Unit 5 Entrepreneurship Development
Unit 5 Entrepreneurship Development
Topic -1
Sources of Finance
Business is concerned with the production and distribution of goods and services to meet demands. Finance is required
by businesses to carry out many activities. As a result, finance is said to as the “vital blood” of any business. Business
finance refers to a company’s need for finances to carry out its numerous operations.
Sources of Finance
A company can raise capital from a variety of sources. Each source has distinct features that must be properly analyzed
in order to choose the greatest accessible method of obtaining finances. For all organisations, there is no one optimum
source of funding. A choice of the source to be used may be made depending on the situation, purpose, cost, and associated
risk.
Finance is required at the point when an entrepreneur decides to launch a business. For example, funds are needed to
buy furniture, equipment, and other fixed assets. Similar to this, funds are needed for regular operations, such as buying
supplies or paying employees’ salaries. Additionally, a business needs funds to expand. For Example, if a company wants
to raise funds to fulfil its fixed capital requirements, long-term finances may be necessary, which can be raised through
either owned or borrowed funds. Similarly, if the goal is to meet the day-to-day needs of the business, short-term sources
may be utilized.
Without sufficient funding, a business is unable to operate. The entrepreneur’s initial investment may not always be
enough to take care of the company’s entire financial needs. As a result, a businessman needs to look for various other
sources where the need for funds can be satisfied. Running a business organisation, therefore, requires a clear
understanding of the financial requirements and the identification of various sources of funding.
Different Sources of Finance
1. Retained Earnings:
In most cases, a company does not release all of its earnings or share its profits with its shareholders as dividends. A part
of the net earnings may be retained in the company for future use. This is known as retained earnings. It is a source of
internal finance, self-financing, or profit ploughing. The profit available for reinvestment in an organisation is dependent
on a variety of factors, including net profits, dividend policy, and the age of the organisation.
2. Trade Credit:
Trade credit is credit given by one trader to another for the purchase of products and services. Trade credit facilitates
the purchase of goods without the need for immediate payment. Such credit shows in the buyer of goods’ records as
‘sundry creditors’ or ‘accounts payable.’ Business organisations frequently utilise trade credit as a form of short-term
finance.
It is granted to consumers that have a solid financial status and a good reputation. The amount and period of credit
provided are determined by criteria, such as the purchasing firm’s reputation, the seller’s financial status, the number of
purchases, the seller’s payment history, and the market’s level of competition. Trade credit terms might differ from one
industry to another and from one person to another.
3. Factoring :
Factoring is a financial service in which the ‘factor’ provides a variety of services such as :
Bill discounting (with or without recourse) and debt collection for the client: Under this, receivables from the
sale of goods or services are sold to the factor at a certain discount. The factor takes over all credit control and debt
collection from the buyer and protects the company against any bad debt losses.
Factoring has basic two methods: Recourse and Non-recourse.
The customer is not safeguarded against the risk of bad debts while using recourse factoring. Non-recourse factoring, on
the other hand, involves the factor assuming the complete credit risk, which means that the full amount of the invoice is
reimbursed to the client if the debt goes bad.
Factors retain vast volumes of information on the trading history of businesses, which they use to provide
information about the creditworthiness of prospective clients, among other things. This can be beneficial to individuals
that use factoring services, and therefore avoid doing business with consumers who have a bad payment history. Factors
may also provide appropriate consulting services in areas, like finance, marketing, and so forth.
4. Lease Financing:
A lease is a contractually enforceable arrangement whereby a one party, the owner of an asset, grants the other party the
right to use the asset in exchange for a monthly payment. In other terms, it is the rental of an asset for a certain amount of
time. The party who owns the assets is known as the ‘lessor,’ while the party who utilises the assets is known as the
‘lessee.’ The lessee pays the lessor a predetermined periodic sum known as lease rental in exchange for the usage of the
asset.
The lease contract includes the conditions and terms that regulate the lease arrangements. At the end of the lease
agreement, the asset will be returned to the owner. Lease financing is a critical tool for the firm’s modernization and
diversification.
5. Public Deposits:
Public deposits are deposits gathered from the public by organisations. Interest rates on public deposits are often higher
than those on bank deposits. Anyone who wants to make a monetary contribution to an organisation can do so by filling a
specified form.
In return, the organisation gives a deposit receipt as proof of payment. A business’s medium and short-term financial
needs can be met through public deposits. Deposits are beneficial to both the depositor and the organisation. While
depositors receive higher interest rates than banks, the cost of deposits to the corporation is lower than the cost of
borrowing from banks. Companies often seek public deposits for up to three years. The Reserve Bank of India regulates
the acceptance of public deposits.
6. Commercial Papers:
Commercial Paper (CP) is an unsecured promissory note. It was first created in India in 1990 to allow highly rated
corporate borrowers to diversify their sources of short-term borrowings and to give investors an additional instrument.
