Small-scale industries (SSI) are the proven building blocks in national development and consume a major share of the total energy resources of India. Today, India is ranked sixth in energy consumption globally. These SSI units, which generally exist in clusters all over the country, usually suffer from sub-optimal use of this scarce energy resource. This paper while indicating the present energy status in India, discusses the need of energy management for the entrepreneurs operating in the much vibrant SSI sector and goes on to suggest a cluster specific approach towards its implementation. Entrepreneurs can derive twin advantages due to their focus on efficient energy utilisation. They can increase their competitiveness by cost reduction and at the same time it will help in generating a consensus towards optimum use of the energy resources amongst the cluster members due to the active cluster dynamics. Thus paying more attention towards a problem of great national as well as global importance. The paper concludes, after proper justification with the help of a case study, that cluster- based approach is most suited for energy management in SSI units.