A collective is a group of people/ entities that share or are motivated by at least one common issue or interest, or work together to achieve a common objective. The Collectives under Kudumbashree focus upon an economic benefit and saving. The units under Kudumbashree collective are not registered into societies or producer companies. The collective aims to reduce costs while maintaining healthy rewards for participating units. This is accomplished by eliminating the operating costs that are needed to support levels of management. In Kudumbashree the units under collectives do business functions as a partnership of individual, recognizing them as equals.

The approach is to set Common Facility Centers and Clusters under Collectives. This will be set wherever LSG provides space and other infrastructure facilities. The assets created through this will be under joint ownership of the LSG and Kudumbashree. Each CFC will have a common infrastructure to support a cluster of 10-20 small-units. This will provide innovation and design support and packing facilities, lab facilities and a host of other support services. This will be managed by Professionals employed by Kudumbashree. A business cluster is a geographic concentration of interconnected business suppliers, and associated institutions in a particular field. Clusters are considered to increase the productivity with which units can compete, nationally and globally. Clusters have the potential to affect competition in three ways: by increasing the productivity of the units in the cluster, by driving innovation in the field, and by stimulating new businesses in the field.

The projects on anvil under collectives for 2017-18 are