Following that, primary dealers and all-India financial institutions were authorised to issue CP in order to cover their
short-term funding needs for their operations. Individuals, banks, other corporate organisations (registered or
incorporated in India), unincorporated bodies, Non-Resident Indians (NRIs), and Foreign Institutional Investors (FIIs),
among others, can invest in CPs. CP can be issued in denominations of Rs.5 lakh or multiples thereof with maturities
varying from 7 days to up to one year from the date of issue.
7. Issue of Shares:
A share is the smallest unit of a company’s capital. The firm’s capital is split into small units and issued to the public as
shares. The capital gained via the issuance of shares is referred to as ‘Share Capital.’ It’s a kind of Owner’s Fund.
There are two kinds of shares that can be issued:
Equity Shares: These are shares that do not pay a fixed dividend, but do have ownership and voting rights.
Owner of the firm refers to the company’s equity shareholders. They do not get a set dividend, but are paid dependent on
the company’s profitability.
Preference Shares: Preference shares are shares that have a slight preference over equity shares. Preference
Shareholders get a set dividend rate and have the right to receive their capital before equity shareholders in case of
liquidation. They do not, however, have any voting rights in the company’s management.
8. Debentures:
Debentures are an effective instrument for raising long-term debt capital. A firm can raise capital by issuing debentures
with a fixed rate of interest. A firm’s debenture is a recognition that the company has borrowed a specified amount of
money, which it commits to repay at a later period. Debenture holders are part of the company as the company’s creditors.
Debenture holders get a definite stated amount of interest at predetermined periods, such as six months or a year.
Debentures issued publicly must be assessed by a credit rating agency such as CRISIL (Credit Rating and Information
Services of India Ltd.) on factors such as the company’s track record, profitability, debt payment capability,
creditworthiness, and perceived risk of lending.
9. Commercial Banks:
Commercial banks play an important role in providing finances for a variety of purposes and time periods. Banks
provide loans to businesses in a variety of ways, including cash credits, overdrafts, term loans, bill discounting and the
issuance of letters of credit. The interest rate imposed on such credits varies depending on the bank as well as the nature,
amount, and duration of the loan.
10. Financial Institutions:
The government has established many financial institutions in the country to give financing to businesses. They provide
both owned and loan capital for long- and medium-term needs. These organisations are often known as ‘Development
Banks’ since they aim to promote a country’s industrial development. In addition to financial help, these institutes conduct
surveys and provide organisations with technical assistance and management services. Financial institutions provide
funds for the expansion, reorganisation and modernisation of an enterprise.
Topic -2
Venture Capital (VC) industry has 4 main entities,
1. Entrepreneurs who need funding
2. Investors with an objective of securing very high returns.
3. Investment bankers who need companies to sell.
4. Venture Capitalists (VC) who make money for themselves by creating a market for the above 3 players in the
industry.
What do you mean by Venture Capital?
Entrepreneurs need investments for their start-up companies. The investments or the capital that these entrepreneurs
receive from wealthy investors is called Venture Capital and the investors are called Venture Capitalists.
VC firms reduce the risk of investments by co-investing with other VC firms. Usually, there will be the main investor
called the ‘lead investor’ and other investors will be called ‘followers’.
How does Venture Capital Fund work?
1. Venture Capital Fund is made up of investments from wealthy individuals or companies who give their money to
a VC firm to manage their investment portfolios for them and to invest in high-risk start-ups in exchange for equity.
2. The basic idea is to invest in a company’s balance sheet and infrastructure.
3. Venture Capitalist nurtures the idea of an entrepreneur for a short period of time and exits with the help of an
investment banker.
4. In a start-up company, VC will receive an equity partnership in exchange for investments in the start-up
company.
5. VC’s receive liquidation preference, it means in the worst-case scenario where the company fails, VCs are given
the first claim to all the company’s assets and technology. It also offers voting rights over key decisions like Initial Public
Offer (IPO) or even sale of the company.
What are the types of Venture Capital funding?
As per the ideation stage, age of start-up company and its performance over the years, venture capital funding can be
categorised into different types.
Below table gives a list of the types of venture capital funding and their features
Type of Objective & Amount of Funding
Funding
As the founder of a marketing company that helps start-ups and small businesses, people often ask me, “How can we
effectively market and scale with a tight budget?” It can be challenging to decide where to invest your time and limited
resources in marketing. Should you invest in the top of the funnel or the bottom?
In my experience, a full-funnel approach is usually the most sustainable over time. That said, certain strategies are just
out of reach and do not make sense for smaller companies — like, for example, TV advertising. Here are eight tried-and-
tested marketing strategies I recommend every startup or small business consider:
1. Earned Media/PR
The value of a credible third party touting your praises cannot be underestimated. Not only do press articles and earned
media gain you trust, but you can also benefit from a wider distribution by leveraging their existing audiences. Influencers
and bloggers can fall into this category and can share your company with their followers, which gains you an endorsement
with potentially exponential reach. Stunts can also be a creative (and low-cost, if done right) way to garner media
attention or that of your target market.
