CBSE Class 11 Business Studies MSME and Business Entrepreneurship Worksheet

Mcq Questions for Ncert Class 11 Business Studies MSME and Business Entrepreneurship

Question. Which institution is at top of hierarchy in the administrative setup for the promotion and development of the small scale, agro and rural industries?
(a) SIDO
(b) NSIC
(c) Ministry of MSME
(d) Ministry of Industrial Affairs

Answer : C

Question. ………….. provides subsidised loans to youth to establish their business if their family income is less than ₹ 1,00,000.
(a) Prime Minister Vikas Yojana
(b) Prime Minister Business Scheme
(c) Prime Minister Grameen Yojana
(d) Prime Minister Rozgar Yojana

Answer : D

Question. A business centre that offers working space and specialised support for new start ups is known as 
(a) Isolator
(b) Injector
(c) Incubator
(d) Integrator

Answer : C

Question. In India, industries are classified on the basis of investment in plant and machinery. Amount of ………. in a village industry per head artisan cannot exceed is ₹ 50,000.
(a) working capital investment
(b) cash investment
(c) fixed capital investment
(d) Both (a) and (c)

Answer : C

Question. Government at various levels are providing assistance to small businesses by various means. By helping small industries, government aims at
(a) prevention of migration
(b) poverty alleviation
(c) employment to artisans
(d) All of these

Answer : D

Question. A …… is an exclusive right granted by government which provides the exclusive right to exclude all others and prevent them from using or offering from sale.
(a) copyrights
(b) patent
(c) proprietary rights
(d) trademark

Answer : B

Question. ……… is the single point of contact for the entire start-up ecosystem to enable knowledge exchange and funding access.
(a) Start India fund
(b) Start India forum
(c) Start India hub
(d) Start India meeting

Answer : C

Question. Statement I Entrepreneurship development leads to concentration of economic activities in few areas of the country.
Statement II For start-ups, there will be government inspection regarding such compliance from second year onwards.
Alternatives
(a) Statement I is correct and Statement II is wrong
(b) Statement II is correct and Statement I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect

Answer : D

Question. ……… institution is setup as an Apex Bank to provide direct/indirect financial assistance under different schemes and also coordinates the functions of other institution in similar activities.
(a) SIDBI
(b) IDBI
(c) NSIC
(d)NABARD

Answer : A

Question. Statement I Small business has generally short gestation period.
Statement II Small scale industries are considered good for countries that have less labour and surplus capital.
Alternatives
(a) Statement I is correct and Statement II is wrong
(b) Statement II is correct and Statement I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect 

Answer : A

Question. People who own, operate and take risk of a business venture is called .............. .
(a) aptitude
(b) employee
(c) entrepreneur
(d) entrepreneurship

Answer : C

Question. M/s ABS is a small enterprise engaged in the production of springs. It supplies its entire output to tractor manufactures. M/s ABS can be classified as a
(a) ancillary industry
(b) tiny industry
(c) secondary industry
(d) traditional industry

Answer : A

Case Based MCQs :

Siraj is a handicraft artist. He has been doing the work for different firms for more than 10 years. Now, he has decided to set up his own enterprise in his small town.
He has employed three local people and invested ₹ 5 lakh. He has received lot of assistance with government policies. The raw materials are sourced from the nearby villages. The firm is known to produce products as per the individual customer tastes and preferences. The goods are sold at a cheap price because cost of production is low. However, as the business is growing, Siraj is finding it difficult to manage all the work since he has never managed business to such an extent.
In the recent times, company has also faced the problem of arranging finance for funding increasing purchase orders of big tickets. But to his rescue, he got finance from an institution that provides finance to rural and small industries and organises training and development programmes for rural entrepreneurs.
However, he has now got a new problem at hand. One of the big textiles players has entered this handicraft space and has started poaching Siraj’s employees at higher salaries. Siraj is now seeking a solution to this.

