Strengthening India’s Traditional Industries through SFURTI: The Progress, Challenges and Way Forward

Policy Update

Ambika Sharma

Introduction

India’s traditional industries have often been viewed not only as a form of economic activity but also as a symbol of craftsmanship and cultural heritage, providing millions of artisans with livelihoods and financial support across rural and urban areas. However, the rapid rise of modern industrialization, evolving consumer preferences, and scattered production systems have diluted the competitive value of these sectors. To address structural issues, the Ministry of Micro, Small, and Medium Enterprises (MSME) introduced the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) as a cluster development program, which aims to strengthen traditional industries and create livelihood opportunities for artisans and people working in the informal sector. 

Over the years, SFURTI has evolved from being a support scheme into becoming one of India’s flagship cluster development programs for traditional industries. Through skill development, design innovation, and technological integration, the scheme aims to transform traditional artisan groups into independent enterprises. As India continues to focus on inclusive growth and the promotion of local products under initiatives such as Atmanirbhar Bharat, Vocal for Local, and Make in India, SFURTI continues to assume greater policy importance.

Background

The Scheme for Fund for Regeneration of Traditional Industries (SFURTI) was launched in 2005 by the Ministry of MSME to make traditional cultural industries more market-ready while preserving India’s cultural heritage. Before the scheme was introduced, many artistic industries, such as pottery, handloom, handicrafts, and rural industries, were experiencing declining productivity, obsolete technology, and limited access to the organized sector. Also, the absence of economies of scale had reduced their ability to compete against the modern industries.

Identifying these obstacles, the Government of India chose to adopt a group development approach, bringing all artisans, cooperatives, and self-help groups together within production centers. SFURTI emphasizes enhancing the entire cultural ecosystems through creating a collective marketing and skill development system and adopting modern technology. It mainly targets cooperatives, rural entrepreneurs, and micro-enterprises who are engaged in manufacturing and cultural activities. Many agencies, such as the Coir Board, the Khadi and Village Industries Commission (KVIC), and other skill-related institutions, are collaborating with state governments and development ecosystems to implement this scheme at both the local and national scales.

Since its launch, SFURTI has gone through many revisions, with recent one being in 2022, to enhance the implementation efficiency, increase financial support for the artisans and entrepreneurs, and expand its outreach across diverse traditional sectors. Recent development has focused on digital marketing, scheme promotion, skill development and convergence with other programs to support MSMEs and rural livelihoods.

Functioning

SFURTI functions through a systemic developmental model that aims to address common barriers and constraints faced by traditional industries. The implementation of the scheme starts with identifying potential artisan groups by cultural institutions and state governments, following which, a detailed project report is prepared with support from technical and skill-based agencies. After the report is approved by the Scheme Implementation Committee, the financial aid grant is released in phases for effective implementation of the project.

The scheme consists of three interventions : soft, hard and thematic interventions. 

Soft interventions: They function upon building institutions, skill development, entrepreneurship training and designing the parts of artisan clusters. 

Hard interventions: They include providing modern equipment, improving packaging facilities and upgrading the production systems which enable artisans to access technology that would otherwise remain unaffordable for many individual enterprises. 

Thematic interventions : They work on promoting traditional industries through digital marketing and exports, diversify the products along with enhancing their quality and participate in trade fairs to sell their products across these fair markets.

The cluster approach towards industrial development has allowed artisans to reduce  production costs through collective sharing of resources along with improvising product quality and expanding the scope of market opportunities.

Performance

Over the past five years, the SFURTI scheme has expanded both sector-wise and geographical-wise, supporting cultural industries across several cities and states. According to the Ministry of MSME’s report, hundreds of artisan groups have been approved under the scheme, covering a wide range of sectors like bamboo, handicrafts, handlooms, agriculture processing and rural enterprises.