2. Content Marketing
Creating content that’s relevant and interesting to your target audience can help you generate new leads by capturing
their interest and building trust. It can also help increase your close ratio by building your brand, answering customer
questions and providing reasons why prospects should choose you. From articles to infographics to eBooks and even
videos, you should showcase your expertise, differentiation and brand values to attract potential customers and help
those who are already considering you to make that purchase decision. Great content also often gets featured and
backlinked, so you can increase your domain authority by placing it on your website.
3. Partner Marketing
Partnering with another company or organization that has a similar target customer can help you both increase your
reach and marketing abilities if you pool your resources together to build your brands. Complimentary products and
services can be a great place to start. By sharing email lists, exchanging blogs, bundling offerings or even co-branding
programs, ads or sponsorships, you can create win-win situations for both partners.
4. Social Media
Having your own social channels not only allows you to control your message and share updates freely, but also allows
you to build a community around your brand, company and product. As a free channel to activate, social media can be a
great place to build user-generated content, get feedback or even address customer service concerns. Many customers
also look to social channels to see if they can trust the brand or company or to check out their reviews, so maintaining a
presence can actually help conversion rates.
5. Search Engine Optimization (SEO)
Most people search for information online, and organic search can account for the majority of a website’s traffic. This
makes optimizing your website for SEO extremely important. Through strategic SEO, you can introduce yourself to leads
with a high need state or purchase intent, which can make this kind of business easier to close. Furthermore, if a customer
searches for help with a problem and your website comes up, this helps position you as a credible, trustworthy source to
help them.
6. Email Marketing
If you’ve built your email list right, you’ve gathered a group of people who have expressed some interest in your
company or product. By segmenting this group based on different characteristics and then emailing them with the right
content and offers at the right time in their customer journey, you can influence a purchase decision successfully with no
added impact to your marketing budget.
7. Affiliate Programs
Affiliates are a cost-effective way to build sales without adding large fixed marketing costs like advertising. Because they
have skin in the game, affiliates are properly incentivized to promote your products or services and are only rewarded if
they are successful. These affiliates can take the form of influencers, content publishers and review or coupon sites, and
you can structure the partnerships to pay out based on clicks, leads or sales.
8. Referral Marketing
Tapping into the goodwill of happy, existing customers is one of the fastest, easiest and most cost-effective ways to grow.
Mobilize your customers to spread the word about your products or services by reminding them to share their
experiences and incentivizing them to bring new business to you. You’ll likely get highly qualified leads at a lower overall
cost of acquisition than if you had to find them on your own.
Even with a modest budget, there are many options available to you to create a solid marketing plan as a startup or small
business. By employing a number of different affordable strategies that address the entire marketing funnel, from
awareness through conversion and advocacy, you can strategically, creatively and tactfully garner customers and build
revenues to eventually reinvest in your marketing efforts and speed up your growth.
Topic -4
HR strategy for business growth: 7 ways HR can contribute to business development
While you might focus on sales and marketing as your business’ principal drivers, you can’t afford to overlook the
importance of a solid HR strategy for business growth.
Your company’s largest single asset isn’t the patents or real estate holdings, but your employees. If you treat your
employees well, they can propel your company to new heights.
The role of HR in business growth
Human resources professionals are in a unique position to help shape the way businesses operate. Because people who
work in operations, marketing, and middle management tend to look at the business through the lens of revenue, they
tend to lose sight of its core values.
Your HR strategy is the bedrock of a successful company. Decades of research show that robust human resource
management practices lead to higher business growth rates.
Here are seven ways your HR strategy can contribute to the success of your business.
1. Hire the right people
With a great team behind you, it’s possible to achieve so much. You can tackle a long list of tasks in a short space of time
because you know the person you assigned the task to will complete the work. Moreover, the work will be of the quality
you expect. Unfortunately, the opposite is also true.
It is important to develop an effective system that helps you identify and hire the best candidates for a job. An effective
recruitment process can help you identify suitable personnel. You should also have a review process to ensure that the
people you hired perform and have a process for dealing with staff who fail to hit their targets.
Setting up a thorough hiring and review process takes time. You will experience problems. However, you need such a
system to help you identify and hire competent staff if you want your company to grow fast.
2. Build a strong culture & promote it
Organizational culture is a collection of values, expectations, and practices that inform how your team works together.
Your organizational culture impacts the environment that your staff experiences when they come to the office.
The organizational culture will impact how people perceive your company and the type of employees you attract. For
example, consider Google.
You can see why a lot of people want to work for Google. They’ve created an organizational culture focused on business
growth and support their staff’s personal and professional goals.
The organizational culture is set at the top. Determine what you want to stand for as a company and how you want your
staff to treat each other. If you can create a great organizational culture, you’ll find it easy to attract the best talent. Not
only that, you’ll reduce employee turnover.
HR should then work with everyone in the company -- from C-level leaders to rank-and-file employees -- to help
implement the organizational culture, ensuring people know what it means to work for your business. Besides, HR leaders
should promote and reward employee behavior that reflects the desired culture.
