Unit 8: Small Business and Enterprises

Introduction
Micro, Small and Medium Enterprises (MSME) contribute significantly to the development
process and acts as a vital link in the industrialisation in terms of production, employment and
exports for economic prosperity by widening entrepreneurial base and use of local raw materials
and indigenous skills. MSME dominate the industrial scenario in the country with sizeable
proportion of labour force and tremendous export potential. MSMEs play a significant role in the
economic growth and contribute approximately 29.7 per cent of GDP and 49.66 per cent of
exports. The sector offers employment to nearly 60 million people through 28.5 million
enterprises, after the agriculture sector.
MSMEs are complementary to large industries as ancillary units and form an integral part of
value chain for building a conducive environment for indigenous skills, grass root innovations
and entrepreneurship development. This sector produces a wide range of products, from simple
consumer goods to high-precision, sophisticated finished products. Recognising the potential of
this sector for the national development, this segment of industry is encouraged in both in pre-
reform and post–reform period for fulfilling the objective of selfreliance and rural
industrialisation.

In India, the MSME consists of both ‘traditional’ and ‘modern’ small industries. This sector has
eight subgroups. They are handlooms, handicrafts, coir, sericulture, khadi and village industries,
small scale industries and powerlooms. The Khadi and Village Industries and Coir segment is
another major contributor to the growth of the MSME. Many global companies are increasingly
looking to Indian MSMEs for strategic partnerships of mutual benefit due to the innovative
capabilities in niche of low-cost manufacturing and local skills and capabilities.

Micro, Small and Medium Enterprises

It is important to know how size is defined in our country, with reference to MSME
establishments. Several parameters can be used to measure the size of business units. These
include the number of persons employed in business, capital invested in business, turnover of
business, etc. The definition used by the Government of India to describe MSME is based on the
investment in plant and machinery and turnover. This measure seeks to keep in view the socio-
economic environment in India where capital is scarce and labour is abundant
MSMED ACT:-
The classification of Micro, Small and Medium Enterprises is defined under the MSMED Act
2006 amendment dated 01/06/2020. The Micro, Small and Medium Enterprises is based on the
Investment in Plant, Machinery or Equipment values (excluding land and building) and Annual
Turnover. This shall come into effect from 01.07.2020.
(a) Micro Enterprise: Where the investment in Plant and Machinery or Equipment does not
exceed 2.5 crore rupees and turnover does not exceed 10 crore rupees.

(b) Small Enterprise: Where the investment in Plant and Machinery or Equipment does not
exceed 25 crore rupees and turnover does not exceed 100 crore rupees.

(c) Medium Enterprises: Where the investment in Plant and Machinery or Equipment does
not exceed one hundred and twenty 125 crore rupees and turnover does not exceed 500
crore rupees.
Role of MSME

MSME in India enjoy a distinct position in view of their contribution to the socio-economic
development of the country. The emphasis on MSME has always been an integral part of India’s
industrial strategy. Development of MSME prevents migration of rural population to urban areas
in search of employment and contributes to other socio-economic aspects, such as reduction in
income inequalities, dispersed development of industries and linkage with other sectors of the
economy. In fact promotion of MSME and rural industrialisation has been considered by the
Government of India as a powerful instrument for realising the twin objectives of ‘accelerated
industrial growth and creating additional productive employment potential in rural and backward
areas.’
The following points highlight their contribution.