Question. Which role of small scale industries in India is highlighted in the passage?
(a) Balanced regional growth
(b) Low cost of production
(c) Customised production
(d) All of the above 

Answer : D

Question. In which category, Siraj’s firm falls into?
(a) Micro enterprises
(b) Small enterprises
(c) Medium enterprises
(d) None of these

Answer : A

Question. “He got finance from an institution that provides finance to rural and small industries and organises training and development programmes for rural entrepreneurs.” Which institution is highlighted in this line?
(a) NSIC
(b) RSBDC
(c) NABARD
(d) Ministry of MSMEs

Answer : C

Question. One of the big textiles players has entered this handicraft space and has started poaching Siraj’s employees at higher salaries. Which problem of small business is highlighted in this line?
(a) Managerial skills
(b) Labour
(c) Finance
(d) Quality

Answer : B

Question. “He has received lot of assistance with government policies.” Which ministry is the nodal ministry for formulation of policy and coordination of central assistance for the promotion and development of small scale industries in India?
(a) Ministry of micro enterprises
(b) Ministry of small enterprises
(c) Ministry of medium enterprises
(d) None of the above

Answer : D

Question. Which problem of small scale industries is highlighted in the line, “Siraj is finding it difficult to manage all the work since he has never managed business to such an extent”?
(a) Quality
(b) Capacity utilisation
(c) Managerial skills
(d) Finance 

Answer : C

Mayank, after completing his master’s degree in management, decided to start his own enterprise with the name Mayank Food Industries in his village in Himachal Pradesh and opted for labour-intensive techniques to provide employment to local people.
He took the help of DIC, a government institution for promoting small scale industries to get knowledge about incentives and schemes launched by the government for opening small scale industries. It was estimated that, the food and beverages plant to be set up will require a fixed capital investment of ₹ 80 lakhs.
The working capital requirements is estimated to be ₹ 20 lakhs. The directors of the company decided to raise the capital by issuing shares as well as taking loans from financial institutions. In addition to this, to thrive the business, the directors decided to take benefit of various policies and programmes formulated by the ministry. 
With all these products, they were able to produce extremely high quality and delicious food recipes. This led to creation of intellectual property right for the firm.

Question. DIC stands for which of the following?
(a) District Industrial Centre
(b) Development and Industrial Corporation
(c) Department of Infrastructure and Capital Formation
(d) None of the above 

Answer : A

Question. Which organisation is responsible for implementing and monitoring various policies and programmes formulated by the ministry of micro, small and medium enterprises?
(a) NSIC
(b) SIDBI
(c) NABARD
(d) SIDO

Answer : D

Question. Mayank has entrepreneurship skills as shown in above case. Which of the following indicates entrepreneurship?
(a) Setting up one’s own business
(b) Pursuing employment
(c) Practising profession
(d) All of the above 

Answer : A

Question. “With all these products, they were able to produce extremely high quality and delicious food recipes.” Which IPR is highlighted in this line?
(a) Patents
(b) Copyrights
(c) Trademarks
(d) Trade secrets

Answer : D

Question. The category into which this industry will be placed under MSMED Act is
(a) micro enterprises
(b) small scale manufacturing enterprises
(c) small service enterprises
(d) medium enterprises

Answer : B

Question. The Directors of the company decided to raise the capital by issuing shares as well as taking loans from financial institutions. The shares are the example of ……… capital source.
(a) internal, long-term
(b) external, long-term
(c) internal, borrowed
(d) external, borrowed

Answer : A

Important Questions for Ncert Class 11 Business Studies MSME and Business Entrepreneurship

Very Short Answer Type Questions

Question. State any feature of cottage industries.
Answer : Cottage industries are characterised by certain features like the following:
- these are organised by individuals, with private resources;
- normally use family labour and locally available talent;
- the equipment used is simple;
- capital investment is small;
- produce simple products, normally in their own premises;
- production of goods using indigenous technology

Question. Name areas where SSLs feel threatened from global enterprises
Answer : It is difficult to withstand the quality standards, technological skills, financial creditworthiness, managerial and marketing capabilities

Question. What different parameters are used to measure the size of service business?
Answer : In the case of enterprises engaged in providing or rendering of services there are three types of enterprises:
Micro enterprise: investment in equipment does not exceed ten lakh rupees.
Small enterprise: investment in equipment is more than ten lakh rupees but does not exceed two crore rupees.
Medium enterprise: investment in equipment is more than two crore rupees but does not exceed five crore rupees