Relevant: Watch our webinar on How to create a winning company culture
3. Training new talent
The recruitment journey doesn’t stop when the successful candidate signs on the dotted line. To formally welcome your
new hire, your HR team will need to create an employee onboarding process that will equip them with the skills and
organizational knowledge they need to do their jobs properly.
Spend time developing your onboarding process
One element of the onboarding process will cover the company and the culture. All employees, regardless of their
position, should learn about the company and the corporate culture you are looking to create.
The earlier you instill the values of collaboration, transparency, and continuous improvement to your new employees,
the better.
In addition to a general onboarding, every employee will have to learn the skills and processes specific to their role. If
you are going to hire multiple employees for the same position, you should systemize staff training.
Create guides with the information people will need, assign people to supervise new employees, etc. Having such a
process in place can reduce the amount of time new employees spend learning and speed up the time it takes to deliver to
their potential in the new role.
4. Participate in growth planning
As your business grows, you will need to hire new staff. You might need to train staff to do new tasks, or you might
decide to expand into a new market. Whatever the strategy, growth planning, and the ability to execute your plan will be
critical to your success.
Relevant: Why a growth mindset is a crucial recruitment skill
Your HR team should play a key role in growth planning. Your HR team will need to be aware of the positions you want
to fill. Yet it’s not just that. Your HR team can provide valuable insights regarding how a team that you want to expand is
operating, what problems are likely to arise, and even things like how long it is likely to take to fill these positions.
All of these are critical to mission success. For example, after you submit a project proposal for a large client and win the
bidding process, you will need to get the right people to help deliver results for the client. Involving human resources in
the project planning process will help them identify the skills needed for the project and identify people both within and
outside the company who could be part of the project team.
5. Minimize employee turnover
Finding, hiring, and training employees is a significant expense for any organization. Ultimately, the cost of finding a
replacement is proportional to the difficulty of the role and the number of suitable candidates available.
A study by the Society for Human Resource Management estimated that a salaried employee’s replacement cost is equal
to six months’ wages. That sounds about right for a person in a senior role at a company.
The impacts of employee turnover are not just financial. Staff turnover can impact delays to projects and service
delivery, lead to loss of productivity, and hurt the team or company morale. Anything that your HR department can do to
reduce unwanted employee turnover is likely to promote business growth.
6. Take feedback from employees
If you want to monitor employee satisfaction, it’s important to ask for feedback. Employee feedback is one of the most
important data sets that you can gather about how your company operates and living up to the company culture you want
to build.
Because your HR team has exposure to almost everyone in your organization, they are in the best position to solicit
employee feedback and analyze the data to develop solutions to common issues.
Employees are also more likely to submit feedback to HR personnel because they know that their concerns will be
handled professionally and their data is in safe hands.
Relevant: 10 questions for employee satisfaction surveys
7. Employee growth & performance management
One of the most important aspects of an HR strategy for business growth is employee growth and performance
management.
A good performance management system is key to monitoring employee development. Part of how you monitor an
individual’s growth in the company is tracking their performance, measuring it against certain key performance
indicators, and identifying their strengths and opportunities for improvement.
Your HR team should take the lead in implementing the performance management system. The data that a performance
management system gathers is a valuable source of insights about employee goals and potential career movements.
Relevant: 5 ways to upskill your workforce
Bottomline
In innovative organizations, HR teams are not seen as the people who hire and fire new employees. The HR team is an
integral part of the business. A great HR team seems to fade into the background, yet much of what they do underpins
business growth.
It makes sense to involve the HR team in the decision-making progress. Your HR team’s work will impact your ability to
execute expansion plans, attract the best people, equip them with the skills they need to thrive in the organization,
and keep them from leaving. The seven tips I shared are just some of the many ways an effective HR strategy can pave the
way for business growth.
Topic -5
Types of Intellectual Property Rights in India
Intellectual property, in basic terms, refers to specific types of intangible assets which have been created (owing to
application of one’s mental faculties). The requirements for obtaining registration for intellectual properties may vary as
per the type of asset under consideration. The ownership of intellectual property rights affords various rights for
protection and commercialization of such assets (which are protected by the law of intellectual property).
Intellectual property rights are classified in a universal manner across the globe (with minor jurisdiction-specific
changes in terminology as well as requirements for registration). In India specifically, the different forms of intellectual
property rights are – Copyright; Trademarks; Patents; Geographical Indications; Designs; Semiconductor integrated circuit
layouts and Plant varieties. Each of the aforementioned types of intellectual property rights have been discussed in detail
below:
What are the different types of Intellectual Property Rights in India
1. The Copyrights Act, 1957 (“Copyright Act”)
Copyright protects the expression of an idea rather than the idea itself. Under section 13 of the Copyright Act, a
protection under copyright can be obtained for ‘original literary, dramatic, musical and artistic works; cinematograph
films; and sound recording’. Interestingly, a copyright protection can also be obtained for computer programmes. A
copyright is an ‘exclusive right’ that is granted to a person to do or authorize to carry out certain activities with regards
the copyrighted work. For eg: in case of a literary, dramatic or musical work, the owner (or any person authorized by the
owner) is permitted to perform the work; make translation(s) of such work; make adaptations of the work, etc.
