Introduction

The last three decades or so have often been labelled as the decades of ‘jobless growth’ in India. The employment content of growth has decelerated over the years. It has been stark in the organised manufacturing sector (Papola 2014). The share of the manufacturing sector in gross domestic product (GDP) still hovers around 16 per cent, up merely by 0.57 per cent during the last 10 years. The slow growth was ascribed to the stifling and over-regulated policy framework. The political dispensation in the 1990s realised these constraints and started dismantling some of the archaic rules and regulations, though at a snail's pace.

Realising that the growth of the manufacturing sector is vital to generate sustainable and decent employment, the Government of India envisaged the manufacturing sector to contribute 25 per cent, up from the current 16.57 per cent, to the GDP and create 100 million jobs by 2022, under its ‘Make in India’ campaign, announced on 25 September 2014. As per the campaign, both domestic and foreign entrepreneurs are encouraged to set up their manufacturing facilities in India, produce and trade globally, besides catering to the vast Indian market. Such investments, it is envisioned, will create incomes and jobs for millions of youth, besides augmenting exports and foreign exchange earnings.

Within the manufacturing sector, the track record of organised large-scale industries in creating employment, as stated earlier, has been somewhat disappointing. The performance of the micro, small and medium enterprises (MSME) sector in this regard has been noteworthy (Gade 2018). MSMEs have continued to employ a larger number of semi-skilled and un-skilled workers, over the years, compared to the large-scale enterprises. Not only in India but elsewhere too, such as in the USA, small and medium enterprises (SMEs) have been generating more jobs than the large ones (Katua 2014; United Capital 2019). In India, a characteristic feature of the development of SMEs has been their emergence and growth in a clustered form (Awasthi 2004).

Industrial Clusters: A Road to Competitiveness

Both developed and developing countries have witnessed the congregated emergence of SMEs, widely known as ‘industrial clusters’. From Marshal (1974 [1890]) to Porter (1990), industrial clusters have travelled a long way.