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DIRECTORATE OF SFURTI
Khadi & Village Industries Commission
Government of India, Ministry of Micro, Small & Medium Enterprises
3, Irla Road, Vile Parle (West), Mumbai 400 056.
**********




India has a rich heritage in promoting traditional industries.
The eco-friendly products of traditional industries not only have
great potential for growth in production and export but also for
generating sustainable employment opportunities in the rural
areas of the country.

Micro Small and Medium Enterprises do play an important
role in the industrial development of our nation. This sector has
contributed 40% to its industrial output and 35% to direct exports,
out of which rural artisan based clusters producing 60% of India's
manufactured exports with significant share of employment
generation, to thirteen million people. A rural artisan cluster is
geographically concentrated household units producing
handicraft/handloom products, often belong to a traditional
community, producing the long-established products for
generations and the skill of centuries old. India is known for its
rural traditional industries clusters producing variety of items
including basketry, mat weaving, cane-bamboo articles,
DRAFT SCHEME/OPERATIONAL
MODALITIES
FOR MODIFIED SFURTI PROGRAMME
FOR 12
TH
FIVE YEAR PLAN

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earthenware, folk paintings, glass products, horn and bone,
leather, jewelry, metal wares, pottery, sea shell crafts, wood
carvings, etc. Majority of these clusters are in the handicrafts
sector, covered with few hundred workers. Some are so specialized
in making shawls and malmal that no other part of the world
matches their skills and global competence, at the same time a
minority of such clusters is globally competitive.

Realizing the need for conserving and bringing productivity
out of the traditional skills, providing decent income for livelihood
of the artisans and facilitating their sustainable development, the
Ministry of MSME, Govt. of India has taken up this challenge and
evolved a high design of successful model - SFURTI: the Scheme
of Fund for Regeneration of Traditional Industries, that
witnessed the taste of time, with the successful implementation of
the programme under 11
th
Five Year Plan.

The new modified SFURTI is now devised to set up 915
SFURTI (approx.) Khadi and Village Industries Clusters in different
parts of the country for 12
th
Five Year Plan.

The Implementing Agencies will have the flexibility to choose
its own basket of components as per its needs and accordingly
project size would be determined for each eligible cluster.

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The Scheme will be implemented by Ministry of Small and
Medium Enterprise (MSME), through its Nodal Agency Khadi and
Village Industries Commission with the collaboration of State
Governments, State/Central Govt. undertakings/Agencies and
Non-Governmental Organizations including artisan/industry
associations. A sum of Rs.1000.00 Crores (approx.) has been
envisaged for establishing 915 (approx.) Khadi and Village
Industries for the 12
th
Five year Plan (2012-2017).

The Operational guidelines of the new Scheme of fund
for Regeneration of Traditional Industries are detailed as
under:

1. TRADITIONAL INDUSTRY AND TRADITIONAL
INDUSTRY CLUSTERS:
(i) Broadly, traditional industry means an activity which
produces marketable products, using locally available
raw material and skills and indigenous technology.

(ii) Traditional industry cluster, in the context of this
Scheme, refers to a geographical concentration of
around 500 beneficiary families of artisans/micro
enterprises, suppliers of raw materials, traders, service
providers, etc., located within one or two revenue sub-
divisions in one or more contiguous District(s).

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

Total No. of Cluster : 915
Total Fund Outlay : Rs.1000.00 Crores

Sr.
No.
Type Non-NE NE Total Fund
(Rs.in Cr.)
Khadi V.I. Khadi V.I. Non-NE NE
1 Large 23 22 1 4 45 5 150.00
2 Medium 46 44 2 8 90 10 200.00
3 Small 113 112 4 21 225 25 250.00
4 Micro 226 224 8 42 450 50 250.00
TOTAL (*) 408 402 15 75 810 90 850.00
(*) Projection is an indicative figures in terms of no. of clusters as well as allocation of fund.

Heritage Clusters : 15 Nos.
Fund for Heritage Clusters: Rs. 150 Crores

2. OBJECTIVES OF THE SCHEME :
The objectives of the Scheme are
(i) to develop clusters of traditional industries in various
parts of the country over a period of five years
commencing 2012-17

(ii) to make traditional industries more competitive with
more market-driven, productive, profitable and
sustained employment for traditional industry artisans
and rural entrepreneurs;

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(iii) to strengthen the local governance systems of industry
clusters, with the active participation of the local
stakeholders, so that they are enabled to undertake
development initiatives by themselves; and

(iv) to build up innovated and traditional skills, improved
technologies, advanced processes, market intelligence
and new models of public-private partnerships, so as to
gradually replicate similar models of cluster-based
regenerated traditional industries.

3. TARGET SECTORS AND POTENTIAL BENEFICIARIES :
The target sectors and potential beneficiaries will
include:
(i) Artisans, workers, artisan groups, SHGs, machinery
makers, raw material providers, entrepreneurs,
institutional and private business development service
(BDS) providers engaged in traditional industries and
working in selected clusters of Khadi, coir and village
industries, including leather pottery, Honey, Bamboo,
Wood, Metal carving and other traditional crafts and
industries.

