MSME and Business Entrepreneurship PDF

Chapter 9 MSME and Business Entrepreneurship LEARNING OBJECTIVES After studying this chapter, you should be able to: explain the meaning and nature of MSME in India; appre...

Chapter 9 MSME and Business Entrepreneurship LEARNING OBJECTIVES After studying this chapter, you should be able to: explain the meaning and nature of MSME in India; appreciate the role of MSME in India; analyse the problems faced by of MSME in India; and discuss the role of innovation and entrepreneurship for MSMEs 2024-25 Chapter 9.indd 198 9/2/2022 2:20:50 PM  MSME and Business Entrepreneurship 199 Romi Bags of Manipur Khumbongmayum Dhanachandra Singh didn’t have much in life. The son of a poor tailor, he wasn’t brought up with many privileges. He saw his father working day and night to earn a meagre income. He saw the rich getting richer and the poor remaining poor. The boy wanted to do something more in life. He couldn’t imagine a life of stitching clothes relentlessly and earn just enough to survive. Imphal is a small city in Manipur. Hardworking men and women send their children away to bigger cities so they can have opportunities to progress. Khumbongmayum’s father couldn’t afford to send him or even educate him. He just taught him what he knew— tailoring. Fabrics, stitching and clothing styles was what the boy grew up with. There was only one sewing machine and the boy used it when his father wasn’t using it. He learnt it silently because he knew it was what his father wanted, but his heart wasn’t in it. Sometimes an incident can change your life. This happened to Khumbongmayum when he stitched a purse made out of leftover fabrics from his father’s scraps. Khumbongmayum offered the purse to his friend who marvelled at the unique design. The friend in turn showed the interesting purse to his other friends. They asked Khumbongmayum if he could make such purses for them also. It led him to wonder if there was a market for his designs. And he knew he had stumbled on to his business venture. He made a business plan and launched a purse making venture ‘Romi Bags’ in 1996. Khumbongmayum was not one to do anything on a whim. He noticed the demands of his product and he calculated his costs, expenses and expected income. In 2007, he received the National Award for bag making under Micro and Medium Enterprises. For him, though it’s just the beginning, Khumbongmayum Dhanchandra Singh has changed his life by sheer grit, perseverance and hard work. You can’t let anything stop you from moving forward. You can’t become successful or reach the top if you don’t listen and hear effectively. 9.1 Introduction MSMEs play a significant role in the economic growth and contribute Micro, Small and Medium Enterprises approximately 29.7 per cent of GDP (MSME) contribute significantly to and 49.66 per cent of exports. The the development process and acts as sector offers employment to nearly a vital link in the industrialisation 60 million people through 28.5 million in terms of production, employment enterprises, after the agriculture and exports for economic prosperity sector. MSMEs are complementary to by widening entrepreneurial base large industries as ancillary units and and use of local raw materials and form an integral part of value chain for indigenous skills. MSME dominate the building a conducive environment for industrial scenario in the country with indigenous skills, grass root innovations sizeable proportion of labour force and and entrepreneurship development. tremendous export potential. This sector produces a wide range of 2024-25 Chapter 9.indd 199 18-04-2024 11:33:03  200 BUSINESS  STUDIES products, from simple consumer handicrafts, coir, sericulture, khadi goods to high-precision, sophisticated and village industries, small scale finished products. industries and powerlooms. The Recognising the potential of this Khadi and Village Industries and Coir sector for the national development, segment is another major contributor this segment of industry is encouraged to the growth of the MSME. Many in both in pre-reform and post–reform global companies are increasingly period for fulfilling the objective of self- reliance and rural industrialisation. looking to Indian MSMEs for strategic In India, the MSME consists of partnerships of mutual benefit due both ‘traditional’ and ‘modern’ small to the innovative capabilities in niche industries. This sector has eight of low-cost manufacturing and local subgroups. They are handlooms, skills and capabilities. The Diversity of the Indian MSME Sector MSME Tool Rooms have been credited to provide at least 10 components for Mangalyaan (Mars Orbiter Mission probe), India’s first inter-planetary space mission. It has contributed vital inputs for other space satellites such as the Chandrayan. India’s second moon mission. Chandrayaan-2, which was successfully launched on July 22, 2019 the moon mission of India, acknowledges the contribution Central Tool Room and Training Centre (CTTC) Bhubaneswar and Institute for Design of Electrical Measuring Instruments (IDEMI) Mumbai in developing several vital components for the Cryogenic engine of the Launch Vehicle, Navigational assemblies of the Lunar Orbiter and the wheel assemblies for the Moon Launch. MSMEs are now only not limited up to small business but their contribution starts from ground level which directly creates a major effect on such big missions. This sector, thus, holds key to inclusive growth and plays a critical role in India’s future. Source: Ministry of MSME, MSME Insider, 2019, Government of India. 