Question. A micro small scale industry has investment of Rs. 24 lakhs and engaged in manufacturing business. Now, it wants to increase its investment byRs. 4 Lakhs. what type of small Business will it become and what is the maximum investment limit in such cases?
Answer : It will become small type of small business and can invest upto 5crore

Short Answer Type Questions :

Question. Write short note on
(i) Design
(ii) Plant variety
(iii) Semiconductor Integrated Circuits Layout Design
Answer : (i) 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.
(ii) Plant Variety It 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.
(iii) Semiconductor Integrated Circuits Layout Design A semiconductor layout design means a layout of transistors and other circuitry elements used and formed on a semiconductor material, as an insulating material, or inside the semiconductor material. Its design is to perform an electronic circuitry function.

Question. Under NCEUS, what issues are being considered?
Answer : Following issues are being considered under National Commission for Enterprises in Unorganised Secotor
(i) Growth poles for the informal sector in the form of clusters, in order to get external economic aid.
(ii) Potential for public private partnership in imparting the skills required by the informal sector.
(iii) Provision of micro finance and related services to the informal sector.
(iv) Providing social security to the workers in the informal sector.

Question. Sana and Vishal are friends who have been planning for a start-up. With the money they had, they did initial research and proof of concept. To fund their idea, a professionally managed fund institution provided them the funding. Identify this source to fund the start-up and explain.
Answer : The way to fund the start-up highlighted is venture capital. Venture capital are professionally managed funds who invest in companies that have huge potential in future. They focus on sale rather than profit of ventures. This type of funding is often obtained in exchange for an equity stake in business. Generally, such funding is involved in software, technology and bio-technology. It bridges the gap where traditional sources of funds cannot participate actively in funding new venture. e.g., Nexus Venture Partner, Kalaari Capital, Accel Partners.

Question. Service enterprises can be divided into three categories majorly. Mention about these categories.
Answer : Service enterprises are categorised as follows
(i) Micro Enterprise In micro enterprise, the investment in equipment does not exceed ₹ 10 lakh.
(ii) Small Enterprise In small enterprise, the investment in equipment is more than ₹ 10 lakh but does not exceed ₹ 2 crore.
(iii) Medium Enterprise In medium enterprise, the investment in equipment is more than ₹ 2 crore but does not exceed ₹ 5 crore.

Question. The government has launched startup India scheme for promoting startup culture in the country. What are the major objectives of this scheme?
Answer : Following are the objectives of startup India scheme
(i) trigger an entrepreneurial culture, inculcate entrepreneurial values in the society at large and influence the mindset of people towards entrepreneurship.
(ii) create awareness about the charms of being an entrepreneur and the process of entrepreneurship, especially among the youth.
(iii) encourage more dynamic startups by motivating enducated youth, scientists and technologists to consider entrepreneurship as a lucrative, preferred and viable career.
(iv) support the early phase of entrepreneurship development, including the pre-startup, nascent, as well as, early post startup phase and growth enterprises.

Question. Identify any six major industries that are grouped in the small-scale sector of India.
Answer : Six major industries are
(i) Food product
(ii) Chemical and chemical products
(iii) Leather and leather products
(iv) Hosiery and garments
(v) Repair services
(vi) Beverages, tobacco and tobacco products

Question. What is Entrepreneurship Development Process (EDP)?
Answer : EDP is a process to help an individual in strengthening his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entrepreneurial role effectively. EDP is not merely a training programme. It is a process to
(i) enhance the motivation, knowledge and skills of potential entrepreneurs. 
(ii) reforming the entrepreneurial behaviour.
(iii) assist entrepreneurs to develop their own ventures.

