Micro Small and Medium Enterprises (MSMEs), mostly existing in clusters, are strategically vital in Indian economy. These clusters are experiencing unprecedented pressure to enhance competitiveness for their survival and growth. Improving Energy Efficiency (EE) helps in increasing their competitiveness and reducing environmental pollution. This monograph comprises a study of three such clusters belonging to Brick and Tile, Foundry and Textile. The energy use patterns are analyzed and environmental implications are estimated. The assessment of prevailing EE revealed the potential for energy conservation. The ‘production function'' and ‘returns to scale'' are estimated and linkage between EE and economic performance are probed. A model of factors influencing EE is proposed and validated. Multiple regression models are employed in ascertaining the significance of factors influencing EE and ANOVA models are adopted in identifying key variables. The barriers to EE are identified and prioritized using AHP, a multi-criteria decision-making tool. The drivers to EE are also recognized and ranked. The policy implications are indicated.