Role of MSME REPSELD

MSME in India enjoy a distinct position in view of their contribution to the socio-economic
development of the country.

Development of MSME prevents migration of rural population to urban areas in search of

employment and contributes to other socio-economic aspects.

1. Balanced regional development, small industries-95% in country.

2. Second largest employer of HR after agriculture, employment generate, more labour less
capital intensive.

3. Supply large variety products(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.)

4. Simple products with simple technology, locally available resources, benefit in every region,
balanced development in country.

5. 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.

6. Low cost production.

7. Quick and timely decisions.

Problems with MSME

1. FINANCE-non-availability of adequate finance to carry out its operations, small capital, lack
credit worthiness, depened on local financial resources, face exploitation, lack of adequate
working capital, either due to delayed payment of dues to them or locking up of their capital
in unsold stocks, banks no collateral

2. RAW MATERIALS- compromise on quality, pay high price, low bargaining power, cant buy
bulk, waste of production capacity for the economy and loss of further units.

3. MANAGERIAL SKILLS- single person, less successful in marketing output, cant afford
professional managers.

4. MARKETING- Marketing is one of the most important activities as it generates revenue.

Effective marketing of goods requires a thorough understanding of the customer’s needs and
requirements. depend excessively on middlemen, who at times exploit them by paying low
price and delayed payments.

5. QUALITY- Many MSMEs do not adhere to desired standards of quality. Instead they
concentrate on cutting the cost and keeping the prices low.
 6. CAPACITY UTILISATION- Due to lack of marketing skills or lack of demand, many firms have to
operate below full capacity due to which their operating costs tend to increase. Gradually
this leads to sickness and closure of the business.

7. GLOBAL COMP.- comp from medium large and mnc which are giants

MSME and entrepreneurship development

Entreprenership- the process of setting up one’s own business as distinct from pursuing any other
economic activity, be it employment or practising some profession.

 person who set-up his business is called an entrepreneur.

 The output of the process, that is, the business unit is called an enterprise.

 entrepreneurship becomes crucial for overall economic development of a nation

 a developing country needs entrepreneurs to initiate the process of development, the

developed one needs entrepreneurship to sustain it.

Characteristics/Features of entrepreneurship SLIOR

(i) Systematic Activity

 Not based on chance or a mysterious gift.

 It is a step-by-step, purposeful process.

 Requires specific temperamental, skill, and knowledge competencies.

 Can be developed through:

o Formal education.

o Vocational training.

o Observation and work experience.

 Dispels the myth that entrepreneurs are born, not made.

(ii) Lawful and Purposeful Activity

 Entrepreneurship involves only lawful business activities.

 Cannot justify illicit activities as entrepreneurship despite risks.

 Purpose: Create value for personal profit and social benefit.

(iii) Innovation

 May involve cost-saving or revenue-enhancing efforts.

 Innovation should become a habit, even if no direct savings or revenue are achieved.
  Involves value creation through:

o New products.

o Discovery of new markets and sources of supply.

o Technological breakthroughs.

o Improved organizational methods.

 Ensures better, cheaper, faster production with minimal ecological harm.

(iv) Organisation of Production

 Combines resources like land, labour, capital, and technology.

 Entrepreneurs may rely on resource providers, not owning all resources themselves.

 Success depends on:

o Identifying resource availability and location.

o Optimal combination of resources.

o Strong negotiation skills.

 Requires convincing financial institutions and managing contracts.

(v) Risk-Taking

 Entrepreneurs take calculated, not reckless, risks.

 Example: Quitting a job for a business involves income assessment.

 They convert 50% chances into 100% success with planning and confidence.

 Avoid extreme risks but prefer challenges for business excitement.

 Risks are personal stakes; underperformance leads to dissatisfaction.

(Intellectual Property Rights) (ipr)

 Once idea becomes actual product, one can ask for its protection by govt.

 These legal rights on product are called IPR

 IP- products of human mind, can rent give or sell to other ppl

 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 and other forms of property is that intellectual property is intangible,
i.e., it cannot be defined or indentified by its own physical parameters.

 Traditional Knowledge (TK):

 o Refers to the knowledge, systems, innovations, and practices of local communities
globally.

o Developed and accumulated over generations.

o Examples in India: Ayurveda, Unani, Siddha, and Yoga.

o Often includes homely remedies passed down through families.

 Importance of TK in Intellectual Property (IP):

o Traditional knowledge falls under the domain of intellectual property.

o Protecting TK prevents its misuse or wrongful patenting by others.

 Traditional Knowledge Digital Library (TKDL):

o Developed by the Government of India.

o A digital repository of traditional knowledge, particularly about medicinal plants and

formulations used in Indian systems of medicine.

o Safeguards India’s ancient wisdom and prevents its exploitation.

