Micro and Small Enterprises Cluster Development Programme (MSE-CDP)

What is MSE-CDP?

Micro and Small Enterprises Cluster Development Programme (MSE-CDP) is a scheme of the Office of the Development Commissioner (MSME), Ministry of Micro, Small and Medium Enterprises, that funds shared physical infrastructure for groups of micro and small enterprises working in the same or complementary lines of business.

MSE-CDP began as the Small Industries Cluster Development Programme and was renamed in October 2007, when the Integrated Infrastructural Development scheme was merged into it. The guidelines have been revised several times since.

According to the dcmsme.gov.in scheme page, MSE-CDP supports Common Facility Centres, industrial estate infrastructure, marketing hubs and exhibition centres, thematic interventions in existing clusters, and state innovative cluster programmes on a matching basis.

What MSE-CDP is trying to fix

• Individually, a micro unit cannot afford a testing lab, an effluent treatment plant, a design centre or a raw material depot.
• A cluster of such units sharing one facility can, which is why the grant goes to a collectively owned Special Purpose Vehicle rather than to a firm.
• Industrial estates in which such clusters sit often lack roads, power, drainage and effluent treatment, which the Infrastructure Development component addresses.

Who is eligible for MSE-CDP?

Who can bring a proposal

• A Special Purpose Vehicle formed by micro and small enterprises for a Common Facility Centre. The SPV must be a Section 8 company (a registered society or co-operative society in Sikkim). Farmer Producer Organisations and Farmer Producer Companies registered under Section 8 also qualify.
• State Governments, industrial park development agencies and state corporations for Infrastructure Development projects, where the land must be in the name of the State Government or state implementing agency with clear title.
• Registered industry associations with more than 500 MSE members, as members or sponsors of an SPV, holding no more than 26% of it.
• Product-specific associations with a Gold or higher SMO rating from NABET (QCI) for marketing hubs and exhibition centres, and associations of women entrepreneurs at the enhanced rate.

Cluster and membership conditions

• Minimum 20 MSEs, startups, greenfield MSEs or FPOs for a CFC of Rs 10 crore and above; minimum 10 for a CFC below Rs 10 crore.
• Member contribution of at least 10% of project cost below Rs 10 crore and 20% above it (5% and 15% in the North Eastern Region), brought in as equity.
• Every SPV board member must be from the industry the CFC serves, with one professional from a management institute and no more than one industry association representative.

Who cannot apply

• An individual entrepreneur cannot apply for a personal grant, loan or subsidy under MSE-CDP. This is the single most common misunderstanding about the scheme.
• An SPV that has taken a grant from another Government of India scheme for the same project is not eligible.
• Consultants, service providers and suppliers related to the SPV by ownership or management cannot be engaged on the project.
• Projects below Rs 5 crore are normally not considered and are pointed to SFURTI instead.

What documents are required for MSE-CDP?

How to apply for MSE-CDP

1. Form the Special Purpose Vehicle with the required minimum number of micro and small enterprise members and register it as a Section 8 company.
2. Prepare a Detailed Project Report. The SPV or State Government is responsible for it; agencies empanelled under any Ministry of MSME scheme are eligible to prepare it. There is no central grant for DPR preparation, but up to 4% of project cost subject to Rs 50 lakh counts as State Government or SPV contribution.
3. Get the DPR appraised by any SIDBI branch or commercial bank, which produces the techno-economic feasibility report.
4. Register on cluster.dcmsme.gov.in using the "New User" sign-up, then log in and complete the online application form under the current MSE-CDP guidelines. Once finalised, the application cannot be edited.
5. Print the finalised application, sign it and send it with the supporting documents to the State Government, submitting the DPR simultaneously to the State Level Screening Committee and the MSME-Development Institute to save time.
6. The State Level Steering Committee, chaired by the Principal Secretary or Secretary (Industries/MSME), examines the DPR and recommends it. If it does not act within the stipulated time, the proposal is treated as deemed recommended.
7. The State Government forwards the application to the concerned MSME-Development Institute within 30 days, failing which the system deletes it automatically. The MSME-DI then submits it online to the Office of DC (MSME) for approval.

How much does MSE-CDP pay?

According to the Office of DC (MSME):

• Common Facility Centre: up to 70% of a project of maximum Rs 20 crore, and 90% in North Eastern and hill states, island territories, aspirational and LWE-affected districts, and clusters with more than 50% micro, village, women-owned or SC/ST-owned units.
• Infrastructure Development: 60% of project cost, with a ceiling of Rs 10 crore for an industrial estate and Rs 15 crore for a flatted factory complex; 80% in the same disadvantaged categories.
• Marketing hubs and exhibition centres: 60% of a project of maximum Rs 10 crore for eligible product associations, and 80% for associations of women entrepreneurs.
• Thematic interventions — 50% of the cost of up to five interventions in an approved or completed CFC, not exceeding Rs 2 lakh each and Rs 10 lakh per CFC.
• State innovative cluster programmes; central funding on a matching basis, capped at the State Government share or Rs 5 crore, whichever is lower.

Where a project costs more than the ceiling, the assistance is calculated on the maximum eligible project cost, and the SPV or state meets the balance.

How MSE-CDP differs from related MSME schemes

MSE-CDP and SFURTI are the Ministry's two cluster schemes and the guidelines explicitly align them: SFURTI covers traditional industries and artisan clusters with per-cluster budgets of Rs 2.5 crore to Rs 5 crore, while MSE-CDP covers micro and small manufacturing clusters at Rs 5 crore and above. Projects too small for MSE-CDP are directed to SFURTI.

MSE-CDP is not a credit scheme. Bank borrowing by the SPV is separate and can be guaranteed under CGTMSE. It is also unrelated to ZED certification or Lean consultancy under the MSME Champions Scheme, which subsidise an individual enterprise rather than shared assets.

Help and grievance redressal

• Scheme portal: cluster.dcmsme.gov.in, which also carries the directory of MSME-Development Field Offices and Cluster Development Officers
• Ministry of MSME CHAMPIONS helpline: 1800-180-6763
• State route: the Director or Commissioner of Industries, who may be nominated as nodal officer for single-window clearances by the State Level Steering Committee

There is no in-principle approval stage under MSE-CDP. A project is either approved or not approved, and no fee is charged for applying on the portal.