The Copyright Act, under section 17, clearly states that the author of the original work (for which protection under
copyright has been obtained) shall be the first owner of the work. Further, the owner has the right to license the copyright
of their work to third-parties through a written agreement.
In case of published literary works, dramatical works and artistic works, copyright protection shall be provided to such
works for a term of 60 (sixty) years in addition to the life of the author.
Incidental to the protection awarded under a copyright, the Copyright Act, also confers certain special rights on the
author, under section 57. An author/ owner of the copyright work, even after assigning the work to another person
(wholly or partially), has the right to ‘claim authorship of the work’ and the right to ‘claim damages’ with respect to any
‘distortion, mutilation or modification’ of the author’s original work, in the event such distortion or any other act is
damaging to the author’s reputation.
2. The Trade Marks Act, 1999 (“Trade marks Act”)
The Trade Marks Act, under section 2(zb) defines a ‘trade mark’ as ‘a mark capable of being represented graphically and
which is capable of distinguishing the goods or services of one person from those of others and may include shape of
goods, their packaging and combination of colours…’. In simpler words, a trademark provides protection for symbols,
colours, shapes, words, etc. representing and relating to a good or a service.
Interestingly, a trademark application need not be filed in respect of marks which are in use (but can also be filed in
respect of marks which are intended to be used in the future). The primary requirements for registration of a trademark
includes that it should consist of a mark capable of distinguishing the goods/services from those of others and that it is
capable of graphical representation. The Trade Marks Act provides for absolute grounds of refusal of registration such as –
(a) the mark not having a distinctive character; (b) a mark being deceptive and confusing to the public; (c) if a mark is
hurtful to religious sentiments; (d) the mark is offensive, scandalous, or obscure, etc. In addition to the absolute grounds
of refusal, the statute also provides for relative grounds of refusal of registration (viz. similarity with pre-existing marks).
Further, India is a signatory to the Madrid Protocol under which a trademark can be applied for and registered
internationally. However, the prerequisite for filing and registering an international application (under the Madrid
Protocol) in a foreign jurisdiction is that the mark needs to be first filed in India.
A protection afforded from a trademark registration is imperative as it protects the brand name, logo, sound, shape, etc.,
and distinctively identifies the goods/services to the brand bringing uniqueness to the mark. Also, the validity of a
trademark registration is for an initial period of 10 (ten) years which can renewed perpetually for successive period of 10
years (subject to timely filing of renewal applications).
3. The Patents Act, 1970 (“Patents Act”)
A ‘Patent’ is an intellectual property right which protects any new invention. It is an exclusive right that protects the
rights of the inventor and prevents other people to unauthorizedly use and misappropriate the registered patent.
A patent is granted for a term of 20 (twenty) years from the date of filling of the application. It is important to note that
patent for a new invention is registered only if the invention is ‘novel’ and ‘original’ i.e. it has not been introduced in the
public domain in India or anywhere in the world; is ‘capable of industrial application’ which refers to the ability of the
invention to be used in an industry; and is an invention that requires to employ a process of ‘inventive steps’, which is
defined as ‘a feature of an invention that involves technical advance as compared to the existing knowledge or having
economic significance or both and that makes the invention not obvious to a person skilled in the art’, under the Patents
Act.
The Patents Act bestows each inventor, whose patent has been registered, with certain rights, namely:
with respect to a patent for a product, the right to prevent third parties form using, selling, making, importing,
etc. the product without prior consent; and
with respect to a process for which a patent is obtained, the right to prevent third parties from using, selling,
offering, etc. a product obtained from that process, without the prior consent of the original inventor.
Further, India is a signatory to the Patent Cooperation Treaty (PCT) which permits an applicant to file an application for
registration of an international patent. Upon filing such application, an inventor can obtain patent protection in multiple
countries (members of PCT), simultaneously.
4. The Design Act, 2000 (“Design Act”)
A ‘design’ under the Designs Act [section 2(d)] means and includes ‘only the features of shape, configuration, pattern,
ornaments or composition of lines or colours, applied to any article whether in two dimensional or three dimensional or
in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which
in the finished article appeal to an are judged solely by the eye’.
An application for registration of an industrial design is to be made to the Controller- General of Patents, Designs and
Trade Marks. However, a design shall only be considered for registration if – (a) it is novel and an original innovation i.e., it
has not been produced before or reproduced by anyone; (b) it has not been disclosed to the public anywhere in India or
outside the jurisdiction of India; and (c) it can be easily distinguished from other known designs.
Furthermore, once a design is registered, the registered proprietor is afforded protection for an initial period of 10 (ten)
years, which is extendable (upon filing an application for extension) for a further period of 5 (five) years.