(ii) Artisan guilds, cooperatives, consortiums, networks of
enterprises, self-help groups (SHGs), enterprise
associations, etc.
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(iii) Implementing agencies, field functionaries of
Government institutions/organizations and policy
makers, directly engaged in traditional industries.

4. SELECTION OF CLUSTERS :
The selection of clusters will be based on their
geographical concentration which should be 50 to 500 or
more beneficiary families of artisans/micro enterprises,
suppliers of raw materials, traders, service providers, etc
depending on the type of cluster, located within one or two
revenue sub-divisions in a District (or in contiguous Districts).
The clusters would be from Khadi and Village industries,
including leather and pottery Honey, Bamboo, Wood&Metal
carving and other traditional crafts and industries. The
potential for growth in production and generation of
employment opportunities will also be considered in selecting
clusters under SFURTI. The geographical distribution of the
clusters throughout the country, with at least 10 per cent
located in the North Eastern region, will also be kept in view
while selecting clusters.





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Projection of modified SFURTI programme 2012-2017
(Rs. in Lakhs)
Types of
clusters

Proposed
allocation of
fund per
cluster
Coverage
of artisans
Duration
of the
project
Projected
Turnover
(*)
Expertise
in terms of
minimum
Experience
1. 2. 3. 4. 5. 6.
Heritage
Cluster
1000.00 Any
number
5 years Between 1000
to 1200 (**)
5 years
Large 300.00 500+ 4 years Between
Rs.300 to 500
5 years
Medium 200.00 250-500 3 years Between
Rs.200 to 300
5 years
Small 100.00 150-250 2 years Between
Rs.150 to 200
5 years
Micro 50.00 50-150 2 years Between
Rs.75 to 150
3 years
(*) That the projected turnover will be 50% for NE States and for other backward States, who
are contributing 10% towards overall project cost, as defined under 11(vi) at Page-23.

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

Types of Clusters
Heritage Clusters :- A no. of prominent activities are being
carried out traditionally in many parts of the country over the
centuries promoting certain products and related activities.
More importantly, these activities can be similar to any one of
the following
Khadi :
Muslin of Bengal
Ponduru of Andhra Pradesh
Kanjivaram of Tamilnadu
Kotadoria of Rajasthan & many others
Village Industries :
Phulkari of Punjab
Chikan Embroidery of UP
Wood Craft of Saharanpur
Madhubani Painting & many others
Kalankari of A.P.
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A series of key assets is highlighted within these
clusters that promote development opportunities for the
artisans and stakeholders in each of the cluster. This will
further emphasize the socio-economic characteristics and
institutional architecture of each of the respective cluster with
the embryonic agglomeration along with a dominant public
sector and high levels of collaboration. A common enterprise
will be set up, which is revealed that aids collective learning
and co-operation amongst cluster members. This spirit has
its source in the traditional history of each of the cluster.
However, the role of the public sector and an altruism may be
found in many clusters. The Heritage clusters play a key role
as a catalyzing resource that provides a collective identity and
inspires cluster members to work for the greater good.

5. INTERVENTION/SUPPORT MEASURES :
These would consist of the following
(i) Replacement of Charkhas, Looms, other tools,
implements and machineries.
(ii) Establishment of CFC.
(iii) Capacity Building Measures.
(iv) Design and Development.
(v) Market Promotion.

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Activities that will be merged under SFURTI clusters are
as under :-

(vi) Enhancing Productivity and Competitiveness of Khadi
Industry and Artisans,

(vii) Strengthening Infrastructure of Existing Weak Khadi
Institutions and Assistance for Marketing Infrastructure.

(viii) Product Development Design Intervention and
Packaging,

(ix) Workshed Scheme of Khadi Artisans,

(x) Rural Industries Service Centre,

(xi) Other small interventions like Ready Warp Units, Ready
to Wear Mission, etc. run by KVIC during XI Plan from
Khadi Grants and VI Grants.

6. PROJECTED ALLOCATION OF FUNDS UNDER DIFFERENT
CLUSTERS :
An overall projection has been given in Annexure-III
indicating the projection of funds for different types of
clusters ranging from Rs.0.50 Crore to Rs.3.00 Crore.

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Looking to the various activities/interventions of the
cluster, the allocation of funds has been made under the
overall sanction of funds, wherein contribution to the tune of
25% has to be borne by the Implementing Agencies under
Non-NE States and 10% by NE States and other backward
States, as defined under 11(vi) at Page-23.

7. ELIGIBILITY CRITERION OF IMPLEMENTING AGENCY :
The nature and characteristics of Implementing Agencies
shall be as under :-
(i) Khadi Institutions affiliated to KVIC / KVIB having
requisite competence, expertise and experience. Have
the financial capacity and infrastructural base to take up
the programme.

