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Frank Mc Donald, Dimitrios Tsagdis and Qihal Huang (2006) conducted a study to analyse the impact of government policy on the growth of cluster. The authors conducted research in 43 European clusters and found that there is no impact of government policies on the industrial clusters. The authors did not found any evidence that government policies helps in overcoming the obstacles in the growth of the cluster.

Mallika Shakya (2009) explains that the role of government changes with the change in the level of development of cluster. In initial stages, the role of government. should be high profile such as guiding the cluster mapping creating association between public and private sector in order to remove all bottlenecks. During intermediate stage, its role should be low profiles as product and market segmentation, analysis of firm level increase competitiveness. The role may differ at different stage but government. should actively involve in the development of cluster.

Mallika Shakya (2009) has conducted a Study to analyze the role of government. in development of cluster. The author found that government. should take following measures to increase the performance of cluster:

Remove entry/exit barriers to industry related to the cluster.

Develop institutions that can help in enhancing the competitiveness of firms located in cluster and increase the research and development activities of firms.

Provide incentives to increase exports.

Enhance availability infrastructure and other factors required by the cluster.

Remove all the regulations that restrain firms from doing work efficiently.

Manipat Ranawat and Rajnish Tiwari(2009) study the impact of government policies on automotive industry of India. The authors found that various policies affecting industry are indigenization, protection, regulation of industry, relaxation of technology acquisition and liberalization of foreign investment.

Those policies have made industry better & stronger. The indigenization and protection policies have led to product innovation of domestic firms like Bajaj Auto and Tata Motors.
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