Draft End of Project Report under the project ‘Support to Country Effort for SME Cluster Development’ of UNIDO (US/IND/01/193) during 2002-05

The Textiles Committee, Ministry of Textiles, Govt. of India

By: UNIDO Cluster Development Programme

November 22, 2005

1. Executive Summary

The Textiles Committee (TC) was established in 1964 under the Textiles Committee Act 1963. It is under the administrative control of the Ministry of Textiles and is headed by a Chairman (from the industry) and managed by a CEO. Headquartered in Mumbai, it has 29 offices across the country. TC had been associated with the UNIDO project at Tirupur, even prior to start of the SCE project.

As per the mandate of the SCE project, the clusters at Panipat and Ludhiana were selected as demonstration clusters for implementation. Through the affiliation with UNIDO, the partner wanted to learn the tools for fostering collaborative activities in the cluster, by undertaking activities other than technical ones, where the partner enjoys a high degree of core competence. TC was quick in understanding the methodology and the main committee approved a complete plan for taking up cluster development on a large scale.

There were 23 clusters identified for intervention by TC in 2002. Subsequently the CDAs were trained on the UNIDO methodology and asked to conduct diagnostic studies in their respective clusters. The TC has transformed itself from a regulating to a facilitation agency working closely with the industry in the last 5 years. Steps to support cluster development followed suit as the CDAs were provided with both necessary funds and commensurate authority to be able to undertake cluster development work. TC aims to become a one-stop solution provider to the textiles industry through the cluster programme. Initially driven by the CEO, the cluster programme is now endemic to the committee and suitable support mechanisms (both administrative and policy) are being built. Several sections of the organization cutting across line and staff functions have been integrated into the cluster development work.

Certain gaps however exist in implementation and understanding of the approach at some levels in the organization. While steps have been taken to overcome these issues, a clear delineation of the role of the CDAs is yet to be done in terms of their organizational growth. Reinforcement and backstopping support mechanisms need to be created to create a sustainable cluster development system in place.

2. About the partner

The Textiles Committee started functioning on from the 22nd August, 1964, established under the textiles Committee Act 1963. The main objective of the Textiles Committee is to ensure the quality of textiles and textile machinery both for internal consumption and exports. The Textiles Committee, as a corollary to its main objective, has been entrusted with the following functions:

  1. To undertake, assist and encourage, scientific, technological and economic research.
  2. To establish standard specifications for textiles, textile machinery and the packing materials.
  3. To establish laboratories for the testing of textiles and textile machinery.
  4. To provide training in the techniques of quality control.
  5. To provide for the inspection and examination of textiles and textile machinery.
  6. To promote export of textiles.
  7. To collect statistics and
  8. To advise the Central Government on all matters relating to textiles and textile machinery, etc.

The Committee is under the administrative control of the Ministry of Textiles, Government of India. The Textiles Committee is managed by a Committee comprising of 29 members. It has a chairman from the Industry, a vice-chairman, Textile Commissioner (ex-officio), and a Secretary, who also acts as the Chief Executive of the organization as a Member Secretary. There are 12 other ex-officio members representing various textile federations, ‘Export Promotion Councils’ etc., and 14 other members representing almost all the interests of the textile sector.

The Committee's headquarters is at Mumbai. There are 29 other officesin major textile manufacturing/exporting centers, of them 18 have textile testing laboratories, including 9 eco-parameters testing laboratories.

The main business functions of the Textiles Committee are handled by the following Divisions:

  1. Export Promotion & Quality Assurance Division
  2. LaboratoryDivision
  3. TQM Division
  4. Market ResearchDivision

3. Principal turning points of the partner during the last 5 years preceding CDP

The Govt. of India has targeted its institutions and statutory bodies to become self-reliant. This implies that institutions can no longer continue to depend on govt. funding and have to raise resources to meet their recurring expenses. Most institutions have been given phased deadlines. Textiles Committee was also facing a similar challenge. It was hence essential for TC to find a business model out of the existing set of activities and at the same time continue to work towards it original objective of making the textile industry more competitive. The Textiles Committee in the last 5 years had evolved from primarily a cess collection agency to a service provider first providing testing services followed by consultancy services for Quality assurance and Social Auditing. While being in cess collection and issuing of certificate for GSP, the TC was vested with the administrative power, which brought the industry to their doorstep. But with TC becoming a service provider, the style of working has become more customers friendly. The reorientation of the staff was not an easy task to accomplish as it required execution of a complete transformation process starting from creating a desire in the entire cadre including the designated CDAs.