5. The Geographical Indications of Goods (Registration and Protection) Act, 1999 (“GI Act”)
Many goods in India are widely popular owing to their place of origin. For instance, ‘Darjeeling tea’ is unique and popular
owing to many factors including but not limited to its origin, the skill set of the tea farmers of Darjeeling and the weather
prevailing in that area. Other such examples of products which have a bearing of the place of origin (or factors specific to
the place of origin includes Banarsi Saree; Basmati Rice, etc).
A ‘Geographical Indication’ is defined as ‘an indication which identifies such goods as agricultural goods, natural goods
or manufactured goods as originating, or manufactured in the territory of country, or a region or locality in that territory,
where a given quality, reputation or other characteristic of such goods is essentially attributable to its geographical origin
and in case where such goods are manufactured goods one of the activities of either the production or of processing or
preparation of the goods concerned takes place in such territory, region or locality as the case may be’. The GI Act covers
only goods such as agricultural goods, food stuff, handicraft goods, manufactured goods, and natural goods.
An application for registering a good under the GI Act requires a statement explaining how the geographical indication
affects to the origin of the good in terms of the quality, characteristics, and reputation of the good; the class of goods;
particulars with regards the appearance of the geographical indication and the map of the territory/area/country where
the good has originated.
A registered geographical indication is awarded protection for a term of ten (10) years with the option of renewing and
extending such protection for further tenures of ten (10) years from the date of expiration of the original registration.
6. The Protection of Plant Varieties and Farmer’s Rights Act, 2001 (“Plant Varieties Act”)
The objective of the Protection of Plant Varieties and Farmer’s Right Act, 2007, is to recognize rights of Indian farmers
and to provide protection to plant varieties in order to encourage the growth and development of more plant varieties.
In 1994, India became a member to the Trade Related Aspect of Intellectual Property Rights Agreement (TRIPS) under
which all members are required to accommodate and provide for the protection of plant varieties [Article 27(3)(b) of
TRIPS]. All plant varieties that have been registered and awarded protection are entered and recorded into the National
Register of Plant Varieties.
The Plant Varieties Act permits any breeder, farmer and any person as authorized, to apply for registration of a new
plant variety. A new plant variety is registrable if it satisfies the conditions of ‘novelty, distinctiveness, uniformity and
stability’. To elaborate, the condition of novelty requires that at the date of filing the application (for protection), the plant
variety must not be sold. Further, distinctiveness encompasses the requirement of having at least one distinguishing
factor from all other existing and protected plant varieties. The requirement of uniformity means that all essential
characteristics of the plant variety must be uniform. Lastly, the plant variety being registered for is required to be ‘stable’,
meaning that the essential characteristics of the plant variety must remain unchanged after repeated propagation of such
plant variety.
The validity of registration for the protection of a plant variety is for a period of nine (9) years in the case of trees and
vines, and for a period of six (6) years in the case of crops, with the option of renewal of such registrations.
7. The Semiconductor Integrated Circuits Layout- Design Act, 2000 (“SICLD Act”)
A ‘semiconductor integrated circuit’ is defined as ‘a product having transistors and other circuitry elements which are
inseparably formed on a semiconductor material or an insulating material or inside the semiconductor material and
designed to perform an electronic circuitry function’.
Under the SICLD Act, all layout-designs capable of being registered are required to be original; commercially unexploited
anywhere in India and in any convention countries; inherently distinctive and inherently distinguishable from other
registered layout- designs. An application for registration of design layouts has to be in writing and is required to be filed
before the Registrar in the Semiconductor Integrated Circuits Layout-Design Registry present in the territorial limits of
the principal place of business of the applicant.
Further, the protection afforded to registered layout-designs is for a period of 10 (ten) years.
Conclusion
In India, there are different forms of intellectual property rights, allowing a person to obtain protection for their assets.
India has actively become party to many conventions and treaties in order to afford international recognition and
protection for intellectual property rights recognized in India. Some conventions have led India to introduce new
enactments such as the Plant Variety Act, in order to award protection to goods that represent the heritage, agricultural
background and fauna of India.
Frequently Asked Questions
1. What are the different types of intellectual property rights?
In India, there are 7 types of intellectual property rights, namely – copyright, trademarks, patents, geographical
indications, plant varieties, industrial designs and semiconductor integrated circuit layout designs.
2. If I obtain a copyright registration in India, would it be recognized internationally?
Yes, since India is a signatory to the Berne Convention, a copyright registration obtained in India will be recognized in
the nations which are signatories to the Berne Convention.
3. For how long will a trademark registration be valid for?
A trademark registration is valid for a term of 10 (ten) years. A trademark registration can be renewed perpetually for
succeeding periods of 10 (ten) years by filing an application for renewal.
4. What is the importance of intellectual property rights under the Geographical Indication Act?
The Geographical Indications Act, protects various types of goods including natural goods, manufactured goods,
agricultural goods, handicrafts, etc. The primary importance of protection of the A protection under the relevant act is
primarily to protect the skill of the local artisans, craftsmen, etc. and thereby protect their commercial interests in respect
of indigenously developed products.
