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Diagnostic Study Report of Hyderabad Pharma Cluster, Telangana

UPDATION OF FINANCIAL & NON-FINANCIAL GAPS IN BHAGALPUR TEXTILE CLUSTER, BIHAR

Submitted to:

Small Industries Development Bank of

India

Strictly Private and Confidential

Submitted on: December 2020

Mapping Financial & Non-Financial Gaps in Bhagalpur Textiles Cluster, Bihar 1

Table of Contents List of Tables ............................................................................................................................................... 4

List of Figures .............................................................................................................................................. 5

Abbreviations ............................................................................................................................................... 6

1 Executive Summary ............................................................................................................................. 7

1.1 Cluster Population & Structure .................................................................................................... 7

1.2 Key Issues Faced by MSMEs in Cluster ..................................................................................... 8

1.2.1 Raw Material ............................................................................................................................ 8

1.2.2 Finance .................................................................................................................................... 8

1.2.3 Market ...................................................................................................................................... 8

1.2.4 Skill Development .................................................................................................................... 9

1.2.5 Infrastructure............................................................................................................................ 9

1.2.6 Credit Demand, Supply & Gap .............................................................................................. 10

1.2.7 Other Issues .......................................................................................................................... 10

1.3 Credit Demand, Supply & Gap .................................................................................................. 10

1.4 Key Recommendations ............................................................................................................. 10

2 Brief Background and Methodology .................................................................................................. 13

2.1 Context of the Assignment ........................................................................................................ 13

2.2 Objective and Scope of the Assignment ................................................................................... 13

2.3 Approach ................................................................................................................................... 14

2.4 Overall Project Methodology ..................................................................................................... 14

2.4.1 Secondary Research ............................................................................................................. 15

2.4.2 Primary Research .................................................................................................................. 15

2.5 Methodology for Credit Gap Assessment .................................................................................. 15

2.5.1 Credit Demand Estimation ..................................................................................................... 15

2.5.2 Credit Supply Estimation ....................................................................................................... 16

2.5.3 Credit Gap Estimation ........................................................................................................... 17

3 Baseline Study of the Cluster ............................................................................................................ 19

3.1 Product ...................................................................................................................................... 19

3.2 Place .......................................................................................................................................... 19

3.3 History & Evolution .................................................................................................................... 20

3.4 Cluster Profile – Basic Statistics ................................................................................................ 20

3.5 Ecosystem of the Cluster ........................................................................................................... 21

3.5.1 Government Institutions & other Support Institutions ............................................................ 22

3.5.2 Technical & Skill Development Institutions ............................................................................ 23

3.5.3 Industry Associations and Other Service Providers .............................................................. 23


3.5.4 Financial Institutions .............................................................................................................. 23

3.6 Raw Materials Used .................................................................................................................. 23

3.7 Production/Manufacturing Process ........................................................................................... 24

3.7.1 Production Process ............................................................................................................... 24

3.8 Value Chain Analysis Based on Financial Transactions ........................................................... 30

3.9 Markets/Customers ................................................................................................................... 32

3.10 Skill Development ...................................................................................................................... 33

3.11 Finance ...................................................................................................................................... 34

3.12 Usage of Schemes .................................................................................................................... 36

3.13 General Infrastructure ................................................................................................................ 37

3.14 CFCs in the Cluster ................................................................................................................... 38

3.15 Status of Previous Interventions ................................................................................................ 38

4 Benchmark Cluster Analysis.............................................................................................................. 39

4.1 History ........................................................................................................................................ 39

4.2 Specialties ................................................................................................................................. 39

4.3 Place .......................................................................................................................................... 40

4.4 Value Chain Analysis ................................................................................................................. 40

5 Analysis of Business Operations ....................................................................................................... 41

5.1 Raw Material .............................................................................................................................. 41

5.2 Production Process Related ...................................................................................................... 41

5.3 Access to Markets ..................................................................................................................... 44

5.4 Skill Development ...................................................................................................................... 45

5.5 Finance ...................................................................................................................................... 45

5.5.1 Financial Gap Analysis .......................................................................................................... 47

5.6 Sustainable Development.......................................................................................................... 49

5.7 Infrastructure ............................................................................................................................. 50

5.8 Any other issues emerging in the cluster .................................................................................. 50

5.9 Status of business development services in the cluster ............................................................ 50

5.9.1 Who Does Who Pays (WDWP) Matrix .................................................................................. 50

5.10 Major Learnings from Benchmark Cluster ................................................................................. 51

5.11 Major Learnings from Value Chain Analysis ............................................................................. 51

6 Suggestions and Recommendations ................................................................................................. 52

6.1 SWOT Analysis ......................................................................................................................... 52

6.1.1 Strength ................................................................................................................................. 52

6.1.2 Weakness .............................................................................................................................. 52

6.1.3 Opportunities ......................................................................................................................... 52

6.1.4 Threats ................................................................................................................................... 52


6.2 Vision and objectives of the cluster ........................................................................................... 53

6.2.1 Cluster Vision......................................................................................................................... 53

6.2.2 Long Term Objectives ........................................................................................................... 53

6.2.3 Short Term Objectives ........................................................................................................... 53

6.3 Recommendations & Action Plan for Non-Financial Areas ....................................................... 54

6.4 Recommendations for Financial Issues .................................................................................... 57

6.5 Interventions Suggested at Policy, Cluster and Unit Level ....................................................... 58

6.5.1 Initiatives where SIDBI may Intervene .................................................................................. 59

6.6 Big Impact Initiatives .................................................................................................................. 60

7 Annexure ........................................................................................................................................... 61

7.1 Comparative Analysis Between Previous Study and Present Study......................................... 61

7.1.1 Basic Statistics....................................................................................................................... 61

7.1.2 Comparative on Key Issues ................................................................................................... 61

7.2 Sample Target vs Achieved....................................................................................................... 64

7.3 List of Stakeholders / Interviewees ............................................................................................ 64

7.4 Validation Exercise .................................................................................................................... 66

7.5 Secondary Sources Referred .................................................................................................... 68

7.6 Questionnaire for Principal Firms .............................................................................................. 69

7.7 Questionnaire for Public and Private Service Providers ........................................................... 75

7.8 Questionnaire for Support firms (Buyers like wholesalers, retailers, exporters etc.) ................ 77

7.9 Questionnaire for Support firms (Supplier of raw material/machinery) ..................................... 80

7.10 Questionnaire for Banks/ NBFCs/ other FIs .............................................................................. 83

7.11 Questionnaire for BMO .............................................................................................................. 85


LIST OF TABLES

Table 1.1 - Cluster Statistics ....................................................................................................................... 7 Table 1.2 - Summary of Credit Gap .......................................................................................................... 10 Table 2.1 Credit Demand Estimation Process .......................................................................................... 16 Table 2.2 - Credit Supply Estimation Process ........................................................................................... 17 Table 3.1 - Product Categories ................................................................................................................. 19 Table 3.2 - Key Pockets in the Cluster .................................................................................................. 20 Table 3.3 – Number of Powerlooms .......................................................................................................... 21 Table 3.4 - Cluster Statistics ..................................................................................................................... 21 Table 3.5 - Type of Yarns Used ................................................................................................................ 23 Table 3.6 Process for Kundi Finish for 50 Sarees ..................................................................................... 28 Table 3.7 Value Chain Addition - Tussar Silk Saree: (Tussar 80 GSM including Blouse total length 6.25

meter) ........................................................................................................................................................ 30 Table 3.8 Value Chain Addition - Suit Length (Tussar Fabric): ................................................................. 31 Table 3.9 Value Chain Addition - Linen Shirting 50”/ Meter: ..................................................................... 31 Table 3.10 Value Chain Addition - Bhagalpuri Chaddar (54”x 108”): ........................................................ 32 Table 3.11 Value Chain Addition - Napkin ................................................................................................ 32 Table 3.12 - Whether Units have Applied for Loan Before ........................................................................ 34 Table 3.13 Source of Borrowing ................................................................................................................ 35 Table 3.14 Schemes .................................................................................................................................. 36 Table 3.15 Road Connectivity ................................................................................................................... 37 Table 3.16 Bus Connectivity ...................................................................................................................... 37 Table 3.17 Train Connectivity .................................................................................................................... 37 Table 3.18 - Interventions and its Impact .................................................................................................. 38 Table 4.1 – Comparison of Bhiwandi & Bhagalpur Cluster ....................................................................... 39 Table 4.2 Value Chain Analysis of Linen Fabric of 55” Produced on Powerloom .................................... 40 Table 5.1 Credit Supply Estimation ........................................................................................................... 47 Table 5.2 - Working Capital Demand Assessment ................................................................................... 48 Table 5.3 - Term Loan Demand Assessment ........................................................................................... 49 Table 5.4 - Credit Gap Analysis ................................................................................................................ 49 Table 5.5 - Who Does Who Pays Matrix ................................................................................................... 50 Table 6.1 Action Plan ................................................................................................................................ 55 Table 6.2 - Recommendations for Financial Issues .................................................................................. 57 Table 6.3 Financial Action plan ................................................................................................................. 58 Table 6.4 Initiatives where SIDBI may Intervene ...................................................................................... 59 Table 7.1 Comparative Between the Previous Study and this study ........................................................ 61 Table 7.2 - Sample Mix.............................................................................................................................. 64 Table 7.3 - List of Interviewees ................................................................................................................. 64


LIST OF FIGURES

Figure 2.1 Project Approach ...................................................................................................................... 14 Figure 2.2 - Credit Gap Estimation Methodology ...................................................................................... 15 Figure 3.1 - Geographical Spread of Cluster ........................................................................................ 19 Figure 3.2 Cluster Map .............................................................................................................................. 22 Figure 3.3 – Weaving Process .................................................................................................................. 24 Figure 3.4 Direct Warping.......................................................................................................................... 25 Figure 3.5 Weaving Process ..................................................................................................................... 26 Figure 3.6 – Calender Finishing. ............................................................................................................... 29 Figure 3.7 – Production Process Flow Chart for Weaving Industry .......................................................... 30 Figure 3.8 – For what Purpose do MSMEs Require Loans ....................................................................... 35 Figure 3.9 - Government’s Scheme Awareness ....................................................................................... 36 Figure 3.10 - Government’s Scheme Availed............................................................................................ 36 Figure 5.1 - Issues Faced while Applying for Loans ................................................................................. 46


ABBREVIATIONS

Abbreviation Full-Form

MSME Micro Small and Medium Enterprises

DIC District Industries Center

PSC Power loom Service Center

WSC Weavers Service Center

BIADA Bihar Industrial Area Development Authority

MWs Master Weavers

GoB Govt. of Bihar

GoI Govt. of India

NABARD National Bank for Agriculture and Rural Development

CSB Central Silk Board

BIST Bihar Institute of Silk Technology

NIFT National Institute of Fashion Technology


1 EXECUTIVE SUMMARY

1.1 CLUSTER POPULATION & STRUCTURE There are two types of textile industries in Bhagalpur cluster. One is handloom and the other is power loom. Though there is no census data on number of looms in the cluster, but a rough estimation says, there are around 8000 handlooms operational in the cluster, employing around 20,000 people directly and indirectly. 99% of the looms are pit looms up to 52 to 56 inches and remaining one percent frame loom. More than 95% of weavers do job work for traders while remaining 5% are independent weavers or work under cooperative fold. Traders located in Bhagalpur township give orders to Master Weavers who execute the orders through weavers and pay wages. Here, Master Weavers (MWs) work like commission agent and take around 7% commission on total value of product. The investment on yarn and wage is done by the traders.

There are approximately 14,000 power looms in the Bhagalpur cluster employing around 30,000 people. Most of the looms are secondhand looms bought from Meerut, Bangalore, Mumbai area at around INR 40,000 to INR 50,000 depending upon the condition of the loom; whereas a new machine costs around INR 75,000 to INR 90,000. Since the looms are old, their productivity is also low, almost 40%-50% lesser compare to new ones. Both handloom and power loom together give employment to 50,000 people in the cluster of which 70 % are Muslims and rest 30 % belong to other communities. The total turnover of the cluster is estimated to be around INR 1620 crores.

The support institutions in the cluster are the Weaver Service Centre (WSC), District Industry Centre (DIC, GoB), Directorate of Handlooms (Industries Department, GOB), Central Silk Board (CSB), Power loom Service Centre (PSC), Bihar Institute of Silk and Textile, Exporters at Bhagalpur, Kolkata and New Delhi, Designers at Bhagalpur, Indian Silk Export promotion Council, Financial Institution, Lead Bank, Co-operative Banks and NABARD.

According to District Industry Center there 300 registered power loom units are functional in the cluster. A

study conducted by Foundation by MSME Clusters in 2014 for SIDBI in 2014 says there 6000 handloom

and 10,000 power looms are operational in the cluster and the turnover the cluster is estimated to be

around 1185.6 crores. Again in 2017 SIDBI has validated the report under one of its flagship programme

M- CIP and according to the report the cluster has around 14,000 power looms 8,000 hand looms

operational in the cluster. Considering the above and the interaction with the primary stake holders the

cluster statistics is as follows.

Table 1.1 - Cluster Statistics

Head 2019-20

Cluster Turnover (INR Cr)

Micro 1254

Small 330

Medium -

Total 1584

No. of Units

Micro 4180

Small 220

Medium -

Total 4400

Employment Total 50000

Source: Discussion with various stakeholders in the cluster and research on secondary information


1.2 KEY ISSUES FACED BY MSMES IN CLUSTER

1.2.1 Raw Material

The commonly used materials in the cluster are tussar silk, matka silk, mulberry silk, noel, Korean and

Chinese silk. With shifting of units from handloom to power loom the use of synthetic staple, viscose and

cotton is also visible. Among the yarn used in the cluster silk is procured locally while noel, viscose and

synthetic staples are being procured from Surat, Kolkata and other south Indian states.The yarn market

of the cluster is dominated by local traders, around 80% of the yarn supply is done by the traders and rest

20% is procured by the weavers themselves. The weavers purchase yarn from the dealers who get

commission of 5% & if there is delay on the payment then they take interest of 12%. The weavers

frequently face high price fluctuations due to artificial shortage created by the trader and has become a

regular practice in the cluster which indirectly reduces the profit margin of the weavers. Even if there is a

Raw Materials bank opened with the financial assistance from State Government, but its access has been

limited to few. Moreover, for Chinese silk and Korean silk which is generally traded informally (without tax),

the same yarn when it is sold from yarn bank, it is comparatively high as the marketing system is formal.

A robust control mechanism through collective sourcing of raw material may be taken up to overcome the

dominance of traders, private suppliers. Most of the weavers don’t procure raw material directly due to

lack working capital, rather most of them do the job works where the raw material and other inputs are

supplied by the traders and the weavers have to manage with the nominal wages.

1.2.2 Finance

As far as finance is concerned a power loom operator need around INR 1 lakh to set up a power loom with

dobby and other accessories required, where as a handloom operator need around INR 30,000 to set up

a new loom with required accessories like dobby/ jacquard. Hence most of unit’s are operational form their

home only separate capex for setting up a work shed is not felt.

The cluster has good access to major financial institutions like Lead Bank (UCO Bank), Punjab National

Bank, State Bank of India, Central Bank of India, Bhagalpur Central Co-operative Bank Limited and

NABARD. The role of banks for providing financial assistance to the Weavers of Bhagalpur is nominal.

In Bhagalpur 95% handloom and power loom weavers work with the MWs and traders on the job work

basis where the raw material and other required inputs are provided the by the traders through the master

weavers. So, majority of weavers don’t feel the need of working capital, however, to become an

entrepreneur from weavers, to master weaver to trader and trader to exporter one need working capital

and expansion of looms and work.

There are few successful weavers who upgrade themselves in the value chain by using bank loans and

credit from other informal sources and started own production and marketing, but the example of such

progressive weavers is few. The cluster also need adequate number of service providers in the area of

finance who can deal with the financial requirement and to facilitate the process of documentation required

for a bank loan.

1.2.3 Market

The Bhagalpur cluster stands 2nd in the total countries silk supply after Karnataka. The Indian sericulture

market was worth INR 205 billion in 2017, the market is further projected to reach INR 553 billion by 2023,

at a CAGR of around 18% during 2018-23. India is currently the world’s second largest producer of raw

silk and the largest consumer of raw silk and silk fabric. The market for silk in India is driven by both exports

and very strong domestic demand. Fabrics made up of silk are quite popular in the domestic market during

ceremonies, religious rituals, wedding and festivals. The major market for Bhagalpur was export till mid-

twenties where around 70% of the cluster products were supplied through export market. Despite a drastic

decline the trend in last 7-8 years the total supply to the national and global market is around 50%. This


change includes the change in product range and shifting of weavers from handloom to power loom. It is

also astounding to see that out of 142 primary producer samities (cooperatives) only one is functioning

profitably and has expanded its business of handloom products despite huge competition posed by power

loom. The president of this cooperative says it is because of adhering to quality and originality of handloom

products and constant endeavor on innovation in terms of color / designs of the product to taste the niche

market. However, this niche market is not a general market. Here customers are design and product

sensitive and not price sensitive. As far as the market for power loom is concerned the power loom owners

sell their product through traders in Bhagalpur. Unlike the handloom traders, who invest on raw materials

and wages, in power loom sector, the entrepreneurs who own the units, invest on such working capital.

However, since production is not enough to sell directly to traders in national market. Therefore, most of

these entrepreneurs depend on traders of Bhagalpur to supply their products. Moreover, these

entrepreneurs also look after other work such as- production supervision, purchase of spears &

consumables, accounts and finance and thus find it difficult to invest time in marketing the product.

Besides, they also do not have enough working capital to continue business even if there is delay in

payment; therefore, they prefer to sell it to small traders locally. The final product of the Bhagalpur cluster

goes to cities like Kolkata, Mumbai, Bangalore, Delhi, dyed/printed & finished there and sold. The major

value addition is done here by printing it which gives almost 75%-100% profit. Both the handloom and

power loom products are different in terms of their cost of production, quality, and design. Both have huge

potential in their respective markets. However, the problem comes when they compete with each other.

Being low-cost cheaper power loom product, if sold in the name of handloom, it creates unhealthy

competition and distorts the market of the later. However, these power loom products are demanded by

the national market, especially the middle-income group, if they are sold in the name of power loom silk

product only, it would retain its image, become competitive and will also not create adverse condition for

handloom products. The potential markets and their exclusivity can be seen in the following diagram.

1.2.4 Skill Development

The cluster in houses around 30,000 power loom worker and 20,000 hand loom workers. Hence the

weaving is a traditional occupation for the people here the skill is inherited. The weavers of the clusters

are highly skilled in weaving and able to do any kind of complex motifs and designs. Hence textile industry

is highly competitive and a consumer sensitive industry the workers need to upgrade them on a regular

basis with the changing trends and market demand. It was observed that the design produce in the cluster

is outdated and traditional. The cluster has a very limited base for value added work and organic dye.

Emphasis must be given on building a capable workforce on block printing, digital printing and high-quality

dyeing practices. The weavers of the cluster have very low understanding on contemporary design,

production pattern and quality aspects. The cluster is also required a huge attention towards development

of allied sector centric skill like garment making and others to absorb the product locally in certain extent

1.2.5 Infrastructure

Infrastructure plays a critical role in growth of any industry. Bhagalpur is a city well connected with common

infrastructure like national highway, state highway and rail network. An industrial has been established

BIADA (Bihar Industrial Development Authority) with 113 plots but most of the industry in the industrial

area are food processing industry while no such provisioning has made to promote textile base industry in

the district. The textile units in the cluster whether it is power loom or hand loom are operational form the

home of the weavers. The high-density population coupled with shortage of land in residential area restricts

the units for further expansion and up scaling. As far as supporting industry is concerned there are few

dyers and printing units are operational in the cluster again operating from the residential area creating a

serious threat to the health of the residents. The cluster is highly dependent on city like Kolkata, Banaras

for value added work like printing and in some extent high quality dyeing. The cluster has a yarn bank and

dye unit established by the intervention under Integrated Handloom Development Scheme Programme of

DC Handloom in the year 2014 have limited with an objective to provide good quality dyeing and yarn


access to the weavers but it was observed that the cluster and the weavers has a very limited access to

the facilities.

1.2.6 Credit Demand, Supply & Gap

The flow of credit for working capital and capex is seems to be very low and alarming. The units in the

cluster are highly unorganized and have a very orientation on healthy banking practices. Low

understanding on the financial products, complex banking formalities, high NPAs restricts the units and

banks for a cohesive financial ecosystem.

1.2.7 Other Issues

Among the other issues frequent power cut, use of outdated and obsolete technology, low quality of power

loom fabric, mixing of low-quality yarn in silk and linen fabric with a intention to earn more profit, low

orientation on market trend, demand and supply, low level quality consciousness and availability of a

healthy and sage work space are prominent.

1.3 CREDIT DEMAND, SUPPLY & GAP As per the calculations, for the fiscal there is a gap in working capital credit to the tune of INR 225 cr, but

excess supply for term loans.

Table 1.2 - Summary of Credit Gap

In Crores Working Capital Term Loan

Credit Demand

Micro 251 0

Small 66 0

Medium 0 0

Credit Supply

Micro 73 8

Small 19 2

Medium 0 0

Credit Gap for MSME 225

-10

1.4 KEY RECOMMENDATIONS The cluster is dealing with several issues as discussed above still the cluster has a huge potential to

grow. Though the cluster has a negative graph of export since last few years the cluster is still popular

for its silk product and standing as second highest supplier of silk fabric in the country after Karnataka.

To restore the past glory and bring back the economy and export potential of the cluster again following

steps must be taken on a priority basis.

• Introduction of technology in pre-loom activities like motor run pirn winding machine electric/ solar

for the handloom weavers may be done to minimize the time consumption at pre loom stage.

Assistance from specialized institutes like IITs, Handloom Technology Development Centers may

be taken to develop and upscale such activities.