9.2 Micro, Small and Medium The definition used by the Enterprises Government of India to describe MSME is based on the investment in It is important to know how size is plant and machinery and turnover. defined in our country, with reference to MSME establishments. Several This measure seeks to keep in view the parameters can be used to measure the socio-economic environment in India size of business units. These include where capital is scarce and labour is the number of persons employed in abundant. business, capital invested in business, turnover of business, etc. 2024-25 Chapter 9.indd 200 9/2/2022 2:20:50 PM  MSME AND BUSINESS ENTREPRENEURSHIP 201 Investment in Plant Type of Units Turnover and Machinery Micro Enterprises 1 Crore Does not exceed 5 crore Small Enterprises 10 Crore Does not exceed 50 crore Medium Enterprises 50 Crore Does not exceed 250 core % share of MSMES in Micro Enterprises 99.4% Small Enterprises 0.52% Medium Enterprises 0.1% The emergence of a large service concerns of such enterprises as micro, sector has necessitated the government small and medium and provide them to include other enterprises covering with a single legal framework. The both Small Scale Industries (SSI) sector MSMED Act, 2006 came into force and related service entities under the w.e.f., October, 2006. The Micro, Small same umbrella. Expansion of the small and Medium Enterprises Development enterprises was taking place growing (MSMED) Act, 2006 addressed these into medium enterprises and they issues relating to its definition, were required to adopt higher levels credit, marketing and technology up of technologies in order to remain gradation. Medium scale enterprises competitive in a fast globalising world. and service related enterprises also Thus, it was necessary to address the come under the purview of this Act. Village Industries Village industry has been defined as any industry located in a rural area which produces any goods, renders any service with or without the use of power and in which the fixed capital investment per head or artisan or worker is specified by the central government, from time to time. Cottage Industries Cottage industries are also known as rural industries or traditional industries. They are not defined by capital investment criteria as in the case of other small scale industries. 2024-25 Chapter 9.indd 201 9/2/2022 2:20:50 PM  202 BUSINESS  STUDIES 9.3 Role of MSME intensive. This is a boon for a labour surplus country like India. MSME in India enjoy a distinct position (iii) MSME in our country supply an in view of their contribution to the enormous variety of products socio-economic development of the which include mass consumption country. The emphasis on MSME has goods, readymade garments, always been an integral part of India’s hosiery goods, stationery items, industrial strategy. Development of soaps and detergents, domestic MSME prevents migration of rural utensils, leather, plastic and population to urban areas in search rubber goods, processed foods of employment and contributes to and vegetables, wood and steel other socio-economic aspects, such furniture, paints, varnishes, as reduction in income inequalities, safety matches, etc. Among dispersed development of industries the sophisticated items and linkage with other sectors of the manufactured are electric and economy. electronic goods like televisions, In fact promotion of MSME and calculators, electro-medical rural industrialisation has been equipment, electronic teaching considered by the Government of India aids like overhead projectors, air as a powerful instrument for realising conditioning equipment, drugs the twin objectives of ‘accelerated and pharmaceuticals, agricultural industrial growth and creating tools and equipment and several additional productive employment other engineering products. A potential in rural and backward areas.’ special mention should be made The following points highlight their of handlooms, handicrafts and contribution. other products from traditional (i) T h e c o n t r i b u t i o n o f t h e s e village industries in view of their industries to the balanced regional export value. development of our country is (iv) MSME which produce simple noteworthy. Small industries in products using simple India account for 95 per cent of technologies and depend on the industrial units in the country. locally available resources both (ii) MSME are the second largest material and labour can be set up employers of human resources, anywhere in the country. Since after agriculture. They generate they can be widely spread without more number of employment any locational constraints, the opportunities per unit of capital benefits of industrialisation can invested compared to large be reaped by every region. They, industries. They are, therefore, thus, contribute significantly to considered to be more labour the balanced development of the intensive and less capital country. 