5. What are the factors considered by the Registrar when considering an application for protection for layout-
design?
The factors considered by the registry includes: (a) whether the layout design is original; (b) whether it has been
commercially exploited in India; (c) whether it is inherently distinctive; and (d) whether it is capable of being
distinguished from other registered layout- designs.
6. What is the term permissible for extension of validity under the Designs Act?
A design registration is valid for an initial period of 10 (ten) years and can be renewed once thereafter for a further
period of 5 (five) years by filing an application for renewal.
Topic -6
Q. What is the future of entrepreneurship in India?
A. In India, business was traditionally considered to be the domain of scholarly challenged individuals or the result of
natural inheritance within business communities. Gradually, the appetite for risk and the acceptance of failure increased,
but only recently have alternate professions and the idea of "following one’s dream" gained approval. In particular,
entrepreneurship caught the fancy of the Indian middle class after the economy was liberalized. The economic reforms
introduced in 1991 reduced the bureaucratic controls, promoted private enterprise, and lowered the barriers to creating
new businesses. Coupled with the emergence of knowledge economy, the demand for skilled employees greatly increased
and a trend emerged toward technology entrepreneurship in the services sector, which is less capital-intensive than
traditional industries.
Indeed, the future of entrepreneurship in India lies in the services sector, and the Government of India is providing
support to encourage this trend. However, there are as many challenges as there are opportunities, as will be discussed
below.
Government Support
Traditionally, government programs, and support from the banking and finance industry, were largely focused and
aligned to the manufacturing sector with its strong product focus. Industry associations such as the Confederation of
Indian Industry (CII), the Federation of Indian Chambers of Commerce and Industry (FICCI) and the Associated Chambers
of Commerce and Industry of India (ASSOCHAM) have existed since the pre-independence era and lobby the government
for policy initiatives that favour traditional businesses and industries. With the information technology sector emerging as
a rapidly growing segment of Indian industry the National Association of Software and Services Companies (NASSCOM)
was formed in 1988 as the industry association for information technology industry.
In 2000, the National Science & Technology Entrepreneurship Development Board (NSTEDB) – under the aegis of the
Department of Science and Technology (DST) – launched the Technology Business Incubation (TBI) program, which is
geared towards supporting entrepreneurship in emerging technology areas such as information and communications
technology, manufacturing, biotechnology, nanotechnology, and agricultural technology. This program was an extension
of the Science & Technology Entrepreneurs' Park program, which was initiated in 1985 by the NSTEDB in academic
institutions and research labs of excellence with an objective of promoting self employment for young science and
technology graduates. The NSTEDB identified 120 technology business incubators in different technology areas within
India (NSTEDB, 2009). Of these, 53 were promoted by the NSTEDB, 40 were software technology parks promoted by the
Ministry of Information and Communication Technology, and the remaining 30 were promoted by other government
departments, banks, financial institutions, or private companies. The numbers are small for a country as large as India and
the geographical distribution is also not uniform: 56% of incubators are located in southern India, 21% are in northern
India, 17% are in western India, and only 6% are located in eastern regions (NSTEDB, 2014).
The Government of India promoted and supported small and medium-sized enterprises (SMEs) in India by establishing
clusters across the country. District Industry Centres were established in all major cities and towns of India. Cottage
industries were established and promoted through various support programs under the Khadi and Village Industries
Commission. In 2006, the Government of India established the Ministry of Ministry of Micro, Small & Medium Enterprises
(Ministry of MSME), which provides support in the form of infrastructure resources, funds, training, and tax benefits.
Besides government initiatives, many private organizations are helping build the entrepreneurial ecosystem and related
support services. A number of private incubators and accelerators have entered the field in the past few years, though
most of these are located in the main technology hubs of the country (i.e., Delhi-NCR, Mumbai, Bangalore, Pune,
Hyderabad, Chennai, Kolkata) leaving a lot of scope for penetration to less prominent cities and towns.
Challenges and Opportunities
Data from the NASSCOM resource centre paints a clear picture of the emerging startup ecosystem in India (NASSCOM,
2014):
The number of technology startups has tripled in last six years, from about 1000 to 3000 startups.
Two-thirds of entrepreneurs are less than 30 years of age.
Health care, retail, and SMAC (social, mobility, analytics, and cloud) are the hot beds of technology
entrepreneurship.
The number of angel investors has grown from 7 to 32 from 2006 to 2012 while the number of venture
capitalists has grown from 43 to 48 in the same period.
Thus, the entrepreneurial journey of an independent India has only just begun and the road ahead is full of promise,
provided that a favourable ecosystem continues to develop and give wings to this fledgling trend. There is much to desire
in terms of policy reforms and support system available to entrepreneurs. However, numerous challenges and related
opportunities remain and can be summarized as follows:
1. Culture shift: India has experienced nearly two centuries of colonial influence followed by a half century of
socialistic policy leanings, and neither of these contexts favour free private enterprise. The shift to an entrepreneurial
culture is a recent phenomenon, which is yet to transform the traditional middle-class mindset of business being "the
refuge of the incompetent and the unscrupulous" and of salaried jobs being a secure option in an uncertain world. This
culture is gradually changing with social acceptance of new alternatives and growing appetites for risk. The shift to
nuclear families and high mobility has also reduced social pressures to conform. In most areas, the gaps are many and
competition is limited, hence a large opportunity exists for entrepreneurial initiatives.