(i) The contribution of these industries to the balanced regional development of our
country is noteworthy. Small industries in India account for 95 per cent of the
industrial units in the country.
(ii) MSME are the second largest employers of human resources, after agriculture. They
generate more number of employment opportunities per unit of capital invested
compared to large industries. They are, therefore, considered to be more labour
intensive and less capital intensive. This is a boon for a labour surplus country like
India.
(iii) MSME in our country supply an enormous variety of products which include mass
consumption goods, readymade garments, hosiery goods, stationery items, soaps and
detergents, domestic utensils, leather, plastic and rubber goods, processed foods and
vegetables, wood and steel furniture, paints, varnishes, safety matches, etc. Among t h
e s o p h i s t i c a t e d i t e m s manufactured are electric and electronic goods like
televisions, calculators, electro-medical equipment, electronic teaching aids like
overhead projectors, air conditioning equipment, drugs and pharmaceuticals,
agricultural tools and equipment and several other engineering products. A special
mention should be made of handlooms, handicrafts and other products from
traditional village industries in view of their export value.
(iv) MSME which produce simple p r o d u c t s u s i n g s i m p l e technologies and
depend on locally available resources both material and labour can be set up
anywhere in the country. Since they can be widely spread without any locational
constraints, the benefits of industrialisation can be reaped by every region. They, thus,
contribute significantly to the balanced development of the country.
(v) MSME provide ample opportunity for entrepreneurship. The latent skills and talents
of people can be channelled into business ideas which can be converted into reality
with little capital investment and almost nil formalities to start a small business.
 (vi) MSME also enjoy the advantage of low cost of production. Locally available
resources are less expensive. Establishment and running costs of small industries are
on the lower side because of low overhead expenses. Infact, the low cost of
production which small industries enjoy is their competitive strength.
(vii) Due to the small size of the organisations, quick and timely decisions can be taken
without consulting many people as it happens in large sized organisations. New
business opportunities can be captured at the right time.

Cottage industries are characterised by certain features such as:

• Typically, family labour and locally available skill are used; • The use of simple and basic
tools; • The capital outlay is minimal; • Manufacturing of simple products is there, mainly in
their own premises; • The use of indigeneous technology is made to manufacture products.
Role of Small Business in Rural India:-
1. Provides Employment in Rural Areas: Cottage and rural industries provide employment
opportunities in the rural areas as these are labour oriented enterprises. In Indian rural areas
ample labour is available.
2. Improve Economic Condition: Small business provides multiple source of income to the rural
households. SSI improves economic conditions & standard of living of people living in those
areas.
3. Prevent migration: Development of rural and village industries can also prevent migration of
the rural population to urban areas in search of employment.
4. Utilisation of Local Resources: SSI use local resources e.g. coir, wood and other products.
5. Equitable distribution of rational Income: Small Scale Industries and cottage Industries ensure
equitable distribution of national income. This helps to reduce the gap between rich and the poor
in the country.
6. Balanced Regional development – These enterprises are often dependent on local source of
production. This way, industries do not just limit themselves to a particular place but diversify.
This helps in balanced regional development.

Government Assistance
I. National Small Industries Corporation (NSIC):- This was set up in 1955 to
promote, aid and foster the growth of small scale units in India. Main constraint faced
by entrepreneurs is shortage of funds to purchase machinery and equipment. Non
availability of finance, deprives many new entrepreneurs from availing opportunities.
NSIC was established to cater to this need of entrepreneur.
 Main functions of NSIC:
(a) It supplies imported machines & raw materials to small industries on easy hire-
purchase schemes.
(b) It exports the products of small units.
(c) It provides technology to Small Scale Industries.
(d) Helps in up gradation to technology.
(e) Provides in up gradation of technology
(f) Provides various equipment on lease basis.
(g) Undertakes construction of industrial estates.
II. District Industries Centers (DICs): DICs were established in May 1978. District Industries
Centers is the institution at the district level which provides all the services and support facilities
to the entrepreneurs for setting up small and village industries.
Identification of suitable schemes, preparation of feasibility reports, arranging for credit,
machinery and equipment, provision of raw materials and other extension services are the main
activities undertaken by these centers.
Functions of District Industries Centre:
(a) Act as the focal point of industrialization of the district (b) Identifies projects for setting
up of SSI units. (c) Issues permanent registration certificate to SSI units. (d) Provides
marketing support to SSI units (e) Act as a link between the entrepreneurs and the lead
bank of district. (f) Helps businessman in obtaining license from Electricity board, water
supply board etc