2024-25 Chapter 9.indd 202 9/2/2022 2:20:50 PM  MSME AND BUSINESS ENTREPRENEURSHIP 203 (v) MSME provide ample opportunity modern technology, procurement of for entrepreneurship. The latent raw materials are some of these areas. skills and talents of people can This gives rise to several problems. be channelled into business ideas The problems majorly include which can be converted into reality remote location with less developed with little capital investment and infrastructural facilities, lack of almost nil formalities to start a managerial talent, poor quality, small business. traditional technology and inadequate (vi) MSME also enjoy the advantage availability of finance. The problems of low cost of production. Locally of exporting small scale units include available resources are less lack of adequate data on foreign expensive. Establishment and markets, lack of market intelligence, running costs of small industries exchange rate fluctuations, quality are on the lower side because of standards, and pre-shipment finance. low overhead expenses. Infact, In general the small businesses are the low cost of production which faced with the following problems: small industries enjoy is their (i) Finance: One of the severe competitive strength. problems faced by MSME is that of (vii) Due to the small size of the non-availability of adequate finance organisations, quick and to carry out its operations. Generally timely decisions can be taken these businesses begin with a small without consulting many people capital base. Many of the units in the as it happens in large sized small sector lack the credit worthiness organisations. New business required to raise as capital from the opportunities can be captured at capital markets. As a result, they the right time. heavily depend on local financial resources and are frequently the 9.5 Problems Associated With MSME victims of exploitation by the money The potential of MSME is often not lenders. These units frequently suffer realised fully, because of several from lack of adequate working capital, problems related to size and operations. either due to delayed payment of dues We shall now examine some of the to them or locking up of their capital in major problems that small businesses unsold stocks. Banks also do not lend whether in urban or in rural areas money without adequate collateral are encountering in their day-to-day security or guarantees and margin functioning. money, which many of them are not MSMEs are at a distinct in a position to provide. disadvantage as compared to largescale (ii) Raw materials: Another major industries. The scale of operations, problem of MSME is the procurement availability of finance, ability to use of raw materials. If the required 2024-25 Chapter 9.indd 203 9/2/2022 2:20:50 PM  204 BUSINESS  STUDIES materials are not available, they have may not be feasible for small business to compromise on the quality or have firms as they lack the necessary to pay a high price to get good quality infrastructure. materials. Their bargaining power is (v) Quality: Many MSMEs do not relatively low due to the small quantity adhere to desired standards of quality. of purchases made by them. Also, they Instead they concentrate on cutting the cannot afford to take the risk of buying in bulk as they have no facilities cost and keeping the prices low. They to store the materials. Because of do not have adequate resources to general scarcity of metals, chemicals invest in quality research and maintain and extractive raw materials in the the standards of the industry, nor do economy, the small scale sector suffers they have the expertise to upgrade the most. This also means a waste of technology. In fact maintaining quality production capacity for the economy is their weakest point, when competing and loss of further units. in global markets. (iii) Managerial skills: These (vi) Capacity utilisation: Due to lack businesses are generally promoted and of marketing skills or lack of demand, operated by a single person, who may many firms have to operate below full not possess all the managerial skills capacity due to which their operating required to run the business. Many costs tend to increase. Gradually this of the small business entrepreneurs leads to sickness and closure of the possess sound technical knowledge business. but are less successful in marketing (vii) Global competition: Apart from the output. Moreover, they may not the problems stated above MSME are find enough time to take care of all not