Thereafter, initiatives for building their capacities to undertake cluster development work, integrating the other organs of the organization into the cluster development work were undertaken. Infrastructure support, administrative support, motivational support and empowerment were all provided in a phased manner to ensure a smooth transition.

4. Vision of the Partner with respect to its relationship with cluster programme

An appreciation of the UNIDO approach already existed at the CEO level in TC thanks to the interaction with the UNIDO CDA based at Tirupur. Through the cluster programme the partner had a vision of becoming a one-stop solution provider for the textile industry in India. Under the aegis of the cluster programme the partner could undertake wide-ranging initiatives that could enhance the competitiveness of the textile clusters.

Interventions ranging from marketing support to infrastructure could be taken up under the ambit of the cluster programme. The partner while committing to financial outlay for the two joint clusters also made allocation for taking up initiatives on a national basis. The partner was also proactive and clear that an integration of various stakeholders was necessary for the success of the programme. Accordingly in the national programme several public and private stakeholders were involved.

Besides becoming one stop solution provider and facilitator in enhancing the competitiveness of the textile industry, the partner also wanted to ensure an increase in the revenue from its existing set of services. The revenue growth of the existing services of TC was contingent on the growth of the industry fostering an active interest in cluster development. Through the affiliation with UNIDO, the partner wanted to learn the tools of fostering collaborative activities in the cluster, while undertaking activities other than the technical ones where TC already had a core competence[1].

5. Implementation Strategy of partner’s CDP and evolution thereof

At the outset of the programme, an explicit statement of intent and the methodology to be applied for cluster development was approved by the main committee. This approval was the first step indicating the seriousness of intent. Simultaneously, financial allocations were made to facilitate the implementation process. Subsequently, the partner in the first year of the programme developed a countrywide programme to be implemented in 23 clusters. In this programme several cross cutting issues were taken up to implement after customizing them according to specific needs of the respective clusters.

A policy statement endorsed by the board of Textiles Committee was issued and published as a reference brochure. In addition to this, another nationwide programme focusing on training was also launched. The CDAs from all the 23 clusters underwent training on cluster development methodology and other key management areas to ensure that the CDAs were ready and capable to address the challenges while implementing the programme in clusters. In the first year itself the Textiles Committee took proactive measures to support implementation in clusters. The CDAs were provided with a revolving fund of Rs 50,000 per cluster for initiating activities. The CDAs were also authorized to take decisions at the local level for any initiative where budget required was less than Rs. 5000 per activity.

In several clusters the programme was initiated through export marketing activity, which was the most explicitly demanded. This facilitated trust building, which was then followed by well-planned interventions that were determined jointly with the cluster firms and other stakeholders. The TC methodology drew substantively from the UNIDO methodology and hence focused on convergence and synergy with the stakeholders. More so the involvement and empowerment of the local system was also retained as the end objective to be achieved in most clusters.

In the second year, the skill development of the CDAs continued and as a policy, other technical officers were requested to get engaged in cluster activities. The branch heads were asked to convene monthly meetings and fix responsibilities of each individual for activities already proposed in the action plan. Till almost the end of the second year the cluster initiatives were entirely driven by the CEO. However to improve the effectiveness of the programme and to get the senior team engaged in this activity, the CEO divided the clusters on a regional basis and 4 directors were assigned for each group of clusters within every region.

In the third year the need of having a central support unit was being felt to meet the continuously emerging request from the clusters and ensuring difficulty in meeting the requirements by each director individually. A centralized support unit was hence created that would act both as advisor to CDAs in clusters, give them back stopping support as well as monitor the programme.

6. Evolution of the Administrative Setup of the partner for cluster programme management - Role of UNIDO CDP

For the initial one and a half year, the cluster programme drew heavy support from the CEO. The CEO was involved actively in planning, executing and even monitoring work in all the clusters. Such intensive engagement was essential considering that:

  1. TC had a staff that had been traditionally engaged in inspection (regulatory) activities. It was difficult for the staff to accept the new role as a service provider who had to sell his services to the same client group they used to monitor/inspect earlier.
  2. Psychological reorientation of the staff and importance of this initiative would only be visible and get translated into action only if the message and ensuing action came from the top supported.