• Availability of genuine and good quality of raw material at a mill gate / reasonable price will

enhance the quality of products as well as the profitability of the units. The revival of the yarn

bank or establishment of a separate yarn bank for the power loom weavers may be done as the

raw material requirement and quantity of raw material consumption is different in handloom and

power loom is different.


• The upgradation of existing infrastructure i.e., looms, jigger machines, winding/ warping machine,

automated embroidery, dyeing, and printing is much needed. A CFC with such facilities with R&

D facility may be established in the cluster.

• The products of the clusters are traditional and out of trend, the MWs, local designers and

entrepreneurs may be exposed and capacitated through exposure visit to markets and capacity

building trainings.

• The cluster needs to give much attention on in-house value-added work like organic dye, block

printing, digital printing. The indigenous artwork like Madhubani and Manjusa may be integrated

with the cluster produces for a better visibility and market.

• A strong linkage with market needed to be established by linking the producers directly with the

market. A separate market study may be conducted to suggest the exact and more accurate

measures for the cluster.

• To increase the bargain power of the marginal weavers the exiting producer network may be

revived and strengthen to provide end to end services to the weavers.

• There is lack of coordination among the support stake holder in the cluster, an effective synergy

among them key stake holder may be established to use the resources and services provided

them more effectively.

• There is need of finding an alternative energy solution for the cluster, an expert agency may be

consulted, and energy scoping study may be done for the cluster for an initial piloting.

• Encouraging and promoting private service providers to support the financial need of the cluster

units.

• The weavers and units of the clusters must be oriented on the occupational health hazard and

remedial measures which is a neglected area in the cluster.


BRIEF BACKGROUND AND CONTEXT


2 BRIEF BACKGROUND AND METHODOLOGY

2.1 CONTEXT OF THE ASSIGNMENT The micro, small and medium (MSME) sector is a major contributor and the proverbial backbone of Indian

economy. The MSME sector accounts for around 6.11% of the manufacturing GDP and 24.63% of the

GDP from service activities as well as 33.4% of India's manufacturing output. It is further estimated that

the MSME sector provides employment to around 120 million persons and contribute around 45% of the

overall exports from India.

With its agility and dynamism, the MSME sector has shown admirable innovativeness and adaptability to

survive the previous economic downturn and recessions. However, different studies have pointed out that

despite their relative importance to the Indian economy, the MSME units across the country face a lot of

challenges, both financial as well as non-financial, ranging from unavailability of timely and adequate

credit, raw material, skilled personnel, access to technology, access to market, proper infrastructure, etc.

2.2 OBJECTIVE AND SCOPE OF THE ASSIGNMENT The main objective of this study is to conduct an on-site analysis of the business dynamics and need

assessment of the cluster to do its gap analysis to work out an action plan to enhance the cluster

competitiveness, besides ascertaining the current level of hard and soft intervention. More specific

objectives of the assignment (scope of work) are as follows:

• Updation of Non-Financial gaps

o Business Services - Business Services which are strategic in nature and are necessary

to improve the competitiveness of the cluster. The agency will have to update these kind

of services which are required in the cluster, their present status, the desired situation

etc., in the cluster. The agency will update the entire ecosystem of the cluster and also

mark the cruciality of these service providers in the entire ecosystem.

o Update need and scope for these services, as also find out the services which these

MSMEs require but don't have its availability at all in the cluster. The agency may use

various tools viz., "Who does who pays matrix", "Participatory Appraisal of Competitive

Advantage" (PACA), "Value Chain Analysis" (VCA) etc., for the mapping.

o Update on infrastructure - issues which are continue to affect the growth of the cluster viz.

spatial issues - basic cluster infrastructure (roads, industrial space/galas), common facility

centre, SPVs, social capital, marketing infrastructure, power, water, effluent treatment

infrastructure, cloud / IT services infrastructure, govt. linkages including PPP,

environmental degradation related issues, renewable energy sources, technical

requirements (specific) etc. Identification of gaps in the above, possible actionable points

to address them including the rough cost estimates.

o Update support services (transactional services)- support service areas which are

necessary for the improvement in the cluster. Present stage of these services (status of

services, no of service providers, % of MSMEs availing their services, network of these

service providers etc.). The agency will find out the need and scope for these services.

o Update existing schemes of various State Govt., Central Govt, MSME-DI (MSME-

Development Institutions) and other MSME related schemes and will try to develop the

synergy between them.

• Updation of Financial Gaps

o Updated Assessment of credit gap: Document the demand and supply side issues in

current credit disbursements


▪ Services provided by various Banks / FIs / NBFCs etc. (e.g., Adequacy of financial

services with emphasis on credit, timely availability, rate of interest/other costs,

application and approval process, seasonality etc.)

▪ Key bottleneck (e.g., procedural, awareness, delay in decision making etc.) for

access to finance from various Banks / FIs / NBFCs

▪ Financial value chain analysis to recognize which activities need to be a focus

area for banks to support them through finance and specific financial products

o Assess the institutional mechanism for the credit delivery in the cluster and also suggest

the measures to improve the same.

o Estimate the credit gap in the selected cluster by estimating the current demand & supply

in the cluster and the impact of the same on industrial growth and competitiveness of the

firms/cluster.

o Document the suggestions in terms of:

▪ Refinement required in existing products and procedures to meet the genuine

credit needs of the enterprises in the cluster

▪ Recommendations to enhance the flow of credit to the cluster

▪ Suggest on need of cluster specific financial products

▪ Chart out an action plan for implementation of the recommendation

2.3 APPROACH The project approach adopted by the study team is detailed below.

Figure 2.1 Project Approach

Source: Project Team

The elements which were covered in each of these modules are detailed below.

• Baseline Study – This was done based on secondary and primary research. Given the complexity

of the cluster in terms of the products manufactured, we first identified the key products for focus

and then did a complete value chain mapping of the identified products.

• Benchmark Cluster Analysis – In this module, we identified a renowned cluster having similar

product profile to key factors of success which can be applied/incorporated in this cluster.

• Need Assessment and Gap Analysis – Key gaps and requirements for various factor conditions

like raw material, marketing, skill development, finance, infrastructure, testing & certification and

other such issues have been highlighted in this module.

• Diagnostic Study Recommendations – Here, hard and soft interventions along with an action

plan for implementing the same has been proposed.

2.4 OVERALL PROJECT METHODOLOGY To execute this assignment a three-pronged approach was adopted by the study team.

Baseline StudyCluster

Benchmarking Need Assessment

& Gap AnalysisDiagnostic Study

Recommendations


2.4.1 Secondary Research

Information from secondary sources such as RBI & government publications and documents from local

support institutions & research institutions have also been used for this study. A detailed list of all the

documents and websites searched are captured in Annexure.

2.4.2 Primary Research

A series of structured primary surveys were conducted to understand the main issues in the clusters.

Structured questionnaires (provided in Annexure) was developed to guide the discussions with the MSME

units and other stakeholders. Questionnaire-based interactions were conducted with about 40 primary and

20 support stakeholders (list provided in Annexure) drawn from:

• MSMEs in the clusters – covering micro, small and medium units

• Raw material and machinery suppliers

• Buyers

• BDS providers for various segments like infrastructure, marketing, skill development, environment

protection, finance, technology, energy efficiency and so on.

• Office bearers of cluster-level industry associations

• Government bodies such as District Industries Centre (DIC)

• Local government and private skill imparting institutions

• Lead Bank of the district

• Local Banks and financial institutions

2.5 METHODOLOGY FOR CREDIT GAP ASSESSMENT Credit gap for an MSME-Cluster can be defined as the difference between the ‘aggregate demand of

credit’ and the ‘aggregate supply of credit’ in the cluster at a particular point of time. Estimation of Credit

Gap requires identification of Credit Demand and Credit Supply to MSMEs. Further, these can be broken

down into Working Capital gap (demand, supply) and Term Loan gap (demand, supply). Below is the

schematic of credit gap estimation and discussion of suitable credit gap estimation methodologies.

Figure 2.2 - Credit Gap Estimation Methodology

Source: Study Team Analysis

2.5.1 Credit Demand Estimation

We have used the following methods for the estimation of credit demand:


• Working Capital Demand – The working capital demand has been estimated by using appropriate

statistical tools with ‘total number’ of enterprises’, ‘their aggregate turnover’, ‘percentage of growth

of the cluster’. According to the Nayak Committee recommendations, the working capital

requirement of MSME units is roughly 20 per cent of unit turnover. The number of units and its

breakup among micro, small & medium, along with per unit turnover and the per cent growth rate

that the cluster is expected to witness in the current financial year has been found using the

primary survey among MSME units and other relevant stakeholders in the cluster including leading

associations, bankers, support stakeholders, etc.

• Term Loan Demand – The term loan demand has been arrived at by finding out the total

investments in plant and machinery in the cluster and the expected investment in plant and

machinery by the units in the cluster has been arrived at from the primary survey. The difference

in plant and machinery investments between two fiscals gives us the likely investment in plant &

machinery in this fiscal. Banks typically finance 80 per cent of any investment in fixed assets like

machinery. Using that we have arrived at the term loan demand for the cluster.

The step-wise process for estimation of credit demand is as follows:

Table 2.1 Credit Demand Estimation Process Steps Details Source/ Calculation

Working

Capital

Demand

Step 1 Number of units in the cluster– Micro, Small & Medium (a) Primary Interactions1

Step 2 Per unit turnover of MSME in the cluster (b) Primary Interactions2

Step 3

Cluster turnover (last fiscal) for MSME (c) a*b

Average turnover growth for the Cluster (d) Primary Interactions2

Cluster turnover (present fiscal) for MSME (e) c*(1+d)

Step 4 Nayak Committee Guidelines for WC Loan (f) 20%

Working Capital Funding Requirements (present fiscal) (g) e*f

Term Loan

Demand

Step 5 Cluster Total Investments in Plant & Machinery of all units in the

cluster (last fiscal) (h) Primary Survey3& Calculations

Step 6

Average growth rate of Plant & Machinery for present fiscal (i) ASI4

Cluster Total Investments in Plant & Machinery of all units in the

cluster (present fiscal) (j) h*(1+i)

Step 7

Growth in Investment in Plant & Machinery in present fiscal (k) j-h

Bank Finance (l) Primary Interactions5

Step 8 Term Credit Funding Requirement – March (present fiscal) k*l

2.5.2 Credit Supply Estimation

Enterprise turnover is one of the important criteria for loan appraisal process and it can be safely assumed

that credit supply to the cluster is correlated with the turnover generated. Thus, the study team has used

a method involving the “Proportion of Cluster Turnover to Industry State Turnover” to arrive at cluster level

credit supply.

In the first step, the study team has found out the advances given by the all scheduled commercial banks

to the same industry as this cluster from secondary sources (RBI statistical tables). Following this, the

study team found out the turnover of the industry (similar to the one for this cluster; data from Annual

survey of industries). This data is last available for 2017-18 fiscal. The study team using IIP growth rates

then calculated the state industry turnover for the required fiscal. The cluster turnover is then calculated

by multiplying the number of units with per unit turnover (separately for micro, small and medium units)

1 Interaction with Industry Associations & BDS agency for the cluster 2 Interaction with Units (survey) & Industry Associations in the cluster 3 Primary Survey of Units in the cluster 4 ASI, MOSPI 5 Interactions with bankers in the cluster


based on the primary survey that the study team did. Cluster level advance outstanding is found by

multiplying the ratio of cluster turnover to state industry turnover with the state industry advances. Then

based on the ratio of term loan credit to total credit disbursed in the district (received from lead bank) the

term loan supply and working capital loan supply is calculated. The step-wise process for estimation of

credit demand is as follows:

Table 2.2 - Credit Supply Estimation Process # Details Source/ Calculation

Step

1

State industry advances outstanding (last fiscal) (a) Table 5.6, RBI6

Average growth rate of the state industry advances for present fiscal (b) Table 5.6, RBI6

State industry advances outstanding (present fiscal) (c) a*(1+b)

Step

2

State industry turnover (base year) (d) ASI 7

IIP Growth Rate for the sector- CAGR (e) IIP Growth Rate8

State industry turnover (present fiscal) (f) d*(1+e)

Step

3 Number of units in the cluster– Micro, Small & Medium (g)

Primary Interactions9

Step

4 Per unit turnover of MSME in the cluster (h)

Primary Interactions10

Step

5

Cluster turnover of all units (last fiscal) (i) g*h

Average turnover growth rate for next year(j) Primary Interactions2

Cluster turnover of all units (present fiscal) (k) i*(1+j)

Step

6 Proportion of cluster turnover to state industry turnover (l) k/f

Step

7

Cluster level advance outstanding as of March present fiscal for MSME (m) l*c

Ratio of Advance Achievement for MSE to Credit outstanding for MSE (for the last

available year) (n)

SLBC11, Lead Bank12 and

RBI6

Cluster level credit supply (present fiscal) (o) m*n

Step

8

State Level Advances: Term Loan Advance (Small Enterprise) as % of

Total Advance (Small Enterprises) (p)

SLBC11, RBI13 and Primary

Interactions14

State Level Advances: Term Loan Advance (Medium Enterprises) as % of Total

Advances (Medium Enterprises) (q) Primary Interactions14

Step

9 Working Capital Supply (present fiscal) (WCS)

o*(1-p) or

o*(1-q)

Step

10 Term Loan Supply (present fiscal) (TLS) o-WCS

2.5.3 Credit Gap Estimation

Credit gap has estimated by calculating the difference between Working capital demand (WLD) & Working

capital supply (WLS) and Term loan demand (TLD) and Term loan supply (TLS).

6RBI – Basic Statistical Returns of SCBs in India – Table 5.6 7MOSPI - ASI 8MOSPI 9Interaction with Industry Associations & BDS agency for the cluster 10 Interaction with Units (survey) & Industry Associations in the cluster 11SLBC – Individual SLBC Websites 12 Primary Survey - Lead Bank in the District 13 Basic Statistical Tables Relating to Banks in India 14Interaction with Bankers in the cluster


MAJOR FINDINGS/CHALLENGES HAMPERING THE

GROWTH OF MSMES IN THE CLUSTER


3 BASELINE STUDY OF THE CLUSTER

3.1 PRODUCT Bhagalpur town situated at the bank of river Ganga in the state of eastern Bihar carries a historical importance. Once considered as the biggest trade center of eastern India, the city is famous for its unique silk fabric called Tusser silk. Weaving silk is an old tradition of the city. Bhagalpur ranks 2nd after Karnataka in India in the production of silk. Fabric produced in the cluster is highly popular in India as well as abroad. Silk fabric produced at Bhagalpur are being exported countries like West Asia, Europe, USA and Japan. Bhagalpur Textile Cluster can be majorly categorized by two categories of production process There are two types of textile industries in Bhagalpur cluster. One is handloom and the other is power loom. As per the general definition, a loom is a device used to weave cloth. The basic purpose of any loom is to hold the warp threads under tension to facilitate the interweaving of the weft threads. When the loom is operated manually it is called handloom and when it is operated by energy/ power it is called power loom. Again, based on looms the products produced in the cluster can be broadly classified by three categories as below,

Table 3.1 - Product Categories

# Categories Products

1 Saree Synthetic silk, mulberry, tusar ghiccha and linen

2 Dress Material Salwar suits, Kurta, Scarf and Stoles

3 Home furnishing Cushion Covers, Sofa Covers, Rugs, Table Covers, Bedsheet and others

Source: Primary Survey

3.2 PLACE Bhagalpur, the Silk City of Bihar, is famous for its sericulture, manufacture of silk yarn, and weaving of Tussar silk. It is the third largest urban centre of Bihar. Bhagalpur, the city is referred as one of the biggest trade centers in eastern India. The city had a big harbour on the Ganges River at place called Champanagar (another name for Bhagalpur), now called Champanala, which flows on the western boundary of present city near Nathnagar.

Figure 3.1 - Geographical Spread of Cluster

Hand loom units in the cluster are concentrated around Hussainabad, Champa Nagar, Nath Nagar,

Puraini, Kharik and Mirzafir, However, there is no baseline statistics on the number of looms in these



pockets. On the other hand as per the details from Power loom Service Center the pocket wise loom

distribution is as follows,

Table 3.2 - Key Pockets in the Cluster

Name of the major pockets No. of Unit Number of Looms

Champa Nagar 400 6000

Hasnabad 170 2000

Tanti Bazar 220 2000

Maskand 160 500

Nath Nagar 130 3000

Tati patti 40 100

Narga 20 60

Kharik 20 200

Khanjarpur 30 150

Aliganj and Tatarpur 10 40

Total 1200 14050


3.3 HISTORY & EVOLUTION Bhagalpur, known as Silk City, is famous worldwide for its silk production. The silk industry in this city is

more than 200 of years old. Bhagalpur is well known for its sericulture, manufacture of silk yarn and

weaving them into lovely products. Bhagalpur is known for its distinct and special type silk called Tussah

or Tusser Silk. Bhagalpur silk and saree are a household name in India and the lovers of Bhagalpur silk

fabrics are found across the globe.

During 1941, G. Griyarson who is District Magistrate under British Regime has taken a sample of

Bhagalpur Product to UK and popularized the brand globally15 . Soon after, the hand-woven silk fabrics

started gaining global recognition.

The communal riots in the city in 1989 triggered weaver’s migration and change of profession. In last 15

years many units started shifting from handloom to power loom products because of low cost of production

and growing silk fabric in domestic market. Now, there are more power loom than handloom in the cluster

(approximately 14,000 power looms compared to 8,000 handlooms).

Presently, the silk industry of Bhagalpur is reeling under adverse conditions. It is estimated that while the

market for sarees in the country is poised to grow, but the move to less delicate power looms and an influx

of cheap imported Chinese and Korean silks which have flooded the domestic saree market, have created

an adverse impact on this market.

3.4 CLUSTER PROFILE – BASIC STATISTICS There are approximately 14,000 power looms mostly owned by entrepreneur weavers. One person may

have a maximum of up to 8-10 looms. These entrepreneur weavers get the work done by the master

weavers on contract basis. The power loom sector in the Bhagalpur cluster employs around 30,000 people.

Most of the looms are secondhand looms bought from Meerut, Bangalore, Mumbai area at around INR

40,000 to INR 50,000 depending upon the condition of the loom; whereas a new machine costs around

INR 75,000 to INR 90,000. Since the looms are old, their productivity is also low, almost 40%-50% lesser

compare to new ones.

15 Power loom Service Centre, Bhagalpur


Similarly, there are about 8000 handlooms in Bhagalpur employing about 20000 people. 99% of the looms

are pit looms up to 52‟‟ to 56‟‟ inches and remaining one percent frame loom. Loom manufacturers and

suppliers are locally available. 95% of weavers do job work for traders and remaining 5% are independent

weavers or work under cooperative fold. Traders located in Bhagalpur Township give orders to Master

Weavers who execute the orders through weavers and pay wages. Here, Master Weavers (MWs) work

like commission agent and take around 5% commission on total value of product. The investment on yarn

and wage is done by the traders.

The power loom units of Bhagalpur can be categorized in to 4 categories based on the number of looms

operational by the units. However, there is no such statistics available on the units of handlooms.

Table 3.3 – Number of Powerlooms Power loom units

Subcategories Type of unit

No. of power looms Per unit

No. of units (Approx.) No. of power looms

(Approx.)

Type-A Up to 4 looms 450 1800

Type-B 05 to 08 looms 550 3600

Type-C 12 to 24 looms 150 3000

Type-D Above 24 Looms 50 1600


There are about 8000 handlooms and 14000 powerlooms providing employment to 20000 and 30000

workers respectively.

Table 3.4 - Cluster Statistics

Head 2019-20


Micro 1254

Small 330

Medium -

Total 1584

No. of Units

Micro 4180

Small 220

Medium -

Total 4400

Employment Total 50000

Source: Discussion with various stakeholders in the cluster and research on secondary information

3.5 ECOSYSTEM OF THE CLUSTER The ecosystem of the cluster is explained below with the help of the cluster map. The thick ness of arrow

shows the degree of relationship among the various stake holders of the cluster.


Figure 3.2 Cluster Map

3.5.1 Government Institutions & other Support Institutions

There are few govt. institutions and support system available in the cluster catering to the different

service requirement of the clusters.

District Industries Center: The DIC at Bhagalpur under the Directorate of Industries and Commerce

looks after the promotion of Micro, Small and Medium Enterprises in the district with focus on employment

generation and wealth creation. The center is being instrumental in providing training support, marketing

assistance and ensuing loan support through different schemes to the MSMEs in the district.

Weavers Service Center (WSC): The Weavers Service Center, Bhagalpur was established in the year of

1974 with an objective to develop and support the handloom industry in Bihar and Jharkhand. The major

activists of the Center involves product development, design development, market development. The

center has facilities like testing of colours, count and strength of yar, analysis of blended yarn and uniform

fabrics.

Power loom Service Center (PSC): The Power loom Service Centre (PSC), GOI was established in the

year 2005 with a view to developing power loom industries in the Bhagalpur cluster. There have been partially

successful in providing training to weavers and in designing, testing & technical consultancy.

Central Silk Board: The CSB at Bhagalpur is operational in the cluster under the Ministry of Textile with

a mandate on research and development, training, transfer of technology, seed organization, market

development and quality certification like silk mark.



3.5.2 Technical & Skill Development Institutions

Bihar Institute of Silk Textiles: Bihar Institute of Silk and Textiles is having its campus at Nath Nagar offers 4 years full time undergraduate degree courses in silk technology and textile engineering. Revived in 2005, the Institute is presently offering a two-year vocational course in silk and textile technology. The major course of concern in the institute is lack of teaching staff.

NIFT Patna: The National Institute of Fashion Technology is one of a premier institute in the state situated

in the state capital Patna offers Undergraduate, Postgraduate and Continuing Education Programmes in

fashion technology and accessories designing. The institute has implemented the mega handloom cluster

programme in the cluster in 2014 and provides time to time support in product development and design

development in the cluster and the state.

IIT Patna: Indian Institute of Patna an autonomous institute of education and research in science,

engineering, and technology located at Patna. This institute may play role in technology development for

the cluster in pre loom, on loom and post loom activities.

