Micro, Cottage and Small Industries (MCSIs) or Micro, Small and Medium Enterprises (MSMEs) constitute the backbone of national economies regardless of the level of their development. The definition of SMEs varies from country to country, however in Nepalese context these are characterized as Micro, Cottage and Small Industries (MCSIs) and play significant role in national economy contributing 90% of the total industrial GDP. MCSI sector contribute about 70-80% of the total industrial value addition providing 80% of the Industrial employment and 70% of the total national export. Importance of MCSI sector is also due to its self-employment generation capacity providing adequate space for establishing new industries in rural areas. In addition, MCSIs are labor intensive, consuming local raw materials and can therefore help contribute in balanced agro-industrial growth and equity in income distribution.
Realizing these facts, Federation of Nepal Cottage and Small Industries (FNCSI), the apex body of Nepalese micro, cottage and small industries, was established in 1990.
Definition of Member Industries (as of Industrial Policy-2010):
i)              Micro Industries: Enterprise with fixed capital not exceeding NRs. 200,000 working at local level utilizing local raw materials and labors with total employees not exceeding nine persons and electrical power consumption utilizing less than 10 KW. The registered group of such enterprises can only be the general members of the FNCSI.
ii)            Cottage Industries: Local human resource and raw material based on traditional industries reflecting country’s indigenous art and culture.
iii)           Small Industries: Small scale industries (SSI) with authorized capital size (fixed assets) not exceeding NRs. 50 millions but not the cottage industries.