Question. Explain the two banks established by the support of government for the purpose of development of small-scale industries and rural development. 
Answer : The two banks are NABARD and SIDBI
(i) National Bank for Agriculture and Rural Development (NABARD) The NABARD was set up on 15th July, 1982 to provide finance to rural areas in order to promote integrated rural development. It is an apex institution that provides finance to rural and small industries and organises training and development programmes for rural entrepreneurs.
(ii) Small Industries Development Bank of India (SIDBI) It was established in April, 1990 as a wholly owned subsidiary of IDBI, under the Small Industries Development Bank of India Act, 1990. Its main object is to promote, finance and develop the small scale sector in India. It provides direct and indirect financial assistance to small business organisations under various schemes. It coordinates the functions of other institutions engaged in similar activities.

Question. Differentiate between ancillary unit and tiny unit on any three basis.
Answer : The differences between an ancillary unit and a tiny unit are

Question. Amar, Akbar and Anthony are three good friends who have completed a vocational course in entrepreneurship. After their school education finding the job market tough. They were contemplating the idea of setting up a small business using the skills they had learnt in their course. However, they knew very little about business.
They were wondering what business to start, where to locate it, how to procure machinery and materials needed for the business, how to raise money and how to market. They came across a notification given by the district industries centre located near the industrial estate in Balanagar Ranga Reddy District of Andhra Pradesh regarding a seminar on government’s assistance for a small business aimed at young entrepreneurs. Excited with the news, the three friends decided to attend the seminar. They were told about the financial and other assistance offered by the central and state governments under the rural employment generation programme to the educated youth. They found that toys were in demand and decided to manufacture toys. They started a small scale industry in their village by taking financial assistance with the help of khadi and village industries commission. Today, they are successful makers of toys and in the near future. They plan to get into export market as well.
(i) Which problems were faced by Amar, Akbar and Anthony, when they decided to set up a small business?
(ii) Which institutions helped Amar, Akbar and Anthony in establishing their small scale industry?
Answer : (i) Amar, Akbar and Anthony faced the following problems when they decided to set up a small business
(a) Problems related to identification of a business idea.
(b) Problems related to location of business.
(c) Problems related to procurement of materials and machines required for the business.
(d) Problems related to finance and marketing
(ii) Following institutions helped Amar, Akbar and
Anthony in establishing their small scale industry
(a) District Industries Centre
(b) Khadi and Village Industries Commission

Question. ‘Kamna’ is SSI engaged in the manufacturing of handloom sarees. 60% of the share capital of this unit is jointly owned by Sumitra and her daughter Kamayani. What form of concessions is the above unit entitled to?
Answer : ‘Kamna’ is a women enterprise. If a small scale industry’s more than 51% share capital is owned by women or a group of women, individually or jointly, then it is referred to as a ‘women enterprise’. Such types of enterprises can avail the following concessions from the government
(i) Low rate of interest on loans
(ii) Easy repayment facility.

Question. Apart from increasing the employment opportunities and adding to the GDP, small scale industries contribute and assist a country like India in numerous ways. Do you agree? Give reasons.
Answer : Yes, I agree with the statement that apart from increasing the employment opportunities and adding to the GDP, small scale industries contribute and assist a country like India in numerous ways. The reasons for the same are (any three)
(i) Supply Variety of Products Small industries in our country supply enormous variety of products which include goods of mass consumption such as readymade garments, hosiery goods, stationery items, soaps and detergents, domestic utensils, etc. Sophisticated goods such as electrical goods, engineering goods, drugs, etc are also manufactured by these industries.
(ii) Balanced Regional Development As these industries produce products using simple technologies and depend on locally available resources in terms of both material and labour,
thus, they can be opened anywhere in the country, without any locational constraints and the benefits of industrialisation can be reaped by every region.
(iii) Provide Business Opportunities They 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 or nil capital investment.
(iv) Low Cost of Production They also enjoy the advantage of low cost of production. This is because the establishment and running cost are minimum. Locally available resources are less expensive. Due to lower cost of production, they have competitive strength.

Question. Vijay runs his small factory for producing cotton goods. He wants to venture into other countries but could not. Moreover, some MNCs have come up in the country giving tough times to Vijay. Which problem of small scale industries is highlighted here?
Answer : In the given text, ‘global competition’ is highlighted as the problem of small scale industry. Small businesses feel threatened from the global entrepreneurs in the following areas
(i) Competitions from medium and large industries as well as multinational companies.
(ii) High quality standards, technological skills, financial credit worthiness, managerial and marketing capabilities of large industries.
(iii) Due to strict requirements of quality certification like ISO 9,000, small industries have limited access to markets of developed countries.