2. Disparity: The entrepreneurial ecosystem is evolving every day with the birth of new support agencies (both
government and private initiatives) to meet the growing needs of entrepreneurs; yet, it has a long way to go to address the
needs of a country as large as India. The rapid growth of a support system is concentrated in certain pockets of urban
development centres, mainly in the technology hubs limited to metropolitan areas and some state capitals. The
distribution of facilities though uneven is fast spreading, and the benefits of the developing economy are gradually
percolating to the remote geographies and to the demography at "the bottom of the pyramid" thanks to increased social
entrepreneurship. The equitable distribution of the benefits of economic growth and development has caught the
attention of many socially inclined entrepreneurs. Hopefully, the glaring disparity in wealth distribution can be made less
stark by providing an even playing field.
3. Foreign influence: The growth of the Indian economy is service oriented with a heavy dependence on export. The
domestic demand is low due to stagnant primary and secondary sectors of the economy. A huge spate of economic
reforms are the need of the hour to boost domestic agriculture and the industrial sector to create indigenous demand for
services and to develop the domestic markets. A heavy dependence on foreign economies makes growth unstable and
vulnerable to external uncertainties. That the need for this balance is being recognized at different levels and that policy
reforms for promoting the neglected sectors of the economy are being initiated are good signs. A heavy investment in
infrastructure development and business-friendly regulations being planned to improve the country's ratings in terms of
the ease of doing business and to attract foreign direct investment and foreign institutional investment, if successfully
implemented, can open doors to new possibilities for entrepreneurs.
4. Lack of success stories: The success of predecessors opens doors for those who follow. India needs more
entrepreneurial success stories to feed on and motivate the next generation to embrace the difficult but rewarding
entrepreneurial journey. Rags to riches success stories of early Indian entrepreneurs associated with Infosys, Flipkart,
Naukri, Makemytrip, Biocon, Dr. Reddy's, Red Bus, and the like are giving rise to new hopes and aspirations in the masses.
The blooming SME sector reflects the strength of a country's economic ecosystem. India needs to recognize and reward its
risk takers and promote entrepreneurs of all hues as the growth engines of the economy. Having tunnel vision about what
success consists of and what is considered an achievement for an entrepreneur may restrict the diversity of initiatives.
The ecosystem needs to support all segments of entrepreneurial effort without discrimination or bias for set categories.
5. Social entrepreneurship: India suffers from inequitable distribution of wealth, with 42% of its large population
living below the international poverty line of $1.25 USD per day (UNICEF, 2008). Many are still deprived of the benefits of
economic growth and the technology revolution. To achieve inclusive growth for all economic sections of the society,
another trend is social entrepreneurship, which aims to create enterprises that will impact the lives at the bottom of
demographic pyramid. For example, the penetration of mobile technology to the remotest geographies and the lowest
economic strata is proving to be the most helpful tool in reaching out to this segment, and social entrepreneurship funds
and incubators are now available with exclusive focus on this sector. Incubators such as Villgro, the Rural Technology and
Business Incubator (RTBI), Periyar Technology Business Incubator are exclusively focused in this area while others such
as the Centre for Innovation Incubation and Entrepreneurship (CIIE) and the Deshpande Foundation are increasing efforts
to identify scalable models in social enterprises. Funds such as Ennovent, Dasra, and UnLtd India are trying to
systematically invest in scalable social enterprises. Because there are large gaps in this sector, the potential and scope for
innovation is also high.
6. Funding: Although the traditional banking and financial industry has rules and regulations that favour the
industrial sector, which is more oriented towards secured debt, new equity-investing arms are coming up in most public
and private financial institutions to support the service sector. Private seed and angel funding besides private equity and
venture capital funding are fast growing, primarily in funding technology ideas that have a shorter life cycle and rapid
scalability potential.
Conclusion
The Indian experience has established that, when the right environment is created by the policy makers, the
entrepreneurial spirit of the people finds expression and the economic activity booms. The government and the citizens
alike have realized the potential of private initiatives ever since the Indian economy was liberalized in the 1990s. The
trend of private enterprise is picking up pace in India and is likely to be supported by all executive and legislative
functions of the country irrespective of political ideologies.
Despite many challenges, the entrepreneurial opportunities in India are substantial. A new-found entrepreneurial
culture is creating a favourable ecosystem of service and resource providers. Besides government programs and agencies,
a number of private funds, mentors, and service providers are entering the arena to further accelerate the trend. There is a
long way to go to reach a mature entrepreneurial landscape in India, but the opportunities are sufficiently large and
numerous that the future of India will likely be shaped by its entrepreneurs.