(ii) Registered NGO under 1860 Act or Cooperative Societies
registered under State Cooperative Acts and Rules
having relevant competence, expertise and experience.
Have the financial capacity and infrastructural base to
take up the programme.

(iii) State / Central Govt. Agencies, Registered Banking
Institutions promoting micro finance activities, Self Help
Groups having group synergy, Consortium of Small &
Micro Industries can also take up the project fulfilling the
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criterion / conditional requirement for taking up SFURTI
projects.

(iv) The expertise in terms of experience as required by the
Implementing Agency as well as the projected turnover
in terms of annual production and sales has been stated
in Column No.5 & 6 in the table at Page-7.

8. MAJOR PARAMETERS IN DETERMINING SFURTI
CLUSTERS :
(a) Artisans : Different kinds of SFURTI clusters have been
visualized focusing on the coverage / involvement of
artisans fulfilling the target objectives. Artisans may
therefore be defined as the Spinner, Weavers, Skill &
Unskilled Workforce in Khadi and V.I. directly associated
to manufacturing / production of SFURTI clusters and
getting a minimum of 100 days work in a year and
getting annual wages no less than Rs.8,000/-, which
may be verified by Bank Pass Book issued to the artisans
or otherwise from Wages Register at the level of
Implementing Agency or by other way of verification,
since many artisans particularly V.I. artisans may not be
directly associated with the Implementing Agencies in
regard to their payment of wages.

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(b) Duration of the Project : Considering the various
interventions/activities to be completed in each cluster,
the timeline / duration of project period for Heritage
clusters, Large and Medium type of clusters has been
kept for 5, 4 and 3 years respectively to complete all the
interventions and to achieve the objective outcome of
the respective cluster.

Similarly, Small and Micro type of clusters shall be
having a project period of 2 years in completing specific
interventions as well as in achieving the objective
outcome of the respective cluster.

(c) Projected Turnover : A basic minimum turnover (as
annual total of production and sales) shall be required
for the Implementing Agencies to submit proposals for
different types of clusters. The detail has been stated in
the table at Page-7 at Column No.5.

(d) Expertise in terms of experience :
Years of experience has been stated in the table at
Page-7 at Column No.6.




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9. DETERMINING THE MERIT OF IMPLEMENTING AGENCY:
Already a proposal under progress for approval of the
Commission in regard to determining credit rating of the KVI
institutions by the reputed Credit Rating Agencies of the
country such as CRISIL, ICRA etc.

A suitable framework will be developed for determining
the merit of implementing agency by Credit Rating yardstick,
so that the ultimate outcome for the SFURTI clusters do
become achievable in terms of physical and financial
progress.

Implementing Agency taking up SFURTI project shall
ensure credit rating in regard to their institution during
implementation of SFURTI projects, if not already done with.

10. INCURRING FUNDS FOR MAJOR INTERVENTIONS :
(a) Replacement of Charkhas and Looms / Machineries
& Equipments :-
This is one of the major components under SFURTI
programme. Based upon the DSR, the concerned
implementing agency shall determine the Charkhas and
Looms or the Machineries and equipments that may be
necessary for replacement considering the size of the
unit and the involvement of artisans thereupon.

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The DPR should clearly indicate the total no. of
charkhas, looms, machineries and equipments that will
be replaced/additionally procured under the SFURTI
proposal, besides indicating the total plant and
machinery to be installed at the CFC.

Implementing Agency will however, provide
appropriate land having connectivity of water and
electricity and road, so that a workshed for CFC could be
established. The cost for the workshed may be taken up
under the DPR, excluding the cost of land.

(b) Common Facility Centre(s) :-
This is equally a major intervention for achieving
success of SFURTI programme. This intervention will be
required for all types of clusters including Heritage
cluster. The implementation of CFC(s) will act as a
backward and forward linkages for product development,
product identification, product promotion including brand
building, product positioning and marketing of the
product.

The Implementing Agency shall submit a proper
sketch and design showing the installation of
machineries in the cluster, names of the machineries,
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indicative cost and the capacity utilization of the entire
CFC by the artisan group as a whole.

The Implementing Agency may take help of the
premium technical institutions in the country particularly
IITs, NITs, CFTRI etc. for the purpose for designing the
CFCs in a most appropriate manner,

It has to be kept in mind that CFC(s) shall act as a
vulnerable focal point(s) to improve access / enhance
the productivity, earnings of artisans, reducing real time
inventory as well as reducing per capita investment,
besides improving quality control, standardization etc.

The Programme Directors shall become associated
in approving the design of CFC(s) as prepared by the
Technical Agencies and thereby vetting the machineries,
the cost etc. considering the aspect of capacity
utilization.

The implementing agency shall however provide
land and infrastructure, as may be necessary including
connectivity of roads, electricity, water, etc. for allowing
the CFC(s) to become operational. In this context, it
may be stated that, a provision of fund has been kept
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for construction of workshed for CFC(s) in the scheme
itself, excluding cost of land.