3.5.3 Industry Associations and Other Service Providers

There is total 9 weavers association functional in the cluster. The objective behind formation of these

cooperatives/ associations/ networks was to provide end to end services in raw material supply and

marketing support. However, none of them are working now in the envisaged direction due to internal

conflict, lack of strong management system and lack of proper planning and execution.

3.5.4 Financial Institutions

The major financial institutions are Lead Bank (UCO Bank), Punjab National Bank, State Bank of India, Central Bank of India, Bhagalpur Central Co-operative Bank Limited and NABARD. The role of banks for providing financial assistance to the Weavers of Bhagalpur is nominal.

3.6 RAW MATERIALS USED The raw materials used in this cluster are Tussar silk, Matka Silk, Eri and Mulberry silk, noil and Chinese silk. Along with the silk, the usage of synthetic staple, viscose, cotton, linen is also being used. The share of silk yarns used16 in the cluster are given as under: Table 3.5 - Type of Yarns Used

# Type of Yarn Percentage Share

1 Tussar 27.72

2 Eri 15.65

3 Matka 26.40

4 Noel 19.45

5 Others 10.78

Total 100.00

Source: Silk Club House, Bhagalpur

The basic raw material i.e., silk is procured locally and the remaining i.e. noil, viscose and synthetic staple is sourced from Surat, Kolkata and south India. Chinese and Korean silk are being imported for the production of fabrics. Major clusters in the Bhagalpur district that produce silk yarn are Nathnagar, Champa Nagar, Aliganj, Puraini, Dariapur, Shekpura, and Mirzafir.


3.7 PRODUCTION/MANUFACTURING PROCESS In Bhagalpur Textile cluster the weaving of yarn into a fabric is performed on a weaving machine called a

loom. Looms can be classified in two categories.

• Shuttle Loom: In shuttle looms, winding of weft yarn on pirns and picking and checking of shuttle,

which carries the pirns, are common feature, which limits the speed of the looms. These are mainly

4 types of shuttle loom.

o Handloom

o Non- automatic power loom

o Automatic power loom

o Circular loom

• Shuttle Less Looms: Shuttle less looms can be classified in below mentioned six major groups.

o Projectile weaving

o Rapier

o Flued Jet

o Multiphase weaving

o Circular weaving

o Triaxial weaving

3.7.1 Production Process

The production process of weaving through handloom and power loom is almost kind of similar. The initial

stage of textile manufacturing involves the production of the raw material either by farmers who raise

cotton, sheep, silkworms, or flax or by chemists who produce fiber from various basic substances by

chemical processes. The fiber is spun into yarn, which is then converted into fabric in a weaving or knitting

mill. After dyeing and finishing, the woven material is ready for delivery directly to manufacturer of textile

products where they are finally stitched into clothes. Polymers are the resource for man-made fibers, which

are derived mostly from oil. Plant fibers and animal fibers constitute the natural fibers. After the fabric is

formed, it is generally subjected to finishing and/or dyeing process, in which the raw fabric properties are

modified for the end use. The most commonly used fabric forming methods are weaving, braiding, knitting,

felting, tufting and nonwoven manufacturing.

3.7.1.1 Process Sequence in Weaving:

Weaving process involves broadly 3 steps warping, sizing and final weaving. The flow chart of the weaving process is shown below,

Figure 3.3 – Weaving Process


Cone/ Cheese warping

(Warper's beam)

Sizing (Weaver's beam)

(Warper's beam)

Weaving (Cloth roller beam)

(Weaver's beam)


• Step 1 - Warping: This process is also known as beaming. A beam contains large number of

individual threads parallel to each other. The resulting package is a warper's beam. There are

broadly two types of warping 1) Sectional warping 2) Direct warping

• Sectional or Pattern Warping: In sectional warping, sections are made sequentially and because

of this the process is rather slow. The sectional warping is used mainly for short runs or for complex

color patterns. Sectional warping is done primarily for producing fancy fabrics (stripe/Check). To

produce the beam from yarns does not require any sizing material to be applied before weaving.

A tapered beam or drum is used for this type of warping.

• High Speed Beam/ Direct Warping: It denotes the transference of yarns from single-end yarn

packages, wound packages, directly to a beam in a one step process. This means that there are

an equal number of packages in the creel area as there are ends on the beam, except in the case

of a magazine creel. A magazine creel connects the tail of one wound package to the beginning

of a new wound package for an easy package transfer. Directly warping is done primarily for power

loom weaving for following reasons,

▪ Produce the common fabric in large quantities.

▪ Produce weaver’s beam for from single yarn.

▪ High speed production

▪ Weavers beam is produced after sizing

▪ Simple flange beam is used

▪ Produce weavers’ beam from large amount of yarn

Figure 3.4 Direct Warping

• Step 2 - Sizing: It is the heart of weaving. In the sizing process, coating of a starch-based adhesive

is applied to the sheet of yarn to improve its weaving speed. Sizing increases yarn strength

reduces hairiness, which minimize the abrasion that occurs between the warp thread and various

parts of the loom.

• Step 3 – Weaving: A woven cloth consists of two sets of yarns namely warp and weft. The yarns

that are placed lengthwise or parallel to the selvedge of the cloth are called warp yarn and the

yarns that run crosswise are called weft yarns. Each thread in the weft is called a pick.



Figure 3.5 Weaving Process

• Basic Motions in Weaving: Every loom requires three primary motions to produce woven fabric

▪ Shedding: This process refers to separate the warp threads into two layers. One

layer is raised and other lowered.

▪ Picking: This process refers to insert a weft thread across the warp ends through

the shed.

▪ Beat-up: This process refers to push the weft thread that has been inserted across

the warp ends up to the cloth fell. Besides the three main basic motions in

weaving, there are other two subsidiary motions necessary for continuous

weaving which are termed as secondary motion.

Dyeing and Printing

• Textiles are usually colored to make them attractive and beautiful. They would appear extremely

dull in the absence of color. There are two ways of adding color to a textile substrate, i.e. printing

and dyeing. Printing is a process in which a multicolor effect is produced on the textile at discrete

places whereas dyeing completely covers the substrate with color. The substances used to color

the textiles can be classified as dyes or pigments. Dyeing is one of a critical process in any textile

industry, the quality of dying is much crucial in the entire process as the contrast and requirement

of color is too important for the customers across the globe.

• Methods of Dyeing


Weaving

Pirn loaded in shuttle

Winding the pirn

Warp brought forward over warp roller

Winding the warp on to the warp beam through the raddle

Spreding the warp in the raddle

Winding the warp

Winding thread in to a cone

Cone of Thread


• Batch wise Process: The machine used in this process is jigger, jet dyeing machine

Continuous processes: These methods are specified by continuous dyeing range. The

basic units for continuous process are padding, steaming, dry heat treatment and soaping.

• Quality of Dyeing: The major requirements for dyed goods are evenness of dyeing,

desired fastness value and brightness of colors. Process controls are necessary to

achieve these objectives.

Printing Process

• Printing results in multicolored design effects on textiles. The most economical multi-colored

effects on textiles can also be produced by combining dyed fabrics or woven and knitted fabrics

using colored yarn, but the effects are restricted to simple geometrical designs. In printing, there

is no restriction to the designer and all types of fabrics in any yarn, pliers or fabrics can be printed.

Printing can be combined with white as well dyed fabric grounds. Broadly, printing can be

classified into these groups.

• Flat Bed Screen Printing: The fabric is printed with the first screen and passes to the next

screen. In this process all the screens for the design (one screen for each color) are

positioned accurately along the top of the long endless belt, known as a blanket.

• Rotary Screen Printing: In rotary screen printing, continuous rotation of a cylindrical

screen while in contact with the fabric ensures genuinely continuous printing. The print

paste is fed inside of the screen. During printing it is forced out through the design area

with the acid of a stationary squeeze.

• Heat Transfer Printing: In this case the paper is printed, first and then it is transferred to

the fabric at high temperature simply by sublimating the disperse dye. Printing of textiles

also contains various styles which can be classified as follows.

• Direct Style of Printing: In this style, the print paste is directly applied either by roller or

screen and desired motifs with different colors can be obtained. This style is generally

applied for all type of print Motifs irrespective of no. of colors, coverage of the print paste

and the cost.

• Discharge Style of Printing: In this style, generally the fabric is dyed all over with any class

of the dye and after drying, the same is printed with certain chemicals which destroy or

discharge the dyed color in the printed portion, which is responsible in giving white portion

in the dyed ground. This is called as white discharge effect or style. If a dye which is

resistant to the above chemicals in the print paste is incorporated, the colored effect

instead white can be obtained and is termed as colored discharge on dyed ground. The

chemical which destroys or discharge the color in the printed portion is called as

'discharging agent'. The dyed color must have good discharge ability whereas a dye in

the printed portion must have no discharge ability property.

• Resist Style of Printing: In this style, the printing is carried out first with certain chemicals,

called as resisting agents and dyeing afterwards. The resisting agents resist for the

development of the color in the printed portion and produced a white effect. If colored

effect is needed, a dye which is resistant to this resisting chemical must be incorporated

in the printing paste and dyeing follows. In this case, a colored resist effect is obtained.

Generally, discharge and resist styles of printing are applied to the fabric motifs where

heavy blocks are used wherein shrinkage of the fabric after printing and cost of the direct

style of printing will be very high and hence discharge and resist style of printing is used.

▪ Weft Preparation: Yarn is first plied to 3-4 threads by winding onto a stick cage in two stages which

takes 5-8 days. Then the yarn twisted in a local process which takes one day. The process

followed here is purely manual. It is interesting that though the plied weft yarn at present is

available in the open market, it is not used by these weavers in order to avoid duplication in quality


of raw material. Plying or blending process has ample scope for adulteration in the quality of silk

yarn which is not noticed in the naked eye. If low quality silk yarn is mixed in this plying process,

the protrudes in the resultant yarn develop pilling effect during end use. Therefore, it is better to

procure single yarn in pure form. But automatic plying machine here also can be experimentally

introduced to reduce the too much add on labor cost. The yarn is soaked in water for 8-10 hours

before degumming. The degumming is carried out for 1 hr. followed by rinsing with hot water and

then cold water. Then yarn is left for drying within one two days. The yarn is again made to 2 ply

by winding on to a stick cage which takes two days and after that the yarn treated with sizing

material in a day and again plied by rewinding on to a stick cage which also takes one day and

then left for drying.

Dyeing Process

▪ Most of the handloom as well as power loom weavers use dyed yarn for weaving. Some prefer to

dye it as per the order received. However, in both the cases, the dyeing technique remains the

same. Mostly Direct, Acid and Metal complex dye stuffs are used in the cluster. All dye stuffs are

water soluble. As the name indicates, metal component is incorporated into Acid dyes to form

Metal complex dyes. Dying is carried out in acidic bath.

▪ Dissolution of dye stuffs: As per the desired shade percentage and material weight to be dyed,

weight of dye stuff is calculated and dissolved in warm water to form a paste and then diluted with

poured warm water up to a measured quantity.

▪ Dye Bath: Dye bath (steal and earthen vessel) is set at 400C approximately with M: L (material to

liquor ratio) of 1: 20. The volume of dye solution is deducted after calculation of liquor ratio.

Chemicals like 10% of Glauber’s salt, 1 – 2 % glacial acetic acids are added separately.

▪ Preparation of Material: The tied silk yarn is soaked in water for 4 – 6 hours with 0.5 – 1% of TR

oil and squeezed gently before entry to dye bath. This is very important because uneven shade

will be developed if the material is not properly soaked.

▪ Finishing: Textile finishing covers an extremely wide range of activities, which are performed on

textiles before they reach the final customer. The term finishing includes all the mechanical and

chemical processes employed commercially to improve the acceptability of the product. The

finishing can be categorized as mechanical finishing and chemical finished.

▪ Mechanical Finishing: This can be further sub divided as calendaring and napping.

• Napping and Shearing: This process essentially consists of surface shearing and cut the

raised naps to a uniform height. Tussar finish is generally done by two techniques to

improve the cover, lusture and look of the fabric. These are dependent on the type of

finish. There are two types of finish which are as under:

• Kundi finish i.e. Beating with wooden hammer: Kundi finish is very common and mostly

done in all export varieties of tussar fabrics manufactured for domestic market. This is an

indigenous practice of fin shining of silk fabrics. After bleaching, the cloth is washed well

in cold water and then it is treated into the finishing bath having the following recipe for 50

saree pieces.

Table 3.6 Process for Kundi Finish for 50 Sarees Material Amount required

Kalatek J 1200 gms

Stabilizer C 50gms.

Arrowroot powder 50gms

Glycerin & I.R. O little amount

Temperature Room temperature



• After treating the silk material in the above bath at room temperature it is dried. Dried tussar fabric can be moistened and wrapped with cotton/silk fabric. The bundle is then placed on a wooden block and vigorously beaten by two persons from two sides with the help of hammer for about 15-20 min. to impart a soft handle and luster. This process can be compared with a button or knife breaking machine finish, where fabric is passed several times rapidly back and forth over small rollers studded with brass buttons or slanted knives. It is followed by ironing. Later the silk material is folded and sent for packing.

• Calendar finish - The process refers to compression of fabric between two heavy rollers

to provide a smooth appearance and the fabric surface. Tassar silk fabrics can be

calendared on a two-bowl calendaring machine for improving handle and appearance.

• This finish consists of such steps as passing through the steam heated calendars at a

slow speed after which the cloth pieces are folded properly and packed. The calendar

finish is generally of material is finished at a time. The aim pursed in silk finishing is to

reveal the properties, i.e., luster, handle, drapability etc. The finishing of Tassar silk is not

a common feature. However, depending upon the specific requirements, chemical or

mechanical, generally the fabric is soaked in the finishing chemicals and squeezed

manually, or the chemical are sprayed onto the fabric.

Figure 3.6 – Calender Finishing.

Printing: Printing is not common in Bhagalpur. However, there are few printers who do printing on order basis. However, the major value addition in saris/ other materials in Bhagalpur is done outside the cluster barring few cases where traders get the printing done by some local printers. Other weavers and traders supply plain saris and fabrics to national and international market. Prior to printing, the fabrics are washed in a locally produced iron-free soap. Printing may be carried out by screen or block printing method. Block printing is done with blocks smeared with color. The blocks are produced by local artisans using their own designs. The dyes used for printing are acid, metal complex acid, or direct dyes. The printing pastes are stored in special wooden containers. Printing is done on a heavy table. After printing, the fabrics are dried, steamed, and wrapped in unbleached cotton. Shanada prints, Patli prints, Koria prints, Pancha, and other design motifs are some of the commonly used designs. The printed fabric is dried under mild conditions to retain a good, printed mark and prevent the goods from marking off during subsequent process. Steaming is carried out in saturated steam for 45-120 minutes depending on the steamer used. Washing is carried out under mild alkaline conditions with a standard detergent to prevent the re-adsorption of washed dye onto the fabric. The fabric is neutralized and dried at low temperature. Ironing: At the end, the finished products go for ironing and packaging



Figure 3.7 – Production Process Flow Chart for Weaving Industry

3.8 VALUE CHAIN ANALYSIS BASED ON FINANCIAL TRANSACTIONS The major products of the clusters are tussar silk sarees, suit length, linen fabric, Bhagalpuri chaddar and

napkin. The value chain analysis of above products is given below,

Table 3.7 Value Chain Addition - Tussar Silk Saree: (Tussar 80 GSM including Blouse total length 6.25 meter)

Yarn Qty. Rate/KG Amount

Korea Tussar 100 gm. 5000 500

Khewa Tussar 225 gm. 6000 1350

Eri 125 gm. 4000 500

Warping/ saree 68

Total (including wastage) 450 gm. 2418

Dying Cost 450 gm. 300 250



Weaving Charges / Saree 600

Mending/ climping @ 100/saree 100

Finishing/calendaring @ 50/saree 50

Total 3418

Master weaver / trader 7% 239

Total 3657

Distributor 10% 368

Total 4025

Retailer 20% 805

Selling price 4830


Table 3.8 Value Chain Addition - Suit Length (Tussar Fabric):


Korean Tussar (including wastage) 245 gm. 5000 1225

Warping 10

Dying Cost @ 300/K.G 245 gm. 300 73.5

Weaving Charges @ 60/Meter 4.5 Mt. 60 270

Fuel incase of Power cut 12

Mending/Climping @ 10/Meter 4.5 Mt. 10 45

Kundi /calendaring @7/Meter 4.5 Mt. 7 31.5

Total for 4.5 Meter 1668

Master weaver / trader 7% 117

Total 1785

Distributor 10% 179

Total 1964

Retailer 20% 392

Selling Price 2356


Table 3.9 Value Chain Addition - Linen Shirting 50”/ Meter:


Linen thread (including wastage) 220 gm. 600 132

Dying Cost @ 20/meter 20

Weaving Charges @ 20/Meter 20

Mending/climping @3/Meter 3

Finishing @ 10/meter 10

Total cost of Production for 1 Meter (at Bhagalpur) 185

Commission of Master weaver/trader 15% 28

Total for 1 Meter (at Bhagalpur) 213



Table 3.10 Value Chain Addition - Bhagalpuri Chaddar (54”x 108”):


Yarn (including wastage) 600 gm. 200 120

Pre loom processes 28

Weaving Charges @ 20/Pc. 20

Finishing @ 10/chaddar 10

Total 178

Master weaver / trader 17

Retailer 25

Selling Price 220


Table 3.11 Value Chain Addition - Napkin


Yarn (including wastage) 135 gm. 235 32

Dying charges 7

Weaving Charges @ 6/Pc. 6

Total 45

Master weaver 8% 4

48

Trader 15% 7

Retail Price 56


3.9 MARKETS/CUSTOMERS Till 2010, the major market for Bhagalpur was export market where 70% to 80 % of cluster products were

supplied. However, the trend has changed during the last 7-8 years. Now more than 50 % of products are

going to national market.

Moreover, the product range has also changed significantly. Many weavers have shifted from handloom

to power loom. It is surprising to note that, some of the traders and master weavers in the cluster say that

the handloom market is declining, and some say it is growing. While the sector statistics/ study done by

many researchers say it is declining, but there is no evidence that it is so because of falling preference of

consumer for handloom products or because of increasing power loom production to substitute the

handloom made silk and Tussar products.

It is quite evident that the textile market in general has grown substantially over the last 10 years primarily

because of increase in purchasing power of middle- and low-income group people.

During our interaction with two well-known traders in the cluster mentioned that there is enough unexplored

export market for Tussar and silk product. Their business over years has grown substantially as they keep

on focusing on quality and better design of products as per taste of export market. They believe those who

have lost the market because of nonadherence to quality or diluting the product supply with cheaper power

loom substitutes.

It is also astounding to see that out of 142 primary producer samities (cooperatives) only one is functioning

profitably and has expanded its business of handloom products despite huge competition posed by power


loom. The president of this cooperative says it is because of adhering to quality and originality of handloom

products and constant endeavor on innovation in terms of color / designs of the product to taste the niche

market. However, this niche market is not a general market. Here customers are design and product

sensitive and not price sensitive.

On the other hand, there is a growing tier-two national market dominated by middle income group who

demand silk and Tussar products but are also very price sensitive. There is enough scope for power loom

made products for this clientele.

Presently the power loom and hand loom owners sell their product through traders in Bhagalpur. Unlike

the handloom traders, who invest on raw materials and wages, in power loom sector, the entrepreneurs

who own the units, invest on such working capital. However, since production is not enough to sell directly

to traders in national market. Therefore, most of these entrepreneurs depend on traders of Bhagalpur to

supply their products. Moreover, these entrepreneurs also look after other work such as production

supervision, purchase of spears & consumables, accounts and finance and thus find it difficult to invest

time in marketing the product. Besides, they also do not have enough working capital to continue business

even if there is delay in payment; therefore, they prefer to sell it to small traders locally. The final product

of the Bhagalpur cluster goes to cities like Kolkata, Mumbai, Bangalore, Delhi, dyed/printed & finished

there and sold. The major value addition is done here by printing it which gives almost 75%-100% profit.

Both the handloom and power loom products are different in terms of their cost of production, quality, and

design. Both have huge potential in their respective markets. However, the problem comes when they

compete. Being low-cost cheaper power loom product, if sold in the name of handloom, it creates

unhealthy competition and distorts the market of the later. However, these power loom products are

demanded by the national market, especially the middle-income group, if they are sold in the name of

power loom silk product only, it would retain its image, become competitive and will also not create adverse

condition for handloom products.

These days a lot of online market tapping is also happening in Bhagalpur, the credit goes to of course

digital India movement. Around 20% units relate to online selling through social sites, online B2C portals

and B2B line India Mart, Exporter India, and others. The export of the products done in the cluster through

the few exporters like JJ Exports, SR Overseas, ZR Silk and others. The exporters are directly connected

to the MWs and traders for procurement of finished products from weavers.

3.10 SKILL DEVELOPMENT The cluster is housing around 30,000 skilled labor forces specialized in different skilled required for pre

loom and post looms activities like warping, weaving, dyeing and finishing. The skills that are possessed

by the workforce mostly inherited form their fore father or they have learnt in a passage of time. Time to

time the skills were upgraded by different agencies.

In 2017, SIDBI has implemented a project called MSME- Cluster Intervention Programme where around

382 participants were up graded skill in different aspects of weaving, design development, new product

development, marketing and other skill sets.

Two government institutions in the cluster namely power loom service center and weavers service center

are instrumental in the cluster for upgrading the skills of the work force involved in power loom and

handloom weaving activities subsequently

Both handloom and power loom together give employment to 50,000 people in the cluster as per Govt.

records of which 70 % are Muslims and rest 30 % belong to other communities. Currently however there

is a huge migration of weavers to other textile clusters of India (pegged at close to 40% of handloom and

power loom weavers). Weavers are generally migrating to UP (Banaras, Meerut), Haryana (Panipat),


Maharashtra (Bhiwandi), Bihar (Gaya) and Surat where they can earn at least INR.400/day as compared

to INR. 150/day in Bhagalpur on an average.