MSME and Entrepreneurship Development

Entrepreneurship is the process of setting up one’s own business as distinct from pursuing any
other economic activity, be it employment or practising some profession. The person who set-up
his business is called an entrepreneur. The output of the process, that is, the business unit is
called an enterprise. It is interesting to note that entrepreneurship besides providing self-
employment to the entrepreneur is responsible to a great extent for creation and expansion of
opportunities for the other two economic activities, that is, employment and profession. And, in
the process, entrepreneurship becomes crucial for overall economic development of a nation.
Every country, whether developed or developing, needs entrepreneurs. Whereas, a developing
country needs entrepreneurs to initiate the process of development, the developed one needs
entrepreneurship to sustain it. In the present Indian context, where on the one hand, employment
opportunities in public sector and large-scale sector are shrinking, and on the other, vast
opportunities arising from globalisation are waiting to be exploited; entrepreneurship can really
take India to the heights of becoming a super economic power. Thus, the need for
entrepreneurship arises from the functions the entrepreneurs perform in relation to the process of
economic development and in relation to the business enterprise.
The following are the characteristics of entrepreneurship:
(i) S y s t e m a t i c A c t i v i t y : Entrepreneurship is not a mysterious gift or charm
and something that happens by chance! It is a systematic, step-by-step and purposeful
activity. It has certain temperamental, skill and other knowledge and competency
requirements that can be acquired, learnt and developed, both by formal educational
and vocational training as well as by observation and work experience. Such an
understanding of the process of entrepreneurship is crucial for dispelling the myth
that entrepreneurs are born rather than made.
(ii) Lawful and Purposeful Activity: The object of entrepreneurship is lawful business. It
is important to take note of this as one may try to legitimise unlawful actions as
entrepreneurship on the grounds that just as entrepreneurship entails risk, so does
illicit businesses. Purpose of entrepreneurship is creation of value for personal profit
and social gain.
(iii) Innovation: From the point of view of the firm, innovation may be cost saving or
revenue-enhancing. If it does both it is more than welcome. Even if it does none, it is
still welcome as innovation must become a habit! Entrepreneurship is creative in the
sense that it involves creation of value. By combining the various factors of
production, entrepreneurs produce goods and services that meet the needs and wants
of the society. Every entrepreneurial act results in income and wealth generation.
Entrepreneurship is creative also in the sense that it involves innovationintroduction
of new products, discovery of new markets and sources of supply of inputs,
technological breakthroughs as well as introduction of newer organisational forms for
doing things better, cheaper, faster and, in the present context, in a manner that causes
the least harm to the ecology/ environment.
(iv) Organisation of Production: Production, implying creation of form, place, time
personal utility, requires the combined utilisation of diverse factors of production,
land, labour, capital and technology. Entrepreneur, in response to a perceived
business opportunity mobilises these resources into a productive enterprise or firm. It
may be pointed out that the entrepreneur may not be possessing any of these
resources; he may just have the ‘idea’ that he promotes among the resource providers.
In an economy with a well-developed financial system, he has to convince just the
funding institutions and with the capital so arranged he may enter into contracts of
supply of equipment, materials, utilities (such as water and electricity) and
technology. What lies at the core of organisation of production is the knowledge
about availability and location of the resources as well as the optimum way to
combine them. An entrepreneur needs negotiation skills to raise these in the best
interests of the enterprise.
(v) Risk-taking: It is generally believed that entrepreneurs take high risks. Yes,
individuals opting for a career in entrepreneurship take a bigger risk than involved in
a career in employment or practice of a profession as there is no “assured” payoff. In
 practice, for example, when a person quits a job to start on his own, he tries to
calculate whether he or she would be able to earn the same level of income or not. To
an observer, the risk of quitting a well-entrenched and promising career seems a
“high” risk, but what the person has taken is a calculated risk. They are so sure of
their capabilities that they convert 50 per cent chances into 100 per cent success.
They avoid situations with higher risks as they hate failure as anyone would do; they
dislike lower risk situations as business ceases to be a game/fun! Risk as such more
than a financial stake, becomes a matter of personal stake, where less than expected
performance causes displeasure and distress.
Process of Entrepreneurship Development
(1) Discover: Any new process begins with fresh ideas and objectives, wherein the entrepreneur
recognizes and analyzes business possibilities. The analyzing of opportunities is a risky task, and
an entrepreneur looks out for inputs from other persons, including channel partners, employees,
technical people, consumers, etc. to reach an ideal business opportunity.
(2) Evaluation: The evaluation of an opportunity can be done by asking several questions to
oneself. For instance, questions like whether it is worth taking a chance and investing in the idea,
will it attract the consumer, what are the competitive advantages and the risk linked with it are
asked. A reasonable and sensible entrepreneur will also analyze his skills and whether it matches
his entrepreneurial objectives or not.
(3) Developing a plan: After the identification of an opportunity, an entrepreneur has to build a
complete business plan. It is the most important step for new business as it sets a standard and
the assessment criteria and sees if a company is working towards the set goals.
(4) Resources: The next step in the process of entrepreneurial development is resourcing. Here,
the entrepreneur recognizes the source of finance and from where the human resource can be
managed. In this step, the entrepreneur also tries to find investors for his new business.
(5) Managing the company: After the hiring process and funds are raised now it’s time to start
the operation to accomplish the desired goals. All the entrepreneur will decide on the
management structure that will be assigned to resolve the operational problems whenever it
occurs.
(6) Harvesting: The last step in this process is harvesting, where an entrepreneur determines the
future growth and development of the business. Here, real-time development is compared with
the projected growth, and then the business security or the extension is initiated accordingly.

