The diagnostic study conducted by UNIDO in 1997 identified an unexploited capacity for the traditional artisans in the cluster to target profitable national and world markets. The vision and action plan developed for the cluster envisaged the revaluation of the traditional form of production and the improvement of the living standards of the artisans by: 

• Reducing the cluster disarticulation (i.e. lack of linkages among the different cluster actors);
• Enhancing the design, production and marketing capacity of the firms; 
• Developing a product image (including a common brand) in line with current market demand; and
• Improving and increasing the types of business support services available in the cluster. 

• The lack of communication among the artisans;
• The absence of an active association;
• Inadequate quality control capacity of the entrepreneurs;
• Lack of design and marketing skills as the hand-block printers had grown accustomed to working as sub-contractors for exporters; and
• Inadequate access to credit. 

Initially the local support institutions displayed much less interest in the UNIDO activities than the entrepreneurs. The first cluster-wide meeting called in January 1998 had therefore limited results. In spite of the proposals coming from  CALICO and COTEX and of the previous sensitization by UNIDO, the local institutions failed to pick up any of the projects identified, thus contributing to a further worsening of the relationships between the local producers and support institutions. 

UNIDO thus opted for a more time-consuming sensitization of the support institutions both at the local level and through their headquarters, whereby the main thrust of the cluster approach was repeatedly presented, the initiatives identified by the artisans were introduced and financial support was requested. This strategy finally started to pay off as the National Bank for Agriculture and Rural Development  agreed to make a
" token" contribution (little more than 15% of the total costs) for the participation of the cluster artisans in a fair at Jaipur city. Since this ice-breaking initiative, collaboration within the cluster improved considerably.

In fact the Small Industries Development Bank of India (SIDBI) initiated various critical activities along with UNIDO and the cluster actors especially in areas related to marketing training, design development, technical training with National Institute of Design (a lead design institute), creation of Dhabu (mud-dye) pasting machine, creation of an innovative credit mechanism and targeted national and international exposure of artisans and exporters. SIDBI has also adopted this cluster under its Rural Industrialisation Programme for further intervention.

Moreover, in an attempt to secure the emergence of a partner institution within the cluster, UNIDO started to collaborate more and more closely with a local NGO, the Indian Institute for Rural Development (IIRD) which was invited to participate and contribute to all cluster initiatives. 

Numerous other nation-wide SSI support institutions joined, most prominent among them the Small Industries Development Bank of India, the State Bank of India, the Development Commissioners (Handicraft), the Development Commissioners (Handlooms)and the Chamber of Commerce. By the end of 1999 their financial contribution to cluster related activities reached an average of 20%. Furthermore, it is now common for the local branch officers of these institutions to get in touch directly with CALICO, COTEX and the IIRD to learn about upcoming initiatives and to inquire about the possibility of co-financing them. 

Strengthening the business system also required the improvement of the relationships between SSI and commercial banks, which had effectively ceased since a serious flood had hit the village in 1991 depriving the SSIs of their collateral. The initial meetings between members of CALICO and the bank managers was stormy. Thanks to the efforts of the Focal Point (who personally chaired the meeting), all participants  agreed on a common platform and  assigned individual responsibilities accordingly. One of the major outcomes  was that the president of CALICO (one of the largest and most respected businessmen of Sanganer) could facilitate loan disbursement by providing collateral on behalf of the consortium's other members and by screening applications in light of his knowledge of the local firms. 15 loans applications were signed between the local banks and CALICO members within few months after the agreement had been reached. Subsequently, the supply of loans  increased so dramatically that it is now common for bank managers to contact CALICO directly to ask if any other loan application has been handed in. . With a view to reduce the gap between the bankers and the potential borrowers, SIDBI with UNIDO support conceived and sanctioned a Mutual Credit guarantee Fund Scheme where the former will contribute on a matching basis to the guarantee corpus created by the beneficiaries, 2 banks have already expressed their interest in making use of this scheme and is expected to have a wider outreach in the coming months.  

The Focal Point therefore shifted the focus of awareness building towards the artisans' sons (themselves block printers) hoping that they may not yet share the same mutual mistrust and that their superior education would equip them with a longer-term approach to business. A series of one-to-one interviews were conducted to identify the needs and priorities of these young artisans. It thus emerged that they shared a keen interest in strengthening marketing skills, and that they would contribute to a suitably designed training course. In conjunction with a locally operating NGO and with the support of the Small Industries Development Bank of India, a market orientation training program was organized in Bagru for 23 young artisans with an average age of 21. Besides class teaching on marketing promotion, quality testing, product development, advertising and distribution, the program included a visit to Delhi (to showrooms and representatives of artisan support agencies) and to Jaipur (to the larger block-printers as well as trading houses). 

