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2 Feb 2026·Source: The Indian Express
4 min
EconomyNEWS

Budget 2026-27: Reviving 200 Legacy Industrial Clusters for Growth

Government aims to revive 200 legacy industrial clusters to boost growth.

Budget 2026-27: Reviving 200 Legacy Industrial Clusters for Growth

Photo by Shoham Avisrur

The government is set to revive 200 legacy industrial clusters. This initiative aims to promote growth and modernization within these clusters. A NTTF report suggests joint policy intervention from state and central governments. This will help in improving infrastructure, technology, and access to markets for these clusters. The focus is on enhancing competitiveness and creating employment opportunities in these regions. The government is also looking at Asian economies for best practices and Microsoft investments for over 20-25 years.

Key Facts

1.

Revival of 200 legacy industrial clusters

2.

Focus on infrastructure, technology, market access

UPSC Exam Angles

1.

GS Paper 3: Economy - Industrial Policy and Development

2.

Connects to syllabus topics like infrastructure, investment models, and inclusive growth

3.

Potential question types: Statement-based, analytical questions on the role of industrial clusters in economic development

Visual Insights

Potential Locations of Revived Industrial Clusters

This map shows potential locations where the 200 legacy industrial clusters could be revived. As the specific locations are not mentioned, markers are placed in states known for industrial activity.

Loading interactive map...

📍Maharashtra📍Gujarat📍Tamil Nadu📍Karnataka📍West Bengal
More Information

Background

Industrial clusters have a long history, evolving from traditional craft centers to modern manufacturing hubs. The concept gained prominence in the late 20th century as a strategy for regional economic development. Michael Porter's cluster theory emphasized the importance of geographic concentration of interconnected companies and institutions in a particular field. This theory highlighted how clusters enhance competitiveness through increased productivity, innovation, and new business formation. Over time, industrial cluster development has been influenced by various government policies and initiatives. In India, the focus has shifted from promoting individual industries to fostering ecosystems that support collaboration and innovation. The Make in India initiative, launched in 2014, aims to boost domestic manufacturing and attract foreign investment. This initiative recognizes the role of industrial clusters in enhancing the competitiveness of Indian industries. The evolution also involves adapting to changing global dynamics, such as technological advancements and shifts in consumer preferences. The legal and institutional framework for industrial cluster development in India is multifaceted. The Ministry of Micro, Small and Medium Enterprises (MSME) plays a crucial role in promoting and supporting these clusters. Various schemes and programs, such as the Scheme of Fund for Regeneration of Traditional Industries (SFURTI), provide financial assistance and technical support to clusters. State governments also have their own policies and initiatives to promote industrial development in their respective regions. These policies often focus on infrastructure development, skill development, and access to finance.

Latest Developments

The revival of legacy industrial clusters aligns with the government's broader strategy to boost economic growth and create employment opportunities. Recent initiatives, such as the Production-Linked Incentive (PLI) scheme, aim to incentivize domestic manufacturing and attract investment in key sectors. The focus on improving infrastructure and technology in these clusters is expected to enhance their competitiveness and enable them to integrate into global value chains. There are ongoing debates about the most effective approaches to cluster development. Some experts argue for a more targeted approach, focusing on clusters with high growth potential. Others emphasize the importance of a holistic approach that addresses the needs of all clusters, regardless of their size or sector. The role of state governments in cluster development is also a subject of discussion, with some advocating for greater decentralization and local control. The future outlook for industrial clusters in India is positive, with the government setting ambitious targets for economic growth and job creation. The revival of legacy clusters is expected to contribute to these goals by unlocking their potential and creating new opportunities for businesses and workers. The government is also exploring partnerships with other countries and international organizations to leverage best practices and access new technologies. The success of these efforts will depend on effective implementation and collaboration between various stakeholders.

Frequently Asked Questions

1. What are the key facts about the revival of 200 legacy industrial clusters that are important for the UPSC Prelims exam?

The key facts for Prelims are: The government is planning to revive 200 legacy industrial clusters. The focus is on improving infrastructure, technology, and access to markets. This initiative aims to enhance competitiveness and create employment opportunities.