without fears, especially in the functional activities. At the same time present context of globalisation. These they are not in a position to afford enterprises face competition is not only professional managers. from medium and large industries, but (iv) Marketing: Marketing is one also from multinational companies of the most important activities which are giants in terms of their size as it generates revenue. Effective and business volumes. marketing of goods requires a thorough understanding of the customer’s needs 9.7 MSME and Entrepreneurship and requirements. In most cases, Development marketing is a weaker area of small organisations. These organisations Entrepreneurship is the process of have, therefore, to depend excessively setting up one’s own business as on middlemen, who at times exploit distinct from pursuing any other them by paying low price and delayed economic activity, be it employment payments. Further, direct marketing or practising some profession. The 2024-25 Chapter 9.indd 204 9/2/2022 2:20:50 PM  MSME AND BUSINESS ENTREPRENEURSHIP 205 person who set-up his business is step-by-step and purposeful activity. called an entrepreneur. The output of It has certain temperamental, skill the process, that is, the business unit and other knowledge and competency is called an enterprise. It is interesting requirements that can be acquired, to note that entrepreneurship learnt and developed, both by formal besides providing self-employment educational and vocational training to the entrepreneur is responsible as well as by observation and work to a great extent for creation and experience. Such an understanding expansion of opportunities for the of the process of entrepreneurship is other two economic activities, that crucial for dispelling the myth that is, employment and profession. And, entrepreneurs are born rather than in the process, entrepreneurship made. becomes crucial for overall economic (ii) Lawful and Purposeful Activity: development of a nation. The object of entrepreneurship is Every country, whether developed lawful business. It is important to or developing, needs entrepreneurs. take note of this as one may try Whereas, a developing country needs to legitimise unlawful actions as entrepreneurs to initiate the process entrepreneurship on the grounds that of development, the developed one just as entrepreneurship entails risk, needs entrepreneurship to sustain so does illicit businesses. Purpose of it. In the present Indian context, entrepreneurship is creation of value where on the one hand, employment for personal profit and social gain. opportunities in public sector and (iii) Innovation: From the point of large-scale sector are shrinking, and view of the firm, innovation may be on the other, vast opportunities arising cost saving or revenue-enhancing. If from globalisation are waiting to be it does both it is more than welcome. exploited; entrepreneurship can really Even if it does none, it is still welcome take India to the heights of becoming a as innovation must become a habit! super economic power. Thus, the need Entrepreneurship is creative in for entrepreneurship arises from the the sense that it involves creation functions the entrepreneurs perform of value. By combining the various in relation to the process of economic factors of production, entrepreneurs development and in relation to the produce goods and services that meet business enterprise. the needs and wants of the society. The following are the characteristics Every entrepreneurial act results of entrepreneurship: in income and wealth generation. (i) S y s t e m a t i c A c t i v i t y : Entrepreneurship is creative also in Entrepreneurship is not a mysterious the sense that it involves innovation- gift or charm and something that introduction of new products, discovery happens by chance! It is a systematic, of new markets and sources of supply 2024-25 Chapter 9.indd 205 9/2/2022 2:20:50 PM  206 BUSINESS  STUDIES of inputs, technological breakthroughs employment or practice of a profession as well as introduction of newer as there is no “assured” payoff. In organisational forms for doing things practice, for example, when a person better, cheaper, faster and, in the quits a job to start on his own, he present context, in a manner that tries to calculate whether he or she causes the least harm to the ecology/ would be able to earn the same level environment. of income or not. To an observer, the risk of quitting a well-entrenched and (iv) Organisation of Production: promising career seems a “high” risk, Production, implying creation of form, but what the person has taken is a place, time personal utility, requires calculated risk. They are so sure of the combined utilisation of diverse their capabilities that they convert 50 factors of production, land, labour, per cent chances into 100 per cent capital and technology. Entrepreneur, success. They avoid situations with in response to a perceived business higher risks as they hate failure as opportunity