Uttar Pradesh’s cluster-based industrial model is transforming its economy by fostering MSME growth, creating jobs, and attracting investments. With over 90 industrial clusters, the state is leveraging shared infrastructure and sector-specific hubs to boost competitiveness. Recent initiatives, like the Jewar-Noida cluster, aim to position UP as a global manufacturing hub, supported by policies enhancing ease of doing business.
Uttar Pradesh Adopts Cluster-Based Approach for Industrial Boom
Uttar Pradesh, India’s most populous state, is witnessing a transformative shift in its industrial landscape through a cluster-based growth model. This strategy, which focuses on grouping interconnected micro, small, and medium enterprises (MSMEs) and related institutions within specific geographic areas, is driving economic development, job creation, and global competitiveness. As of September 2025, the state has established over 90 industrial clusters, with plans to expand further, positioning UP as a key player in India’s manufacturing ecosystem.
The cluster-based approach involves creating sector-specific hubs where businesses share resources, infrastructure, and supply chains to reduce operational costs and enhance productivity. For instance, the Jewar-Noida industrial cluster, centered around the upcoming Noida International Airport, is emerging as a hub for electronics, aerospace, and logistics. This cluster alone is expected to attract investments worth over ₹20,000 crore and generate approximately 100,000 jobs in the next five years, according to data from the UP Industrial Development Authority.
Other notable clusters include the leather and footwear hub in Agra, the textile cluster in Varanasi, and the brassware industry in Moradabad. These clusters leverage local expertise and resources, fostering innovation and economies of scale. For example, the Agra footwear cluster, home to over 5,000 MSMEs, has seen a 15% increase in exports in 2024, driven by shared testing facilities and government-backed subsidies, as reported by the MSME Ministry.
The state government’s proactive policies have been instrumental in this growth. The UP Industrial Investment and Employment Promotion Policy 2022 offers incentives such as capital subsidies, tax exemptions, and land benefits to MSMEs within clusters. Additionally, the establishment of Common Facility Centers (CFCs) provides access to advanced machinery, training, and R&D facilities, reducing capital expenditure for small businesses. In 2024, the state allocated ₹500 crore for developing CFCs across 20 clusters, boosting local entrepreneurship.
The cluster model also aligns with India’s broader economic goals. By integrating supply chains and promoting collaboration between industries, universities, and government bodies, UP’s clusters are enhancing the state’s competitiveness in global markets. The Moradabad brassware cluster, for instance, has adopted digital tools to streamline exports, resulting in a 10% rise in international orders in 2024, according to the Export Promotion Council for Handicrafts.
Challenges remain, including the need for better digital infrastructure and financing for MSMEs. The state is addressing these through initiatives like the UP Digital Transformation Program, which aims to integrate Industry 4.0 technologies, such as IoT and AI, into clusters by 2027. Additionally, partnerships with financial institutions are unlocking credit facilities for small businesses, with ₹1,200 crore disbursed to MSMEs in 2024 alone, as per the Reserve Bank of India.
The cluster-based model is also fostering sustainable growth. The Varanasi textile cluster has implemented eco-friendly practices, such as water recycling and solar energy adoption, reducing its carbon footprint by 12% in the past year, according to a report by the Ministry of Textiles. Such initiatives align with global demands for sustainable manufacturing, enhancing UP’s appeal to foreign investors.
With the state’s ease of doing business ranking improving to second place nationally in 2024, as per the Department for Promotion of Industry and Internal Trade, UP’s cluster-based strategy is setting a blueprint for other states. The government’s focus on infrastructure development, including expressways and power supply, further supports these clusters, ensuring seamless connectivity and operational efficiency.
Disclaimer: This article is based on recent news reports, government data, and industry sources as of September 2025. Information is subject to change, and readers are advised to verify details through official channels.