STARTUPS
The government of India initiative for creating job opportunities and wealth was launched by
Prime Minister Narendra Modi on 16th January 2016. It was named as the Start-up India Scheme.
The startup India scheme’s primary objective is to develop and innovate products and services
and create more job opportunities in India. This would further lead to an increased employment
rate and help strengthen the economy.
The scheme not just facilitates job opportunities, it also allows the companies to avail of various
benefits set forth by the government in terms of tax, compliance and more.
Benefits of Startup India
Financial Benefits
The Government of India provides an 80% rebate on the patent cost incurred by the startup
company. Most often, startups have unique products or services, these require patenting. Under
the startup scheme, the registration of these patents is relatively faster.
Income Tax Benefits
The tax exemption is one of the biggest reliefs companies are allowed to avail. However, these
exemptions are available only up to 3 years from the period of incorporation. Further by
investing in some specialized funds, the companies can claim an exemption for tax on Capital
Gains. The Inter-Ministerial Board validates all startups and grants eligibility for tax benefits by
the startup scheme by issuing a certificate.
Registration Benefits
Generally, it is believed that the registration process is tedious and involves a lot of
administrative processes back and forth to be done. Hence, as discussed earlier, the government
of India has set up various Startup Hubs that facilitate a time meeting for the application,
registration and grievances.
Government Tenders
Government tenders are widely opted for by entrepreneurs as passing through a Government
tender will bring in a large volume of business and involves big money. These tenders are
usually hard to acquire. However, under the current scheme, the startups are given priority even
though they do not have any prior experience in handling Government tender or large volumes.
Huge Networking Opportunities
Exposure, word of mouth marketing and reputation are dependent on how many people know
about your startup and how many startups you are associated with. This sounds like a process
that might happen along the way of the business. This scheme brings all platforms under one
roof twice a year and organizes start-up fests which allow the companies to develop their
network and opens doorways to new markets and collaborations.
STARTUP INDIA ACTION POINT

(i) Simplification and handholding: In order to make compliance for startups, friendly and
flexible, simplifications are announced.
(ii) Startup India Hub: The objective is to create a single point of contact for the entire
startup ecosystem and enable knowledge exchange and access to funding.
(iii) Legal support and fasttracking Patent Examination: The scheme for Startups
Intellectual Property Protections (SIPP) is envisaged to facilitate protection of patents,
trademarks and designs of innovative and interested startups.
(iv) Easy exit: In the event of a business failure and wind up of operations, procedures are
being adopted to reallocate capital and resources towards more productive avenues. This
will promote experimentation with new and innovative ideas, without fearing complex
and long drawn exit process.
(v) Harnessing private sector for incubator setup: To ensure professional management of
government sponsored/funded incubators, the government envisages setting up of
incubators across the country in PPP mode.
(vi) Tax exemption: The profits of startup initiatives are exempted for income tax for a
period of three years.