(c) Capacity Building :
This is a very prime link in improving the HR and
training quality aspects of the stakeholders in a cluster
including the artisans through a systematic training
schedule during the project period organizing various
types of training of different categories of personnel in
the cluster.

The Directorate of HRD of KVIC shall act as a
pivotal link in organizing the various training programme
as may be necessary through the existing training
institutes of KVIC as well as creating linkages with
established organizations, training houses, academic
institutions etc. This will help facilitate organizing
training in a timely manner for all the clusters across the
country irrespective of Khadi and V.I. programme.
Directorate of SFURTI shall jointly plan it out with the
Directorate of HRD to ensure compliance within a given
time line.

Accordingly, the Directorate of HRD shall plan out
the various courses for different clusters on yearly basis
and the requirement of funds thereupon, which will be
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placed to HRD directly through State/Divisional Directors
or by Directorate of SFURTI.

(d) Design & Development :
Activities proposed in Design & Development will
highlight proper inputs from established Designer
Houses, improved packaging, CAD, CAM, product
development, design development etc. befitting to the
need of consumers in local or domestic market.

Bigger clusters can plan out associations with
reputed and premier institutions like NID, NIFT, IICD
etc. in a regular basis in getting various design
interventions, product mix and product development for
the various target groups based on their demography
(identification of a customer based on age, educational
qualification, income, sex, cultural quotient and similar
other factors). Small and Micro cluster may however
select designers from the empanelled list of designers of
PRODIP programme available with State/Divisional
Director, already.

On the contrary, appointment of new designers in
the cluster should be made through an appropriate
selection process inviting applications through tendering
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process observing the Rules, Regulations and Guidelines
in this regard.

(e) Market Promotion :
Marketing is the ultimate success gradient for any
programme including selling and promotion of products
manufactured / produced under SFURTI programme.
Two specific interventions will qualify for the following
activities :-
(i) Renovation of existing outlet.
AND / OR
(ii) Construction of a new outlet.

The scheme provides support for construction as
well as renovation of sales outlets with exclusive
interiors decoration, air-conditioning, signage,
computerization, furnishing and improving the overall
ambience of the sales outlets. This also speaks of
advertisement, publicity, participation in National and
International Exhibitions, Sales promotion, branding,
product positioning in a bigger way to achieve target
annual sales.

This also includes e-marketing, Website
developments, Quality standardization, besides other
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marketing interventions, so that growth line in terms of
sales is achieved.

Under marketing interventions, the Implementing
Agencies shall plan out primarily for the following :-

Construction of new outlets :-
Any type of cluster can go for the construction of
new outlet at the rate as prescribed under, particularly
considering local PWD / Panchayat / Local Bodies.
However, such rates shall not exceed the following :-

For cities and town falling under A1, A & B
category, the rate per sq.ft. of construction shall not
exceed Rs.3,000/- per sq.ft. for a maximum of 250, 300
and 400 sq.ft. for clusters of Micro and Small, Medium
and Large Category and such construction shall be taken
up from plinth level to completion / finishing of the
outlet in all respects. Completion includes exclusive
interior decoration, air-conditioning, computerization,
signage, furnishing and improving the overall ambience
of the sales outlets.

For Cities falling under other categories can go for
construction, for which rate per sq.ft. of construction
shall not exceed Rs.2,000/- per sq.ft. for the prescribed
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areas as specified in the previous paras for different
types of outlets, keeping all other conditions intact as
per above.

But, the Implementing Agency shall provide the
land along with appropriate infrastructural facilities with
connectivity of road, electricity and water in taking up
construction of sales outlets under SFURTI programme.
At the same time, the plan of such construction activities
needs to be submitted in the DSR with specific allocation
of area and requirement of funds.

(f) Renovation of Sales Outlets :
Renovation of the existing sales outlet shall be
considered @ Rs.1,000/- per sqw.ft. which should
include interior decoration, computerization, furnishing,
signage, air-conditioning and improving the overall
ambience of the sales outlet irrespective of the location,
e.g. cities, towns, semi-towns, villages etc.

However, the overall outlay for renovation or
of construction of sales outlets shall be restricted
to the fund sanctioned under the head of
respective cluster.


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11. IDENTIFICATION OF CLUSTERS :
(i) Nodal Agencies (NA): Khadi and Village Industries
Commission will act as Nodal Agency of the Scheme and
have to identify potential Implementing Agencies (IAs)
for implementation of SFURTI with due approval of the
Steering Committee. The Nodal Agency is wholly
responsible for holding and disbursement of funds to the
identified IAs and monitoring of the Scheme under the
overall supervision of the Steering Committees.

