Micro & Small Enterprises Cluster Development Programme (MSE-CDP)
Introduction
When we talk about Micro and Small Enterprises (MSEs), their biggest strength — and also their weakness — lies in their scale. Individually, these enterprises often struggle with technology, raw material procurement, quality testing, and marketing. But collectively, when they work in a cluster, they can share facilities, reduce costs, and face competition more effectively.
To promote this idea, the Government of India launched the MSE Cluster Development Programme (MSE-CDP).
Quick Facts
- Purpose: Enhance competitiveness and productivity of MSEs.
- Beneficiaries: Existing entrepreneurs, organised into a Special Purpose Vehicle (SPV).
- Funding: Shared between Centre and State Governments.
- Tenure: Implemented during the 15th Finance Commission Cycle (2021–22 to 2025–26).
Objectives
- Support the sustainability and growth of MSEs.
- Build capacity and competitiveness.
- Set up Common Facility Centres (CFCs) for:
- Testing and training
- Raw material depots
- Effluent treatment plants
- Complementary production processes
Characteristics of a Cluster
- A cluster may go beyond just geography — it can be enterprises producing the same, similar, or complementary products/services linked through infrastructure.
- Typically, a group of enterprises located within an identifiable area or along a value chain.
- The focus is on addressing common challenges together — like cost of technology, quality certification, or marketing.
Components of MSE-CDP
There are two main components:
(A) Common Facility Centres (CFCs)
- Creation of tangible, shared assets in an Industrial Estate.
- Example: Testing labs, tool rooms, raw material depots, training centres, effluent treatment facilities.
(B) Infrastructure Development (ID)
- Development of infrastructure in new or existing industrial estates.
- Example: Roads, power supply, water, drainage, common production facilities.
Financial Support Pattern
- For CFCs: Central Government contributes 60% or 70% of the project cost (depending on category).
- For ID projects: Central Government contributes 50% or 60%.
- Cap: No cap on project cost, but central assistance has an upper threshold (beyond which States/entrepreneurs must bear the cost).
Special Incentives
Additional 10% assistance (both for CFC and ID) is provided if the project is located in:
- Aspirational Districts
- North Eastern Region (NER) and Hill States
- Island territories
- LWE (Left Wing Extremism) affected districts
- Clusters with more than 50% units owned by:
- Micro/village enterprises
- Women entrepreneurs
- SC/ST owned units
Conclusion
The MSE-CDP is essentially a collective growth model. Instead of supporting enterprises individually, the government supports them as a cluster, allowing them to:
- Share facilities
- Cut costs
- Improve quality
- Access bigger markets
In short, the programme strengthens the ecosystem of MSEs by combining infrastructure, technology, and inclusivity.
This makes MSE-CDP very relevant for UPSC, especially in topics related to MSME sector, inclusive growth, aspirational districts, and cluster-based development.