Exam Tip

Remember the number '200' as it's a specific figure that can be tested in Prelims.

2. What is the main goal of reviving these 200 legacy industrial clusters?

The main goal is to boost economic growth and create employment opportunities by improving infrastructure, technology, and market access for these clusters.

3. Why is the government focusing on reviving legacy industrial clusters now?

The revival of legacy industrial clusters aligns with the government's broader strategy to boost economic growth and create employment opportunities. Recent initiatives like the Production-Linked Incentive (PLI) scheme also support domestic manufacturing.

4. According to the topic, what specific areas will the government focus on to improve these industrial clusters?

The government will focus on improving infrastructure, technology, and access to markets for these clusters.

5. What role does the NTTF report play in the revival of these industrial clusters?

The NTTF report suggests joint policy intervention from state and central governments to improve these clusters.

6. How might the revival of these industrial clusters impact common citizens?

The revival is expected to create employment opportunities and enhance competitiveness in these regions, potentially leading to better economic conditions for common citizens.

7. What are some potential challenges in reviving these 200 legacy industrial clusters?

Potential challenges include outdated infrastructure, lack of access to modern technology, and difficulty in accessing markets. Coordination between state and central governments will also be crucial.

8. What is the significance of Michael Porter's cluster theory in the context of reviving these industrial clusters?

Michael Porter's cluster theory emphasizes the importance of geographic concentration of interconnected companies and institutions. This theory highlights how such concentration can enhance competitiveness and innovation, which is relevant to the revival efforts.

9. What aspects of Asian economies are being looked at for best practices in this revival effort?

The government is looking at Asian economies for best practices, but the specific aspects are not detailed in the topic data.

10. How might the Production-Linked Incentive (PLI) scheme support the revival of these industrial clusters?

The PLI scheme aims to incentivize domestic manufacturing and attract investment in key sectors. This can complement the efforts to improve infrastructure and technology in the industrial clusters, enhancing their competitiveness.

Practice Questions (MCQs)

1. Consider the following statements regarding the government's initiative to revive legacy industrial clusters: 1. The initiative aims to revive approximately 200 legacy industrial clusters. 2. The initiative focuses solely on improving technology within these clusters. 3. The NTTF report suggests joint policy intervention from state and central governments for the success of this initiative. Which of the statements given above is/are correct?

  • A.1 only
  • B.2 and 3 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: C

Statement 1 is CORRECT: The government is set to revive approximately 200 legacy industrial clusters. Statement 2 is INCORRECT: The initiative focuses on improving infrastructure, technology, and access to markets, not solely on technology. Statement 3 is CORRECT: The NTTF report suggests joint policy intervention from state and central governments for the success of this initiative.

2. Which of the following best describes Michael Porter's contribution to the understanding of industrial clusters?

  • A.He developed the concept of comparative advantage in international trade.
  • B.He emphasized the importance of geographic concentration of interconnected companies and institutions in a particular field.
  • C.He introduced the idea of economies of scale in manufacturing.
  • D.He advocated for government intervention in regulating monopolies.
Show Answer

Answer: B

Michael Porter's cluster theory emphasizes the importance of geographic concentration of interconnected companies and institutions in a particular field. This theory highlights how clusters enhance competitiveness through increased productivity, innovation, and new business formation.

3. Consider the following statements regarding the Scheme of Fund for Regeneration of Traditional Industries (SFURTI): 1. It aims to organize traditional industries and artisans into clusters to make them competitive. 2. It is implemented by the Ministry of Skill Development and Entrepreneurship. 3. SFURTI provides financial assistance for infrastructure development and skill training. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.1 and 3 only
  • C.2 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: B

Statement 1 is CORRECT: SFURTI aims to organize traditional industries and artisans into clusters to make them competitive. Statement 2 is INCORRECT: SFURTI is implemented by the Ministry of MSME, not the Ministry of Skill Development and Entrepreneurship. Statement 3 is CORRECT: SFURTI provides financial assistance for infrastructure development and skill training.

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