(ii) Selection of a Cluster: The selection of clusters will be
based on their geographical concentration of beneficiary
families of artisans/micro enterprises, suppliers of raw
materials, traders, service providers, etc., located within
one or two revenue sub-divisions in a district (or in
continuous districts). The clusters are divided in to five
different types based on the artisan availability which is
as under:

(iii) Types of Clusters:
TYPE OF CLUSTERS Availability of beneficiaries DURATION
Heritage Clusters Any numbers 5 YEARS
Large Cluster 500+ 4 YEARS
Medium Cluster 250 + 3 YEARS
Small Cluster 100+ 2 YEARS
Micro Cluster 50+ 2 YEARS

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The clusters would be from Khadi, Village
Industries. The potential for growth and generation of
sustainable employment opportunities being prime
consideration in selecting clusters. The geographical
distribution of the clusters throughout the country, with
at least 10 per cent located in the North Eastern region,
has also be kept in view while selecting clusters.

Detailed study of social and environmental status,
gender inequalities, poverty conditions, need for
employment generation, level of pollution etc lead to the
selection of a cluster. Other features such as existence
of critical gaps in technology, product quality, common
facilities, skill up gradation, availability of raw material,
marketing support, etc are also considered. Primary data
collection and its analysis are important to build-up
significant knowledge about decision-making in the
planning, appraisal and evaluation of Cluster
Development Programmes.

A Common Proforma (Template-I) will be devised
in the primary stage of selection and DPR of the cluster
is made before the proposal placed in the Steering
Committee for approval of cluster.

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(iv) Implementing Agency: It shall be a clear legal entity,
with evidence of prior experience of positive
collaboration among its members, whether formally or
otherwise, as the applicant of the proposed cluster
development initiative assures sound management. The
proposed IA for cluster development seeking assistance
under the SFURTI must emanate from special purpose
vehicles (SPV), consisting of the actual/likely cluster
beneficiaries/ enterprises organized in any legally
recognized form like a KVI institution, State Board,
MS&ME organizations, institutions associated with
Central/State governments, Co-operative society, NGO,
Trust, Entrepreneur Associations, Artisan Associations,
SHGs etc.

(v) Consent of State Government for Clusters:
It is a mandatory provision by the Govt. of India,
that all SFURTI clusters shall receive the consent of
concerned State Govt. as a prerequisite. The Secretary,
Department of Industries and Commerce of the State
Govt. is the competent authority to issue the consent.
This shall ensure the involvement of local administration
for the smooth implementation of the SFURTI CDP at
cluster level and helps in dovetailing of the schemes of
the state and central governments to strengthen the
local governance system at the cluster. Through this
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process the legal entity, constitution and existence of the
IA are being confirmed by the government machinery

(vi) Consent towards IA contribution: The Implementing
Agency has to contribute 25% funds on Replacement of
Tools, CFC, Product Development Design development
etc. The same to be agreed and executed by entering
into an Agreement/ MoU between NA and IA.

However, implementing agency located in North
Eastern State, J&K, Hill & Border/inaccessible areas, LWE
affected areas and clusters dominated by SC/ST
communities, women, minorities, etc. constituting a
minimum of 60%, shall contribute 10% towards the
contribution of IA for organizing modified SFURTI in their
respective areas.

A suitable agreement/MoU according to the New
SFURTI interventions would be devised in consultation
with Legal experts/Directorate of Legal.

(vii) Direct listing of IA implementing SFURTI CDP with
KVIC:
Direct listing of all the Implementing Agencies
selected for implementation of SFURTI under KVIC is
mandatory.
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Direct listing shall be made by Zonal Dy. CEOs
based on the specific proposal and recommendation of
State/Divisional Offices, concerning SFURTI
implementation.

The purpose of direct listing is to safeguard its
interest, safety and security of funds released for the
programme.

(viii)Execution of EM/Hypothecation:
It will be an avowed responsibility on the part of
State/ Divisional Directors to go for execution of
Equitable Mortgage/Hypothecation Deed of the IA in
regard to the assets created in the cluster within one
year from the date of release of first instalment of funds.

Accordingly, appropriate and necessary action
should be initiated by the State/Divisional Directors for
execution of EM/Hypothecation Deed and to report the
same within the timeline prescribed.

12. STEERING COMMITTEE :
The Ministry of Small and Medium Industry (MSME) will
be the coordinating Ministry providing overall policy,
coordination and management support to the Scheme. The
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Scheme is implemented through Khadi and Village Industries
Commission

Steering Committee will make intra-sectoral adjustments
of activities and sanctioning funds without affecting the basic
objectives and thrust of the Scheme. It is the apex body
wrested with power for approving, planning and monitoring
SFURTI Cluster Development Programme activities.

a. deciding CDP deliverables, making policy decisions,
resolving issues, monitoring and providing necessary
guidance and directions to the SFURTI programme.

b. The Steering Committee is also instrumental in providing
resources, assisting in fund sourcing, involving various
state governments in SFURTI interventions etc

The Steering Committees proposed for the clusters
having the financial outlay of Rs.3.00 to Rs. 10.00 Crores
(Steering CommitteeI) is placed at AnnexureI and the
Clusters having the financial outlay of Rs. 0.50 lakh to
Rs.3.00 Crores (Steering CommitteeII) is placed at
Annexure-II.



