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. The importance of the 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.