New Delhi, Jan 29 (PTI) India must strengthen its industrial cluster strategy to compete globally and it requires reimagining the model as a high-productivity, reform-enabled ecosystem, according to the Economic Survey.
While India has attempted to build industrial clusters through various schemes over the past few decades, the pre-Budget document tabled in the Lok Sabha on Thursday noted that the gap between domestic strength and global competitiveness underscores the need for an upgraded cluster strategy.
“Strengthening India’s global competitiveness requires reimagining the cluster model as a high-productivity, reform-enabled ecosystem,” it noted.
Stating that the strategic way forward can be built on three pillars, the Survey said, “First, it (India) should prioritise scale and location by strategically identifying and anchoring large, high-potential regions in well-connected brownfield locations, ensuring the necessary scale through clear land titling and modern land pooling mechanisms.” Second, an empowered institutional mechanism (like the IFSCA at GIFT City) can be granted the authority to ensure regulatory certainty and flexibility, enabling clusters to operate with globally competitive speed.
“Third, it should involve harnessing private execution by enhancing the role of private developers to masterplan, build, and operate core infrastructure, ensuring market responsiveness and efficiency,” the Survey said.
Clusters designed under this framework may have the potential to become India’s primary engines of growth, accelerating integration into global value chains and supporting the nation’s economic growth and resilience, it added.
The Survey stated that India has attempted to build industrial clusters through various schemes over the past few decades, from the 1997 Industrial Park Scheme and the 2005 SEZ Act to the National Industrial Corridor Development Programme and sector-specific clusters for electronics, textiles, and software.
While India has several organically developed clusters that bolster domestic production, however, transforming these clusters into globally competitive ecosystems requires addressing two key structural factors — achieving optimal scale and enhancing regulatory flexibility, it said.
The Survey pointed out that the median size of India’s clusters is relatively small, often lacking the necessary land area and robust multimodal connectivity essential for global value chain integration.
Commenting on enhancing regulatory flexibility, it said frameworks governing these zones have yet to fully relax key constraints related to labour, building norms, and ease of doing business, which limit their appeal to international firms seeking speed and predictability.
India’s ambition to emerge as a globally competitive industrial hub will critically depend on the strength and scale of its industrial clusters, it said.
The Survey further said evidence from across the world shows that high-performing clusters are not just contributors to industrial activity; they are central to a nation’s export growth, attracting foreign investment, driving innovation and enhancing productivity.
Countries that have successfully integrated into global value chains, starting from China, Vietnam to South Korea, all have done so through a small number of highly competitive, globally connected clusters that combine economic density with institutional agility, it noted. PTI RKL TRB
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