Development and Urbanization
From being an cotton market town in colonial India, Tiruppur in southern India, has emerged as a dynamic garment cluster catering to the growing cotton knitwear demand in global markets. The Tiruppur cluster is a dense network of over 5,000 firms specialising in different stages of garment production, with varying links to markets, internal and external. Being a buyer driven value chain, the cluster caters to leading retailers and supermarkets particularly in Europe and USA. Given the seasonal nature of cotton, some of the bigger firms are trying, with moderate success, to offset seasonality by diversifying into other segments like woolen wear, woven, synthetic, etc. However, while the cluster is facing growing competition from countries like Bangladesh, Cambodia, and Vietnam, there have been a series of policy shifts at the macro-level that appears to undermine the ability of the cluster to sustain its dynamism and its ability to upgrade. This paper focuses on these macro policy shifts and argues that while cluster level policy initiatives are important, the significance of macro policy environment merits more attention. By pointing to the mismatch between the demands of sector specific clusters and the macro-policy agenda, the paper makes two observations with regard to the governance of clusters. One, the shifting nature of institutional embedding of macro policy may undermine a cluster's ability to sustain its economic dynamism. Two, it is important to pay much more attention to the nature of interactions between different scales of governance than what cluster studies do at present.