An Explanation About SFURTI Scheme: Application, Funding and Complete Procedure


The Scheme of Funds for Regeneration of Traditional Industries (SFURTI) is a scheme launched in the year 2004 by the Government of India, for the regeneration of Traditional Industry.

The scheme is made with the objective to create traditional industry clusters and in providing financial aid for the manufacturing, designing, and marketing.

Khadi, Coir and other village handloom and handicraft products are industries which comes under the traditional industry sector. The scheme aims to fund upto Rs. 5 Crore for a cluster and is managed by the Ministry of Micro, Small and Medium Enterprise (MSME).

Till date the scheme has successfully approved 498 clusters all over India with almost 3 lakh artisans have taken advantage from it. 251 clusters of these cluster under SFURTI scheme are functional as well.

Potter cups in the background and text sfurti scheme application funding and complete procedure written at the centre.
Aims and Objectives

As per the new guidelines of the scheme, it has following aims and objectives:

  • Establishing clusters for traditional industries and artisans making provision for long-term sustainability and support for them.
  • A sustainable model of employment for traditional industry artisans and rural entrepreneurs.
  • Providing support for new products, design intervention and packaging for enhancing the marketability of the products.
  • Setting up of common facility centers (CFCs) wherein, tools and equipment’s for artisans available.
  • Building a robust cluster governance system where there is an active participation of stakeholders for facing future challenges and opportunities.
  • Establishing an innovative and improved technologies for enhancing traditional skills and advance processes to gradually replicate similar models of cluster based regenerated traditional industries.
  • Searching and setting up of multi-product groups.
  • Targeting with the objective to understand cluster’s target customer.
  • Fostering a multi-product line for a cluster.
  • Creating a shift from a supply-driven model of selling to a market-driven model.
  • Develop a web-based ecommerce store in outreaching growing the market of the clusters.
  • To take advantage of the possibilities of the e-retail space.
  • To put resources into the area of product design and quality improvement.
SFURTI Project Intervention for Developing Clusters

Cluster development is the essential part under the SFURTI Scheme. The Ministry of MSME sanctions funds for each cluster according to the nature of intervention required.

To develop a cluster, it requires a setting up of common facility center where tools & equipment, machinery and a raw-material bank are placed for providing training to the artisans.

Therefore, in a SFURTI project, the development of a cluster requires following kind of interventions.

  • Soft Interventions
  • Under Soft Intervention the project features following list of activities:

    • General awareness, counseling, motivation and trust-building.
    • Skill development and capacity building for the entire value chain of different skills need to be imparted.
    • Institution development.
    • Exposure visits.
    • Market promotion initiatives.
    • Design and product development.
    • Participation in seminars, workshops and training programmers on technology, up-gradation, etc.
  • Hard Interventions
  • Hard Intervention features creation following facilities:

    • Multiple facilities for multiple products and packaging wherever needed
    • Common facility centres (CFCs);
    • Raw material banks (RMBs);
    • Up-gradation of production infrastructure;
    • Tools and technological up-gradation such as charkha up-gradation, tool-kit distribution etc.
    • Warehousing facility.
    • Training centre;
    • Value addition and processing centre/ multi-products
  • Thematic Interventions
  • Thematic intervention works more as an addition to support provided in Hard and Soft Interventions.

    A cluster developing products in one type of a sector then the other clusters belonging to the same sector type will collaborate in featuring themselves in domestic and international markets.

    Therefore, under thematic intervention following activities are done:

    • Brand building and promotion campaign;
    • New media marketing;
    • E-Commerce initiatives;
    • Innovation;
    • Research & development initiatives; and
    • Developing institutional linkages with the existing & proposed clusters.
Institutions Involved in SFURTI

The process of cluster development requires involvement on necessary institution or agencies defined under the scheme guidelines, which are as following:

  • Scheme Steering Committee
  • Nodal Agency
  • Technical Agency
  • Implementing Agency
  • Special Purpose Vehicle
  • Working Committee

So let us now understand in detail the duties and functions of these institutions in developing cluster:

  • Scheme Steering Committee (SSC):
  • An SSC functions by providing overall policy, coordination and management of the scheme with Ministry of MSME. An SSC is constituted having the following list of members in it:

    1 Secretary, Ministry of MSME Chairman
    2 Additional Secretary and Development Commissioner (MSME) Member
    3 Additional Secretary and Financial Adviser (AS & FA), Ministries of MSME (or a representative) Member
    4 Principal Adviser, PAMD, Niti Aayog Member
    5 Chief Executive Officer, KVIC Member
    6 Secretary, Coir Board Member
    7 Representative of Indian Banks Association (IBA) Member
    8 Representative of National Bank for Agriculture and Rural Development (NABARD) Member
    9 5 Cluster Experts- to be nominated by Ministry of MSME Member
    10 DC (Handlooms) Member
    11 DC (Handicrafts) Member
    12 Joint Secretary (NRLM), Ministry of Rural Development Member
    13 Joint Secretary, Ministry of Food Processing Industry Member
    14 Joint Secretary, Ministry of MSME Member Convener

    An Implementing Agency (IA) makes the proposal for establishing the cluster on behalf of the Nodal Agency before the SSC.