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Convening meeting of Steering Committee :
Steering Committee meetings will be organized in a year
depending upon the need and requirement of such meeting as
determined by KVIC from time to time. Normally, the
Steering Committee meeting should be organized giving due
notice to the members no less than 2 weeks to help them to
participate. Steering Committee meeting can also be
organized in a short notice giving one week time on account
of expressed urgency for convening such meeting.

13. SANCTIONING MECHANISM :
Considering the huge no. of clusters in a given year
during 12
th
Five Year Plan, the mechanism may be considered
quite simple, responsive and development friendly meeting to
the ultimate target objective of the project.

(i) Submission of proposal
State/Divisional Directors shall convene a meeting
of the Institutions, KVI Boards apprising the various
inputs of modified SFURTI programme for 12
th
Five Year
Plan explaining thereupon the role, functions and
objective of the implementing agencies in taking up the
SFURTI projects for the benefit, the enhancement of the
artisan wages as well as in achieving the target
production/turnover of the institution concerned.

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State/Divisional Director shall apprise SLBC of the
modified SFURTI programme seeking participation of
State/Central Govt. Agencies, Nationalized Banks, other
financial institutions and State Govt. for implementation
of such project in a broad based manner. Accordingly,
formal State/Divisional Director shall look for special slot
and timings for briefing over the subject.

In addition to organizing such meeting, the
State/Divisional Directors shall advertise locally seeking
proposals of SFURTI clusters inviting attention of NGOs,
institutions under Central/State Govt., Semi Govt.
institutions, institutions funded by local bodies, having
expertise and competency for carrying out cluster
project, preferably in Rural area within the overall ambit
of KVI programme. Two other advertisements will also
required to be published locally calling participation of
Technical Agencies and Cluster Development Executives

(ii) Screening of applications
All these applications for selection of clusters,
Technical Agency and CDE will be screened on the basis
of eligibility criteria, techno economic viability,
availability of no. of artisans, and other relevant
economic, financial, administrative, environmental
factors etc., by a Committee headed by Zonal Dy.CEO,
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CEO, KVIB, Representative of lead Bank, Technical
Expert (officials of State Govt. Dept. promoting similar
programmes under State Govt.), Representative from
Prominent Academic/Managerial/Rural
Department/Institutions of the concerned State and the
concerned State/Divisional Director shall be the member
convenor.

The Committee based on the template
(Template-II) to be provided by Directorate of SFURTI
and following the guidelines issued for the SFURTI
programme as well as looking to the prevailing terms
and conditions shall go for short-listing of clusters,
Technical Agency and CDE, preferably within the given
timeline.

(iii) Preparation of Draft Project Report (DPR)
State/Divisional Directors shall in consideration of
SFURTI guidelines in force, submit the DPR of the short-
listed SFURTI projects of different categories by the
Implementing Agencies at their cost. The DPR should be
time bound and a valid instrument projecting all the
various functional inputs of the cluster indicating the
growth, enhancement, requirement of fund, fiscal issues,
administrative issues and outcome of the objectives.

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State/Divisional Director shall provide all the
necessary information relating to the institution / IA and
shall also associate one staff of KVIC office for
preparation of each DPR in a time bound manner.
Directorate of SFURTI shall provide a suitable guideline
(Template-III) for framing DPR in a time bound
manner indicating various inputs, financial and
operational scope of work and other aspects as may be
necessary.

(iv) Submission of formal proposal by State/Divisional
Director -
Upon preparation of DPR, the State/Divisional
Director shall, with the recommendation of the Dy.CEO
of the Zone, submit suitable proposal to Directorate of
SFURTI seeking approval of the cluster and sanctioning
of the fund as well as approval of Technical Agency and
panel of CDE in a formal manner.

Directorate of SFURTI shall examine all the
proposals categorically observing thereupon the
fulfillment of eligibility criterion and other related
conditions, besides obtaining vetting from the proposed
concerned Programme Director in regard to the proposal
initiated.

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A Technical Committee shall be constituted at the
Central Office level under the Chairmanship of Jt.CEO,
Director(KC), Director(VIMBI/PCBI/FBI),
Director(Finance) and Director(SFURTI) as Member
Convenor, besides concerned Zonal Dy.CEO and
State/Divisional Directors for examination, screening and
finalization of proposals with due recommendation for
seeking necessary approval at the level of SFC and
Commission.

(v) Approval by SFC and Commission
The short-listed DPRs having been recommended
by the Technical Committee in the Directorate of SFURTI
will be placed to SFC as well as to Commission seeking
in-principle approval for organizing the clusters as well
as appointments of Technical Agencies and the panel of
CDEs of the respective State/Divisional Offices. The
approval will indicate the name of the cluster,
Implementing Agency, requirement of fund etc., in order
to allow the State/Divisional Offices to execute the
programme as well as to go for preparation and sanction
of DSR, upon obtaining the consent of the respective
State Govt. in this regard.



32

(vi) Preparation of Diagnostic Study Report (DSR)
On getting approval of Commission/SFC on the
DPR, the State/Divisional Director shall ensure early
appointment of CDE and Technical Agency for
preparation of DSR, which will be the basic document in
highlighting all the rational inputs in the project and
setting out the activities as planned under SFURTI
project.

The preparation of DSR will be a time bound work
of the Technical Agency following the guidelines of the
Directorate of SFURTI to be prepared for the purpose.

The DSR will highlight the output and outcome of
the project, growth parameters, fundamental concept in
regard to activities outlined and shall provide the specific
action plan on annual basis indicating the requirement of
fund and the fulfillment of objectives.

The DSR will be examined by the Directorate of
SFURTI initially and thereafter it will be placed to an
Scheme Steering Committee for obtaining formal
approval of the cluster. Two Steering Committees have
been proposed one for the clusters having financial
requirement from Rs.3.00 Crore to Rs.10.00 Crore and
33

the other from Rs.0.50 Crore to Rs.2.00 Crore, as per
Annexure-I and Annexure-II.

Director (SFURTI) shall accordingly convene the
meeting Steering Committee at the level of MSME
seeking approval of DSR.

(vii) Communicating sanctioning of the project
Upon approval of DSR, Director(SFURTI) shall
communicate sanction and release of funds to respective
State/Divisional Director for effective utilization of fund
for the cluster in a prescribed manner.

14. IMPLEMENTATION OF THE CLUSTER PROJECT :
Director (SFURTI) shall ensure sanction by SFC as well
as by the Commission for all the cluster projects and shall
hand it over to the respective programme Directors for
implementation of the programme, excepting the Heritage
cluster and the cluster under Large category.

Remaining clusters of Medium, Small and Micro will be
implemented by Director(KC/KPM) for the Khadi programmes
and by Director (VIMBI/FBI/PCBI) for the V.I. programmes.

Accordingly, the overall fund will be allocated to the
concerned Directors for onward release of fund to the
34

respective clusters for implementation of the programme
leaving the fund for the Heritage clusters and clusters
belonging to large category.

This will facilitate implementation of the programme of
all clusters as per the projection in the first year of 12
th
Five
Year Plan. At the same time, the entire plan period will be
made available to all the clusters, so as to utilize funds as per
the given activities in each cluster.

In view of that, the concerned Programme Directors
shall ensure reporting of the clusters of their jurisdiction in a
regular manner, so as to facilitate single reporting to the
concerned Directorate in KVIC as well as to the Ministry.

15. TECHNICAL AGENCIES (TAs) :
The Technical Agencies shall be reputed national level
Institutions with expertise in cluster development
methodology and shall provide technical support to the NAs
and the IAs. The responsibilities of the TAs will include
assisting the NAs in identification of clusters, conducting
training of the Cluster Development Executives (CDEs) and
other officials of the IAs and NAs, validation of cluster action
plans, guiding in diagnostic studies, preparation of action
plan, validation of cluster action plan, supervising execution
of CDP, monitoring and evaluation, etc.
35

Technical Agency can extend creative contribution in areas
such as, Organizing Awareness programmes, skill development
programmes, workshops, preparing news bulletins showcasing
progress and achievements, arranging hand holding with
public/private Business Development Services (BDS) providers,
out sourcing/improving tools and equipments, developing
strategies & best practices for credit linkage, formation of SHGs,
successful marketing, financing, training modules, technology
development, branding, product catalogue preparation etc. The
resource person/team shall make visits as may be necessary to
the entrusted cluster in a year in a regular manner. The Technical
Agencies shall ensure preparation of DPR/DSR as the case may be,
for obtaining necessary approval of the cluster in a timely manner.
The Technical Agencies shall also MoU with the NA as per the given
terms and conditions.

16. CLUSTER DEVELOPMENT EXECUTIVE (CDE) :
Cluster Development Executive (CDE) is the mentor,
who oversees the implementation of the CDP successful at
ground level. He is conversant with all stake holders as
accessible and a facilitator. Right from conducting the
diagnostic study, preparation of Action Plan,
implementation/execution of the same, monitoring and
evaluation are the broad responsibilities. Setting tangible and
realistic goals, preparing strategies with full participation and
involvement of the stake holders, induce collective
36

responsibility, generate confidence and extend support are
some of the inherent qualities of CDEs. As a catalytic agent,
he shall motivate the artisan group and shall promote
entrepreneurs in running micro enterprises at the backend of
the cluster, with a view of facilitating the growth of the
cluster.

CDE has to create an entrepreneurial environment
throughout the cluster and to exploit all the opportunities
commercially by the artisan groups, entrepreneurs and by the
IA.

The CDE shall take up the assignment as full time basis
and in close coordination with TA and IA. He will report
directly to IA and will ensure weekly/fortnightly visit to
State/Divisional Directors, submitting necessary reports in
regard to formation and successful implementation of the
cluster.

On the other hand, he is to promote linkages with other
organizations, institutions, Govt. functionaries for inclusive
growth and convergence to build proper local governance
framework for the cluster.

The CDE shall be accessible at the cluster always and
the IA shall provide necessary infrastructure such as
37

mobile/telephone, Computer with accessories, Internet
connection, Laptop, Digital camera, furniture etc. to him in a
form of office that will be regularly attended by CDE. NA
shall arrange training for all the CDEs in a regular and formal
manner. On Zonal basis a panel of experienced CDEs has
been prepared through open advertisement by a selection
committee headed by Dy.CEO. Directorate of SFURTI has
notified requisite qualifications of CDE. The IAs can select one
among them as per their terms on contract basis for five
years or termination of the project whichever comes first. An
agreement to be executed between CDE and IA.

Appointment of CDE :
CDE shall be appointed by a Committee headed by
Dy.CEO, concerned State/Divisional Director, concerned Chief
Executive Officer of KVIB, Representative of a Nationalized
Bank preferably Nodal Bank and by Representative of IA,
through open and transparent procedure calling formal
advertisement in this regard and specifying the necessary
terms and conditions thereupon.

17. NODAL OFFICER :
Nodal Agency is to nominate a Nodal Officer for each
cluster, preferably in the rank of Development Officer and not
below the rank of Asstt. Development Officer having sufficient
knowledge and experience in associating with the cluster in
38

regard to implementation of various activities as per the DSR
of the programme. Nodal Officer will visit regularly and
ensure proper implementation of the programme and shall
report to State/Divisional Director on monthly basis.

18. CLUSTER DEVELOPMENT CO-ORDINATION
GROUP (CDCG) :
CDCG is the committee formed under the chairmanship
of District Collector or his/her representative with State/ Div.
Director, Rep of TA, Chairman/Secretary of IA, concerned
Govt. officials of the district, LDM (Banker), DDM-NABARD,
Rep of KVIB, Reps of Artisans, Reps of nearby Institutions,
and CDE. The State/Divisional Director shall be the Convenor
of the group. The group will formulate, review and shall
facilitate execution of the cluster in a regular manner.

The CDCG will normally meet at least once in a quarter
or preferably in every month or as and when required. The
group shall however approve the Annual Action Plan of each
cluster including the requirement of fund in a regular manner,
examining and reviewing the activities taken up or to be
taken up in each cluster.

CDCG approval is necessary for any financial proposal
and for release of fund by the Directorate of SFURTI, as per
the approved DSR. Accordingly, the Technical Agency and
39

CDE will put up financial proposals before CDCG vetted
through State/Divisional Director for allocation of fund to the
cluster for various activities to be undertaken from time to
time. At the same time, progress report in regard to previous
activities taken place in the cluster have to be brought to the
notice of CDCG for appraisal.

19. RELEASE OF FUND :
The release of fund will be cluster specific. The fund will
be released directly to Nodal Agencies and in turn to the
State/Divisional Director, who will place it to ESCROW A/c for
further withdrawal of fund and for incurring expenditure for
the specific activities upon approval of CDCG of respective
cluster.

20. PROJECT MONITORING :
CDE and Technical Agency shall submit report in a
prescribed format (to be developed by Directorate of SFURTI)
to the concerned State/Divisional Director on 26
th
of every
month indicating the performance of each cluster as well as
the overall utilization of funds for the period from 25
th
of the
preceding month to 25
th
of the current month invariably as
well as the information as may be required for RFD. The
submission of such information through online arrangements
is under consideration, so that same may be placed at a time
40

to the competent authorities in the Commission for further
direction.

Besides that, a regular monitoring at the level of
State/Divisional Director involving Nodal Officer, TA and CDE
has to be done in every month and ensuring submission of
such report on quarterly basis to the Directorate of SFURTI in
the given prescribed format.

21. PROJECT EVALUATION :
Concurrent and post-facto evaluation study will be
conducted on each cluster to ascertain the growth parameters
in the cluster as well as to identify the weak points for further
necessary action.

22. EXIT POLICY:
Based on the Report of Evaluation Study Group, an Exit
Policy will be required to be formulated associating Technical
Agencies, Implementing Agencies and other stakeholders, so
that the clusters remain functional after the expiry of project
period and the artisans do not get deprived of the sustainable
employment opportunities. At the same time, implementing
agency shall continue to function in the cluster tapping
regular normal budgetary support for the same in an yearly
basis for the Khadi and Village Industry clusters.

41


12
TH
FIVE YEAR PLAN


SFURTI









DRAFT SCHEME/OPERATIONAL MODALITIES
FOR MODIFIED SFURTI PROGRAMME
FOR 12
TH
FIVE YEAR PLAN








DIRECTORATE OF SFURTI
Khadi & Village Industries Commission
Government of India, Ministry of Micro, Small & Medium Enterprises
42

3, Irla Road, Vile Parle (West), Mumbai 400 056.