mobilises these resources anyone would do; they dislike lower into a productive enterprise or risk situations as business ceases to firm. It may be pointed out that the be a game/fun! Risk as such more entrepreneur may not be possessing than a financial stake, becomes a any of these resources; he may just matter of personal stake, where less have the ‘idea’ that he promotes among than expected performance causes the resource providers. In an economy displeasure and distress. with a well-developed financial system, he has to convince just the funding 9.9 Intellectual Property Rights institutions and with the capital so (Ipr) arranged he may enter into contracts Over the past two decades, intellectual of supply of equipment, materials, property rights have grown to a stature utilities (such as water and electricity) from where it plays a major role in and technology. What lies at the core the development of global economy. of organisation of production is the Intellectual property is everywhere, knowledge about availability and i.e., the music you listen to, the location of the resources as well as technology that makes your phone the optimum way to combine them. An work, the design of your favourite entrepreneur needs negotiation skills car, the logo on your sneakers, etc. It to raise these in the best interests of exists in all the things you can see—all the enterprise. are the products of human creativity (v) Risk-taking: It is generally believed and skill, such as inventions, books, that entrepreneurs take high risks. paintings, songs, symbols, names, Yes, individuals opting for a career images, or designs used in business, in entrepreneurship take a bigger etc. All inventions of creations begin risk that involved in a career in with an ‘idea’. Once the idea becomes 2024-25 Chapter 9.indd 206 9/2/2022 2:20:50 PM  MSME AND BUSINESS ENTREPRENEURSHIP 207 Startup India Scheme The objective of Startup India Scheme is to build a strong ecosystem for nurturing innovation and startups in the country. The scheme specifically aims to: (i) trigger an entrepreneurial culture and inculcate entrepreneurial values in the society at large and influence the mindset of people towards entrepreneurship, (ii) create awareness about the charms of being an entrepreneur and the process of entrepreneurship. (iii) encourage more dynamic startups by motivating educated youth, scientists and technologists to consider entrepreneurship as a lucrative, preferred and viable career, and (iv) Broad base the entrepreneurial supply by meeting specific needs of under represented target groups, like women, socially and economically backward communities, under represented regions to achieve inclusiveness and sustainable development to address the needs of the population at the bottom of the pyramid. an actual product, i.e., Intellectual musical works, artistic works, such as Property, one can apply to the authority drawings, paintings, photographs and concerned under the Government sculptures and architectural designs. of India for protection. Legal rights The most noticeable difference conferred on such products are called between intellectual property and other ‘Intellectual Property Rights’ (IPR). forms of property is that intellectual Hence Intellectual property (IP) refers property is intangible, i.e., it cannot to products of human mind, hence, be defined or indentified by its own just like other types of property, the physical parameters. The scope and owners of IP can rent, give or sell it to definition of intellectual property is other people. constantly evolving with the inclusion Specifically, Intellectual property of newer forms. In recent times, (IP) refers to the creations of the geographical integrated circuits and human mind, like inventions, literary undisclosed indications, protection and artistic works, symbols, names, of plant varieties, information have images and designs used in business. been brought under the protection Intellectual property is divided of semi-conductors and umbrella of into two broad categories: industrial intellectual property. The following property, which includes inventions types of Intellectual Property Rights (patents), trademarks, industrial are recognised in India: Copyright, designs and geographical indications, Trademark, Geographical Indication, while the other is copyrights, which Patent, Design, Plant Variety, includes literary and artistic works, Semiconductor Integrated Circuit such as novels, poems, plays, films, Layout Design. In addition to this, 2024-25 Chapter 9.indd 207 9/2/2022 2:20:50 PM  208 BUSINESS  STUDIES traditional knowledge also fall under 9.9.1 Why is IPR Important for IP. You must have often taken homely Entrepreneurs? remedies passed on from your grandparents and great-grandparents It encourages creation of new, path- as cure for an ailment. These homely breaking inventions, such as cancer remedies are traditional medicines cure medicines. It incentivises that have been practiced in India for