to the prevailing terms and conditions shall go

27

for short-listing of clusters, Technical Agency and CDE,

preferably within the given timeline.

(iii) Preparation of Draft Project Report (DPR) –

State/Divisional Directors shall in consideration of

SFURTI guidelines in force, submit the DPR of the short-

listed SFURTI projects of different categories by the

Implementing Agencies at their cost. The DPR should be

time bound and a valid instrument projecting all the

various functional inputs of the cluster indicating the

growth, enhancement, requirement of fund, fiscal issues,

administrative issues and outcome of the objectives.

State/Divisional Director shall provide all the

necessary information relating to the institution / IA and

shall also associate one staff of KVIC office for

preparation of each DPR in a time bound manner.

Directorate of SFURTI shall provide a suitable guideline

(Template-III) for framing DPR in a time bound manner

indicating various inputs, financial and operational scope

of work and other aspects as may be necessary.

(iv) Submission of formal proposal by State/Divisional

Director -

Upon preparation of DPR, the State/Divisional

Director shall, with the recommendation of the Dy.CEO

of the Zone, submit suitable proposal to Directorate of

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SFURTI seeking approval of the cluster and sanctioning

of the fund as well as approval of Technical Agency and

panel of CDE in a formal manner.

Directorate of SFURTI shall examine all the

proposals categorically observing thereupon the

fulfillment of eligibility criterion and other related

conditions, besides obtaining vetting from the proposed

concerned Programme Director in regard to the proposal

initiated.

A Technical Committee shall be constituted at the

Central Office level under the Chairmanship of Jt.CEO,

Director(KC), Director(VI–MBI/PCBI/FBI), Director(Finance)

and Director(SFURTI) as Member Convenor, besides

concerned Zonal Dy.CEO and State/Divisional Directors

for examination, screening and finalization of proposals

with due recommendation for seeking necessary

approval at the level of SFC and Commission.

(v) Approval by SFC and Commission –

The short-listed DPRs having been recommended

by the Technical Committee in the Directorate of SFURTI

will be placed to SFC as well as to Commission seeking

in-principle approval for organizing the clusters as well

as appointments of Technical Agencies and the panel of

CDEs of the respective State/Divisional Offices. The

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approval will indicate the name of the cluster,

Implementing Agency, requirement of fund etc., in order

to allow the State/Divisional Offices to execute the

programme as well as to go for preparation and sanction

of DSR, upon obtaining the consent of the respective

State Govt. in this regard.

(vi) Preparation of Diagnostic Study Report (DSR) –

On getting approval of Commission/SFC on the DPR,

the State/Divisional Director shall ensure early

appointment of CDE and Technical Agency for

preparation of DSR, which will be the basic document in

highlighting all the rational inputs in the project and

setting out the activities as planned under SFURTI

project.

The preparation of DSR will be a time bound work of

the Technical Agency following the guidelines of the

Directorate of SFURTI to be prepared for the purpose.

The DSR will highlight the output and outcome of

the project, growth parameters, fundamental concept in

regard to activities outlined and shall provide the

specific action plan on annual basis indicating the

requirement of fund and the fulfillment of objectives.

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The DSR will be examined by the Directorate of

SFURTI initially and thereafter it will be placed to an

Scheme Steering Committee for obtaining formal

approval of the cluster. Two Steering Committees have

been proposed – one for the clusters having financial

requirement from Rs.3.00 Crore to Rs.10.00 Crore and

the other from Rs.0.50 Crore to Rs.2.00 Crore, as per

Annexure-I and Annexure-II.

Director (SFURTI) shall accordingly convene the

meeting Steering Committee at the level of MSME

seeking approval of DSR.

(vii) Communicating sanctioning of the project –

Upon approval of DSR, Director(SFURTI) shall

communicate sanction and release of funds to respective

State/Divisional Director for effective utilization of fund

for the cluster in a prescribed manner.

14. IMPLEMENTATION OF THE CLUSTER PROJECT :

Director (SFURTI) shall ensure sanction by SFC as well as

by the Commission for all the cluster projects and shall hand

it over to the respective programme Directors for

implementation of the programme, excepting the Heritage

cluster and the cluster under Large category.

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Remaining clusters of Medium, Small and Micro will be

implemented by Director(KC/KPM) for the Khadi programmes

and by Director (VI–MBI/FBI/PCBI) for the V.I. programmes.

Accordingly, the overall fund will be allocated to the

concerned Directors for onward release of fund to the

respective clusters for implementation of the programme

leaving the fund for the Heritage clusters and clusters

belonging to large category.

This will facilitate implementation of the programme of

all clusters as per the projection in the first year of 12th Five

Year Plan. At the same time, the entire plan period will be

made available to all the clusters, so as to utilize funds as per

the given activities in each cluster.

In view of that, the concerned Programme Directors shall

ensure reporting of the clusters of their jurisdiction in a

regular manner, so as to facilitate single reporting to the

concerned Directorate in KVIC as well as to the Ministry.

15. TECHNICAL AGENCIES (TAs) :

The Technical Agencies shall be reputed national level

Institutions with expertise in cluster development

methodology and shall provide technical support to the NAs

and the IAs. The responsibilities of the TAs will include

assisting the NAs in identification of clusters, conducting

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training of the Cluster Development Executives (CDEs) and

other officials of the IAs and NAs, validation of cluster action

plans, guiding in diagnostic studies, preparation of action

plan, validation of cluster action plan, supervising execution

of CDP, monitoring and evaluation, etc.

Technical Agency can extend creative contribution in areas

such as, Organizing Awareness programmes, skill development

programmes, workshops, preparing news bulletins showcasing

progress and achievements, arranging hand holding with

public/private Business Development Services (BDS) providers, out

sourcing/improving tools and equipments, developing strategies &

best practices for credit linkage, formation of SHGs, successful

marketing, financing, training modules, technology development,

branding, product catalogue preparation etc. The resource

person/team shall make visits as may be necessary to the

entrusted cluster in a year in a regular manner. The Technical

Agencies shall ensure preparation of DPR/DSR as the case may be,

for obtaining necessary approval of the cluster in a timely manner.

The Technical Agencies shall also MoU with the NA as per the given

terms and conditions.

16. CLUSTER DEVELOPMENT EXECUTIVE (CDE) :

Cluster Development Executive (CDE) is the mentor, who

oversees the implementation of the CDP successful at ground

level. He is conversant with all stake holders as accessible

and a facilitator. Right from conducting the diagnostic study,

preparation of Action Plan, implementation/execution of the

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same, monitoring and evaluation are the broad

responsibilities. Setting tangible and realistic goals, preparing

strategies with full participation and involvement of the stake

holders, induce collective responsibility, generate confidence

and extend support are some of the inherent qualities of

CDEs. As a catalytic agent, he shall motivate the artisan

group and shall promote entrepreneurs in running micro

enterprises at the backend of the cluster, with a view of

facilitating the growth of the cluster.

CDE has to create an entrepreneurial environment

throughout the cluster and to exploit all the opportunities

commercially by the artisan groups, entrepreneurs and by the

IA.

The CDE shall take up the assignment as full time basis

and in close coordination with TA and IA. He will report

directly to IA and will ensure weekly/fortnightly visit to

State/Divisional Directors, submitting necessary reports in

regard to formation and successful implementation of the

cluster.

On the other hand, he is to promote linkages with other

organizations, institutions, Govt. functionaries for inclusive

growth and convergence to build proper local governance

framework for the cluster.

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The CDE shall be accessible at the cluster always and

the IA shall provide necessary infrastructure such as

mobile/telephone, Computer with accessories, Internet

connection, Laptop, Digital camera, furniture etc. to him in a

form of office that will be regularly attended by CDE. NA shall

arrange training for all the CDEs in a regular and formal

manner. On Zonal basis a panel of experienced CDEs has

been prepared through open advertisement by a selection

committee headed by Dy.CEO. Directorate of SFURTI has

notified requisite qualifications of CDE. The IAs can select one

among them as per their terms on contract basis for five

years or termination of the project whichever comes first. An

agreement to be executed between CDE and IA.

Appointment of CDE :

CDE shall be appointed by a Committee headed by

Dy.CEO, concerned State/Divisional Director, concerned Chief

Executive Officer of KVIB, Representative of a Nationalized

Bank preferably Nodal Bank and by Representative of IA,

through open and transparent procedure calling formal

advertisement in this regard and specifying the necessary

terms and conditions thereupon.

17. NODAL OFFICER :

Nodal Agency is to nominate a Nodal Officer for each

cluster, preferably in the rank of Development Officer and not

below the rank of Asstt. Development Officer having sufficient

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knowledge and experience in associating with the cluster in

regard to implementation of various activities as per the DSR

of the programme. Nodal Officer will visit regularly and

ensure proper implementation of the programme and shall

report to State/Divisional Director on monthly basis.

18. CLUSTER DEVELOPMENT CO-ORDINATION

GROUP (CDCG) :

CDCG is the committee formed under the chairmanship

of District Collector or his/her representative with State/ Div.

Director, Rep of TA, Chairman/Secretary of IA, concerned

Govt. officials of the district, LDM (Banker), DDM-NABARD,

Rep of KVIB, Reps of Artisans, Reps of nearby Institutions, and

CDE. The State/Divisional Director shall be the Convenor of

the group. The group will formulate, review and shall

facilitate execution of the cluster in a regular manner.

The CDCG will normally meet at least once in a quarter

or preferably in every month or as and when required. The

group shall however approve the Annual Action Plan of each

cluster including the requirement of fund in a regular manner,

examining and reviewing the activities taken up or to be

taken up in each cluster.

CDCG approval is necessary for any financial proposal

and for release of fund by the Directorate of SFURTI, as per

the approved DSR. Accordingly, the Technical Agency and

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CDE will put up financial proposals before CDCG vetted

through State/Divisional Director for allocation of fund to the

cluster for various activities to be undertaken from time to

time. At the same time, progress report in regard to previous

activities taken place in the cluster have to be brought to the

notice of CDCG for appraisal.

19. RELEASE OF FUND :

The release of fund will be cluster specific. The fund will

be released directly to Nodal Agencies and in turn to the

State/Divisional Director, who will place it to ESCROW A/c for

further withdrawal of fund and for incurring expenditure for

the specific activities upon approval of CDCG of respective

cluster.

20. PROJECT MONITORING :

CDE and Technical Agency shall submit report in a

prescribed format (to be developed by Directorate of SFURTI)

to the concerned State/Divisional Director on 26th of every

month indicating the performance of each cluster as well as

the overall utilization of funds for the period from 25 th of the

preceding month to 25th of the current month invariably as

well as the information as may be required for RFD. The

submission of such information through online arrangements

is under consideration, so that same may be placed at a time

to the competent authorities in the Commission for further

direction.

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Besides that, a regular monitoring at the level of

State/Divisional Director involving Nodal Officer, TA and CDE

has to be done in every month and ensuring submission of

such report on quarterly basis to the Directorate of SFURTI in

the given prescribed format.

21. PROJECT EVALUATION :

Concurrent and post-facto evaluation study will be

conducted on each cluster to ascertain the growth

parameters in the cluster as well as to identify the weak

points for further necessary action.

22. EXIT POLICY:

Based on the Report of Evaluation Study Group, an Exit

Policy will be required to be formulated associating Technical

Agencies, Implementing Agencies and other stakeholders, so

that the clusters remain functional after the expiry of project

period and the artisans do not get deprived of the sustainable

employment opportunities. At the same time, implementing

agency shall continue to function in the cluster tapping

regular normal budgetary support for the same in an yearly

basis for the Khadi and Village Industry clusters.

12TH FIVE YEAR PLAN

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SFURTI

DRAFT SCHEME/OPERATIONAL MODALITIES FOR MODIFIED SFURTI PROGRAMME

FOR 12 TH FIVE YEAR PLAN

DIRECTORATE OF SFURTIKhadi & Village Industries Commission

Government of India, Ministry of Micro, Small & Medium Enterprises3, Irla Road, Vile Parle (West), Mumbai – 400 056.

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