Gradually the CDAs became more empowered and began to make suggestions and propose activities and to consult the other stakeholders in the clusters. Since most of the activities were planned at the HQ and even some of the experts were hired for intervention across different clusters nationally, the activities remained top down. In many cases the CDAs simply implemented the programmes without even knowing what end results they would produce. But such activities were initiated with tested consultants whose credibility was well established by way of gauging their competence level at the headquarter level.

Gradually the participation of the entire office was solicited and the branch head was requested to steer the process locally and devise a mechanism whereby the entire office got involved albeit for small activities. This way every person could seek enhancement in his own business portfolio as well as provide services to the industry. This was also essential to ensure that the senior person in the branch is made responsible for all actions of the office and a cohesive face is put before the clients.

In the third year the functional heads were also involved and the CEO designated each of the 5 functional heads to different regions in the country. Each functional head (designated Director) was allotted more than one cluster and was supposed to act as advisor and suggest the strategy for intervention. The director was also supposed to monitor the cluster development work in each of the allocated cluster. It was an effort to build cross cutting teams for cluster work; however certain administrative issues remained unresolved. Most individuals (including CDAs) belong to different functional streams within TC and therefore feel more accountable to their parent department and profile of the parent department rather than the cluster work as the final annual performance reports have to be written by the functional head that may or may not be their cluster coordinator too. This causes a shift in priorities of the CDA who himself is a part of a functional stream.

7. Areas of hand holding Assistance provided to CDAs by Technical Advisor (TA) and its implication- Role of UNIDO CDP

i. Diagnostic Studies: In both the clusters of Panipat and Ludhiana under partnership, the CDA was assisted in preparing the diagnostic study. The diagnostic study was built around the UNIDO methodology i.e. it focused on the business processes, value chain, and cluster mapping.

ii. Formulation of the Strategy of Intervention: On the basis of the diagnostic study, the UNIDO TA assisted the CDA in identifying the priority areas including the allocation of resources to get the maximum output at different stages of the programme. For example the initial launch stage of the cluster programme requires initiating with activities that give quick results or focusing on activities that respond to the most emergent needs articulated in the cluster. While a little later in the programme, the CDA requires to focus on activities that take a short term and a long term perspective simultaneously through a range of interventions.

iii. VisionBuilding of the Local Association and creation of ownership of the action plans: The diagnostic study tried to capture the changes that the cluster firms see happening in near and distant future. Based on these inputs the TA and the CDA prepared a matrix of possibilities and changes that may happen in relation to the cluster and by sharing these possibilities, the direction of the cluster was evolved followed by the vision and action plans.

iv. Soliciting cooperation from the industry association and local institutions: Integration of the local associations and the local institutions to create an ownership of the interventions locally was an essential component. Also participation by local institutions ensures that an up scaling can be done once the skill sets desired and available are matched locally.

v. Facilitating linkages with knowledge institutions and BDS providers who could be located away from the cluster. Facilitating the first visit of such BDS to the cluster and assisting in promoting the new concepts.

vi. Giving inputs on marketing and various schemes of government. Also giving inputs on how the association could be built and what kind of services it could render to its members.

vii. Facilitating international linkages with service providers and agencies that support subsidized interventions in developing countries like NMCP and CBI etc.

viii. Assisting in planning of large events or assisting on an exception basis for interventions where the CDA is finding a difficulty in mobilizing participation.

8. Policy level changes in partner with respect to cluster development policy

The Textiles Committee had framed a complete programme for cluster development to be implemented in 23 clusters across the country. The document detailed out the complete methodology for implementation along with action plans for each of the 23 clusters. To ensure a greater cohesiveness and a concerted action, all the local branch offices were designated as the cluster development office thereby communicating upfront the importance of the Textiles Committee being in cluster development. No substantive changes were felt as needed to be introduced in the policy framework except for the administrative arrangements for introducing a layer of senior management to ensure more effective monitoring and support to the CDAs.

9. An assessment of the perceived gaps in original program formulation and implementation of the programme

The following gaps were perceived: