The location of such enterprises can span over a few villages, a town or a city and its surrounding areas. Thus a cluster of MSMEs, hereafter referred to as “cluster”, is identified by the ‘product/service’ that the micro and small enterprises produce and the ‘place’ where the enterprises are located. Foundation for MSME Clusters assists institutions in undertaking cluster based local area development, effectively and inclusively in developing and transition economies.

Also read: Indian SME vs. Global SME

Features of Cluster:
Give rise to collective benefits, for example through the spontaneous inflow of suppliers of raw materials, components and machinery or the availability of workers with sector specific skills.
Favour the creation of providers of specialised technical,administrative and financial services.
Create a conducive environment for the development of inter-firm co-operation as well as of co-operation among public and private institutions to promote local production, innovation and collective learning.

Clusters: Some Facts Around 636 SME (industrial) and 6000 artisan/micro enterprises clusters are estimated to exist in India.
The micro and SME clusters in India are estimated to have a significantly high share in employment generation.

Source : MSME Foundation