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City Cluster Economic Development (CCED) India Case Study SPMS-NIUA-APDS Supported by ADB WUF 5: Rio, Brazil March 2010 Objectives of CCED • Assess spatial and economic characteristics and explain patterns • Identify key challenges • Explore good practices and innovative solutions • Develop innovative strategies • Disseminate knowledge NCR Total Area -30242 Sq Kms Total population -37 Million (2001) Administrative units in CNCR Competitive Business Clusters and Development Strategy in NCR India Pre- Profiling Identifica Busines Diagnosti feasibility Profiling of of tion of s Plans c of of important economic important for Selected important cities in Developm Business selected Business projects in India ent in Clusters business clusters business NCR in NCR clusters clusters 60.0 Employment- Concentration, Growth & Size Delhi Retail Trade LQ 13.73 40.0 Finance,insurance,real estate,business services LQ 1.12 Relative Growth 1998 - 2005 20.0 Community & other services LQ 0.38 0.0 -4.00 -2.00 0.00 2.00 4.00 6.00 8.00 10.00 12.00 14.00 16.00 Manufacturing LQ 1.43 -20.0 Construction LQ 0.12 Transport,storage & -40.0 communication LQ 0.51 -60.0 -80.0 Electricity,Gas,Water LQ 0.24 -100.0 Location Quotient 2005 Manufacturing Concentration - NCR NCT Gurgaon Fridabad Sonipat Ghaziabad Food Products, beverages &Tobacco Products low low low low low Textiles high low low low low Leather & leather products low low medium low low Basic Chemical & chemical products low low low medium high Rubber,plastic, petroleum and coal pdts low high high low medium Other non-metallic mineral pdts low high low high low Basic metals & metal products medium low high low high Machinery & Equipment high high high high high Transport equipment & parts high high high high high Other manufacturing industries low medium high high medium Four Important Manufacturing Industries For NCR • Textiles- Readymade garments • Auto Components • General Engineering • IT Enabled Services Diagnostic of Selected Business Clusters National Sector Background Products Machinery & instruments, castings, forgings, Demand Creation is mainly from fasteners, electronic goods and project Infrastructure and process exports. The engineering sector employs over Industry 4 million skilled and semi-skilled workers Heavy and Light Engineering The sector can be categorized into Heavy The industry is dominated by Engineering and Light Engineering segments. large companies without with out Heavy engineering constitutes over 80 per foreign Collaboration. cent of the total industry, while light engineering contributes the rest. The heavy engineering industry includes capital goods/machinery and equipment, and Small sector is dominated by transport equipment. The light engineering vendors to medium and large industry includes items like castings, forgings players in the heavy engineering and fasteners and sophisticated microprocessor-based process control industry equipment and diagnostic medical instruments Faridabad General Engineering Demand Factors- Faridabad Factor Conditions - Faridabad Labour Markets 3.00 2.25 2.20 2.15 2.00 2.15 2.10 1.00 Workers 2.05 Conditions 0.00 Infrastructure 2.12 Business 2.23 New Products Environment Resources Firm strategy and Rivalry -Faridabad Realted Support Institutions- Structure 2.00 Faridabad 1.50 Supply 1.00 Chains 2.00 0.50 0.00 1.00 Technology Collaboration 0.00 Orientation GOVERNME Value Adding NT Faridabad General Engineering Cluster- Competitiveness Factors FACTORCONDITIONS Supportfor Enforcementof businessregulations R&D3.50 Labour· Availabilityof SkilledLabour Longtermplansforindustrydevelopment · ManagementSkills Governmenttaxand subsidysystem · EfficiencyandProductivityof Labour Governmentsupportforcluster… · EducationandTrainingfacilities 3.00 GOVERNMENT Infrastructure Firmsawarenessof valueaddingpotential 2.50 · Qualityof InfrastructureServices… Potentialto addvalueto supplychains · Qualityof InfrastructureServices… ValueAdding 2.00 · Affordabilityof Services Qualityof localsupportservices 1.50 · Qualityof Telecommunication… Responsetimeoflocalsupportservices Resources 1.00 Availabilityofbusinessdevelopment… · Proximityto rawmaterial SupplyChains 0.50 · Affordabilityof localrawmaterialsvis… RELATEDSUPPORTINGINDUSTRIES 0.00 · Qualityof rawmaterials Levelof technologyapplicationin firms WorkersConditions TechnologyOrientation · Qualityof livingconditions for… Levelof CSRactivities · Workplaceconditions Proactive atnationalor internationallevel DEMANDCONDITIONS Stronglocalassociationand business… Markets Levelof knowledgesharing Rateof domesticmarketsexpansion Levelof firmcollaboration Rateof exportmarketsexpansion Collaboration NewProducts Flexibilityofproductionsystems Expansioncapacityfornewproducts Noof foreignand jointventurefirm… Responsivenessand innovativenessto… Structure BusinessEnvironment FIRMSTRATEGYSTRUCTUREAND… risk Readiness to face Quality productsupport Postsales and& reliabilityofproducts Levelof businessethics Major Characteristics –RMG NCR • Around 40% of the Readymade Garments (RMG) of the country are made in NCR • It is one of the largest sources for different types of Readymade Garments • There are approximately 2500 units comprising of manufacturers, fabricators, Embroidery and other supporting units. • The Okhla cluster contributes about 16 % to the total readymade garments exported from India. • Most of the small firms have family owned expertise in areas such as quality controller, finance controller etc. except a few diploma holders for merchandising. • Large firms and export houses have commercially qualified employees for production, inventory control and designing work. Okhla RMG Factor Conditions Demand-okhla Labour Markets 3.00 2.70 2.60 2.00 2.50 2.40 2.30 1.00 2.20 Workers 2.10 Conditions 0.00 Infrastructure 2.00 Business New Products Environment Resources Related Support Industries Firm Strategy And Rivalary Supply Chains Structure 3.00 3.00 2.00 2.00 1.00 1.00 0.00 0.00 GOVERNME Technology Value Adding Collaboration NT Orientation Gaps Identified in the Clusters 4 Availability of 3.5 Education and Business 3 2.5 training facilities Devlopment… 2 1.5 1 Faridabad Govvernment tax 0.5 and subsidy 0 Support for R&D Gurgaon system Okhla Level of long term plans Knowledge for industrial Sharing dvelopment Quality of Infrastructure services Faridabad Engineering Cluster -Activities The long-run vision of the cluster is “The Faridabad Engineering cluster will become highly competitive in both domestic and international markets by adopting the best practices in production process improved technology and innovative marketing” Short Term Activites Long Term Activites • Quality and standards • Tool Room Facilities • Productivity improvement • Reverse Engineering and CAD/ CAM Centre • To improve use of Information Technology in • Testing Centre (up gradation) of QMC the cluster • Expanding markets and enhancing market penetration • Improving supply chain management practices • Workers’ health and safety programmes • To improve access to finance • Joint purchase of raw material Proposed Interventions- Okhla RMG Quality Control and Cutting Room Productivity Improvement Improvement Re-organisation and Fabric Control Plant layout Raw Material Production friendly Sample Garment Engineering Store development Use of standards Pattern Making of Production planning Line balancing Specialized products Sewing Operator Training Textile Knowledge centre R&D and Training innovations Support EDP / IT Application Cluster Based Knowledge Government Sharing Support Okhala Garment And Textiles Cluster Member Number of Sewing Companies Units Machines 23 90 15500 Garments Turn Over (INR /Annum MILLION) 48 mn 1500 Strategic Plan for Competitiveness • Develop Strategic Partnerships • Develop linkages between the local industrial units, technological and research institutes • Participation in domestic and international trade fairs • Networking of stakeholders for convergence of services • Commitment to Social Responsibility • Seek Govt. participation in authoritative manner • Remove bottlenecks in infrastructure • Work towards resolution of critical issues for SME’s Major learning CCED 2 • Preparation of Baseline Information- Data, industry structure value chain and spatial location • Investment Analysis and Opportunities • Prepare pre-feasibility study of a selected action plan for a marketable inter-sectoral project for the garment industry cluster. PEARL/INDIA • Peer Experience And Reflective Learning (PEARL) under JnNURM • To create manageable networks between JNNURM 65 • PEARL website (www.indiaurbanportal.in). • Documentation of URBAN best practices. • Newsletter “PEARL Update” . • Conducting National and Groups Workshops.
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