A startup must follow the given characteristics:

A startup is referred to a company that is in its first stage of operation. Startups are founded by
people who invest in a particular product or service and develop it. Funding a startup refers to the
money required to start or run a business. A fund is a financial investment in a company for
developing, manufacturing, sales and marketing, etc. For a startup to grow successfully,
investors and venture capitalists must fund the business to scale it and to make it profitable. One
should explore different perspectives on how to get funding for the startup.
Methods to Fund a Startup
The first step towards funding a startup is by ensuring the investors validate the idea or plan of
the startup. Investors have to like the idea and be willing to invest in a project that has a demand
or a great future in the market. The investors are obligated to analyse the startup idea’s
economic, sociological, environmental, and other aspects. After this stage, the funding begins.
There are a lot of ways to fund a startup, and the process of how to get the financing of a startup
is as follows:
Bootstrapping
(i) Boot strapping: Commonly known as self financing, it is considered as the first
funding option because by stretching out your personal savings and resources, you
are tied to your business. Also, at a later stage, investors consider it as your merit.
 However, it is a good option of funding only if the initial requirement is small and
handy.
(ii) Crowdfunding: It is the pooling of resources by a group of people for a common
goal. Crowdfunding is not new to India. There are many instances of organisations
reaching out to common people for funding. However, the emergence of platforms
that promote crowdfunding is fairly recent to India. These platforms help startups
or small businesses to meet their funding requirements.
(iii) Angel investment: Angel investors are individuals with surplus cash who have keen
interest to invest in upcoming startups. They also offer mentoring or advice
alongside capital.
(iv) Venture capital: There are professionally managed funds which are invested in
companies that have huge potential. Venture capitalists provide expertise, mentorship and
act as a litmus test of where a business organisation is going, evaluating business from
sustainability and scalability point of view.
(v) Business incubators and accelerators: Early stage business can consider incubator and
accelerator programmes as a funding option. These programmes assist hundreds of
startup businesses every year. These two are generally used interchangeably. However,
incubator is like a parent who nurtures the business (child), whereas, accelerator helps to
run or take a giant leap in business. Incubators and accelerators ably connect the startups
with mentors, investors and fellow startups using this platform.
(vi) Microfinance and NFBCs: Micro finance is basically access to financial services to
those who either do not have access to conventional banking services or have not
qualified for a bank loan. Similarly, NBFCs (Non Banking Financial Corporation)
provides banking services without meeting legal requirement/definition of a bank.

Intellectual Property Rights (Ipr)

Over the past two decades, intellectual property rights have grown to a stature from where it
plays a major role in the development of global economy. Intellectual property is everywhere,
i.e., the music you listen to, the technology that makes your phone work, the design of your
favourite car, the logo on your sneakers, etc. It exists in all the things you can see—all are the
products of human creativity and skill, such as inventions, books, paintings, songs, symbols,
names, images, or designs used in business, etc.
All inventions of creations begin with an ‘idea’. Once the idea becomes an actual product, i.e.,
Intellectual Property, one can apply to the authority concerned under the Government of India
for protection. Legal rights conferred on such products are called ‘Intellectual Property Rights’
(IPR). Hence Intellectual property (IP) refers to products of human mind, hence, just like other
types of property, the owners of IP can rent, give or sell it to other people. Specifically,
Intellectual property (IP) refers to the creations of the human mind, like inventions, literary and
artistic works, symbols, names, images and designs used in business. Intellectual property is
divided into two broad categories: industrial property, which includes inventions (patents),
trademarks, industrial designs and geographical indications, while the other is copyrights, which
includes literary and artistic works, such as novels, poems, plays, films, musical works, artistic
works, such as drawings, paintings, photographs and sculptures and architectural designs.
The most noticeable difference between intellectual property and other forms of property is that
intellectual property is intangible, i.e., it cannot be defined or indentified by its own physical
parameters. The scope and definition of intellectual property is constantly evolving with the
inclusion of newer forms. In recent times, geographical integrated circuits and undisclosed
indications, protection of plant varieties, information have been brought under the protection of
semi-conductors and umbrella of intellectual property. The following types of Intellectual
Property Rights are recognised in India: Copyright, Trademark, Geographical Indication, Patent,
Design, Plant Variety, Semiconductor Integrated Circuit Layout Design. In addition to this,
traditional knowledge also fall under IP.
You must have often taken homely remedies passed on from your grandparents and great-
grandparents as cure for an ailment. These homely remedies are traditional medicines that have
been practiced in India for past several centuries. They are also known as ‘Traditional
Knowledge’. Some examples of Indian traditional medicinal systems are Ayurveda, Unani,
Siddha and Yoga. Traditional Knowledge (TK) means the knowledge, systems, innovations and
practices of local communities across the globe. Such wisdom has been developed and
accumulated over the years and has been used and passed down through several generations. A
Traditional Knowledge Digital Library (TKDL) has been developed by Government of India,
which is essentially a digital knowledge repository of Traditional Knowledge that has existed in
our ancient civilization, especially about medicinal plants and formulations used in Indian
systems of medicine. This rich body of knowledge helps prevents wrongful patenting of our
traditional knowledge.
Another type of IP is Trade Secrets. You must have heard about the popular beverage, Coca
Cola. But do you know that the recipe of this beverage is only known to three people in the
whole world? This secret information is termed as a ‘Trade Secret’. A trade secret is basically
any confidential information which provides a competitive edge. Trade secrets in India are
protected under the Indian Contract Act, 1872 and acts enacted by the Government of India from
time to time. 9.9.1 Why is IPR Important for Entrepreneurs? It encourages creation of new,
pathbreaking inventions, such as cancer cure medicines. It incentivises inventors, authors,
creators, etc., for their work. It allows the work created by a person to be distributed and
communicated to the public only with his/her permission. Therefore, it helps in the prevention of
loss of income. It helps authors, creators, developers and owners to get recognition for their
works.

