Cluster development regards ‘initiatives’ as one of the most result oriented approach available for fostering an environment that is conducive to competitiveness. As stated by UNIDO there are 388 clusters in India. These clusters have about 490,000 firms providing employment of 7.5 million; generating an output of Rs. 1570 billion (50 clusters alone contribute around 80 per cent of this amount).

The Cluster Development Approach leads to positive influence the three levels:

The enterprise level
by increasing operational efficiency through better productivity, reduced costs, improved quality, access to better skills, improved market access and enhanced sales and profits.

The cluster level
By giving way to a commonly agreed vision for development of the cluster, increased awareness and best practices.

The ecosystem level
By positioning linkages with institutions – state agencies, financial institutions, academic and R&D entities, training institutions that will ally with it to achieve a shared objective.