Chapter 9 — MSME and Business Entrepreneurship

Chapter 9 covers Micro, Small and Medium Enterprises (MSME) — their definition, classification, role, and problems — along with the characteristics of entrepreneurship, the MSMED Act 2006, and the types of Intellectual Property Rights recognised in India.

MSMEs are classified based on investment in plant and machinery and turnover. Micro enterprises have investment up to Rs 1 Crore and turnover not exceeding Rs 5 Crore; Small enterprises up to Rs 10 Crore investment and Rs 50 Crore turnover; Medium enterprises up to Rs 50 Crore investment and Rs 250 Crore turnover.

Micro enterprises account for 99.4 per cent of all MSME units, small enterprises 0.52 per cent, and medium enterprises 0.1 per cent.

MSMEs contribute approximately 29.7 per cent of GDP and 49.66 per cent of exports, and provide employment to nearly 60 million people through 28.5 million enterprises.

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 came into force in October 2006. It provides a single legal framework addressing the definition, credit, marketing, and technology upgradation of micro, small, and medium enterprises, including medium scale and service-related enterprises.

The major problems include inadequate finance and lack of credit worthiness, difficulty in procuring raw materials, weak managerial skills, over-dependence on middlemen for marketing, inability to maintain quality standards, under-utilisation of capacity, and intense global competition from large and multinational companies.

Entrepreneurship is a systematic and purposeful activity (not a mysterious gift), it must be lawful, it involves innovation (cost saving or revenue-enhancing), it requires organisation of production by combining land, labour, capital and technology, and it involves calculated risk-taking where entrepreneurs convert opportunities into successful ventures.

The 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).

The types of IPR recognised in India are copyright, trademark, geographical indication, patent, design, plant variety, and semiconductor integrated circuit layout design. Traditional knowledge also falls under intellectual property.

A Geographical Indication identifies agricultural, natural, or manufactured products originating from a definite geographical territory where a given quality or reputation is attributable to its geographical origin. Examples include Darjeeling Tea, Kangra Painting, Nagpur Orange, Banaras Brocades and Sarees, and Kashmir Pashmina.

A patent is an exclusive right granted by the Government that prevents others from making, using, selling, or importing an invention. To be patentable, an invention must be new, non-obvious, and capable of industrial application. A patent grants exclusive rights to the inventor for 20 years.

MSMEs are the second largest employers of human resources after agriculture, generating more employment per unit of capital than large industries. Since they can use locally available resources and are not constrained by location, they contribute to balanced regional development across the country.

The Startup India Scheme aims to build a strong ecosystem for nurturing innovation and startups by triggering an entrepreneurial culture, creating awareness about entrepreneurship, encouraging educated youth to consider it as a career, and broadening the entrepreneurial base by including women and socially and economically backward communities.

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