Table 1 – Key Pillars of SFURTI

Government expenditure under SFURTI scheme has displayed a continuous policy commitment towards enhancing the artisan businesses and upgrading the rural livelihoods.Budget allocation has been increased to scale up the infrastructure development and skill-building programs. However, the actual expenditure has differed across financial years due to variations in use of funds, resources and actual implementation of projects.

Table 2 – Sector-wise Cluster Distribution & Regional Variation

A total of 513 clusters have been approved by the Government of India under the SFURTI scheme. State-wise execution has shown regional variation as states like Uttar Pradesh, Tamil Nadu and Kerala have turned out to be the huge beneficiaries due to their strong industry base and better institutional support. However, at the same time, many central and northeastern states have continued to have fewer clusters despite being enormously filled with talented artisans. Sector-wise has shown that industries like handicrafts, textile handlooms, bamboo and coir have accounted for larger amounts of approved projects and have majorly benefited from diversified product range, social media branding and larger market influences.

Table 3 – Economic Impact and Enterprise Sustainability

Employment creation has been one of the biggest accomplishments of SFURTI scheme because by categorizing the cultural artisans into formal enterprise collectives, it has improved productivity levels of people working into these groups, reduced basic operational costs, enhanced product quality, opened several pathways towards getting revenues and created livelihood opportunities for thousands of artisans, especially for women and rural youth. Overall, the long-term growth of these collectives often depend on sustained market demand,organisation management after the project is completed and long-term governmental guidance and institutional support.

Impact

The SFURTI scheme has contributed largely towards regenerating the traditional industries through promotion of economic and social development, approving 513 clusters and committing over ₹1,330 crore in financial assistance to benefit approximately 3.03 lakh traditional artisans nationwide. Modern technology, upgraded infrastructure and Common Facility Centres (CFCs) have allowed artisans to enhance the efficiency of production and reduce investment costs which are incurred by individuals. Capacity-building programs have built up the entrepreneurial skills and encouraged embracing and adopting the modern techniques which are required in manufacturing and production of the artistic-cultural products. It has also produced positive results through empowerment of women’s participation in rural and micro enterprises, supporting self-help groups and job creation across all communities.

 In many clusters, artisans have reported increased incomes of around 15% to 20% (with top-performing seeing gains up to 40% to 100%) , more access to organised sector markets and greater opportunities for diversifying the product range. However, at the same moment, the scheme’s impact has been inconsistent across regions; while 378 clusters have become independent enterprises with strong market influences, approximately 135 clusters are in implementation stages or struggling due to weak organizational management and less marketing support. Independent studies have suggested that creating infrastructure alone is not adequate unless it is accompanied by digital upgradation and long-term market access. 

In summary, SFURTI has made a significant contribution towards preserving India’s traditional industries and supporting economic development in rural areas,however,its long-term impact will depend on governmental support and keeping up with the pace of dynamic market demands.

Emerging Issues

Despite being one of India’s flagship schemes, SFURTI still continues to face many implementation challenges. 

• Delays related to project approval and release of funds have impacted the completion of several clusters.

•  At many places, CFCs have remained underutilised due to weak organisational structure and inadequate business strategy along with scheme implementation remaining limited to states having strong governmental support, leading to regional disparities. 

• Marketing also remains a cause of concern as though the quality of products have enhanced, several of them continue to face competition from mass-produced products.

• Limited participation in e-commerce platforms have restricted market expansion, leading to less emphasis towards cluster scalability and development.

• Recent evaluations have often emphasized on increasing the number of clusters sanctioned and present outcomes, leading to less focus on long-term parameters such as enhancing productivity, sustainability of the enterprise and exponential income growth.

Way Forward

To create the maximum impact of the SFURTI scheme, future policy efforts need to focus on keeping up with the execution quality, having a long-term vision of sustaining the collective enterprises. It can done through several ways such as:

• Increasing investment in brand identity, quality standardization and integration of both digital and export markets can help artisans tap into international bases.
• Innovating products and experimenting with modern designs can help them keep their goods relevant to changing consumer preferences.
• Focusing more on generating steady and dignified jobs for rural women and youth and business sustainability can help turn clusters into successful,independent enterprises.
• Creating more entrepreneurial and skill-development programs which can help artisans analyse trends, manage finances and navigate the market dynamics.
• Establishing professional management structures and diversified income sources can ensure relevance and viability beyond government funding and support.