inventors, authors, creators, etc., for past several centuries. They are also their work. It allows the work created known as ‘Traditional Knowledge’. by a person to be distributed and Some examples of Indian traditional communicated to the public only with medicinal systems are Ayurveda, his/her permission. Therefore, it helps Unani, Siddha and Yoga. Traditional in the prevention of loss of income. It Knowledge (TK) means the knowledge, helps authors, creators, developers systems, innovations and practices of and owners to get recognition for their local communities across the globe. works. Such wisdom has been developed and accumulated over the years and has 9.9.2 Types of IPs been used and passed down through several generations. A Traditional IPRs are extremely essential for Knowledge Digital Library (TKDL) fostering creativity and contribute has been developed by Government towards the economic growth of a of India, which is essentially a digital nation. Such rights allow creators knowledge repository of Traditional and inventors to have control over Knowledge that has existed in our their creations and inventions. These ancient civilization, especially about rights create incentives for artists, medicinal plants and formulations entrepreneurs and inventors to further used in Indian systems of medicine. commit the necessary resources This rich body of knowledge helps prevents wrongful patenting of our to research, develop, and market traditional knowledge. new technology and creative works. Another type of IP is Trade Secrets. The changing global economy is You must have heard about the creating unprecedented challenges popular beverage, Coca Cola. But and opportunities for continued do you know that the recipe of this progress in human development. There beverage is only known to three are business opportunities to market people in the whole world? This secret or sell IP worldwide. Geographical information is termed as a ‘Trade borders present no impediments— Secret’. A trade secret is basically consumers enjoy near immediate any confidential information which access to almost everything. At such provides a competitive edge. Trade exciting times, it is critical that we are secrets in India are protected under aware about the importance of IPRs the Indian Contract Act, 1872. and how it affects daily life. 2024-25 Chapter 9.indd 208 9/2/2022 2:20:50 PM  MSME AND BUSINESS ENTREPRENEURSHIP 209 Let’s understand each IP now. use of the content which includes Copyright reproducing and distributing copies of Copyright is the right to “not copy”. the subject matter. The unique feature It is offered when an original idea is of copyright is that, the protection of expressed by the creator or author. It work arises automatically as soon is a right conferred upon the creators as the work comes into existence. of literary, artistic, musical, sound The registration of the content is recording and cinematographic film. not mandatory but is essential to The copyright is an exclusive right of exercise exclusive rights in case of an the creator to prohibit the unauthorised infringement. What is protected under Copyright? Literary work Pamphlets, Brochures, Novels, Books, Poems, Song Lyrics, Computer Programme Artistic work Drawings, Paintings, Sculpture, Architectural Drawings, Technical Drawings, Maps, Logos Dramatic work Including Dance or Mime, Screenplay, Musical Work, Sound Recording, Cinetographic films Trademark of deceptive similarity which may be defined as phonetic, structural or A trademark is any word, name, or visual similarity. Trademark may be symbol (or their combination) that categorised as Conventional and Non- lets us identify the goods made by an Conventional trademark— individual, company, organization, etc. (i) Conventional Trademark: Words, Trademarks also let us differentiate colour combination, label, logo, the goods of one company from packaging, shape of goods, etc. another. In a single brand or logo, (ii) Non-Conventional Trademark: trademarks can let you know many Under this category those marks things about a company’s reputation, are considered which were not goodwill, products and services. A considered distinctive previously trademark helps in distinguishing but started getting recognition similar products in the market from with the passage of time, i.e., its competitors. A competitor cannot sound mark, dynamic mark, etc. use the same, or similar trademark Besides these, smell and taste to sell their product in the market are also considered for protection as the same fall under the concept as trademarks, in some parts of the 2024-25 Chapter 9.indd 209 9/2/2022 2:20:50 PM  210 BUSINESS  STUDIES world, but they are not recognised as to the geographical origin of products trademarks in India. The registration of and accord much care to the specific trademark is not mandatory under the characteristics present in the products Trademark Act 1999, but registration that they purchase. In some cases, of trademark helps establish exclusive there is a