The Indian Institute of Forest Management has taken up a ITTO sponsored project on operationalisation of sustainable forestry development with community participation (following the C&I approach) in eight forest divisions in the states of Madhya Pradesh and Chhattisgarh. This document is a pioneer attempt to workout sustainability index based on indicators of forest management units of Madhya Pradesh and Chhattisgarh states. The development of C&I for sustainable forest management and operationalising the functional system with community participation and establishment of institutional capacities for C&I for SFM have been brought to a stage where C&I approach for SFM is now well recognized throughout the country.