The reaction of the young artisans was enthusiastic. These young people emerged more confident about their marketing skills. They also reported a greater deal of interest towards various existing artisan support schemes (about which they admitted they had not known anything before the program) as well as their surprise regarding the profit margins that show rooms earned on products bought at Bagru. Their enthusiasm rapidly spread to their parents who started to show up at the following meetings (often the very same people that had declined to participate earlier on and had actually displayed a great deal of aggressiveness). As a result, 16 hand-block printers voluntarily took part in a UNIDO supported pilot project with SIDBI's support whereby an external designer was hired to pool together the block design of the various printers and to develop new designs which would appeal to foreign buyers. Subsequently, a common brand was created which distinguishes original Bagru products. On the basis of this brand, the same printers have been able to participate jointly in major textile fairs in India, thus significantly broadening their markets. 

After a series of awareness-building initiatives and training courses organized by KNIDGRO in which over 30 Ludhiana firms took part, and after a joint request from KNIDGRO members had reduced the cost of internet access, KNIDGRO embarked on an ambitious attempt to further bridge the gap between the cluster entrepreneurs and the local providers of IT-related services. 
KNIDGRO contacted all the local training institutions in the field of  IT with the request for greater customization of their existing courses in line with the needs and capacities of SSIs. Thanks to the expertise acquired at the Delhi  course and to the in-depth knowledge about its association's members, the director of KNIDGRO was able to devise a suitable syllabus and to put it forward to all the previously  contacted institutions. Having identified the  institution providing the best offer in terms of facilities, quality as well as price, and with the full endorsement of its members, KNIDGRO signed a contract on behalf of 17 of its members. A very similar strategy was implemented the following month, when a dozen KNIDGRO members came up with a request for an on-line outlet site for e-commerce. Once again, KNIDGRO brokered a deal with the most experienced Internet provider from Ludhiana. 

As some of the association's members expressed an interest in ERP (Enterprise Resource Planning) technology and their dissatisfaction with the inability of the local software providers to come up with a sufficiently integrated and robust package, KNIDGRO contacted one of the larger private software providers operating in India. Considering that the cost of developing such a tailor-made product would have made it unbearably expensive for an SSI, KNIDGRO called a meeting with all interested entrepreneurs where it emerged that a further 20 SSIs would be ready to purchase the software if it was successfully tested by someone operating in the cluster. Furthermore, it emerged that up to 500 Ludhiana entrepreneurs were in a position to purchase such a product. Supported by this evidence, the software provider agreed to undertake pilot product development in association with two local producers (who at the end received the software at a very subsidized price) and signed a contract accordingly. 

As a result of this initiative (which lasted approximately one and a half years) the use of IT in the Ludhiana cluster  increased dramatically. In particular, there has been a spectacular increase in the use of e-mail (as an instrument for entrepreneurs to get in touch with one another, to share ideas and projects, and to identify and implement new and more ambitious action plans) and of the Internet (as a source of information and a marketing opportunity through e-commerce). IT penetration in the textile industry appears to be higher than anywhere else in Ludhiana, in spite of the technological backwardness normally characterizing the industry. 

As a result of these initiatives, the great majority of cluster entrepreneurs admitted their ignorance about the law and their inability to keep up with its continuous amendments. As this issue was further discussed with the producers, their requests increasingly shifted towards the need for an information point within the cluster where all the relevant legislation could be rapidly looked up. Furthermore, it emerged that the cluster producers lacked any opportunity of dialogue with the food regulation agency at the federal level because of the intense fragmentation of their representative associations. As a result, the demand was increasingly raised for the establishment of an "umbrella" organization with sufficient critical mass and representativeness to liaise directly with New Delhi. The bilateral meetings also disclosed that the lack of sufficiently reliable and independent testing facilities reduced the capacity of the local producers to monitor their compliance. This realization led to a broader demand for the creation of a technical center in Pune. It also helped introduce the producers to the more general issue of quality control. Finally the importance of acquiring new skills also became apparent to the majority of the cluster producers. 

At a joint meeting of the various cluster actors held towards the end of this awareness-building phase, it therefore proved relatively easy to identify a set of pilot projects (including the creation of an umbrella organization, of a dedicated info point about food legislation, and of a feasibility study for a technical center). These projects have been enthusiastically taken up by a significant number of cluster entrepreneurs who are slowly becoming accustomed to collaborating intensively with one another.