difference between “place of rights over the mark. To register origin” and “geographical indications” the mark you can visit http://www. which suggests to consumers, that the ipindia.nic.in which is the website of product will have a particular quality the Indian Trademark Registry. or characteristic, that they may value. Geographical Indication Patent A Geographical Indication (GI) is A patent is a type of IPR which protects primarily an indication which identifies the scientific inventions (products and agricultural, natural or manufactured or process) which shows technical products (handicrafts, industrial advancement over the already known goods and food stuffs) originating products. A ‘patent’ is an exclusive from a definite geographical territory, right granted by the Government where a given quality, reputation or which provides the exclusive ‘right to other characteristic are essentially exclude’ all others and prevent them attributable to its geographical origin. from making, using, offering for sale, GIs are part of our collective and selling or importing the invention. For an invention to be patentable, intellectual heritage that need to it must be new, non-obvious to any be protected and promoted. Goods person who is skilled in the relevant protected and registered as GI are field of technology and must be capable categorised into agricultural products, of industrial application. natural, handicrafts, manufactured (i) It must be new, i.e., it should goods and food stuffs. Naga Mircha, not already exist in the current Mizo Chilli, Shaphee Lanphee, knowledge anywhere in the world. Moirangphee and Chakhesang Shawl, (ii) It must be non-obvious to any Bastar Dhokra, Warli Paintings, person who is skilled in the Darjeeling Tea, Kangra Painting, relevant field of technology. That Nagpur Orange, Banaras Brocades is, the standard is a person and Sarees, and Kashmir Pashmina reasonably skilled in such field are some of the examples of GIs. The of study (Inventive Step). importance of GIs has increasingly (iii) Finally, it must be capable of grown over the past few decades. GI industrial application, i.e., capable represents collective goodwill of a of being used or manufactured in geographical region, which has built the industry. itself over centuries. Today, consumers Patent can only be filed to get are paying more and more attention rights over an invention and not 2024-25 Chapter 9.indd 210 9/2/2022 2:20:50 PM  MSME AND BUSINESS ENTREPRENEURSHIP 211 discovery. Newton saw the apple Patent creates a temporary fall and discovered gravity which is monopoly. Once the term of a patent considered to be a discovery. On the expires, the invention is in public other hand, the father of telephone domain which means it is free for use Alexander Graham Bell invented by people. This prevents the patentee telephone. Thus when we use our from involving in anti-competitive ability to create something novel, or practices like creating monopoly, etc. something unique into existence, it is called an invention, whereas the Design process of highlighting the existence of an already existing thing is called A ‘design’ includes shape, pattern, discovery. and arrangement of lines or colour combination that is applied to any article. It is a protection given to What cannot be patented? aesthetic appearance or eye-catching Scientific principles, contrary to features. The term of protection of a well established natural laws, design is valid for 10 years, which can formulation of abstract theory, frivolous inventions, prejudicial be renewed for further 5 years after to morality or injurious to public expiration of this term, during which health, method of agriculture or a registered design can only be used horticulture, method of treatment, after getting a license from its owner admixtures, traditional knowledge, and once the validity period is over, the incremental inventions without increase in efficacy and inventions design is in public domain. related to atomic energy are some of the inventions not patentable under Plant Variety Sections 3 and 4 of the Patents Act, Plant Variety is essentially grouping 1970. plants into categories based on their botanical characteristics. It is a type The purpose of patent is to of variety which is bred and developed encourage innovation in the scientific by farmers. This helps in conserving, field. A patent grants exclusive rights improving and making available to the inventor for a period of 20 plant genetic resources. For example, years, during which anybody else who hybrid versions of potatoes. Such wishes to use the patented subject- matter needs to seek permission from protection promotes investment in the patentee, by paying certain costs R&D, recognizes Indian farmers as for the commercial use of such an cultivators, conservers and breeders invention. This process of seeking as well as facilitates high quality seeds exclusive rights of the patentee for a and planting material. This leads to the fee is called Licensing. growth of the seed industry. 