The weavers working on both power loom and handloom are able make any kind of complex weaving

however, the design and color combination of the fabrics are not that trendy and most of them are copied

or of traditional in nature.

3.11 FINANCE The financial requirement to set up a handloom unit is very minimal; an entrepreneur needs around 20,000

to set up and loom and working capital investment of around 10,000 for a 15 days of production cycle. As

the 90% of the cluster units are involved in job work, they get the yarn and other raw materials form traders

and MWs. Whereas a power loom unit require a capital investment around Rs. 90,000- 1,00,000 and

working capital investment up to Rs. 60,000- 80,000 for a production cycle for two months. However, most

of the cluster do the job works and get the raw materials form the traders and MWs. The cluster has

accessed a good access to major financial institutions like Lead Bank (UCO Bank), Punjab National Bank,

State Bank of India, Central Bank of India, Bhagalpur Central Co-operative Bank Limited and NABARD.

The role of banks for providing financial assistance to the Weavers of Bhagalpur is nominal. As per the

primary survey the UCO bank in the cluster has provided a total loan of 421 as of now. This includes both

the working capital and term loan. The use of public scheme seems to be good in number as far as the

use of schemes like Mudra, PMEGP is concerned. The UCO bank in the cluster organizes public

awareness meeting in the cluster time to time to create awareness among the weavers regarding the

documentation process and formalities involved in applying a loan. However, due to lack of sufficient

business providers in the cluster the use of many financial schemes other than Mudra and PMEGP is not

impressive. One of a banks in the cluster the Central Bank of India has told that they have only finance 10

loans including both the term and working capital loan which seems to be very low in comparison to the

UCO bank.

The primary data reveals that out of 40 respondents only 4 respondents have received the loan which is

around 10% of the total applicant whereas 32.5% did not succeeded as the banks do not approved the

loan. The details analysis is explained below.

Table 3.12 - Whether Units have Applied for Loan Before All Micro Small

Yes, loan availed 42.5% 16 2

Yes, but did not succeed 32% 13 0

Yes, but the terms offered were not acceptable 2.5% 1 0

Did not have any loan requirement, hence not applied 15% 6 0

Not applied because of other reasons 10% 4 0

Respondent Base 40 38 02



The purpose of loan for the primary firms in the cluster is as follows,

Figure 3.8 – For what Purpose do MSMEs Require Loans

The major source of borrowing in the cluster are the public sector banks. Table 3.13 Source of Borrowing

Entity Working Capital Term Loans

All units Micro Small All units Micro Small

SIDBI 0% 0% 0% 0% 0% 0%

Public Sector Banks/ Regional Rural Banks

66% 50% 100% 72% 52% 100%

Cooperative Banks 0% 0% 0% 0% 0% 0%

Private Indian / Foreign Banks 0% 0% 0% 0% 0% 0%

State Financial Corporation 6% 6% 0% 5% 9% 0%

NABARD 0% 0% 0% 0% 0% 0%

NBFCs/Micro Finance Institutions 6% 19% 0% 5% 9% 0%

Other Formal Sources 0% 0% 0% 0% 0% 0%

Informal Sources (includes Friends / Family, Customers)

22% 25% 0% 18% 30% 0%

Source: Primary Survey, Respondent Base: Micro – 38, Small – 02, Medium-0, Total- 40

The units of the cluster have limited awareness on the sector specific and general financial schemes. It

was observed that, the units have knowledge on few schemes like Mudra, PMEGP, but they have a very

low awareness on schemes like CGTSME and Credit Linked Capital Subsidy for Technology Upgradation.

It seems like the cluster needs frequent awareness camps on different financial schemes time to time for

a better outreach and usability.

Figure 3.2: For what all purposes do you need a loan?

Source: Primary Survey, Respondent Base: Micro – 38, Small – 02, Medium-0, Total- 40

60%60% 60%

67.5% 65% 65%

2.5% 5% 5%0% 0% 0%

Working Capital Related Capacity Expansion / New ProjectRelated

Specific need for a special project/purpose

Micro All Small Medium


Figure 3.9 - Government’s Scheme Awareness

Figure 3.10 - Government’s Scheme Availed

SIDBI’s Scheme Awareness The awareness among the units regarding the SIDBI’s schemes is nil. Though few of them are aware

about the bank but not aware about the schemes and utility.

3.12 USAGE OF SCHEMES Table 3.14 Schemes

# Name of Scheme

Type of Scheme –

Financial/ Non –

Financial / Subsidy

Details

1 Integrated Handloom

Cluster Development

Programme (IHCDP)

Bhagalpur has already availed support from under which not

only soft activities like skill development training programmes,

market linkage development, etc. have been undertaken, but

also, hard infrastructure like Common Facility Centre (CFC)

has been created.

However, the CFC was not functional during the field visit for

the current study. This CFC has a good scope of revival for the

benefit of weavers. There are more than 6 sub-clusters in

Bhagalpur Textile cluster of which 4 sub- clusters have already

Source: Primary Survey, Respondent Base: Micro – 38, Small – 02, Medium – 00, Total—40

Source: Primary Survey, Respondent Base: Micro – 38, Small – 02, Medium – 00 Total- 40

42%

3% 3%

35%

22%

0% 0%

34%

50%

3% 3%

50%

0% 0% 0% 0%

MUDRA Credit Guarantee TrustFund for Micro & Small

Enterprises

Credit Linked CapitalSubsidy for Technology

Upgradation

PMEGP

All Micro Small Medium

8%3% 0%

35%

8%

0% 0%

34%

0% 3% 0%

50%

0% 0% 0% 0%

MUDRA Credit Guarantee TrustFund for Micro & Small

Enterprises

Credit Linked CapitalSubsidy for Technology

Upgradation

PMEGP

All Micro Small Medium


availed support under Integrated Handloom Development

Programme (IHDP) of Ministry of Textiles.

2 MUDRA & PMEGP Financial credit linkage is concerned the cluster is highly dependent on

schemes like MUDRA and PMEGP through major public sector

banks and rural regional banks.


3.13 GENERAL INFRASTRUCTURE Bhagalpur town has 175 km of roads with a density of 5.8 (ratio of total road length to city area). The city is well connected by roadways and railways with other cities, towns, and villages of the state. Bhagalpur Railway Station is the busiest railway station and relates to many states of the country. Main roads in town include NH-80, SH 19 and 25. The road network is largely undivided with no footpaths, high levels of encroachments, free and haphazard parking contributing to traffic jams. Intra city transport is mainly by way of cycles and auto rickshaws, while intercity transport is catered by state transport buses. 6-seater diesel rickshaw is the major mode of intermediate public transport and the prime cause of traffic jams and pollution. These diesel rickshaws are emitting smoke and polluting the city air. Besides that, cycle rickshaws are also operated on some of the roads. The city growth profile is of linear in nature from east to west and south, but the road network system is deficient in terms of adequate widths and traffic management aspects. Some roads have asphalt whereas some roads have cemented concrete road surface. Road maintenance activities are irregular in nature.

Table 3.15 Road Connectivity Connecting Bhagalpur National Highway (NH) Condition State Highway (SH)/Others Condition

1 Patna NH33 Good SH 78 Good

2 Kolkata NH 19 Fair -- --

3 Ranchi NH114 A V Good -- --

4 New Delhi NH 27 V Good -- --

5 Mumbai Agra National Highway V Good -- --

Bus: There is good connectivity via bus to the nearest cities.

Table 3.16 Bus Connectivity # From Bhagalpur to Bus Frequency

1 Patna BSRTC/ Pvt. Bus Every Day

2 Kolkata BSRTC/ Pvt. Bus Every Day

3 Ranchi BSRTC/ Pvt. Bus Every Day

4 Siliguri BSRTC/ Pvt. Bus Every Day

5 Muzzafarpur BSRTC/ Pvt. Bus Every Day

Railways: There is good connectivity via rail to the nearest cities.

Table 3.17 Train Connectivity # From Bhagalpur to Train No. Frequency

1 Patna BGP SURAT SF EX 09148

DBRG DLI SPECIAL 05955

BGP AVNT SPECIAL 02367

MLTD DLI SPECIAL 03413

SBG DNR SPECIAL 03235

Monday and Thursday

All day

All day

Monday, Thursday and Saturday

All day except Sunday

2 Kolkata JMP HWH SPECIAL

BGP YPR SPECIAL

All days

Wed only

3 Ranchi BGP RANCHI SPECIAL 03404 All day


4 New Delhi BGP AVNT SPECIAL 02367

DBRG DLI SPECIAL 05955

MLTD DLI SPECIAL 03413

All day

All day

Monday, Thursday and Saturday

5 Mumbai No direct train --

Airport: There is no direct air connectivity for Bhagalpur, it either connected to Patna airport or Kolkata

airport by train or roads.

There is a dedicated industrial area near Barari having 113 plots for promoting manufacturing industry

base in the district. The power connectivity in the industrial is regular and stable but no such textile units

has come up here as of now. According to the secondary information collected form BIADA there as still

42 plots laying vacant in the Barari Industrial Area.

3.14 CFCS IN THE CLUSTER There is a modern dye house falls under medium category, and there is scope for promoting more such

units in the cluster. The Common Facility Centers (CFCs) created under IHDP in Puraini area with modern

dyeing facilities is unused and is in a dilapidated state because most of the weavers in the area are job

workers. They get dyed yarns from master weavers to weave and thus there is no need for such

infrastructure. However, traders and master weavers, need such advanced dyeing facilities which can

produce better quality and uniform dyed yarns at reasonable price.

3.15 STATUS OF PREVIOUS INTERVENTIONS As Bhagalpur is one of a major power loom and handloom cluster in the state of Bihar a few developmental

activities, schemes and projects were implemented in the cluster by different agencies. Few of the previous

interventions are discussed as follows,

Table 3.18 - Interventions and its Impact # Intervention Agency Impact

1 Integrated Handloom Development Programme (IHDP) 2014- 15

Directorate of Textile

- The scheme was implemented in the cluster in the year of 2014-15 for a duration of one where the programme intended to improve the cluster infrastructure majorly. The project covered around 5048 handlooms and 20,000 handloom weavers to provide them the basic common infrastructure like dye house, design and product studio and other soft skill development. As a result of which a CFC with all the modern dying facilities were established in the Pureini area of the cluster. But the assessment says the CFC is hardly used by the weavers as most of them are job worker and get the dyed yarn form the traders and master weavers. However, the master weavers and traders are using the facilities for their business interest.

2 MSME Cluster Intervention Programme (M- CIP)

Access Development Services

- In the year 2017- 2020 ADS a Delhi based organization

has implemented a project funded by SIDBI in the cluster

to bring an all-round development of the cluster by both

soft and hard intervention. A producer company in the

name of Bhagalpur Living Looms Producer Company was

formed in the cluster with a membership of more than 200

marginal weavers. Few soft skill development training

programmes were conducted for them in the area of

product development, design development and quality

control. But the programme was discontinued in the mid

of the intervention due to unknown reasons.



4 BENCHMARK CLUSTER ANALYSIS

4.1 HISTORY

The power loom clusters in Bhiwandi has taken here as a benchmark cluster for a comparative study it’s

evolution as a benchmark cluster in the country. Bhiwandi is a power loom hub of Maharashtra situated

about 30 km away from Mumbai is a key textile center of western India. Bhiwandi has approximately 6

lakhs power looms which is 33% of total country’s power loom having a turnover of around 10,000 crores

annually. With approximately 1.6 lakhs customer this industry is spread across 700 sq. km area. Bhiwandi

power loom industry supports the livelihood of 15 lakh workers most of them migrated form UP and Bihar.

Round 40% of the national production is contribute by the town alone. Bhiwandi started with handloom in

the early days and slowly shifted towards the power loom. The industry is also affected by in sufficient

power supply. Power cut has been a control problem faced by units here. Still the units in the cluster are

changing rapidly in the area technology and the methods of production to be in the market as a major

competitor of the industry. Most looms in the clusters are water jet and advanced area keeping the

production capacity and quality of the products best in the industry.

For the hand loom weavers Ponchampally cluster is a good option for the comparison. The weavers here

are using advanced technology in pre weaving and post weaving stage. The cluster is situated Nalgonda

district of Telangana houses more than 5,000 artisans. The cluster is popularly known as Silk City for its

beautifully crafted silk Ikkat sarees and fabric. The cluster is 80 km away from Hyderabad produces only

hand loom woven ikkat sarees and fabric. There are around 2000 functional looms providing employment

to around 5000 weavers family.

4.2 SPECIALTIES

Both Bhagalpur and Bhiwandi power looms clusters have many aspects in common. Bhagalpur is one of

an oldest cluster so as Bhiwandi. Power loom is the lifeline of the cluster in respect to production and

major source of income among the weavers. A comparative analysis of both the cluster has given below

for a better understanding.

Table 4.1 – Comparison of Bhiwandi & Bhagalpur Cluster Particulars Bhiwandi Power loom cluster Bhagalpur Power loom cluster

Loom type Plain power loom, shuttle less loom, Air jet and

Water jet

Plain shuttle less loom (95% of them

are secondhand looms)

Loom in numbers 30,000 14,000

Products Linen, Cotton and other syntenic fabric

Cotton, artificial silk, linen and viscose

fabric

Number of Workers 1,00,000 30,000

Turn over 10,000 Cr 1620 Cr


On the other hand, among Ponchampally and Bhagalpur hand loom industry both the cluster have their

signature products like silk saree, dupatta, and fabric whereas other one is famous for its double ikkat

saree dupatta and fabric. Still the cluster is continuously excelling and proving its significance in handloom

products across the country by its superior quality of products by expanding the handloom base steadily.

The cluster received its GI tag in the year 2005 protecting its intellectual property rights across the

handloom industry. Majority of the products in the cluster are marketed by cooperative society extending

the direct benefit to the weavers. The cluster is also having a handloom park established in 2008 in 24

acres land supported by Ministry of Rural Development and Monitored by National Institute of Rural

Development and the District Rural Development Agency The weavers of Bhagalpur need to visit such


benchmark clusters to understand the need to change, adoptability, synergy among the stake holders and

advanced marketing strategy.

4.3 PLACE

Bhiwandi known for its power looms situated at about 30 km away from Mumbai in Maharashtra state.

Bhiwandi is one of the key textile centers in houses around 33% of total country’s power loom.

Whereas Poncahmpally cluster situated at around 80 km away from Hyderabad in the Nalgonda district of

Telangana state in houses around 2000 hand loom and 5000 weavers.

4.4 VALUE CHAIN ANALYSIS

Table 4.2 Value Chain Analysis of Linen Fabric of 55” Produced on Powerloom


Linen thread (including wastage) 220 gm. 600 132

Dying Cost @ 10/meter 10

Weaving Charges @ 12/Meter 12

Mending/climping @3/Meter 3

Finishing @ 6/meter 6

Total cost of Production for 1 Meter (at Bhiwandi) 163

Profit Margin of Entrepreneur 15% 25

Total for 1 Meter (at Bhagalpur) 188



5 ANALYSIS OF BUSINESS OPERATIONS

5.1 RAW MATERIAL

There are around 100 yarn and dyes suppliers in the clusters. The raw materials used in this cluster are

Tussar silk, Matka Silk, Eri and Mulberry silk, noil, Korean and Chinese silk. Along with the silk, the usage

of synthetic staple, viscose, cotton is also being used. The basic raw material i.e., silk is procured locally

and the remaining i.e. noil, viscose and synthetic staple is sourced from Surat, Kolkata and south India.

Chinese and Korean silk are being imported to produce fabrics. The yarn market of this cluster comprises

of yarn dealers or agent. 80% of the yarn is provided by traders to the weavers. In the remaining 20%,

weavers purchase yarn from the dealers who get commission of 5% & if there is delay on the payment

then they take interest of 12%. Sometimes the dealers hoard the yarns to create shortage and thus

increase the price. Even if there is a Raw Materials bank opened with the financial assistance from State

Government, but its access has been limited to few. Moreover, for Chinese silk and Korean silk which is

generally traded informally (without tax), the same yarn when it is sold from yarn bank, it is comparatively

high as the marketing system is formal.

Report says the total import of India’s silk is not less than 6,000 tones every year from China despite the

fact the there is no such major differences between imported silk and indigenous silk that are produced in

the country. As per Central Sericultural Research and Training Institute if the imported silk is available to

the weavers for INR 3,500/ kg the indigenous silk is available for INR 3,200.

The major problems faced by the textile cluster related to raw material supply is instability in prices,

according to primary sources the weaver’s faces a regular price fluctuation due to kind of monopoly of the

raw material supplier and traders. There is a requirement of regulated yarn market for the cluster, may be

the establishment of govt. sponsored yarn bank shall be helpful for the cluster in reducing the monopoly

of the private supplier.

5.2 PRODUCTION PROCESS RELATED

The entire production process of the cluster can be broadly categorized by 3 stages pre loom, on loom

and post loom. The production process involved in different stages and major issues, challenges and

solutions are discussed as follows,

Pre- Loom: Winding and Dying

There are two types of winding required to make yarn ready to weave. One is warp winding and the other

is weft winding. For handloom products, both these windings are done manually by the women and

children in the weaving household, whereas men do the weaving. In winding process, the yarn is loosened

and wound on a bobbin for preparation of warping and pirn winding. This is achieved using small bobbin

winding tools made from a simple pulley mechanism where the yarn gets transferred onto a swift and from

which it is woven onto bobbins using a simple charkha. Pirn winding is the process of transferring the

yarns from the hanks into spools of the shuttles used in the weft while weaving. As can be seen in the

photograph, pirn winding is achieved by using a small swift consisting of a rotary wheel attached to a

harness of convey or belt giving a similar rotary motion to the spool mounted at the other end. Rotation of

the wheel by hands results in the rotation of the spool and thereby the thread is wound on small spindles

and hence the productivity is very slow. However, simple attachment of cycle chain with ball bearings

instead of conveyer can generate higher speed and thus increase the productivity. It is estimated that one

bobbin reeled through proposed advanced technology will take only 20-30 seconds compare to 4 to 5


minutes taken by traditional winding process. Than its come dyeing, for un-dyed natural color fabrics,

traders buy the yarn in hank and supply it to the weavers through master weavers, who then open the

hank, wind it and make warp and weft. For colored fabric, traders normally give the dyed yarn to the

weavers. Some of these traders have their own dyeing units and some get it dyed from dye houses. There

are around 105 such dye houses in the cluster. However, all of them use traditional technologies for dyeing,

except a couple, who has huge modern infrastructure with advanced automatic machines to do the dyeing.

The yarns dyed by these modern machines have better look and uniformity in color.

The major problems in pre loom production process can be improved and better solution to the weavers

can be given by identifying the aspiring weavers and organizing their exposure to the benchmark clusters

and benchmark technologies can be the 1st entry point in the cluster. The visits can be organized to

benchmark Handloom clusters like Chanderi, Bargarh in Odisha, Pochampalli and Chirala in Andhra

Pradesh and Varanasi in Uttar Pradesh to expose the weavers to various pre loom machineries in use in

those areas. Exposure may work as eye opener to the weavers and can lead to improved understanding

of the need and benefits of technologies. Weavers can also be exposed to the modern Pirn winding

machine (motorized) with following improvements made by The Rural Technology Action Group (RuTAG)

at the Indian Institute of Technology Madras (IITM)

i. Use of brand-new electric motor require capacity

ii. Use of proper bearings for the pirn spindles,

iii. Very little vibrations spindles,

iv. Use of standard bobbin with ease of detachment and attachment,

v. less noise pollution,

vi. Very compact carried out where the motor is kept below the base so that the operator does not

even touch the motor by mistake,

vii. Better reliability and increase in productivity less guidance due to use of proper bearing. This is a

proven technology as about 1000 numbers have been supplied so far to handloom clusters in

Cuddalore, Trivandrum and Srivelliputthur. The technology has been well accepted by the

weavers. Practical demonstrations can be organized in social gatherings, festivals, and functions

at different places within the cluster to promote the technology.

On loom Process:

Handloom:

Around 99% weavers in the cluster use pit loom Mostly, pit looms of up to 52‟ to 56‟ inches are being used

and remaining one percent frame loom. Since most of the weavers weave plain fabric, use of dobby and

jacquard is minimal. The roof height of houses is also too low to install such attachments. The investment

in pit loom is around Rs 5000-Rs 8000 which include the cost of loom and reeds.

Loom manufacturers and suppliers are locally available. Service providers are also available to balance

the loom and repair it locally. However, there are certain weavers who purchase raw wood from the market

and with the help of the local carpenters they prepare and install the loom.

Power loom:

There are approx. 14,000 power looms in the Bhagalpur cluster, most of them are secondhand looms

bought from Meerut, Bangalore, Mumbai. Since the looms are old, their productivity is also low, almost

40%-50% lesser compare to new ones. However, these loom still able to generate profits to the

entrepreneurs. The details of types of loom in Bhagalpur cluster are given below


Types of Loom : Secondhand Shuttle Loom

Speed of Loom : 100 to 130 rpm

With Dobby Shedding : Around 3000 looms

With Jacquard Shedding : Around 200 looms

With drop box : Around 6000 looms

Old / used looms cost Rs 40,000 to Rs 50,000 depending upon the condition of the loom whereas a new

machine cost around Rs 75, 000 to Rs 90,000. The major reason conveyed by respondents for not buying

new power loom is lack of capital. It is estimated that one power loom including the other pre-processing

equipment like bobbin winding, warping machine, etc. will come around Rs 1 lakh.

There are two technical institutions working in the cluster 1. Power loom Service Center and 2. Weavers

Service Center working for power loom and handloom weavers, respectively. They have a limited capacity

to do research and development in on loom activities to improve productivity. There is no private consultant

to guide the weavers on the same. To short the problem, the cluster may be linked with various technical

institutions IITs, handloom technology development centers, etc. Especially, there is lot of scope for

improvement in power loom area. The aspiring weavers/ units form power loom and handloom industry

may be taken to benchmark clusters like Chanderi, Varnashi, Bhiwara and Chirala for the cross learning

and to realize the productivity of the weavers in the clusters.

