MSE-CDP (Micro & Small Enterprises – Cluster Development Programme)

The Micro & Small Enterprises – Cluster Development Programme (MSE-CDP) is one of the oldest schemes of the Office of the Development Commissioner, Ministry of MSME, revised in 2022 in supersession of the earlier 2019 guidelines. It supports clusters of MSEs through two components only: Common Facility Centres (CFCs) and Infrastructure Development (ID). The scheme pursues five objectives:

• •Enhance the sustainability, competitiveness and growth of MSEs by addressing common issues — improvement of technology, skills & quality, and market access.
• •Build capacity of MSEs and Startups for common supportive action through integration of self-help groups, consortia and district industry associations.
• •Create / upgrade infrastructural facilities in new / existing Industrial Areas / Clusters of MSEs.
• •Set up Common Facility Centres in industrial areas (testing, training centre, raw material depot, effluent treatment, complementing production processes).
• •Promote green & sustainable manufacturing technology enabling units to switch to sustainable and green production processes.

General Category

Special Category

Applies to Aspirational Districts, NER, Hill States, Island territories, LWE-affected districts, and clusters with more than 50% (a) micro/village units, or (b) women-owned, or (c) SC/ST-owned units.

• •Project cost: normally ₹5 crore and above. Projects below ₹5 crore go under SFURTI (exceptions: rural / livelihood industries, and FPO projects for high-quality domestic / export markets).
• •SPV form: a Section 8 company (Companies Act 2013). Exception — Sikkim allows a Society or Co-operative Society. FPO / FPC registered under Section 8 also qualifies.
• •Minimum members in SPV: 20 MSEs / Startups / Greenfield MSEs / FPOs for CFC of ₹10 crore and above; 10 for CFC below ₹10 crore.
• •Minimum member direct contribution (as equity): 10% of project cost for CFC below ₹10 crore (5% for NER); 20% for CFC above ₹10 crore (15% for NER).
• •Equity concentration: no single unit may hold more than 10% in the SPV's equity / capital. Mother / large units' SPV contribution may not exceed 26% of equity. Registered industry associations (500+ MSE members) may join but cannot hold more than 26%.
• •Land: cost of land capped at 25% of project cost. For CFC on leased premises, lease must be ≥15 years (≥25 years if on leased land). For ID projects, land must be in the name of State Govt / State IA with clear title and NA conversion.
• •No double-dipping: SPV / firms cannot take grant from any other GoI scheme for the same project.
• •Credit linkage: preference to projects with a bank loan of at least 10% of project cost.

For CFC Proposals

• •DPR (Annexure-3 format)
• •Project Appraisal Report
• •Registered land documents (English / Hindi translation if in vernacular)
• •SPV registration as Section 8 company (certificate + MoA + AoA)
• •Geo-tagging
• •SLSC recommendation along with minutes of meeting
• •Statutory compliances
• •State Government certificate for GFR / CVC compliance (Annexure-5)

For ID Proposals

• •DPR
• •Project Appraisal Report
• •Land documents (translation if in vernacular)
• •Geo-tagging
• •SLSC recommendation along with minutes of meeting
• •Statutory compliances
• •State Government certificate for GFR / CVC compliance

1. 1DPR preparation by SPV or State Government, backed by a credible market study; copies submitted simultaneously to the State Level Screening Committee and MSME-DI.
2. 2Appraisal — DPR appraised by any SIDBI branch or commercial bank; the techno-economic feasibility report plus DPR is placed before the SLSC.
3. 3SLSC (chaired by ACS / Principal Secretary / Secretary Industries) examines and recommends. If SLSC neither recommends nor rejects within the stipulated time, the proposal is deemed recommended.
4. 4MSME-DI forwards the recommended proposal online to the Office of DC-MSME.
5. 5NPAC (chaired by Secretary MSME; meets at least every two months) grants final approval. There is no "in-principle" approval — a project is either approved or not.
6. 6Tripartite Agreement (GoI – State Govt – SPV, Annexure-4) is signed for CFC projects.
7. 7Fund release in three installments of 50 : 40 : 10 to the IA's project-specific account; the final installment is on reimbursement basis. Funds flow only after building completion (≥80%), upfront SPV contribution, proportionate State share, and P&M finalization via GeM / e-tendering under GFR & CVC.
8. 8Completion — UCs, joint verification, mandatory geo-tagging, completion report within two months, and annual evaluation. Third-party evaluation after three years.

Completion: projects must be completed within 18 months from the date of NPAC approval.

Time Extensions

Extension beyond three years from the final approval letter may attract a reduction of GoI share up to 10% (borne by SPV as additional contribution) if the delay is attributable to the SPV.

Indicative Approval Timeline (From Online Submission)

• •Examination: ~1 month (up to 1 month 20 days if shortcomings)
• •SLSC recommendation: by ~3 months
• •Submission to DC-MSME: by ~3 months 5 days
• •NPAC meeting: by ~5 months

Indicative Implementation Timeline (From NPAC Approval)

• •Final approval letter: within ~20 days
• •Building completion: ~7 months
• •1st installment: ~7 months 20 days
• •P&M installation (1st lot): ~1 year
• •2nd installment: ~1 year 25 days
• •3rd / final installment: ~1 year 4 months 15 days
• •CFC functional: ~1 year 4 months 15 days from the date of NPAC approval