There can be no single explanation why enterprises manufacturing the same product concentrate in the same geographical area to form clusters. Whatever be the reason for this phenomenon venture agglomeration, unless there are people wanting to set up firms, however small they may be, clusters cannot come into existence. Factors that make it easy for new firm formation in an industrial cluster are: practical knowledge of setting up of a firm, existence of skilled labour, availability of raw material, enabling support services, favourable governmental policies, etc. Considering the beneficial economic effects clusters bring about to regions and countries, in addition to nurturing natural clusters, many governments across the world have induced clusters as well.