Post Loom:

After weaving, the products, especially Tussar and silk products go for final finishing. Tussar finish is

generally conducted by two techniques to improve the cover, lusture and look of the fabric. These are

dependent on the type of finish. There are two types of finishing process undertaken in the cluster 1.

Kundi finish i.e., Beating with wooden hammer and 2. Calendar finish. Kundi finish is very common mostly

done in all export varieties of Tussar fabrics manufactured for domestic market. Calendarfinish no doubt

is very good and methodical, but it is only applicable if continuous length of a fabric is available. This finish

consists of a chemical recipe and passed through the steam heated calendars at a slow speed after which

the cloth pieces are folded properly and packed. There are around 20 calendaring units in the cluster who

do job work. The units operational in the cluster are providing technical inputs and service to the

requirement of the cluster, however they are not technically sound to deal with the silk fabric to give a

better longevity and look as far as the current market is concerned. These embedded service providers

need to be trained and capacitated to use benchmark calendaring practices for better product quality.

Value added work:

This is a major area concern in the cluster and less priority area given focused by different expert agencies

in previous years. Bhagalpur is well-known for the Tussar/ silk products. But majority of them go to market

without any further value addition like printing, etc. These value additions are done by importers /

designers/ other clusters by themselves. The price difference between fabric without prints and with prints

like Shanada prints, Patli prints, Koria prints, Pancha, and other design motifs printed using handblocks,

is almost 75% to 100%. There are only two block printing units and one screen printing unit in Bhagalpur.

Major value addition is done outside the cluster. Printed mulberry silk fabrics are popular due to the

exclusiveness of designs and attractive colors. But this is less in the case of Tussar silk because of its

inherent color and lack of available technological knowledge in the trade.


To tackle the value addition issues in the cluster more number of entrepreneurs needed to be encouraged

and given handholding support to establish more number of printing units in the cluster and also to do

other possible value added work like garment designing, stitching, etc. A market scoping study can be

commissioned to understand the potentialities of valued added market volume, also to understand

consumer taste and preferences. Services form NIFT like institute/ professional designer may be taken to

introduce a greater number of value-added products.

Energy Audit and Power Supply:

There is no use of energy in handloom, but power loom has full dependency on it. Some of the units in

the cluster use diesel operated power generators for their looms because of erratic supply of electricity in

the area. Per unit cost different between these two sources of energy is around INR 2 to INR 3. Energy

cost constitutes around 7 to 10 % of total cost of production. This cost can be reduced, and productivity

of looms can be improved if low-cost alternate energy source can be found.

5.3 ACCESS TO MARKETS

The major market of Bhagalpur textile cluster is export market. Sources says till mid- twenties the export

market share of the cluster was around 70%. But the current export share of the market is around 50%.

The growth rate of Indian textile market is estimated to be around 8% during fiscal year 2015-20. Despite

the growing national market, the cluster has a declining market trend during last 7-8 years. The exporters

form Bhagalpur says it is because of the shifting of hand loom to power loom. The weavers of the cluster

do not have direct access to the market as most of them do the job works given by the MWs/ local traders.

The local traders aggregate the semi-finished product from the weavers and after the finishing they supply

the fabrics to the exporters operates in the cluster or to the whole seller and retailers in the city like Delhi,

Mumbai, Kolkata and others.

On the other hand, there is a growing tier-two national market dominated by middle income group who

demand silk and Tussar products but are also very price sensitive. There is enough scope for power loom

made products for this clientele. Presently the power loom owners sell their product through traders in

Bhagalpur. Unlike the handloom traders, who invest on raw materials and wages, in power loom sector,

the entrepreneurs who own the units, invest on such working capital. However, since production is not

enough to sell directly to traders in national market. Therefore, most of these entrepreneurs depend on

traders of Bhagalpur to supply their products. Moreover, these entrepreneurs also look after other work

such as- production supervision, purchase of spears & consumables, accounts and finance and thus find

it difficult to invest time in marketing the product. Besides, they also do not have enough working capital

to continue business even if there is delay in payment; therefore, they prefer to sell it to small traders

locally. The final product of the Bhagalpur cluster goes to cities like Kolkata, Mumbai, Bangalore, Delhi,

dyed/printed & finished there and sold. The major value addition is done here by printing it which gives

almost 75%-100% profit. Both the handloom and power loom products are different in terms of their cost

of production, quality and design. Both have huge potential in their respective markets. However, the

problem comes when they compete. Being low-cost cheaper power loom product, if sold in the name of

handloom, it creates unhealthy competition and distorts the market of the later. However, these power

loom products are demanded by the national market, especially the middle-income group, if they are sold

in the name of power loom silk product only, it would retain its image, become competitive and will also

not create adverse condition for handloom products.


With the entry of online marketing giants like of Amazon, Flipkart and other B2B portals in the cluster the

retail sales of the cluster in a constant growing phase, however these facilities are explored by around 5%

of the units those are relatively more in to trading.

Interventions like brand building, hand loom mark certification, buyer seller meet, market promotion

workshops, trade fair, market exposure to understand the market dynamic needed to constantly be done

to restore the gradually sinking market if the cluster.

5.4 SKILL DEVELOPMENT

The cluster in houses around 30,000 power loom work forces and 20,000 handloom workers involved in

different stage of work. The skills are traditionally developed within them or inherited from their families,

less awareness among different quality aspects and concern for a benchmark product makes them less

focused towards skill upgradation and encouraging for them tom acquire new skills. Understanding over

market trend, color combination is very less among the weavers. Most of the products produced in the

cluster are copied either copied form different sources or given by buyers from Delhi, Mumbai, Kolkata

and other cities. This needs an instant focus and needed to take up by units on a priority to restore the

name and fame of Bhagalpur silk industry. The weavers of the cluster need to upgrade their skills in

different aspects of product development, design development, market promotion skills, dyeing skills and

other skills required for the industry time to time.

Observation on Skill Gaps:

Gaps Requirements

During the interaction with the cluster stakeholders, it was observed

that there is a requirement of skilled weavers and other allied workers

in weaving of new products, designs, advanced and market oriented

dyeing practices and other value addition activities like printing,

embroidery.

• Weavers for power loom and handloom (available work forces for existing power looms and handlooms but in case of new looms like rapier, jacquard and dobby installed loom the number is very few)

• New product and design development (The existing workforces have a very minimal number of weavers who can work on new product and design development). The cluster has no such BDS providers in design and product development.

• Low orientation among the weavers on quality parameters and contemporary QC standards.

• Advanced dyeing practices (The dyers in the clusters are not equipped with modern and best industry method of dyeing for ensuing color fastness also there is unavailability of organic dyers in the cluster)

• Value added services (The cluster has two screen printing, one screen printing and one digital printing unit. The digital printing unit is run by a exporter and mostly it is in use for his own use)

Major requirement of skilled work forces in the clusters

for different pre loom, on loom and post loom activities

is essential. Some of high concerned area are

mentioned below.

• Weaving of new product and designs

• Advanced dyeing methods and organic dye

• Ensuring quality and market-oriented standards

• Block and digital printers

• Weaving on jacquard installed looms


5.5 FINANCE

Power loom:

There are approx. 14,000 power looms in the Bhagalpur cluster. Most of them are secondhand looms

bought from Meerut, Bangalore, Mumbai area at around Rs 40,000 to Rs 50,000 depending upon the


condition of the loom. Whereas a new machine costs around INR 75,000 to INR 90,000. Since the looms

are old, their productivity is also low, almost 40%-50% lesser compare to new ones. The major reason for

not buying new machine, mentioned by the units is lack of finance. These units are also not registered and

thereby do not get benefits of various technology up gradation schemes. It has also been found that the

power loom owners purchase the raw material on cash, whereas the sales are always on credit of up to

90 days. Due to which the power loom owners always run short of working capital.

Handloom:

The investment in pit loom is around Rs 5000-Rs 8000 which include the cost of loom and reeds. Moreover,

95% of weavers do job work for traders, executed through master weavers. These traders give raw

materials and wage to the weavers. Thus, there is also no working capital requirement by the weavers.

However, to graduate from weaver (mere wage earner) to entrepreneur weaver or to master weaver and

then to trader, needs finance to invest in working capital. There are few successful weavers who upgrade

themselves in the value chain by using bank loans and credit from other informal sources and started own

production and marketing. However, such examples are very few. There is a good network work of

weavers in the cluster including branches of UCO bank and SBI. However, these banks do not have good

linkage with the weavers, primarily because of credit indiscipline/ defaults. Weavers also get credit through

artisan credit card, but repayment is very low as mentioned by the managers of UCO bank (the lead bank).

Moreover, there is no major initiative by the banks, other support institutions to educate the weavers on

the importance of credit discipline. Their financial literacy to estimate and articulate exact need is also

poor. Therefore, whatever loan size is available they take.

Here finance is a direct problem for power loom weavers and a derived problem for the handloom weavers

thus, the measures may be taken for hand loom weavers in educating them on financial literacy to

streamline the default loans by ensuring the repayment and for power loom weavers a number of private

business service providers may be promoted in the cluster to cater to the financial need of units and

preparing the documents required to apply for a loan.

Figure 5.1 - Issues Faced while Applying for Loans

Source: Primary Survey, Respondent Base: Micro - 35

Having Issues Related to BankFinance 63%

Having no issue related to finance37%


5.5.1 Financial Gap Analysis

5.5.1.1 Supply of Credit to MSMEs

Enterprise turnover is one of the important criteria for loan appraisal process and it can be safely assumed

that credit supply to the cluster is correlated to the turnover generated. We have thus used “Cluster

Turnover proportion to Industry State Turnover” method to arrive at cluster level credit supply.

Table 5.1 Credit Supply Estimation

# Details Unit Numbers

Step 1

State Industry Advances Outstanding (a)17 Mar, 2020 (INR, Cr) 394

Average Growth rate assumed for 2020-21 (b) 18%

State Industry Advances Outstanding (c=a*(1+b)) Mar, 2021 (INR, Cr) 463

Step 2

State Industry Turnover (Yr : 2017-18) (d)18 (INR, Cr) 7,199

IIP Growth Rate 2018-19 (e )19 4%

State Industry Turnover (Yr : 2018-19) (f=d*(1+e)) (INR, Cr) 7,521

IIP Growth Rate 2019-20 (g) -1.7%

State Industry Turnover (Yr : 2019-20) (h=f*(1+g)) (INR, Cr) 7,393

IIP Growth Rate 2020-21 (i) -41.5%

State Industry Turnover (Yr : 2020-21) (j=h*(1+i)) (INR, Cr) 4,322

Step 3 Number of Units in the Cluster - Micro, Small and Medium (k)

Micro No. 4,180

Small No. 220

Medium No. -

Total No. 4,400

Step 4 Average of Cluster Sample Turnover of units for each

classification (l)

Micro (INR, Cr) 0.30

Small (INR, Cr) 1.5

Medium (INR, Cr) -

Total (INR, Cr) 1.8

Step 5 Cluster Turnover of all units in the cluster (2012-13) (m=k*l)

Micro No. 1,254

Small No. 330

Medium No. -

Total No. 1,584

Average Turnover Growth of Cluster (n)20 0.0%

Step 5 ii Cluster Turnover of all units in the cluster (2013-14)

(o=m*(1+n))

Micro (INR, Cr) 1,254

Small (INR, Cr) 330

Medium (INR, Cr) -

Total (INR, Cr) 1,584

Step 6 Proportion of Cluster Turnover to State Industry Turnover

using Results [(5)/(2)]

Micro No. 29.0%

Small No. 7.6%

Medium No. 0.0%

Total No. 36.7%

Step 7 Cluster Level Credit Supply, Mar 2021 (q=p*c) Micro (INR, Cr) 134

17 Table 5.6 : State & Bank Group Wise Classification of Outstanding 18 Annual Survey of Industries 2017-18 19 IIP 20 While IIP growth for sector for 2020-21 (6 months) is -41.6%, the turnover growth expected by cluster unit owners (primary

survey) in next year is 10%. We are taking the figure we got from cluster for projecting turnover growth.


Small (INR, Cr) 35

Medium (INR, Cr) -

Total (INR, Cr) 170

Ratio of ACP achievement for 2019-20 for MSE to Credit

Advances Outstanding to MSE till March'2020 (r )21

60.0%

Cluster Level Credit Supply, Mar 2021 (s=q*r)

Micro (INR, Cr) 81

Small (INR, Cr) 21

Medium (INR, Cr) 0

Total (INR, Cr) 102

Step 8 State Level Advances – Term Loan Advance to MSMEs 10%

Step 9 Working Capital Supply 2020-21 (s*(1-t) or s*(1-u) )

Micro (INR, Cr) 73

Small (INR, Cr) 19

Medium (INR, Cr) -

Total (INR, Cr) 92

Step 10 Term Loan Supply (s-WCS)

Micro (INR, Cr) 8

Small (INR, Cr) 2

Medium (INR, Cr) -

Total (INR, Cr) 10

5.5.1.2 Credit Demand

The working capital demand has been calculated based on the Nayak Committee Guidelines.

Table 5.2 - Working Capital Demand Assessment

Numbers

Step 1 Number of Units in the Cluster - Micro, Small and Medium (a)

Micro 4,180

Small 220

Medium -

Total 4,400

Step 2 Per unit turnover of MSME in the cluster (b)

Micro (INR, Cr) 0.30

Small (INR, Cr) 1.50

Medium (INR, Cr) -

Step 3

Cluster Turnover for 2019-20 (c=a*b)


Small (INR, Cr) 330

Medium (INR, Cr) -


IIP Growth Rate (20-21) for the sector (d) 0.00%

Cluster Turnover for 2020-21 (e=c*(1+d))


Small (INR, Cr) 330

Medium (INR, Cr) -


Step 4

Nayak Committee Guidelines for WC Loan (f) 20%

Working Capital Funding Requirements 2020-21 (g=e*f)

Micro (INR, Cr) 251

Small (INR, Cr) 66

Medium (INR, Cr) -

Total (INR, Cr) 317

21 Source: Lead Bank Office


The term loan demand has been calculated based on the growth of fixed capital approach. Based on our

discussions with the units in the cluster, none of the units in the cluster are expected to make any

investments in plant and machinery in this fiscal and thus we have taken the average growth rate of fixed

capital as 0% and thus there is unlikely to be a demand for term loan in the cluster in the current fiscal.

Table 5.3 - Term Loan Demand Assessment

Step 5 Cluster Total Investments in Plant & Machinery of all units in the cluster for 2012-2013 (h)

Micro (INR, Cr) 523

Small (INR, Cr) 188

Medium (INR, Cr) 710


Step 6

The average growth rate of fixed capital for FY 2020-21 (i)22 0%

Cluster Total Investments in Plant & Machinery of all units in the cluster - Mar 2021 (j=h*(1+i))

Micro (INR, Cr) 523

Small (INR, Cr) 188

Medium (INR, Cr) 710


Step 7 Growth in Fixed Capital (k=j-h)

Micro (INR, Cr) -

Small (INR, Cr) -

Medium (INR, Cr) -

Total (INR, Cr) -

Step 8

Bank Finance (l) 80%

Term Credit Funding Requirement - Mar 2021 (k*l)

Micro (INR, Cr) -

Small (INR, Cr) -

Medium (INR, Cr) -

Total (INR, Cr) -

5.5.1.3 Credit Gap Analysis

As per the calculations, for the fiscal there is no credit demand for term loans and there is excess supply

of term loans in the cluster. However, there is a gap in working capital credit to the tune of INR 225 cr.

Table 5.4 - Credit Gap Analysis

In Crores Working Capital Term Loan

Credit Demand

Micro 251 0

Small 66 0

Medium 0 0

Credit Supply

Micro 73 8

Small 19 2

Medium 0 0

Credit Gap for MSME 225 -10

5.6 SUSTAINABLE DEVELOPMENT

Majority of the units in the cluster use diesel operated power generators for their looms because of erratic

supply of electricity in the area. Per unit cost different between these two sources of energy is around INR

22 Based on Cluster Feedback


2 to INR 3. Energy cost constitutes around 7 to 10 % of total cost of production. This cost can be reduced,

and productivity of looms can be improved if low-cost alternate energy source can be found.

On the other hand, while working on looms the weavers are exposed to lot of noise and dust, which leads

towards a chronic problem of deafness and other respiratory problem. This needs to address by educating

and encouraging them to adopt healthy practices and required remedial measures. Dyeing of fabric

requires use of different chemicals and it was observed that the workers working in the units are performing

their job by bare hand without protecting their hand, eyes and other part of body. The workers need to be

educated on different safety measures that are required for a dyeing unit.

The textile industry releases waste during different stages of production, water pollution has always a

major concern. In Bhagalpur most of dyeing units are unorganized and the dyeing waste coming from the

units are get discharged to the river directly. This is a serious concern and proper effluent treatment

mechanism should be adopted in the cluster to reduce the pollution.

5.7 INFRASTRUCTURE

The looms used in the cluster are outdated and needs rapid transformation and change in technology is

highly required to keep the produce of the cluster market friendly and superior in quality. Regular supply

is a major concern in the area, according to the primary sources 50% of more production could have done

if they get a regular power supply. There is no such CFC available in the cluster for R& D for the power

loom weavers for providing end to end services.

5.8 ANY OTHER ISSUES EMERGING IN THE CLUSTER

Among the other issue’s quality of products, institutional development, coordination among stakeholders,

alternative energy, modernization of loom, occupational health and social security measures and

awareness among the weavers needed to be introduced in the cluster for the all-round development of the

cluster.

5.9 STATUS OF BUSINESS DEVELOPMENT SERVICES IN THE CLUSTER

The current use of BDS around technology, product development, design development, finance, value

addition is minimal. In case of marketing the traders do the aggregation by procuring the semi-finished

products from the weavers and after finishing they supply the finished product to the exporters, retailers,

and other users in other cities. However, the BDS in market exploration, market development is not visible.

5.9.1 Who Does Who Pays (WDWP) Matrix

Table 5.5 - Who Does Who Pays Matrix # BDS Function Who Does Who Pays Payment Mechanism Remarks

1 Technical training on weaving

PSC, WSC and CSB Through govt. sponsored scheme

100% subsidized by govt.

However, on payment service like testing of yarn strength are done by PSC and WSC

2 Technical training on dyeing

PCS, WSC and CSB Through govt. sponsored scheme

100% subsidized by govt

Time to time the institutions conducted training for the weavers

3 Yarn and Dye Testing PSC and WSC Traders and Weavers

100% direct payment


4 Design development PSC and WSC Traders, MWs and Weavers

100% direct payment Sometimes the export houses take design support from professional designers

5 Bank loan document preparation

Bank No payment done by the beneficiaries

Free This is applicable on small loans like Mudra

6 Occupational Health Safety

-- -- -- --

7 Social Security PSC and WSC Govt sponsored schemes

Service cost is free The beneficiaries pay their contribution only

8 Marketing -- -- -- --


5.10 MAJOR LEARNINGS FROM BENCHMARK CLUSTER

The weavers and aspiring entrepreneurs of the cluster needs to visit the benchmark cluster to learn the

benefits of shift in technology, production process, diversification of products and value addition

proposition of the leading clusters. There are few learnings form other benchmark cluster that the cluster

needs to follow,

• The physical infrastructure needs an immediate modifications and changes like upgradation of

looms, changes in technology and more energy saving method of productions

• The level of contemporary production and market viable technologies used by the SME/micro units

need to be followed

• Use of govt. schemes like in situ upgradation shame, group work shed, common facility center,

yarn bank and solar energy schemes are crucial for the cluster

• Protecting the copy right cluster specific products by ensuring/ taking the GI tag for the cluster.

• All round and continuous development of synergy and cooperation among different cluster stake

holder is highly essential to make the cluster eco system more vibrant and active.

• Regular up gradation of skill in quality enhancement, design development and product

diversification are must.

• Creating space for value addition and a greater number of ancillary industries is highly required at

local context.

• Branding and market promotion of cluster products through institutional development and common

marketing platform is the need of the hour.

5.11 MAJOR LEARNINGS FROM VALUE CHAIN ANALYSIS

The major product of the Bhiwandi Power loom cluster is cotton, linen, and viscose fabric. The cluster

produces mostly the grey fabric and later it converted into shirting material locally. The products produced

in the cluster entirely goes to domestic market without any export. The raw materials are mostly procured

locally at very reasonable price, the cost of dyeing and weaving is reasonably lower than the Bhagalpur

cluster due to use of advanced technology. This makes the products of the cluster more competitive in

comparison to the fabrics comes from other power loom cluster.

In case of Ponchampally handloom cluster they have maintained their specialties in production of ikkat

saree and fabric across the country because of the quality of the product. The dyeing process and quality

in the cluster is much better than when it comes to color fastness and longevity. The GI tag of the cluster

has helped the cluster to protect from being copied.


6 SUGGESTIONS AND RECOMMENDATIONS

6.1 SWOT ANALYSIS

6.1.1 Strength

• Availability of 30,000 skilled workforce who can weave complex weaving.

• Availability of easy workforce in the cluster

• The suit length wear produced in the cluster has a special craze during the festive season and

other ceremony in India.

6.1.2 Weakness

• Highly unorganized cluster, according to DIC there are only 300 registered units in the cluster.

• The cluster has inadequate infrastructure facilities for advanced finishing, printing, and dyeing.

• The 95% of the cluster is still operational on shuttle less 2nd hand power loom.

• Low credit flow from the financial institutions, 63% of cluster units has reported having issues in

applying for a loan and 32% of units have failed to get a loan from the bank. The tussar ghiccha

per kg in the cluster costs around 3200 where is it is available in other clusters at around 2800/ kg

• Unavailability of raw materials like cocoons and yarns at reasonable prices

• Lack of strong market platform, network for domestic as well as export market

• Inadequate access to latest design

• Low awareness of govt. schemes. Around 50% of cluster units are not aware about the govt.

schemes.

• Irregular power supply. The cluster units face average 5-6 hours power cut daily during the

daytime.

• DIC has a very poor connection with the units of the cluster.