Types of IPs
IPRs are extremely essential for fostering creativity and contribute towards the economic growth
of a nation. Such rights allow creators and inventors to have control over their creations and
inventions. These rights create incentives for artists, entrepreneurs and inventors to further
commit the necessary resources to research, develop, and market new technology and creative
works. The changing global economy is creating unprecedented challenges and opportunities for
continued progress in human development. There are business opportunities to market or sell IP
worldwide. Geographical borders present no impediments—consumers enjoy near immediate
access to almost everything. At such exciting times, it is critical that we are aware about the
importance of IPRs and how it affects daily life.

Let’s understand each IP now.

Copyright
Copyright is the right to “not copy”. It is offered when an original idea is expressed by the
creator or author. It is a right conferred upon the creators of literary, artistic, musical, sound
recording and cinematographic film. The copyright is an exclusive right of the creator to prohibit
the unauthorised use of the content which includes reproducing and distributing copies of the
subject matter. The unique feature of copyright is that, the protection of work arises
automatically as soon as the work comes into existence. The registration of the content is not
mandatory but is essential to exercise exclusive rights in case of an

Trademark
A trademark is any word, name, or symbol (or their combination) that lets us identify the goods
made by an individual, company, organization, etc. Trademarks also let us differentiate the
goods of one company from another. In a single brand or logo, trademarks can let you know
many things about a company’s reputation, goodwill, products and services. A trademark helps
in distinguishing similar products in the market from its competitors. A competitor cannot use
the same, or similar trademark to sell their product in the market as the same fall under the
concept of deceptive similarity which may be defined as phonetic, structural or visual similarity.
Trademark may be categorised as Conventional and NonConventional trademark— (i)
Conventional Trademark: Words, colour combination, label, logo, packaging, shape of goods,
etc. (ii) Non-Conventional Trademark: Under this category those marks are considered which
were not considered distinctive previously but started getting recognition with the passage of
time, i.e., sound mark, dynamic mark, etc. Besides these, smell and taste are also considered for
protection as trademarks, in some parts of the world, but they are not recognised as trademarks in
India. The registration of trademark is not mandatory under the Trademark Act 1999, but
registration of trademark helps establish exclusive rights over the mark. To register the mark you
can visit [Link] [Link] which is the website of the Indian Trademark Registry.
Geographical Indication
A Geographical Indication (GI) is primarily an indication which identifies agricultural, natural or
manufactured products (handicrafts, industrial goods and food stuffs) originating from a definite
geographical territory, where a given quality, reputation or other characteristic are essentially
attributable to its geographical origin. GIs are part of our collective and intellectual heritage that
need to be protected and promoted. Goods protected and registered as GI are categorised into
agricultural products, natural, handicrafts, manufactured goods and food stuffs. Naga Mircha,
Mizo Chilli, Shaphee Lanphee, Moirangphee and Chakhesang Shawl, Bastar Dhokra, Warli
Paintings, Darjeeling Tea, Kangra Painting, Nagpur Orange, Banaras Brocades and Sarees, and
Kashmir Pashmina are some of the examples of GIs. The importance of GIs has increasingly
grown over the past few decades. GI represents collective goodwill of a geographical region,
which has built itself over centuries. Today, consumers are paying more and more attention to
the geographical origin of products and accord much care to the specific characteristics present
in the products that they purchase. In some cases, there is a difference between “place of origin”
and “geographical indications” which suggests to consumers, that the product will have a
particular quality or characteristic, that they may value.