Question. Write a short note on
(i) Small Industries Development Organisation
(ii) National Small Industries Corporation
Answer : (i) Small Industries Development Organisation (SIDO) This organisation is also referred to as office of the development commissioner, SSI. It is attached to the ministry of micro, small and medium enterprises and is responsible for implementing and monitoring various policies and programmes formulated by the ministry.
(ii) National Small Industries Corporation (NSIC) It is a public sector enterprise of the ministry of micro, small and medium enterprises and has been providing marketing support to the medium and small industries under the marketing assistance scheme.

Question. What is meant by entrepreneurship development? Explain.
Answer : Entrepreneurship development refers to the process of enhancing entrepreneurial skills and knowledge through structured training and institution building programmes. It focuses on individual who wishes to start or expand a business.
The whole point of entrepreneurship development is to increase number of entrepreneurs and to create entrepreneurship culture within society. One trained entrepreneur can guide other on how to start their own enterprises. Now-a-days, it is treated as an important tool of industrialisation and a solution of unemployment in country.

Question. Explain in detail, the following three problems of small scale industries in the country
(i) Finance
(ii) Marketing
(iii) Raw Materials
Answer : (i) Finance One of the severe problems faced by SSIs is the non-availability of adequate finance to carry out its operations. These units lack in credit worthiness and have a small capital base. As a result, they heavily depend on local financial resources and frequently become the victims of exploitation by the money lenders.
(ii) Marketing Small scale enterprises are unable to meet the expenses of marketing activities. They depend on middlemen who exploit them by paying low prices for their goods and delaying their payments.
(iii) Raw Materials If the required materials are not available, small businesses have to compromise on the quality or have to pay high price to get good quality materials. Their bargaining power is relatively low due to the small quantity of purchases made by them. They cannot afford to buy in bulk because they do not have the facility to store material and
neither do they have the necessary finance.

Question. Write any three problems of small business in India
Answer : 
Finance:
- Many of the units in the small sector lack the credit worthiness required to raise as capital from the capital markets.
- They are exploited by the money lenders
- These units frequently suffer from lack of adequate working capital, either due to delayed payment of dues to them or locking up of their capital in unsold stocks
Raw Material:
- If the required materials are not available, they have to compromise on the quality or have to pay a high price to get good quality materials
- They cannot afford to take the risk of buying in bulk as they have no facilities to store the materials
 Managerial Skills
- Promoted and operated by a single person, who may not possess all the managerial skills required to run the business
- They may not find enough time to take care of all functional activities. At the same time they are not in a position to afford professional managers

Question. What is the aim of NSIC.
Answer : National Small Industries Corporation (NSIC) aims at providing:
- Supply indigenous and imported machines on easy hire-purchase terms.
- Procure, supply and distribute indigenous and imported raw materials.
- Export the products of small business units and develop exportworthiness.

Long Answer Type Questions :

Question. Ritvik is a graduate from University of Delhi. He decided to start-up just after the graduation. He took on going edtech wave in his stride and set up a blended (offline + online) model of learning extra-curricular activities. He started boot strapped with the savings of his internship stipend. However, he is struggling to expand on the model because of lack of funds. Suggest him six ways to raise more capital.
Answer : Ways for him to raise capital are
(i) Bank Loan Funding from bank will involve the usual process of sharing the business plan and the valuation details, along with project report based on which the loan is sanctioned.
(ii) Government Programmes that Offers Start-up Capital Most popular scheme is Pradhan Mantri Micro Units Development and Refinance Agency Limited (MUDRA) which started with an initial corpus of ₹ 20,000 crore to extend benefits to around 10 Lakh SMEs.
(iii) Angel Funding Angel Investments take very early-stage business under their wing while venture capital or equity investors do not like to commit capital to tiny business. Many household names, like Google, Facebook were financed in their earliest stages by angel investors. e.g. Mumbai Angels, Hyderabad Angels Lets Venture, etc.
(iv) Venture Capital These are professionally managed funds who invest in companies that have huge potential in future. They focus on sale rather than profit of ventures. This type of funding is often obtained in exchange for an equity stake in business. e.g. Nexus Venture Partner, Kalaari Capital, Accel Partners.
(v) Incubators They provide professional services that facilitates the development of new business by providing resources, support and advice. In India, more than 50% of the incubators are located in universities indicating role of universities in supporting new start-ups. e.g.,
(a) Innovation and Entrepreneurship (SINE), IIT Mumbai
(b) Technology Business Incubator IIT Delhi
(vi) Accelerators These are organisations that offer a range of support service and funding opportunities for startups. They provide capital and investment in return for start-up equity. They target set action to boost the development and growth of a startups. e.g.
(a) Amity Innovation Incubator
(b) IAN Business Incubator, Kyron