• The cluster have very low orientation on 4Ps, and the units have very low understanding on

contemporary market demand.

• Very less priority on market exploration, new market channel identification.

• Very less orientation on quality consciousness

• Weavers are not aware about healthy occupational practices and security measures.

6.1.3 Opportunities

• High potential for home furnishing value added made ups in the overseas markets

• Traditional preference for silk saris by the higher income group.

• High demand of value-added handloom silk sarees in metro cities and export market

• Brand building for Handloom silk value added products in the domestic market as well as in the

international market

• Tapping various governed schemes for Power loom sector

• Alternate energy

6.1.4 Threats

• Threat to indigenous silk from silk products sourced from china and mulberry silk product from

Karnataka and other part of the countries

• Weavers are migrating to other profession as well as places for lack of adequate weaving job and

wages.

• Competition between Handloom and power loom low productivity could be a future bottleneck.


• Any sudden change in International regulatory policies will have adverse impact on the India

Chemical industry.

• Rising Marketing cost.

• The units of the cluster have absolutely awareness on sustainable method of production and

circular economy, any ban in existing use of chemical and wastage discharge may lead to closure

of the units.

• 95% of the units don’t have insurance or risk coverage of their storage. Any accident of fire may

destroy the stock.

6.2 VISION AND OBJECTIVES OF THE CLUSTER

6.2.1 Cluster Vision

The future of Indian textile industry looks promising, pushed by strong domestic consumption as well as

external demand. With consumerism and rising disposable income among the Indian’s the retail market of

textile is growing in a favorable direction. To give a push towards the Make in India initiative of Govt. of

India the Ministry of Textile is also putting many efforts by availing the MSMEs many schemes to give

major boost to the sector. With this point of view to make a strong pillar of Make in India Initiative the

Bhagalpur Textile Cluster needs wholistic approach of cluster development in pre loom, on loom and post

loom supply chain.

6.2.2 Long Term Objectives

With the interactions held, with the industry stakeholders it was `observed on the ground and duly

endorsed that as for any industry and especially the Textile clusters anywhere in the country; the ground

diagnostics brings out the observed gaps in the common 5 key pivots and pillars, namely:

• Increase in the turnover of 200 power loom weavers and 50 power loom entrepreneur weavers by

25%

• Increase in the income of 100 handloom weavers and 30 handloom entrepreneur weavers by 25%

• A need based common facility center equipped in technical advancement for the cluster.

• Linking with 10 millers with 50 power loom entrepreneurs for getting raw material in mill gate prices

and enhancing profitability by 10%

• Revival of existing yarn bank/ establishment of a new yarn bank for a better outreach for the

marginal weavers

6.2.3 Short Term Objectives

As far as the short-term objectives of the cluster is concerned the efforts must be taken to address few

issues as discussed below,

• Linkages with Potential Buyers (at least 30 each for power loom and handloom products)

established and generated purchase orders worth at least INR 1 crore

• At least 30 power loom and handloom Master Weavers started making new design based on the

inputs received from the market and started supplying them.

• 2 producers companies formed and made self-sustainable to undertake various need based

common activities like raw material procurement, production, marketing, various business

development services to the member units and provide and acting as agents among the weavers

and market.

• Established “brand” with having a greater domestic market presence as well as E- Market reach

in India as well as overseas.


• 50 entrepreneur weavers installed dobby & jacquard and started making designer saris, fabric etc.

Price realization of the sarees increased by at least 30%

• Modern technical skills acquired by 200 weavers to remove the existing shortcomings. The quality

of the product got enhanced and rejection rate got reduced by 70-80%

• At least 100 weavers started implemented the inputs on current market trends and demand and

stated producing products with innovation and improvisation in their production and got more than

25% better profit margins.

• At least 100 Power loom weavers and dyers started benefited through implementation of OHS

practices.

• A CFC with a Training cum Design center common to handloom and power loom cluster, with

appropriate production and support infrastructure such as captive Testing lab, ETP, etc.

established and operationalized.

6.3 RECOMMENDATIONS & ACTION PLAN FOR NON-FINANCIAL AREAS • Raw Material: Availability of good raw material at reasonable price is a major concern in the

cluster, weavers here are highly affected by irregular raw material supply and high price fluctuation

result in a unit price of products as well impacting the quality of products reversely. This needs to

be addressed in a priority basis by following actions,

• The exiting primary producer networks may encourage for collective sourcing of yarn directly form

the manufacturers at a factory gate price for the primary weavers by establishing a yarn bank. The

yarn bank scheme of Ministry of Textile may be explored to establish such entities in the cluster.

• Introduction of modern pirn winding machine for a better-quality yarn through adopting machines

developed by the Rural Technology Action Group at the Indian Institute of Technology, Chennai.

The accessories and machines supplied to other clusters in Tamil Nadu by RuTAG is well

accepted and doing good.

• Technology: There is a need for the up gradation of existing infrastructure (looms, jigger machines,

winding/ warping machines, computer embroidery machines etc.), Dyeing and printing services at

Bhagalpur. Especially, there is lot of scope for improvement in power loom area. Weavers also

need to be exposed to advanced/ benchmark clusters like Bengaluru, Varanasi, Meerut to learn

the operations and productivity level of weavers. Schemes of PSC to upgrade looms will be

tapped. The Cluster can be linked to various technical institutions like IITs, handloom

technology development centers, etc.

• Designing: There is a need to train the local designers and master weavers having better design

understanding to keep pace with the fast-changing fashion in every season in the domestic as

well as international market.

• Printing: The cluster need a high priority in printing and value addition. The skill of the existing

block, screen printing units needed to be upgraded as well as a greater number of high- tech

printing units like digital printing required to be introduced to the cluster. For hand loom fabric

integration of local art like Mithila painting, Madhubani painting may be emphasized for greater

level of value addition and price realization.

• Marketing: A market scoping study may be commissioned to diagnose and recommend corrective

actions. Moreover, a need of creating awareness about the product of Bhagalpur silk at domestic

as well as at international forums has been felt. Brand building efforts need to be carried out to

establish cluster branding. There is also need for organizing buyer seller meet in Bhagalpur.

Exploring E-marketing platform has been felt. Use of quality marks such as – Silk Mark, Handloom


Mark, GI certification etc. The intervention may comprise of 1. Market study 2. Brand development

3. Need of common marketing platform 4. Linage with private buyer, exporter, garment

manufacturers, retail chains 5. E- marketing 6. Buyer- Sellers Meet and 7. Inventory enhancement.

A market scoping study may be undertaken to understand significant factors critical for the

business such as ascertaining domestic as well as export market sizes, trends etc. Based on the

recommendations of the scoping study appropriate marketing strategy would be decided.

• Value-added work: There is scope for intervention as there is only one screen printer and two

block printers, which is too less a number to cater to growing market demand in the cluster,

especially on power loom products.

• Training and Capacity Building: There is a scope for training and capacity development to

enhance the core skill sets of the cluster in technology up gradation, design development,

cotemporary weaving pattern, marketing and value addition. This may be done by classroom

training, on loom training and exposure visits to establish markets and benchmark clusters.

• Institutional Building: The marginal weavers of the cluster both from the power loom and handloom

area suffers a lot due to lack of working capital, timely raw material supply, capex for expansion

of units and loom upgradation and direct connect to market due to low scale of production this

may be taken care of by introducing or reviving the existing producer networks. This newly

established producer network or revived one may be oriented and provided with required hand

holding support to provide the marginal weavers end to end services.

• Establishment/ Rejuvenation of CFC: A common facility center with the improvements in various

areas as required need to be established for the use of basic weavers and co-operative societies.

The proposed common facility center would comprise of raw material bank, improved frame looms,

improved dying facilities, printing facilities, sampling and design center, embroidery section,

stitching and fabrication, finishing and packaging and labelling, business information center

including domestic and export marketing activities.

• Quality: Sensitize the buyers/ end consumer of cluster products to the use of authentic certification

from genuine sources like CSB. i.e handloom marks, silk mark, India handloom mark and craft

mark.

• Synergy among the stakeholders: Multiple agencies are engaged in training and capacity building

activities on various aspect of the trade but there is lack of or no coordination among important

service providers viz. PSC, WSC, CSB, DIC etc. An earnest need has been felt to effectively and

efficiently tap and optimally use the inherent potentials and roll out the intervention by actively

involving these institutions. A calendar of activities / training schedule in collaboration with support

stakeholders viz. PSC, WSC, CSB and technical experts etc. needed be developed.

• Energy: A scoping study may be undertaken to suggest low-cost solutions. Based on the

recommendation of the BDSP, a pilot project can be run in the cluster with selected units. After

realizing the potential success, a series of sensitized workshop / seminar can be organized to

upscale the solution.

Table 6.1 Action Plan

# Area of

Concern Activity

Implementor/

Participants/

BDS

Outcome Budget Timeline

1 Raw Material Establishment of

a Yarn Bank

SPV/ Expert

Agency

Easy availability of yarn at mill

gate price and cost of

production reduced.

Leveraging of

Yarn Bank

Scheme, Power

Tex India,

Ministry of Textile

2nd year


(Up to 200 lakhs

for SPV/

Consortium)

Miller –

Entrepreneur

Interface

SPV At least 50 entrepreneurs

connected with 15 institutional

/ miller for direct supply

minimize the price by 5-10%

in 2 interface meetings.

1,50,000 1st year

2 Technology Upgradation of

looms

Expert Agency Upgradation of 50 power loom

units with new technology like

rapier loom, dobby, jacquard

and 50 hand loom upgraded

with dobby/ jacquard

.Productivity enhancement by

25% and rejection down by

30%

Leveraging of

schemes and

beneficiary

contribution

Expert Hiring-

3,00,000

2nd year

Benchmark

Cluster Visit

Weaver /

Entrepreneurs

50 weavers’ entrepreneurs 25

each from hand loom and

power loom visited benchmark

cluster like Ponchampally and

Bhiwandi / Bhilwara for a

cross learning in two separate

visits. At least 50 units

upgraded their looms by take

up motion, let up motion,

dobby and jacquard

5,00,000 2nd year

3 Marketing Market Scoping

Study (60 days)

Expert Agency A market scoping study

commissioned to know the

current market trend and

established market linkage

with 15 regular buyers

5,00,000

1st year

Virtual Buyer

Seller Meet

Weavers/

Entrepreneur

One virtual buyer

seller meet organized in the c

generating a market linkage of

1 Cr directly

10,00,000 3rd year

4 Capacity

Building and

Skill

Upgradation

Orientation on

4Ps (two

programmes)

60 weavers /

MWs/

Entrepreneurs

(two batches)

At least 50 entrepreneurs 25

each from power loom and

handloom trained in different

aspects of 4Ps and start

initiating the practices

3,50,000 2nd year

Orientation on

Quality

Assurance (two

workshops)

Entrepreneurs

60 entrepreneurs 30 each

from handloom and power

loom oriented on different

aspects of quality assurance,

started practicing the

learnings, rejection reduced

by 40%

3,50,000 1st year

Training on

digital/ online

marketing (two

training

programmes

3days each)

50 entrepreneurs

50 weaver entrepreneurs each

25 from power loom and hand

loom trained on online market

applications start initiating

online marketing on B2C and

B2B platform like India Mart,

4,00,000 2nd year


Amazon, Flipkart and others

with a rise in sells around 30%

Capacity Building

Training on

Product

Development

60 entrepreneurs

in two batches 7

days each

At least 60 entrepreneurs

each 30 from power loom and

hand loom trained on different

aspects of new product

development and start

initiating the practice with 30%

enhancement in sales

8,00,000 1st year

Training on

Design

Development (two

training 15 days

each one for hand

loom and power

loom for)

50 MWs/

Entrepreneurs /

Weavers

50 weavers/ MWs/

Entrepreneurs get on loom

training on design

development learn 5 new

design, start weaving the new

designs with a 20% rise in

sales

10,00,000 2nd year

Training on

Organic Dye/

Advanced dyeing

techniques

50 dyers in two

batches 7 days

each

At least 50 dyers trained in

organic dying applications in

two programmes separately

on yarn and fabric dyeing start

initiating the process with a

50% enhancement in sales

4,00,000 2nd year

Orientation on

OHS and Social

Security (3

orientation

programme 100

participants in

each)

300 weavers 300 weavers oriented on OHS

and Social Security measure

start practicing the learnings

3,00,000 2nd year

5 Infrastructure Establishment of

CFC with modern

dyeing, finishing,

printing and R& D

facilities

Expert Agency The turnover of the cluster

increased by 10%

30000000

3rd year

Establishment of

a Yarn Bank

SPV/ Expert

Agency

Easy availability of yarn at mill

gate price and cost of

production reduced.

Leveraging of

Yarn Bank

Scheme, Power

Tex India,

Ministry of Textile

(Up to 200 lakhs

for SPV/

Consortium)

2nd year

6.4 RECOMMENDATIONS FOR FINANCIAL ISSUES Table 6.2 - Recommendations for Financial Issues

Recommendation Area Recommendations

Refinement in Product • Interest Rates: 8 %- 10%

Refinement in Process Repayment Schedule: 6 months grace period with monthly easy installments

Quantum of Finance: Ranging from 50,000 – 20,00,000 for marginal weavers and aspiring entrepreneurs to encourage them.

Scheme Awareness • Improvement in Application Filing & Processing

• Creation of strong private service providers in financing is highly required.


• Continue financial literacy programme for the awareness of cluster units on healthy loaning practices to streamline the bad loans as well as benefits of financial stability / relationship with banks

• Lower Processing Time – Should be ideally 7 days from the date of application submission especially in the case of working capital loan.

• Term loan should ne ideally processed within a month to minimize the project establishment cost and early production

Table 6.3 Financial Action plan

# Concern Area Activity

Implementor/

Participants/

BDS

Outcome Budget Timeline

1 Financial

Literacy

Training

Programme on

Financial

Literacy

Weavers/

Entrepreneurs

100 weavers /

entrepreneurs trained in

banking practices in 4

batches

2,00,000 2nd year

2 BDSP Bank Sathi

Programme

Expert agency 20 private BDSP identified

within the cluster trained

and nurtured and start

providing services

3,00,000 3rd year

3 Working

Capital

Requirement

of Master

Weaver based

Handloom

Units for Yarn

Requirement

Under MUDRA

Loan “Sishu” or

through M.F.I.’s

BMO/Financial

Consultant

Rs 30,000 W.C./HHEs*300

Master Weavers= Rs 90

Lakh

0 Year 1-2

4 Term Loan for

procurement of

Dobby Based

TARA Loom

for 200

weavers

Under MUDRA

Loan “Sishu” or

through M.F.I.’s

BMO/Financial

Consultant

Rs 30,000/Loom. Hence

Total Loan requirement is

Rs 60 lakhs for 200 looms

0 Year 1-2

5 Term Loan for

procurement of

Jacqaurd

Loom for 100

looms

Under MUDRA

Loan “Sishu” or

through M.F.I.’s

BMO/Financial

Consultant

Rs 50,000/Loom. Hence


Rs 50 lakhs for 100 looms

0 Year 1-2

6 Working

Capital

Requirement

for 100 Power-

loom based

units

Under MUDRA

Loan “Kishore”

Category

BMO/Financial

Consultant

Rs 3,50,000/unit. Hence


Rs 3.5 Cr. (Rs 3.5 lakh*100

units)

0 Year 1-2

7 Shuttle less

Power Loom

(Including

Dobby+Drop

Box+Take off

Motion+Let Off

Motion) for 500

looms

Under MUDRA

Loan “Kishore”

Category

BMO/Financial

Consultant

Rs 1.5 lakh/Loom Cost. 500

looms*1.5 lakhs= Rs 7.5 Cr.

Total loan requirement

0 Year 1-3

8 Upgradation in

Rapier Power

Loom for 100

looms

Under MUDRA

Loan “Tarun”

Category

BMO/Financial

Consultant

5 lakh/Loom Cost. 100

looms*5 lakhs= Rs 5 Cr.

Total loan requirement

0 Year 1-3

6.5 INTERVENTIONS SUGGESTED AT POLICY, CLUSTER AND UNIT LEVEL Policy Level


• Remove GST from Handloom products and consider Textile as one of the priority sectors for

employment generation hence provide special financial assistance and loan at lesser interest rate

for the sector

Cluster Level

▪ Create common facilities in value added products like screen printing, block printing, embroidery,

natural dye etc (BMOs)

▪ Strengthen linkage with other craft clusters of Bihar like Madhubani, Sujni etc for value added

products (NIFT Patna, BMOs)

▪ Support creation of Raw Material Banks, One common Tie – Dye Processing Centre and a

Common Yarn Processing Centre (SPV)

▪ Provide Assistance in conducting Skill training to the weavers in designing using CAD technology

(NIFT Patna)

▪ Provide assistance to micro units in formalising their units (BMOs, DIC)

▪ Undertake energy scoping study for Power-loom units (BDSPs)

▪ Banks may facilitate loans under MUDRA scheme particularly for yarn procurement and

upgradation in loom. Micro-credit can also be an option for handloom units

Unit Level

▪ Support creation /strengthening of an SPV for online exhibition and giving primary linkage with

bulk buyers for India and abroad (BDS)

▪ Adoption of Jacquard Looms for Handloom units (W.S.C., BMOs)

▪ Energy audit in SME Power-loom units (BDS)

▪ Training in drawing and new designs making (NIFT Patna)

6.5.1 Initiatives where SIDBI may Intervene

Table 6.4 Initiatives where SIDBI may Intervene

Interventions Year 1 Year 2 Year 3

Create common facilities in value added products like screen printing, block

printing, embroidery, natural dye etc under SFURTI or MSE-CDP scheme

Strengthen linkage with other craft clusters of Bihar like Madhubani, Sujni etc

for value added products

Support creation of Raw Material Banks, One common Tie – Dye Processing

Centre and an Common Yarn Processing Centre under SFURTI or MSE-CDP

scheme

Provide Assistance in conducting Skill training to the weavers in designing

using CAD technology

Provide assistance to micro units in formalising their units

Undertake energy scoping study for Power-loom units

Banks may facilitate loans under MUDRA scheme particularly for yarn

procurement and upgradation in loom. Micro-credit can also be an option for

handloom units

Support creation /strengthening of an SPV for online exhibition and giving

primary linkage with bulk buyers for India and abroad

Adoption of Jacquard Looms for Handloom units

Energy audit in SME Power-loom units

Training in drawing and new designs making


6.6 BIG IMPACT INITIATIVES Product Diversification through Value Added Products and Cluster Twining

Rationale

Over the years products of Bhagalapur, particularly silk Sarees and Dress material has become

monotonous without much change in design or value addition. Slowly buyers are loosing interest on same

designs.

Proposed Plan

i) Madhuabani and Sujni are two well known craft clusters of Bihar. There is already linkage with

these 2 clusters and Bhagalpur, however that are limited among some of the master artisans or

designers. If BMO/marketing specific SPVs can be promoted for regular cluster twining among

these 3 clusters then all these clusters can be benefitted and Bhagalpur will have a value added

product range.

ii) To enhance the scope further, CFC within the cluster can be established for facilities like screen

printing, block printing, embroidery and natural dye.


7 ANNEXURE

7.1 COMPARATIVE ANALYSIS BETWEEN PREVIOUS STUDY AND PRESENT

STUDY

7.1.1 Basic Statistics

According to the ongoing DSR survey, the cluster has 4400 units, out of which 4180 micro units and 220

small units. This includes both power loom as well as hand loom units. The current estimation says there

are around 1200 power loom units operational in the cluster whereas 3200 hand loom units are working

in the cluster. This clearly indicates there is such changes made in power loom units whereas there is a

33% increment in handloom units. Although, there is no bifurcation of number of units was mentioned in

the previous DSR. Further, the cluster presently engages 30000 power loom and 20,000 handlooms.

However, in 2014 the total employment in the cluster was 50000, this means there is no such changes

has been made in terms of employment generation in the cluster. As far as the cluster turnover is

concerned the current turn over of the cluster has been increased by around 36%. This is because of the

growing local market demand of handloom and power loom fabric of Bhagalpur at national level, however

the export market of the cluster shrinking gradually by 20% in comparison to 2014 DSR.

Table 7.1 Comparative Between the Previous Study and this study Head

Previous Study

(2013-14) Current Study

(2020-21)


Micro Not mentioned 4180

Small Not mentioned 220

Medium Not mentioned --

Total 1186 Cr 1620Cr

No of Units

Micro Not mentioned 4180

Small Not mentioned 220

Medium Not mentioned --

Total Not mentioned 4400

No of Looms Power loom 14000 14050

Hand loom 6000 8000

Total 20000 22050

Employment

Skilled Not mentioned 20000

Unskilled Not mentioned 30000

Total 50000 50000

7.1.2 Comparative on Key Issues

7.1.2.1 Raw Material

• Identified in the Present Study - There are no such changes has been observed in the raw

material sourcing pattern in the cluster in terms of market channel, but the current study has

witnessed the changes in consumption pattern of raw material. Currently the power looms units of

the cluster is procuring more synthetic silk, cotton, linen, viscose and Chinese silk whereas the

hand loom units are gradually shifting towards dupian silk, mulberry and other factory made silk

fabrics. The consumption of natural silk has been reduced by around 25%.

• Identified in Previous Study - The major yarn consumed in the cluster were Tussar, Eri, Matka

silk and Noel. The use of linen, dupian and mulberry silk was almost nil or very minimal in the

earlier study.


7.1.2.2 Technology

• Identified in the Present Study - There are two types of looms operational in the cluster one is

hand loom and another one is power loom. Most of the hand loom operational in the clusters are

pit loom running without dobby and jacquard. Probably there are 2% hand loom in the cluster is

using dobby, but the use of jacquard is total nil. The pre loom and post loom activities are

predominantly manual and use of advanced technology like electric charkha is very minimal. In

case of power loom 99% of the looms in the cluster are 2nd hand loom sourced form Karantaka,

Gujurat and other places. There is very minimal scope of technical upgradation in the exiting

looms. This effects the productivity and quality of the products of the units as well as the cluster.