    The SSC after attaining proper documentation and reviewing the necessary criteria in it, can grant or reject the proposal for the cluster.

  • Nodal Agency
  • A Nodal Agency is a national level institution which has sectoral expertise in a major or sub-sector of a traditional industry and are operating in the field of cluster development for the last five years.

    After approval of a proposal by SSC, the newly approved cluster is assigned to the NA. It is selected on the basis of its competency in cluster development, project management and facilitation of access to the market for the traditional industry.

    A cluster will be assigned to such nodal agency registered under any of the above-mentioned laws.

  • Technical Agency
  • Technical Agencies are selected by Nodal Agencies. A Technical Agency is a national level institution, which has a proven expertise in artisanal training and development of small enterprise clusters.

    A TA generally provides all kind of technical support to NAs and IAs which is also know as ‘handholding’ under SFURTI.

    Some important tasks performed by the TA are:

    • Preparation of DPR with NA & IA.
    • Preparing and validating Cluster Action Plan.
    • Conducting training of Cluster Development Executive (CDE) and other officials of IA.
    • Preparation of timeline on the stages of project intervention.
  • Implementing Agency
  • An Implementing Agency is a non-government organization or institution established by Centre or State Government or a semi-Government institution or a field functionary of State / Central Government or a Panchayati Raj Institution which have an expertise in cluster development.

    Private Sector enterprise are also allowed to participate in implementing cluster project. Such as Corporate or Corporate Social Responsibility (CSR) foundation which have an expertise in cluster development are encouraged to become IA.

    The IA is allowed to work on development of one cluster only. However, if the IA have a state-wide coverage, it can set up more clusters after proper assessment by NAs.

    An IA is appointed after reviewing its past experience at the grass root level and it is appointed by a Nodal Agency (NA).

    The primary goal of the IA is cluster development and it takes all necessary steps as per the Cluster Development Program and to take steps for its further development.

    The IA also appoints a Cluster Development Executive (CDE) on a full-time executive role who will be responsible for the implementation of the project as per the approved DPR.

  • Special Purpose Vehicle (SPV)
  • For establishment of any cluster, formation of SPV is required. The SPV is formed by the IA and after the completion of project interventions, the SPV will sustain the cluster.

    An SPV is established and registered under the following laws:

    • A Society under Societies (Registration) Act, 1860;
    • A Co-operative Society under an appropriate statute;
    • A Producer Company under Section 465(1) of Companies Act, 2013 (18 of 2013);
    • Under Section 8 of the Companies Act, 2013 (18 of 2013)
    • A Trust;
    • Any other legal entity, with the prior approval of SSC.

    In case a Panchayati Raj Institute develops a cluster and becomes an IA, it can form an SPV wherein, it will dedicate 33% of the shareholding to micro-enterprise or benefactor of the cluster.

  • Working Committee
  • A working committee is the executive body of the SPV which looks after and plans out the sustainability of a cluster. The working committee will meet in the establishing CFCs, including facilities and infrastructure using aid provided by the Government under the scheme.

    The working committee will compromise the following list members:

    • A Chief Functionary of the IA, will be the Convener.
    • Representative of a Nationalized bank operating in the area;
    • 3-artisans nominated by the IA (including at least one woman) on an annual rotational basis, re-nomination will not be allowed for five years.
    • Representative of the NA; and
    • GM, DIC or his representative.

    The members of the working committee will meet at least once in a month to review the operational and maintenance of the Cluster as well of the CFC.

How Financial Aid Is Given?

In SFURTI Scheme a financial assistance to a maximum of Rs. 5 Crore for creating a traditional industry cluster.

The responsibility for providing funds and aid is made by the NA which is received by the Ministry of MSME for any cluster development project.

The method of financial assistance under the scheme is classified according to the following criteria mentioned in the table below:

Type of Clusters Per Cluster Budget Limit
Regular Clusters (upto 500 artisans) Rs 2.50 Crore
Major Cluster (more than 500 artisans) Rs. 5.00 Crore

The funding is made as per the estimated project cost as per DPR.

A cost of project is arrived after calculating the cost incurred in hard intervention and soft intervention. It also includes the cost of professional services by the TA, the cost incurred by the IA for engaging a CDE and other administrative expense incurred by the TA.

The ministry transfers the funds to an NA under two heads which are:

  • SFURTI Programme Fund
  • SFURTI Administrative Fund

These funds are used to meet out the expense and other project related cost for a cluster.


The aim and objective of the SFURTI scheme is to uplift the traditional industry sector and make its product available world-wide.

The scheme does its job by providing funding to clusters. This financial assistance create initiative for a national level institute as well as private sector entities to participate in cluster development.

The business plan of a cluster drafted looking at profitability and future sustainability of the cluster. The core motive is to make clusters self-reliant in attracting investment and generating income for the artisans working under it. Therefore, SFURTI scheme is a mixture of business model and a government’s program for uplifting the backward citizens of the country.

COHANDS is a national level institution and have experience in setting up handloom and handicraft clusters all over India.

We have assisted several IAs in aiding them with a robust model of application and compliance system with our state-of-the-art Financial Management System and Management Interface System on our website.