 Significance:

o Preserves and documents ancient knowledge systems.

o Acts as a reference to counter wrongful claims or patents on traditional medicinal

practices.

 Trade Secrets:

 A trade secret is confidential information that provides a competitive advantage to a

business.

 Example: The Coca-Cola recipe, known to only three people globally.

 Characteristics of Trade Secrets:

 Must remain confidential to retain its value.

 Provides a business with a competitive edge in the market.

 Protection of Trade Secrets in India:

 Governed under the Indian Contract Act, 1872.

 Relies on agreements or contracts to maintain confidentiality and prevent

unauthorized disclosure.

 Significance:

 Helps businesses maintain uniqueness and market leadership.

 Prevents competitors from replicating or misusing critical proprietary information.

Why is IPR Important for Entrepreneurs? CIPI

1. It encourages creation of new, path breaking inventions, such as cancer cure medicines.

2. It incentivises inventors, authors, creators, etc., for their work.

3. It allows the work created by a person to be distributed and communicated to the public
only with his/her permission.

4. it helps in the prevention of loss of income. It helps authors, creators, developers and owners
to get recognition for their works.

Types of IP

1. COPYRIGHT

 Right to not copy

 Original idea expressed

 It is a right conferred upon the creators of literary, artistic, musical, sound recording and
cinematographic film.

 prohibit the unauthorised use of the content which includes reproducing and distributing
copies of the subject matter.

2. TRADEMARK

 A trademark is any word, name, symbol, or their combination used to identify the goods or
services of an individual, company, or organization.

 It differentiates the goods/services of one entity from another.

 Communicates a company’s reputation, goodwill, products, and services.

 Helps distinguish similar products in the market.

 Prevents competitors from using identical or similar trademarks (deceptive similarity).

 Similarity in trademarks can be phonetic, structural, or visual, leading to consumer

confusion.

 Words, color combinations, labels, logos, packaging, shapes of goods, etc.

 Non-Conventional Trademarks: Include unique marks gaining recognition over time, such as
sound marks,dynamic marks, smell, and taste (though the latter are not recognized in India).

 Registration under the Trademark Act, 1999 is optional but provides exclusive rights and
legal protection.

 To register a trademark in India, visit the Indian Trademark Registry website:

http://www.ipindia.nic.in.

 Certain countries recognize smell and taste as trademarks, unlike India.

3. GEOGRAPHICAL INDICATION

 GI identifies products originating from a specific geographical region, with quality or

characteristics tied to the origin.

 Includes agricultural products, natural goods, handicrafts, manufactured items, and

foodstuffs.

 Examples: Naga Mircha, Mizo Chilli, Darjeeling Tea, Kangra Painting, Banaras Sarees, Kashmir
Pashmina.

 Represents collective heritage and builds regional goodwill over centuries.

 Consumers increasingly value products with unique characteristics tied to their geographical
origin.

4. PATENT

 A patent is an IPR protecting scientific inventions (products or processes) showing technical

advancement.

 It grants the exclusive right to prevent others from using, selling, or manufacturing the
invention.

 Criteria for patentability:

1. New – Not previously known anywhere in the world.

2. Non-obvious – Not easily deduced by experts in the field.

3. Industrial application – Must be usable in industry.

 Patents apply to inventions, not discoveries (e.g., gravity is a discovery, while the telephone
is an invention).

 Non-patentable items: Scientific principles, natural laws, abstract theories, immoral/injurious

inventions, traditional knowledge, and atomic energy inventions.

 Valid for 20 years, during which others need licensing to use the patent.

5. DESIGN

 A design includes shape, pattern, arrangement, or colour applied to an article's aesthetic

appearance.

 Protection covers eye-catching features and lasts for 10 years, renewable for 5 more years.

 During validity, use requires licensing from the owner.

 After expiration, the design enters the public domain.

6. PLANT VARIETY
  Plant Variety groups plants based on botanical characteristics and is developed by farmers.

 It helps conserve, improve, and utilize plant genetic resources (e.g., hybrid potatoes).

 Promotes R&D investment, recognizes farmers as breeders, and ensures high-quality seeds.

 Supports growth of the seed industry.

7. Semiconductor Integrated Circuits Layout Design

 A computer chip contains integrated circuits (ICs) made from semiconductors.

 Semiconductors are materials used in electronic devices, containing transistors and circuitry
elements.

 They perform electronic circuitry functions within the chip.

Role of small business in India

 Small Scale Industries (SSIs) are crucial for India’s socio-economic development.

 SSIs account for 95% of industrial units, contributing 40% of industrial value and 45% of
exports.

 They are the second-largest employers after agriculture.

 SSIs promote balanced regional development by using local materials and indigenous
technology.

 They offer opportunities for entrepreneurship, low production costs, quick decision-making,
and adaptability for customized production.

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).