• Identified in Previous Study The earlier DSR has suggested the upgradation of technology as

per the local need in the area of pre loom and on loom and post loom activities such as upgradation

of looms, use of technology in warping, skilling of local operators, linkage with technical institutes

for technical advancement for enhancement in quality and productivity of the cluster.

7.1.2.3 Skill

• Identified in the Present Study - The cluster in houses around 30,000 power loom work forces

and 20,000 handloom workers involved in different stage of work. The skills are traditionally

developed within them or inherited from their families, less awareness among different quality

aspects and concern for a benchmark product makes them less focused towards skill upgradation

and encouraging for them tom acquire new skills. Understanding over market trend, color

combination is very less among the weavers. Most of the products produced in the cluster are

copied either copied form different sources or given by buyers from Delhi, Mumbai, Kolkata and

other cities. This needs an instant focus and needs to take up by units on a priority to restore the

name and fame of Bhagalpur silk industry. The weavers of the cluster need to upgrade their skills

in different aspects of product development, design development, market promotion skills, dyeing

skills and other skills required for the industry time to time.

• Identified in Previous study - The previous study has suggested there is a requirement of skill

improvisation in dyeing, printing, design development and product development. However, there

was no such clear mention in this regard. Moreover, the study has given emphasis on creation

and development of local business development service provider in the above areas.

7.1.2.4 Marketing

• Identified in the Present Study - The major market of Bhagalpur textile cluster is export market.

Sources says till mid- twenties the export market share of the cluster was around 70%. But the

current export share of the market is around 50%. The growth rate of Indian textile market is

estimated to be around 8% during fiscal year 2015-20. Despite the growing national market, the

cluster has a declining market trend during last 7-8 years. The exporters form Bhagalpur says it is

because of the shifting of hand loom to power loom. The weavers of the cluster do not have direct

access to the market as most of them do the job works given by the MWs/ local traders. The local

traders aggregate the semi-finished product from the weavers and after the finishing they supply

the fabrics to the exporters operates in the cluster or to the whole seller and retailers in the city

like Delhi, Mumbai, Kolkata and others.

• Identified in Previous Study - Traders are doing the major marketing activities like market

exploration, contact development and trading. There is no use of BDSP in market exploration,

study, promotional activities like advertisement, B2B market linkage, facilitation through e- portals,

catalogue/brochure development and linkage creation.

7.1.2.5 Infrastructure

• Identified in the Present Study - The looms used in the cluster are outdated and needs rapid

transformation and change in technology is highly required to keep the produce of the cluster

market friendly and superior in quality. Regular supply is a major concern in the area, according


to the primary sources 50% of more production could have done if they get a regular power supply.

There is no such CFC available in the cluster for R& D for the power loom weavers for providing

end to end services.

• Identified in Previous Study - The previous DSR has recommend the creation of new CFC with

all the modern facilities such as modern dyeing house, finishing and other facilities

7.1.2.6 Finance

• Identified in the Present Study - There are approx. 14,000 power looms in the Bhagalpur cluster.

Most of them are secondhand looms bought from Meerut, Bangalore, Mumbai area at around Rs

40,000 to Rs 50,000 depending upon the condition of the loom. Whereas a new machine costs

around INR 75,000 to INR 90,000. Since the looms are old, their productivity is also low, almost

40%-50% lesser compare to new ones. The major reason for not buying new machine, mentioned

by the units is lack of finance. These units are also not registered and thereby do not get benefits

of various technology up gradation schemes. It has also been found that the power loom owners

purchase the raw material on cash, whereas the sales are always on credit of up to 90 days. Due

to which the power loom owners always run short of working capital. The other problems like

collateral issues, complex documentation work, lack of awareness on different financial schemes

are critical.

• Identified in Previous Study - The banks do not have good linkage with the weavers, primarily

because of credit indiscipline/ defaults. Weavers also get credit through artisan credit card, but

repayment is very low as mentioned by the managers of UCO bank (the lead bank). Moreover,

there is no major initiative by the banks, other support institutions to educate the weavers on the

importance of credit discipline. Their financial literacy to estimate and articulate exact need is also

poor. Therefore, whatever loan size is available they take.


7.2 SAMPLE TARGET VS ACHIEVED Table 7.2 - Sample Mix

# Stakeholder Type Target Achieved

1 Primary

Stakeholder

Micro 30 38

Small 05 02

Medium 05 00

Total 40 40

2 Support Firms – Raw material Suppliers, Machinery Suppliers 3-4 05

3 Buyers 2-3 2-3

4 Industry Associations Minimum 2 02

5 Strategic Business Development Service Providers (BDSPs) 1-2 1-2

6 Government Bodies such as DIC, PCB 2-3 2-3

7 Skill Imparting Institutions – ITIs & Private institutions, NGOs 2 2

8 Financial Institutions – Lead Bank – District, Leading banks in cluster,

including Commercial Branches of Banks, NFBCs Minimum 5 Minimum 5

7.3 LIST OF STAKEHOLDERS / INTERVIEWEES Table 7.3 - List of Interviewees

# Stakeholder Type Stakeholders Met

1 MSME Units Promoters of

• Kamala Devi’

• Niraj Kumar

• Pramanand Prasad

• Rajib Kumar

• Ranjit Dani

• Alok Kumar

• Shishupal Kumar, Manaswi Creations

• Shadanand Gupta, Shivam Textiles

• Bharat Lal, Bharat Lal Handloom

• Manish Kumar, Adya Handloom

• Md. Shamiullah

• Rakesh Kumar

• Diwakar Lal

• Pranav Lal

• Brijnanadan Prasad

• Satyapal Pravakar

• Mazhar Imam

• Nouman Ansari

• Md. Mohoseen Hussain

• Raj Kishor Lal

• Md. Altaf

• Md. Parvez

• Md. Rehmetullah

• Md. Sobash

• Tanveer Kasab

• Md. Faiza Usman

• Asif Hussain

• Rizwan Ansari

• Prem Kishore Shah, Dewarshi Silk

• Shankar Lal

• Md. Imarn, A2Z Silk

• Md. Imtiyaz Alam, RSY Handloom Fabrics

• ShamShad, Tahir Handloom

• Raja Ram Seth, Rishu Handloom

Arvind Kumar Lal

2 Support Firm • Sagar Handloom

• Ms/ Hind Machinery Works

• S. S Fabric


• Shree Tarders

• Bhagawati Trading Company

3 Banks • UCO Bank, Nath Nagar

• Central Bank of India, Nath Nagar

4 BMO • Abdul Kayyum Ansari Bunkar Manch

• Bhagalpur Powerloom Weavers Association

5 Service Providers • Power loom Service Center, Bhagalpur

• Weavers Service Center, Bahgalpur


7.4 VALIDATION EXERCISE Cluster Name: Bhagalpur Textile Cluster

Date of Validation Meeting: 23rd January 2021

Number of Participants: 17

Online/Offline: Offline

A. Suggestions

# Point on which Suggestion is provided

(Capture in brief)

Suggestion Provided

(Capture in Detail)

Suggestion Provided by

Name Type of

Stakeholder

1

• Raw Material

• Infra-Structure

• To control frequent price fluctuation, artificial shortage of yarn a yarn may be established in the cluster.

• Govt. should ensure the problem of frequent power cut in the cluster area.

• Support in solar energy for work sheds

Mr. Prem

Kishore Shah

and Mr.

Satyapal

Pravakar

MD and

BOD of

Bhagalpur

Living

Loom

Producer

Compnay

2

• Technology • Assistance in upgradation of looms with dobby, take up motion, let up motion and drop box.

• Assistance in purchasing of Rapier loom

Md. Imran and

Mr. Robinson

Kumar

Firm

3

• kill upgradation and capacity building

• Technology

• Capacity Building of MWs and Weavers in product and design development

• Use of organic dye shall give a push towards the selling of Bhagalpuri fabric.

• Hand holding in installing jacquard in both handloom and power loom

Mr. Amit

Chourasiya

Designer

and

Aggregator

4

• Marketing Support • Marketing linkage with city buyers for better margin

• Market exposures visit of hand loom weavers.

• Support in participating exhibitions and trade fairs

Mr. Shishu

Kumar Laal

Firm

5

• Infrastructure

• Use of Schemes

• CFC for R&D, high quality processing machines, dyeing facility and printing facility.

• Frequent and mass awareness camps for weavers on different schemes of Ministry of Textiles and other departments.

Mr. Vinay

Kumar Gupta

Asst.

Director,

PSC,

Bhagalpur

6

• Infrastructure • Special Industrial Facility for setting up new units with work shed and other allied facilities

Mr. Amay

Kumar and Mr.

Satyapal

Pravakar

BDS and

Firm

7

• Marketing • Collective Marketing

• Online marketing platform

• Low payment time from 15- 20 days

Md. Oneesh

and Mr. Arun

Kumar

Firm


8

• Finance

• BDS

• Low interest rate 7-9% for the weavers

• Flexibility in documents providing loan to the units by the banks.

• Creation of service providers at cluster level

All firm Firm

B. Participants

# Name

Type of Stakeholder

(along with

Designation)

Contact Details (Mobile & Email

Address)

Date of Participation

(If multiple meetings were

organised)

1 Mr. Amay

Kumar

S S Processor 9334380414 23rd January 2021

2 Md. Imran M K Handloom 9852448039 23rd January 2021

3 Md. Oneesh Power loom Weaver 9973727040 23rd January 2021

4 Md. Abdullas Power loom Weaver 9004213063 23rd January 2021

5 Md. Inzamam Power loom weaver 8434881871 23rd January 2021

6 Mr. Prem

Kishore Shah

MD, Bhagalpur Living

Looms Producers

Company

9431250900 23rd January 2021

7 Mr. Arun Kumar Power loom Weaver 9852155827 23rd January 2021

8 Mr. Sourav

Prasad

Sourav Handloom

9852849736 23rd January 2021

9 Mr. Satyapal

Pravakar

BOD, Bhagalpur Living

Loom Producer

Company

6200154484 23rd January 2021

10 Mr. Sourav

Shad

Dyer

7870656517 23rd January 2021

11 Mr. Shishu

Kumar Laal

Handloom Weaver 9576348791 23rd January 2021

12 Mr. Raj Kishore

Laal

Handloom Weaver 9504445722 23rd January 2021

13 Mr. Robinson

Kumar

Power loom Weaver 9798210890 23rd January 2021

14 Mr. Amit

Churasiya

Designer and

Aggregator

8002027603 23rd January 2021

15 Mr. Vivek Kumar Handloom Weaver 9931420476 23rd January 2021

16 Mr. Deepak

Kumar

Dyer 72779552596 23rd January 2021

17 Mr. Vinay

Kumar Gupta

Asst. Director Power

Loom Service Center,

Bhagalpur

[email protected]

9892500010

23rd January 2021

mailto:[email protected]


7.5 SECONDARY SOURCES REFERRED • “All India Report of Sixth Economic Census (2016)”, Ministry of Statistics and Programme

Implementation

• “Annual Report”, Ministry of MSME, 2017-18

• “Economic Characteristics of Unincorporated Non-agricultural Enterprises (Excluding Construction) in

India, NSSO, NSS 73rd Round, 2015-16 (July-June), Ministry of Statistics and Programme

Implementation

• “Handbook of Statistics of Indian States”, Reserve Bank of India, 2018-19

• “Per Capita Income, Product and Final Consumption”, Central Statistical Organization, Ministry of

Statistics and Programme Implementation, 2018-19


7.6 QUESTIONNAIRE FOR PRINCIPAL FIRMS

1. Basic Information

a) Year of establishment of the Unit

b) Nature of unit: Proprietory/ Partnership/ Private Limited/ Others (Specify)

c) Does the unit have Udyog Aadhar?

d) Is it first or second or third generation business? How interested are the current generation in this business?

e) Existing products/ product line/ services offered

f) Reasons for establishment of unit:

2. Vital Statistics

a) Turnover during the last 3 years

2019-20 2018-19 2017-18

Total Sales (INR, lakhs)

- Domestic Sales (%)

- Export Sales (%)

Total 100% 100% 100%

Profit After Tax (%)

b) Gross investment in plant and machinery

a) upto Rs. 25 lakhs

b) Rs. 25 lakhs to Rs. 1 Cr

c) Rs. 1 Cr to Rs. 3 Cr

d) Rs. 3 Cr to Rs. 5 Cr

e) Rs. 5 Cr to Rs. 10 Cr

f) Above Rs. 10 Cr

c) Number of Employees in the Unit : Full Time: Part Time: Women:

d) Profile of customers (with approximate number )

a) Suppliers for National Brands

b) Supplier for Regional Brands

c) Suppliers for International Brands

d) Supplier for local companies

e) Own brand retail

f) Own brand wholesale

g) Other, please specify

e) Employment growth rate during the last 3 years: <0 per cent, 1-10 per cent, 11-25 per cent, 25-50 per cent, > 50 per cent

f) Who are your major technical & strategic service providers? Please mention names of such service providers

g) Are you member of any association/ SPV? Name

Nature of assistance provided by association/ SPV: Advocacy/ Training & Consulting/ Financial Facilitation/ Others (Specify)

3. Business Analysis

a) Raw Material

Whare the major raw materials required? Their major sources

Does association or any other promtional agency (like NSIC) helped you in sourcing of raw material in the past?

Is there formal/ informal raw material consortium or any meassures for collective procurement created in the past? If so are you

a member of it?

What are the Raw Material related problems? (Please √ the appropriate place and explain)

Explain the problem Explain the problem

Non-availability Sudden change in

supply (uneven supply)

High cost Import Problem (import

duties etc.)

Poor quality of the

raw materials Others (please specify)


b) Marketing

• Where and through which channel are the enterprise's/cluster’s main products sold? (%), any preferable channel, why?

Own

brand

Other

brand

Trader Agent Fair/

Exhibition

Other units Total

Within cluster

Outside cluster

Export (direct/ indirect)

Total 100

• Enterprise’s/ skill related problems in marketing: Lack of exposure/knowledge/skilled employee/skilled service providers/high

cost of skilled employees/ any other (please specify)

• Enterprise’s/ investment related problem in marketing: Too costly to: diversify or create new product range/open a show room/

afford a marketing team/afford to go for export marketing/create the desired volume/any other (please specify)

• Are you aware of any market promotional activities undertaken in the past by promotional/ implementing agencies at cluster

level? If so are you a part of it?

• Name two to three important strategic marketing services you require: Research/ niche driven strategy/ search engine

optimisation/ advertising/ referral marketing/ any others (specify)

c) Machinery/Technology

• What are the 2/3 most important (value wise and/or critical) machinery/ equipment need for your firm/the cluster firms and their

purpose (Like maintaining MIS/ Accounting/ others)? (Question specifically for service based clusters)

• Give details of the major machinery used? (For manufacturing based clusters)

SN Machine Purpose Price Average

age

Source of buying

(Supplier/

Location)

How is the

productivity

(Below average,

average)

Capacity

Utilisation (in

%)

• What are the principal sources of parts, servicing and repairs (including self-servicing by the enterprise itself)?

• Can you mention at least one/two/three/more than three innovative products/process that the enterprise/cluster have made

during the last 5 years (through any previous interventions)?

• Who do you think has played a major support in this process? Local Institute/Institute from outside the

cluster/buyer/supplier/service provider?

• What are the main problems (if any) with the machines or with the processes of production?

d) Skill

Employment details:

Type Full time Part time (Contractual) Salary/ wage Level

Man Woman Man Woman Min Max

a) Professional/managerial

b) Technical

c) Non-technical

d) Others

• Labour productivity of skilled labour of your firm/cluster: very low/low/satisfied/huge scope for improvement?

• What is the average price of skilled and unskilled labour?

• How do you get their supply? Local or Migrant?

• What problems you face in retaining them?


• Which functional area: PR/production/marketing/after sales/quality initiatives/any other (please specify)

• Main providers of technical training of your firm/cluster: Association/Technical Institution/Value Chain Partner/No source, need

to organize specially/none

• Major issues for skilled labour of your firm/cluster: shortage/high cost/quality consciousness skilled/personality issues/lack of

quality technical institutes/orientation of technical institutes for industry training

• Are you a part of any Skill Development/ Management Development programs organised by any promotional agencies

previously? If yes, have you are your workers benefitted through attending such programs?

e) Infrastructure

• What are the challenges for general infrastructure: quality of road/telecommunications/health

services/education/power/water/cargo handling/CETP/ any other (please specify)

• What are the needs for shareable cluster specific infrastructure – testing laboratory/raw material depot/common facility

centre/industrial park/design centre/training centre/display centre/ any other (please specify)?

• What are the challenges with respect to connectivity, power, water, logistics?

• Are there any common infarstructure projects undertaken in the past? If so are you a member of it?

f) Energy and Waste Management

f.1) Energy

• What is your monthly consumption of electricity/other main energy used?

• Do you think that your energy bill can be reduced?

• Have you ever undertaken energy audit? If not the reasons: lack of awareness/ high cost of the audit/ others (specify)

• Water Consumption per month? Can it be optimized? Any idea?

• Are you aware of any relevant energy efficiency interventions undertaken in the past? If so are you a part of it?

f.2) Waste Management

• Waste Disposal

Type Quantity Disposal method Remark

Solid :

Liquid:

Gases:

• Is disposition of waste is a problem?

• Can this waste be minimised or reutilised?

• Are you aware about technology/innovation for reduction or reutilisation waste?

• Is there any common facility for waste management within the cluster region?

• If not, then what are you planning to manage waste?

g) Policy Issues

• What are the major macro-economic factors that are promoting / holding back the growth of the cluster?

• What are the major regulatory factors that are promoting / holding back the growth of the cluster?

• What are the business responsibility factors that are promoting / holding back the growth of the cluster?

h. Finance

1. Have you ever applied for a loan before?

a) Yes, loan availed

b) Yes, but did not succeed

c) Yes, but the terms offered were not acceptable

d) Did not have any loan requirement, hence not applied

e) Not applied because of other reasons (Please specify)

2. What are the payment terms with your suppliers?

% share of total purchase value Additional Cost for Credit Period (%)

a) On Advance

b) On Delivery/Against LC

c) On Credit (mention no. of days)


3. What are the average payment terms for your customers?

% share of total sales value Cash Discount (%)

a) On Advance

b) On Delivery/Against LC

c) On Credit (mention no. of days)

4. For what all purposes do you need a loan?

a) Working Capital Related

b) Capacity Expansion /

New Project Related

c) Specific need for a

special project/ purpose

5. Please provide the overall estimate of funding availed for financing needs, the last time you took a loan. Please indicate the

various sources form which funding was availed, the amount of funding availed from the source and the relevant interest rate.

Working

Capital Loan

Term Loan

Total investment and working capital requirement during your last project expansion/new

project set up/new contract, etc. (INR, Lakhs)

Amount applied for bank funding (INR, Lakhs)

Amount actually sanctioned by the bank (INR, Lakhs)

Source of borrowing Working Capital Loan Term Loan

Amount Interest rate Amount Interest rate

- SIDBI

- Public Sector Banks/ Regional Rural Banks

- Cooperative Banks

- Private Indian / Foreign Banks

- State Financial Corporation

- NABARD

- Micro Finance Institutions/ NBFCs

- Other Formal Sources

Please Specify: __________

- Informal Sources (includes Friends / Family, Customers)

Total 100% 100%

6. Were you able to service your loans timely? (Yes/No)

7. What is the interest rate if borrowed from informal channels of finance? (__________)

C) LOAN PROCESS

8. Did you furnish collateral the last time you took a loan? (Yes/No)

9. If the answer to last question is NO, then did you avail loan under the CGTMSE scheme? (Yes/No)

a. In case NO, are you aware of CGTMSE scheme? (Yes/No)

10. If the answer to Q8 was YES, please indicate the type of collateral that you furnished.

a) Charge created on fixed assets

b) Charge created on current assets

c) Corporate Guarantee

d) Personal Guarantee

e) Third party guarantee

f) Others, please specify

___________

11. Please indicate your response with respect to the different schemes/subsidies of central/state government and other multilateral

agencies.


Schemes Awareness

(Yes/No)

Did you avail it in past

(Yes/No) If availed then for what purpose

1. MUDRA Loan

2. Credit Guarantee Trust Fund for

Micro & Small Enterprises

Credit Linked Capital Subsidy for

4. Technology Upgradation

4. Others (Please specify)

12. Please indicate your response with respect to the different schemes of SIDBI

Schemes Awareness

(Yes/No)


(Yes/No)

If availed then for what purpose

1. SIDBI Make In India Soft Loan

Fund For Micro Small And

Medium Enterprises (SMILE)

2. Loans under partnership with

OEM

3. Working Capital (Cash Credit)

4. SiIDBI-loan for Purchase of

Equipment for Eenterprise’s

development plus (SPEED PLUS)

5. Topup Loan for Immediate

Purposes (TULIP)

6. SIDBI Tem Loan Assistance for

Rooftop solar PV Plants

7. SIDBI assistance to facilitate

emergency response against

corona virus (SAFE)

13. Please indicate the problems faced while applying for loans.

Term Loan related issues like high collaterals, complex documentation, processing charges or others, please specify

Process related ussues like long processing time, poor information dissimination related to documentation, others, please specify

Others like stringent eligibility norms, banker’s behaviour etc., please specify

14. Please share the time taken for sanctioning the loan, the last time you took a loan from a bank.

Type of Loan Time Period (days)

a) Working Capital Loan

b) Term Loan

15. With respect to cluster specific financial products please comment on the following.

Working Capital Term

Loan

a) Preferred interest rate for new loan (%)

b) Ideal period for sanctioning of the loan after you have submitted all

documents. (in days)

c) What kinds of collateral which your frim/ most of the cluster firms can

offer

d) Repayment Period (state the duration)

e) Moratorium (state the period in months)

f) Minimum promoters’ contribution for loans (how much)

I. Business Services:


• What are the areas you need help of Business Service Providers: Marketing/ Finance/ Quality/ Technology/ Infra/ Other

(please specify)

• Are you availing services of any such BSPs? If so who is funding them? Own sources/ SPV/ Association/ others (specify)

• Does any BSPs linked to your firm through previous intreventions undertaken? If so who is the sponsorer? What id the

impact?

