The Cabinet is planning to stimulate the development of innovative clusters, which are groups of linked enterprises concentrated in a single territory.

Officials promise to give grants not only to small and medium-size businesses, but subsidies to regions to help support the aggregation of companies into clusters.

The Economic Development Minister will gather plans from regional governments by March 15 to decide on how much money will be allotted from the federal budget, a high-placed official in the ministry told Vedomosti.

The clusters will be formed as a result of the concentration of connected companies in one area, said Alexei Prazdnichnykh, a partner at Strategy Partners. "They are connected by proximity to a buyer or supplier, by infrastructure or by human resources; universities that prepare specialists for such enterprises are also often included in clusters."

Cluster systems are highly developed abroad, with Hollywood being the most famous example, he said.

In Russia, clusters have been developed exclusively at the initiative of local authorities for a long time, a government official said. "Now, it has been decided to give an impetus to the issue so that it develops into a powerful cluster policy," he said, adding that the issue was a key element to the country's modernization. The advantage of clusters is that help is given not just to a single enterprise but to the whole chain of production, he said.

The first meeting of the interagency working group for developing state policy for entrepreneurship in territorial clusters was held Feb. 18, said Artyom Shadrin, an Economic Development Ministry official.

There are currently 10 developed clusters in Russia and about 100 less-developed clusters, he said. For the time being, clusters receive help through programs for supporting small and medium-size businesses, said Andrei Sharov, a department head in the ministry.

For the first time, the new program calls for new support measures: entrepreneurs may be given a grant of up to 500,000 rubles ($16,765) to start an innovative company, while subsidies of up to 5 million rubles will be given for research and development, production planning and equipment and patents. In addition, money spent on technical audits will be compensated.

Centers for cluster development will be developed in the regions with co-financing from the federal budget. The centers will coordinate the activities of cluster participants, provide informational and consulting services and will function as intermediaries between entrepreneurs and the authorities, Shadrin said.

But how much money is required will become clear after the information is received from the regions, he said. "The amount of subsidies to a specific region will depend on how well-off the region is," he said.

Throughout 2010, federal help will only grow: This year the government will make a decree to grant subsidies to territories for development of innovative clutters, said a high-placed official in the ministry. About 3 billion rubles has been set aside for the project so far, but the figures haven't been agreed upon, another ministry official said. "Support will also be augmented through the development institutions — Vneshekonombank, Rusnano and the Russian Venture Company," the high-placed official said.

The auto cluster in the Kaluga region is developing well, Shadrin said, giving an example of a regional success story. The Yaroslavl region has already confirmed a cluster strategy that calls for not only automotive clusters but information technology, nanotechnology and biotechnology clusters.

Development began on the auto cluster in Kaluga in 2006, and when Volkswagen decided to set up a plant there, a full six months was spent on preparing the land, said Vitaly Yeremeyev, deputy minister of economic development in the Kaluga region. Three automakers are involved in the cluster, (VW, Peugeot and Mitsubishi) and now the regional government hopes to develop another two clusters — biotech and pharmaceutical, along with nuclear medicine, he said.

Entrepreneurs will need federal grants, Yeremeyev said. They will help "small, innovative enterprises that could generate new ideas," he said. For the IT cluster to become a motor of the innovation economy, the state should not increase the tax burden, said Valentin Makarov, president of Russoft, which is participating in an IT cluster in St. Petersburg. It's necessary to stimulate business, support high-tech exports and invest in professional education, he said.

The clusters must be developed, but it's important that entrepreneurs aren't driven into them, Prazdnichnykh said, adding that Singapore was the best example of cluster policy. "In a very short time, it was able to create a world-class biotech cluster without any prerequisites," he said.

Each region should have two or three developed clusters, he said, so that the area doesn't end up dependent on a single industry.

And the more the better, said Moisei Furshchik, from consulting firm FOC. "But it's not necessary to drive clusters within the borders of a single region. There could be interregional clusters, such as the auto cluster in the Volga area.