2024-25 Chapter 9.indd 211 9/2/2022 2:20:50 PM  212 BUSINESS  STUDIES Semiconductor Integrated Circuits IP, not only on ethical grounds, but Layout Design also legal. After all, respect for others’ IP begets respect for one’s IP. Start- Have you ever seen a computer chip? Are you aware of integrated circuits also up is an entrepreneurial venture that known as ‘ICs’? A semiconductor is an capitalises on developing, improving integral part of every computer chip. and innovating new products, processes Any product that contains transistors and services for the target audience. and other circuitry elements used and Start-ups today are responsible for formed on a semiconductor material, several disruptive technologies that as an insulating material, orinside the have changed the very way we think semiconductor material. Its design and live. With 20,000+ start-ups, India is to perform an electronic circuitry is said to have the third largest start- function. up ecosystem in the world. The Start- Whether a business is establishing up India initiative seeks to capture the its presence in the marketplace or is entrepreneurial streak in Indians, and already well-entrenched, protecting create a nation of job-creators, not job- and managing its intellectual property seekers. Intellectual property rights is critical in taking the business ahead. can be critical in aiding new ventures Any business has to continuously monetise their ideas and establish innovate and think ahead, otherwise it competitiveness in the market by will simply stagnate and wither away. extending the protective umbrella It is equally essential to respect others’ offered by IPRs. Key Terms Small scale industries Cottage industries Tiny industries Micro business industries Khadi industries Entrepreneurship SUMMARY Role of small business in India: Small Scale Industries play a very important role in the socio-economic development of the country. These industries account for 95 per cent of industrial units, contributing up to 40 per cent of the gross industrial value added and 45 per cent of the total exports. SSIs are the second largest employers of human resources, after agriculture and produce a variety of products for the economy. These units contribute to the balanced regional development of the country by using locally available material and indigenous technology. These provide ample scope for entrepreneurship; enjoy the advantage of low cost of production; quick decision making, and have quick adaptability and are best suited to customised production. 2024-25 Chapter 9.indd 212 9/2/2022 2:20:50 PM  MSME AND BUSINESS ENTREPRENEURSHIP 213 Role of small business in rural India: Small business units provide multiple source of income, in wide range of non-agricultural activities and provide employment opportunities in rural areas, especially for the traditional artisan and weaker sections of the society. Entrepreneur: The terms ‘entrepreneur,’ ‘entrepreneurship’ and ‘enterprises’ can be understood by drawing an analogy with the structure of a sentence in English language. Entrepreneur is the person (the subject), entrepreneurship is the process (the verb) and enterprise is the creation of the person and the output of the process (the object). EXERCISES Very Short Answer Questions 1. Which year the MSMED Act passed? 2. What is the micro enterprise. 3. What is a cottage industry? 4. What is meant by Village and Khadi Industry? 5. Give any two characteristics of entrepreneurship development. Short Answer Questions 1. What is MSME? 2. State the meaning of entrepreneurship? 3. MSME and Entrepreneurship are connected. Do you agree. Give two reasons. 4. State the role of MSME in development of a country? 5. What are the different parameters used to measure the size of MSME? 6. State the meaning of Village and Khadi industries? 7. State any three major problems faced by MSMEs? Long Answer Questions 1. How do small scale industries contribute to the socio-economic development of india? Discuss 2. Describe the role of small business in rural India. 3. Discuss the problems faced by small scale industries. 4. What measures has the government taken to solve the problem of finance and marketing in the small scale sector? 5. ‘Innovation is integral to MSME’. Discuss giving reasons to your answer. 6. ‘Creativity and Innovation is the key to MSME’. Justify the statement. 2024-25 Chapter 9.indd 213 9/2/2022 2:20:50 PM  214 BUSINESS  STUDIES Projects/Assignments 1. Prepare a profile of anyone MSME operating locally in your area. Prepare a questionnaire to find out: (a) The growth prospects of the unit. (b) Use of local resources and indigenous skills used. (c) The actual problems faced by an owner of a MSME. Prepare a project report on it. (d) Marketing of products and services 2. Find out the GI tag(s) for your sate. Prepare a chart showing its unique attributes. Discuss in the class how GI tag for the product has led to regional development. 2024-25 Chapter 9.indd 214 9/2/2022 2:20:50 PM