• What are the issues related to BDS: Non availability/ high cost/ lack of awareness/ lmited knowledge of BSPs/ others

(specify)

j. Impact of COVID - 19

• Please indicate major thematic areas adversely affected due to COVID – 19:

Finance/ Marketing/ raw material sourcing/ labour availability/ production process (incl. repairs & maintenance, any others

(please specify).

• Please inform the kind of support you are expecting from Central/ State Governments, banks, other promotional agencies

To do’s for interviewer

• Please take business card after the interview or get orally name, communication, etc.

• If possible, start with a tour of the production/storage facilities of the enterprise, before proceeding with the discussions.

• Not everybody will be willing to answer all factors. Hence ask them what is the two most critical issues among raw

material, market, skill, technology, infrastructure, energy & waste, etc. and go for those factors only and go

for the other if there is time and the firms is willing to give time.

• You may also do home work and identify the major raw materials, machinery, equipment, business development services

requirement in advance, for ease of interviewing considering time constraints during interview.

• Names/addresses of significant support firms/ institutes should be noted for possible subsequent interview

• Names/addresses of major buyers should be noted for possible subsequent interview.

• If other enterprises or institutions, including consortia of same, and enterprise associations, have played a significant role,

their names and (if necessary) addresses should be noted, so that they may be interviewed for their side of the story.

Recapitulation/Summary of Main Problems and Strategy of the Enterprise

• Recapitulate - very briefly, in a single short phrase per problem - the three main problems of the enterprise (if it has any

main problems), as seen by the interviewer.

• These problems may be among those noted by the enterprise itself, or by the interviewer but not by the enterprise (e.g.

poor management, disputes between the owners, no skilled floor supervisors, etc.)

• Summarize, in two to three lines, the enterprise's core competitive strategy and strengths, and its most valuable

interactions with other parties in the cluster (e.g. technical excellence and upgrading, market diversification, specialisation,

low costs/prices, using other enterprises for specialised job-work, producing for distant markets via large buyers, etc.).


7.7 QUESTIONNAIRE FOR PUBLIC AND PRIVATE SERVICE PROVIDERS


a) Name of the Organisation:

b) Location:

c) Nature of the entity: Branch/ Regional Office/ Zonal Office/ Head Office

d) Name of the main contact person:

e) Communication details: Phone No Mobile No:

Email Id

2. Business Analysis (mainly related to cluster)

a) What are the services offered by the organisation

Advisory/ Financial Support or facilitation (including grants)/ Licensing & Clearances/ Capacity Building/ market facilitation/

others (please specify)

b) Does a Cluster firm have any linkage with your organisation? if Yes

c) What services provided to the firms?

d) How many firms (Nos): Micro (Nos), Small (Nos), Medium (Nos)

e) Nature of services provided:

Advisory: Micro (Nos), Small (Nos), Medium (Nos)

Financial Facilitation: Micro (Nos), Small (Nos), Medium (Nos)

Licensing & Clearances: Micro (Nos), Small (Nos), Medium (Nos)

Capacity building: Micro (Nos), Small (Nos), Medium (Nos)

Market facilitation: Micro (Nos), Small (Nos), Medium (Nos)

Others: Micro (Nos), Small (Nos), Medium (Nos)

f) What are the challenges faced in serving the cluster MSMEs?

Lack of awareness about the services offered among MSMEs/ budget constraints/ Reluctance of MSMEs to cooperate/

Distance from cluster location/ lack of proper association/ others (please specify)

g) What are the measures undertaken to promote the services offered among cluster MSMEs?

Interface with MSMEs/ periodical advertisements in papers/ delegating a promotional officer/ Dissemination through

associations & federations/ Distribution of pamphlets/ others (specify)

h) Has the organisation conducted any study/ survey with reference to the cluster/ relevant sector in the past? If so, mention

the thematic area:

Industrial Potential Survey/ Skill Mapping/ Credit Mapping / Census for industrial data/ others (please specify)

i) Does your organisation measure the impact of services/ programs provided/ conducted? If so instruments used:

Monitoring & evaluation through monthly or quarterly progress reports/ impact assessment survey/ formal or informal feed

back from beneficiaries/ others (please specify)

j) According to you, what are the major challenges faced by the cluster firms?

Obsolete technology/ limited skill sets/ lack of access to finance/ poor marketing strategies/ shortage of raw material/ poor

quality/ others (specify)


k) Do you feel that cluster MSMEs need customised services based on its product or services offered/ its diversified nature/

product specific statutory requirements/ others (specify)

l) Has your office involved in any cluster-based interventions organised in the past by a third party? If yes, what kind of

support extended?

Advisory/ part funding of activity/ / capacity building/ information dissemination/ others (please specify)

m) Does your office aware of SDIBI Schemes like:

• SIDBI Make In India Soft Loan Fund For Micro Small And Medium Enterprises (SMILE)

• Loans under partnership with OEM

• Working Capital (Cash Credit)

• SiIDBI-loan for Purchase of Equipment for Enterprise’s development plus (SPEED PLUS)

• Top-up Loan for Immediate Purposes (TULIP)

• SIDBI Tem Loan Assistance for Rooftop solar PV Plants

• SIDBI assistance to facilitate emergency response against corona virus (SAFE)


• Please take business card after the interview.

• Try to collect any cluster specific data (hard copy/ soft copy) available with the organisation

• Names/addresses of major cluster MSME customers should be noted for possible subsequent interview


7.8 QUESTIONNAIRE FOR SUPPORT FIRMS (BUYERS LIKE WHOLESALERS,

RETAILERS, EXPORTERS ETC.)


a) Name of the Unit:

b) Year of establishment of the Unit:

c) Nature of unit: Proprietory/ Partnership/ Private Limited/ Others (Specify)

d) Does the unit have Udyog Aadhar?

e) Are you wholesaler/ Retailer/ Exporter/ Mecrhant Manufacturer/ Agent/ Others (please sepcify)

f) Value of goods sourced

g) Gross investment in equipments and other fixed office establishment expenses

g) upto Rs. 25 lakhs

h) Rs. 25 lakhs to Rs. 1 Cr

i) Rs. 1 Cr to Rs. 3 Cr

j) Rs. 3 Cr to Rs. 5 Cr

k) Rs. 5 Cr to Rs. 10 Cr

l) Above Rs. 10 Cr

h) Is growth rate of your business with the cluster during the last 5 years (point to point): <0 per cent, 1-10 per cent, 11-25 per

cent, 25-50 per cent, > 50 per cent /diversifying?

i) How many persons work with you?

j) Do you have branches in other places too?


2.1 Non Financial

h) How many major buyers are present in the cluster?

i) What are the main items and/or services sourced from the MSMEs and of what type?

j) What is the main motivation for such sourcing: low costs/local supply convenience/save on enterprise's own investment/high

quality/ any other (please specify)

k) What are the types of firms (household, micro, small, medium) from whom you source and in what percentage?

l) Do you do retailing or do you in to bulk selling to retailers/brands/other intermediaries like wholesalers and in what percentage?

m) What are the main problems experienced with sourcing from the SMEs: product consistency/high percentage of

defects/timeliness/packaging/willingness for rectification/ any other (please specify)

n) What according to you are the major issues of cluster firms? Lack of finance/ Limited Market/ Limited awareness on new

technologies/ poor skill sets/ lack of management skills/ limited awareness about support firms/ exploitation by middlemen/

others. What is your opinion?

o) Are you aware of any previous interventions undertaken by any promotional/ implementing agencies? If yes, are you a part of

it? If so, can you explain your nature of involvement (Part of any B2B or B2S meets, participating in any Management

Development programs, launch or sensitisation workshops, any others)

p) Are you member of any association/ SPV? If yes, Name of the BMO:

q) Nature of assistance provided by association/ SPV: Advocacy/ Training & Consulting/ Financial Facilitation/ Others (Specify)

a. Financial



f) Yes, loan availed

g) Yes, but did not succeed

h) Yes, but the terms offered were not acceptable

i) Did not have any loan requirement, hence not applied

j) Not applied because of other reasons (Please specify)


d) Working Capital Related

e) Letter of Credit/ Bank

Guarrantee/ any other

non fund related

f) Specific need for a




- SIDBI


- Cooperative Banks



- NABARD





Total 100% 100%



LOAN PROCESS





g) Charge created on fixed assets

h) Charge created on current assets

i) Corporate Guarantee

j) Personal Guarantee

k) Third party guarantee

l) Others, please specify

___________


agencies.

Schemes Awareness

(Yes/No)



1. MUDRA Loan




4.



Schemes Awareness

(Yes/No)


(Yes/No)







Purposes (TULIP)



corona virus (SAFE)






• Please take business card after the interview, if possible.

• Not everybody will be willing to answer all factors. Hence ask them what is the two most critical issues faced by them and

also by cluster firms among raw material, market, technology, finance etc. and go for those factors only and go for the

other if there is time and the firms is willing to give time.

• If institutions like enterprise associations have played a significant role, their names and (if necessary) addresses should

be noted, so that they may be interviewed for their side of the story.

• Refrain probing in depth about their competitors, if they feel uncomfortable.


• Recapitulate - very briefly, in a single short phrase per problem - the three main problems of the support firms, as seen by

the interviewer.


7.9 QUESTIONNAIRE FOR SUPPORT FIRMS (SUPPLIER OF RAW

MATERIAL/MACHINERY) 1. Basic Information

a) Name of the Unit:

b) Year of establishment of the Unit:

c) Nature of unit: Proprietory/ Partnership/ Private Limited/ Others (Specify)

d) Does the unit have Udyog Aadhar?

e) Existing products/ product line/ services offered?

r) Gross investment in plant and machinery (If applicable)

m) upto Rs. 25 lakhs

n) Rs. 25 lakhs to Rs. 1 Cr

o) Rs. 1 Cr to Rs. 3 Cr

p) Rs. 3 Cr to Rs. 5 Cr

q) Rs. 5 Cr to Rs. 10 Cr

r) Above Rs. 10 Cr

f) Annual turnover (for FY 2019-20):

g) How many persons work with you? Full Time: Part Time

h) Do you have branches in other places too?

i) Who are your major technical & strategic service providers? Please mention names of such service providers

j) Is growth rate of your business with the cluster during the last 5 years (point to point): <0 per cent, 1-10 per cent, 11-25 per

cent, 25-50 per cent, > 50 per cent /diversifying?


2.1 Non Financial

a) How many raw material/machinery suppliers/service providers are present in the cluster?

b) What are the main items/services supplied to the SMEs?

c) Are you a Original Equipment Manufacturer/ authorised dealer/ dealer (in case of machinery/ raw material suppliers)

d) What is the usage rate and for which service/ products?

e) Along with the core items supplied, what else is supplied: service/parts/usage advice/training/technical assistance/credit/ any

other (please specify)

f) Are these "supplements" paid separately by the MSMEs? Yes/no

g) What are the types of firms (household, micro, small, medium) from whom you source and in what percentage?

h) What skill related problems your firm face in marketing: Lack of exposure/knowledge/skilled employees/skilled service

providers/high cost of skilled employees/ any other (please specify)

i) Firms investment related problem in marketing: Too costly to: diversify or create new product/ service range/ afford a marketing

team/afford to go for export marketing/ /any others

j) Major issues for skilled labour of your firm/r: shortage/high cost/ lack of quality technical institutes/ others (please specify)

k) What are the major issues faced in supplying or offering materials/ equipment’s/ services to the cluster firms: Longer repayment

period/ limited awareness of firms on products/ services offered/ high competition/ Limited penetration among cluster firms/

others (please specify)

l) What according to you are the major issues of cluster firms? Lack of finance/ Limited Market/ Limited awareness on new


technologies/ poor skill sets/ lack of management skills/ limited awareness about support firms/ exploitation by middlemen/

others (please specify).

m) Are you aware of any previous interventions undertaken by any promotional/ implementing agencies? If yes, are you a part of

it? If so, can you explain your nature of involvement (providing services/ items, training/ sensitisation of your services to cluster

firms, any others)

n) Are you member of any association/ SPV? If yes, Name of the BMO:

o) Nature of assistance provided by association/ SPV: Advocacy/ Training & Consulting/ Financial Facilitation/ Others (Specify)

2.2 Financial


a) Yes, loan availed

b) Yes, but did not succeed

c) Yes, but the terms offered were not acceptable

d) Did not have any loan requirement, hence not applied

e) Not applied because of other reasons (Please specify)


a) Working Capital Related

b) Capacity Expansion /

New Project Related

c) Specific need for a




- SIDBI


- Cooperative Banks



- NABARD





Total 100% 100%



LOAN PROCESS





m) Charge created on fixed assets

n) Charge created on current assets

o) Corporate Guarantee

p) Personal Guarantee

q) Third party guarantee

r) Others, please specify

___________


agencies.


Schemes Awareness

(Yes/No)



1. MUDRA Loan



Credit Linked Capital Subsidy for

3. Technology Upgradation



Schemes Awareness

(Yes/No)


(Yes/No)






OEM






Purposes (TULIP)





corona virus (SAFE)






• Please take business card after the interview, if possible.

• Not everybody will be willing to answer all factors (some factors may not be even relevant). Hence ask them what is the

two most critical issues faced by them and also by cluster firms among raw material, market, technology, finance etc. and

go for those factors only and go for the other if there is time and the firms is willing to give time.

• If institutions like enterprise associations have played a significant role, their names and (if necessary) addresses should

be noted, so that they may be interviewed for their side of the story.

• Refrain probing in depth about their competitors, if they feel uncomfortable.


• Recapitulate - very briefly, in a single short phrase per problem - the three main problems of the support firms (both

financial and non financial), as seen by the interviewer.


7.10 QUESTIONNAIRE FOR BANKS/ NBFCS/ OTHER FIS


a) Name of the Bank/ NBFC/ FI:

b) Location:

c) Nature of the entity: Branch/ Regional Office/ Zonal Office/ Head Office

d) Name of the main contact person:

e) Communication details: Phone No Mobile No:

Email Id

2. Business Analysis (mainly related to cluster)

a) How many of the cluster firms are having account in the branch?

b) What sort of accounts opened in the branch? SB (nos) / Current (nos) / Others (specify)

c) Has the Bank/ NBFC/ FI, financed any cluster firms:

d) If yes, How many firms (Nos): Micro (Nos), Small (Nos), Medium (Nos)

e) Nature of loans provided:

Term Loan: Micro (Nos), Small (Nos), Medium (Nos)

Working Capital: Micro (Nos), Small (Nos), Medium (Nos)

Both TL &WC : Micro (Nos), Small (Nos), Medium (Nos)

Non fund based: Micro (Nos), Small (Nos), Medium (Nos)

f) Average loan amount:

Term Loan: Micro (In Rs ), Small (In Rs. ), Medium (In Rs. )

Working Capital: Micro (In Rs ), Small (In Rs. ), Medium (In Rs. )

g) Number/ Percentage of proposals covered under public supports schemes like:

PMEGP/ CGTMSE/ TUFs/MUDRA/ others (please specify)

h) What are the average interest rates on: Term Loan/ Working Capital Loan/ others (specify),

i) What are the challenges faced post disbursal of loans for cluster MSMEs?

Delays in loan repayments/ increasing NPAs/ poor maintenance of proper documents or ledgers/ non-compliance of

statutory norms like audited expenditure statements; filing of GST returns etc./ others

j) If answer to the question a) is no, then, reasons for not considering cluster MSMEs for credit facilitation

Lack of awareness on bank norms & documentation among MSMEs/ delay (or absence) in submission of required

documents/ lack of proper audited financial statements/ Lack of collaterals/ others (please specify).

k) Do you feel that cluster MSMEs need customised loan products? If so, was it anytime bringing to the notice of SLBC or

relevant forums?

l) Does your branch involved in any cluster-based interventions in the past? If yes, what kind of support extended:

Advisory/ part funding of activity/ appraisal (of any proposals/ counselling/ others (please specify)

m) Does the branch aware of SDIBI Schemes like:

• SIDBI Make In India Soft Loan Fund For Micro Small And Medium Enterprises (SMILE)

• Loans under partnership with OEM

• Working Capital (Cash Credit)

• SiIDBI-loan for Purchase of Equipment for Enterprise’s development plus (SPEED PLUS)

• Top-up Loan for Immediate Purposes (TULIP)

• SIDBI Tem Loan Assistance for Rooftop solar PV Plants

• SIDBI assistance to facilitate emergency response against corona virus (SAFE)



• Please take business card after the interview.

• Try to collect data (hard copy) of loans given to cluster based MSMEs

• Not everybody will be willing to answer all factors. Hence ask them what is the two most critical issues in financing to

cluster MSMEs.

• Names/addresses of major cluster MSME customers should be noted for possible subsequent interview


7.11 QUESTIONNAIRE FOR BMO


Date of visit:

Name of Association:

Year of Establishment

Name & Position of Respondent: (President/ Secretary/ Gen. Manager/ Exec. Director, etc.)

Location: Address:

Communication:

Phone No: Email ID

Website (if any):

Nature of organisation: Society/ Trust/ Cooperative/ Company/Section 8 Company/ Producers

Company/Others specify

Geographical Coverage: National/ State/ District/ Cluster Level

Estimated No of MSME Members: Micro: Small: Medium: Women:

Total

Whether Association has secretariat Yes: No:

If Yes: Number of Paid Staff: Full time: , part time:

Approximate Annual Income:

Approximate Total Assets: Land, buildings, equipment, vehicles, working funds

Membership fee per annum

Do members pay membership fee regularly Mostly/>50%mostly/Rarely/Never

Do you think that Association should charge for

special services to be given to members? Why?

2. Business Relations with and Services to MSMEs in the Cluster

What are the main services the association provides to the MSMEs in the cluster?

Production, Technology, and Training

• Common service facilities (specialist production; testing, designing etc.)

• Information and/or training on new technologies/processes

• Providing consultancy or R&D facilities

• Technical skills upgrading

• Business and management training

Markets and Marketing

• Arranging contacts with large manufacturers/buyers

• Securing and allocating orders from these

• Providing new designs or information on design sources

• Providing market information, e.g. export requirements, subcontracting exchanges

Infrastructure

• Negotiating for land access, industrial estate sites, etc.

• Providing or arranging for premises or serviced land

• Providing or arranging other common services (waste disposal, telecommunications, electricity, etc.)

• Facilitating establishment of common facilities centres through leveraging government schemes

Finance

• Promoting and/or managing savings and loans programmes


• Helping with credit applications to banks, etc. (credit facilitation)

• Providing credit guarantees

Awareness on various schemes

Schemes

Awareness

(Yes/No)

How many members

availed in the past with

the help of association

If availed then for what

purpose

1. MUDRA Loan



3. Credit Linked Capital Subsidy for

Technology Up gradation

4. MSECDP

5. SFURTI

6. NMCP Schemes (design and lean)

7. ZED

8. MDA


10. Others (please specify)

Others

• Bulk purchasing

• Business consultancy, help with business plans, etc.

• Meetings with national and local governments on policy issues (taxation, protection under contracts, zoning, electricity

supply, tariffs, etc.)

3. Issues and Business Services

• What are the problems in hiring Service Providers (be specific for technical, e.g. designing, ec./energy/environmental):

High cost/ non-availability/ not matching with member requirements/ others (please specify)

• In providing services, does the association work with other actors (e.g. large enterprises, Government training or technical

institutes)? And if so, how (technically, financially, etc.)?

• Does the association have literature (brochures, periodic or special reports, videos, etc.) providing further information on any of

these main services, or on their extent and impact?

• Does the association participated/ implemented any of the interventions previously undertaken by SIDBI or other promotional

agencies? If yes,

o What type of interventions (infra development/ financial linkages/ market development/ Energy Efficiency/

Quality Control/ any others)

o What is the status of such interventions?

o What is the impact of such interventions on MSMEs (like increase in turnover/ quality improvement/ product

innovation/ product diversification/ process improvement/ increase credit facilitation/ others)

▪ Does the association have reasonably firm and fundable plans for further expansion/upgrading/diversification of its services to

the MSMEs in the cluster or network within the next two or three years? What is their essence?

Policy Issues


• What are the major macro-economic factors that are promoting / holding back the growth of the cluster?

• What are the major regulatory factors that are promoting / holding back the growth of the cluster?

• What are the business responsibility factors that are promoting / holding back the growth of the cluster?

4. Linkage with SIDBI and scheme awareness

Does the association have any formal links (MoUs) with SIDBI for financial facilitation? Yes: No:

If yes, how many members were provided credit linkages?

Awareness of SIDBI schemes for association executive and secretariat

Schemes Awareness

(Yes/No)

How many members

were facilitated to

avail the scheme

Major purpose for members to avail

the scheme





OEM






Purposes (TULIP)





corona virus (SAFE)

8. Any others, please specify

5. Impact of COVID – 19

How the COVID – 19 impacted the association members related to marketing/ finance/ raw material sourcing/ labour procurement/

others (specify)

How the association helped the members (and their workers) during lockdown period

What support envisaged from State/ Central Governments besides banks/ financial institutions and other promotional agencies post

lock down?


• It may be appropriate to initiate discussion with reference to comments by SMEs on their relations with the association,

services provided by it, etc.; enquire how the Association itself sees these relations and services; and let the discussion

flow from that point. This will be a useful tactic, and will also provide the advantage of specifically crosschecking the SMEs'

remarks. However, the primary purpose of the interview is to discuss only the topics relevant to this association.

• Emphasis should also be on involvement of association in previous interventions undertaken by different promotional/

implementing agencies and their impact. Also major interventions, which can be up scaled or introduced which can sustain

association as well as cluster.


• Any association brochures take or borrow copies to provide further input to the cluster diagnosis

Recapitulation/Summary of the Main SSI Services and Strategy of the Association

Recapitulate very briefly the 3 main types of services provided to MSMEs in the cluster, together with the association’s basic

strategy for those activities and any main problem in providing them, as seen by the interviewer.