Conclusion

In conclusion, the Scheme for Fund for Regeneration of Traditional Industries (SFURTI) is a significant measure towards India’s cultural heritage through traditional industries, while also promoting sustainable social progress. Through its cluster growth model, the scheme has strengthened artisans’ capabilities, opened up several revenue sources, and expanded livelihood and job opportunities across many sectors. Even though implementation-related challenges continue to persist, SFURTI has established a strong foundation that enhances the cultural industries and integrates them into India’s economy. Continuous government support, stronger institutional management, and better market integration will be important for ensuring that India’s artisan industries remain historically relevant and economically competitive in the years ahead. 

References

Ministry of Micro, Small, and Medium Enterprises. (2022). Scheme of Fund for Regeneration of Traditional Industries (SFURTI): Revised guidelines. Government of India. https://cttc.gov.in/sfurti/SFURTI_NEW_GUIDELINES.pdf

Press Information Bureau. (2026). MSME Ministry completes 364 MSE-CDP projects; SFURTI boosts traditional industry clusters. Ministry of Micro, Small & Medium Enterprises, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2240160 

Press Information Bureau. (2026). SFURTI scheme benefits more than 3 lakh traditional artisans across the country. Ministry of Micro, Small & Medium Enterprises, Government of India. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2240587 

Ministry of Micro, Small, and Medium Enterprises. (2026). Annual report 2025–26. Government of India. https://www.msme.gov.in/static/uploads/2026/05/1bfda06b460e72543530b40817573495.pdf

Ministry of Micro, Small & Medium Enterprises. (2022). Revised guidelines for the Scheme for Fund for Regeneration of Traditional Industries (SFURTI). Government of India. https://static.investindia.gov.in/s3fs-public/inline-files/SFURTI_NEW_0.pdf 

Indian Micro Enterprises Development Foundation. (n.d.). SFURTI scheme: Scheme for Fund for Regeneration of Traditional Industries. https://imedf.in/Sfurti-Scheme 

National Institute of Industrial Research. (2026). SFURTI Scheme 2026: Boosting artisan income through cluster development. https://www.niir.org/blog/sfurti-scheme-2026/

Parliament of India. (2024). Lok Sabha Unstarred Question No. 1690: Scheme of Fund for Regeneration of Traditional Industries (SFURTI). https://sansad.in/getFile/annex/268/AU1690_4q3sBC.pdf?source=pqars

Press Information Bureau. (2025, July 24). Scheme of Fund for Regeneration of Traditional Industries (SFURTI). Government of India. https://pib.gov.in/PressReleasePage.aspx?PRID=2278107

Schemes in India. (2026). SFURTI Traditional Industries Cluster Scheme. https://schemesinindia.in/central/sfurti-traditional-industries-cluster

Youth Power. (n.d.). Common Facility Centers (CFCs) under SFURTI. https://youthpower.in/institution-notes/en/cfc_sfurti.pdf

About Contributor

Ambika Sharma is a Research and Editorial Intern at IMPRI India, as well as a contributing writer, interdisciplinary researcher, and strategist. An undergraduate student pursuing Economics and Computer Science at the University of Illinois Chicago, she has research interests in mathematical economics, entrepreneurial finance, public policy, socio-economic issues, and business frameworks. She is also a recipient of the Laadli Media & Advertising Award 2025 and the Laadli Media Fellowship 2025. 

Acknowledgments

The author extends sincere thanks to the reviewer(s) Lubina Dua, Mehul Rastogi, and to the IMPRI team for their guidance throughout the process.

Disclaimer:

All views expressed in the article belong solely to the author and not necessarily to the organization

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