Patent
A patent is a type of IPR which protects the scientific inventions (products and or process) which
shows technical advancement over the already known products. A ‘patent’ is an exclusive right
granted by the Government which provides the exclusive ‘right to exclude’ all others and prevent
them from making, using, offering for sale, selling or importing the invention. For an invention
to be patentable, it must be new, non-obvious to any person who is skilled in the relevant field of
technology and must be capable of industrial application
For an invention to be patentable, it must be new, non-obvious to any person who is skilled in the
relevant field of technology and must be capable of industrial application.
(i) It must be new, i.e., it should not already exist in the current knowledge anywhere in the
world.
(ii) It must be non-obvious to any person who is skilled in the relevant field of technology.
That is, the standard is a person reasonably skilled in such field of study (Inventive
Step).
(iii) Finally, it must be capable of industrial application, i.e., capable of being used or
manufactured in the industry.
Patent can only be filed to get rights over an invention and not discovery. Newton saw the apple
fall and discovered gravity which is considered to be a discovery. On the other hand, the father
of telephone Alexander Graham Bell invented telephone. Thus when we use our ability to create
something novel, or something unique into existence, it is called an invention, whereas the
process of highlighting the existence of an already existing thing is called discoveryThe purpose
of patent is to encourage innovation in the scientific field. A patent grants exclusive rights to the
inventor for a period of 20 years, during which anybody else who wishes to use the patented
subjectmatter needs to seek permission from the patentee, by paying certain costs for the
commercial use of such an invention. This process of seeking exclusive rights of the patentee for
a fee is called Licensing.
Patent creates a temporary monopoly. Once the term of a patent expires, the invention is in
public domain which means it is free for use by people. This prevents the patentee from
involving in anti-competitive practices like creating monopoly, etc

Design
A ‘design’ includes shape, pattern, and arrangement of lines or colour combination that is
applied to any article. It is a protection given to aesthetic appearance or eye-catching features.
The term of protection of a design is valid for 10 years, which can be renewed for further 5 years
after expiration of this term, during which a registered design can only be used after getting a
license from its owner and once the validity period is over, the design is in public domain.
Plant Variety
Plant Variety is essentially grouping plants into categories based on their botanical
characteristics. It is a type of variety which is bred and developed by farmers. This helps in
conserving, improving and making available plant genetic resources. For example, hybrid
versions of potatoes. Such protection promotes investment in R&D, recognizes Indian farmers as
cultivators, conservers and breeders as well as facilitates high quality seeds and planting
material. This leads to the growth of the seed industry.

Semiconductor Integrated Circuits Layout Design Have you ever seen a computer chip? Are you
aware of integrated circuits also known as ‘ICs’? A semiconductor is an integral part of every
computer chip. Any product that contains transistors and other circuitry elements used and
formed on a semiconductor material, as an insulating material, orinside the semiconductor
material. Its design is to perform an electronic circuitry function.

Whether a business is establishing its presence in the marketplace or is already well-entrenched,

protecting and managing its intellectual property is critical in taking the business ahead. Any
business has to continuously innovate and think ahead, otherwise it will simply stagnate and
wither away. It is equally essential to respect others’ IP, not only on ethical grounds, but also
legal. After all, respect for others’ IP begets respect for one’s IP. Startup is an entrepreneurial
venture that capitalises on developing, improving and innovating new products, processes and
services for the target audience. Start-ups today are responsible for several disruptive
technologies that have changed the very way we think and live. With 20,000+ start-ups, India is
said to have the third largest startup ecosystem in the world. The Startup India initiative seeks to
capture the entrepreneurial streak in Indians, and create a nation of job-creators, not jobseekers.
Intellectual property rights can be critical in aiding new ventures monetise their ideas and
establish competitiveness in the market by extending the protective umbrella offered by IPRs.