Question. Small-scale industries have got some inherent problems. These are the problems which have been in system for many years now and make the develop-ment of small scale industries much more challenging. Discuss any six such problems.
Answer : Problems of small-scale industries are
(i) Managerial Skills Small business is generally promoted and operated by a single person, who may not possess technical and managerial skills to run the business.
(ii) Labour Due to low remuneration, talented people are not attracted to work with small business, firms as they cannot afford to pay higher salaries to the employees.
This affects employee willingness to work hard and produce more. Thus, productivity per employee is relatively low and employee turnover is generally high.
(iii) Quality Many small business organisations do not adhere to desired standards of quality. Instead, they concentrate on cutting the cost and keeping the prices low. As they do not maintain quality, they are not able to compete in global markets.
(iv) Capacity Utilisation Due to lack of marketing skills leading to lack of demand, many small business firms have to operate below full capacity due to which their operating costs tend to increase. This leads to sickness and closure of the business.
(v) Technology Use of outdated technology is often stated as a serious problem of such enterprises. This results in low productivity and uneconomical production.
(vi) Sickness Prevalence of sickness in small industries has become a point of worry for both the policy-makers and the entrepreneurs. The causes of sickness are both internal and external. 
(a) Internal problems include lack of skilled and trained labour, managerial and marketing skills. 
(b) External problems include delayed payment, shortage of working capital, inadequate loans and lack of demand for their products.

Question. What do you mean by rural industry? Also, explain its features.
Answer : Rural industry is also known as cottage industry or traditional industry. It is not defined by capital investment criteria as in the case of other small scale industries. However, cottage industries are characterised by certain features which are as follows Following are the features of cottage industry
(i) It is organised by individuals, with private resources.
(ii) It normally uses family labour and locally available talent and is labour intensive.
(iii) In cottage industry, simple equipments are in use.
(iv) In it, capital investment is small.
(v) It produces simple products, normally in their own premises.
(vi) It produces goods using indigenous technology.

Question. Explain the characteristics of entrepreneurship in detail.
Answer : The following are the characteristics of entrepreneurship
(i) Systematic Activity Entrepreneurship 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.
(ii) Lawful and Purposeful Activity The object of entrepreneurship is lawful business. It is important to take note that one may try to legitimise unlawful actions as entrepreneurship on the grounds that just as entrepreneurship entails risk, so does illicit businesses.
(iii) Innovation Entrepreneurship is creative in the sense that it involves innovation, introduction 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 Entrepreneur, in response to a perceived business opportunity, mobilises the resources into a productive enterprise or firm. 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.
(v) Risk-taking Entrepreneurship involves risk as individuals opting for a career in entrepreneurship take a bigger risk that is involved in a career in employment or practice of a profession as there is no ‘assured’ payoff. However, entrepreneurs are so sure of their capabilities that they can convert situations with higher risks into opportunities.

Question. Discuss any six incentives provided by Central/State Government for setting up small scale units in backward or hilly areas.
Answer : Some of the common incentives provided by the government for industries in backward and hilly areas are (any six)
(i) Land Every state offers developed plots for setting up of industries. The terms and conditions may vary. Some states don’t charge rent in the initial years, while some allow payment in instalments. 
(ii) Power Power is supplied at a concessional rate of 50 percent, while some states exempt such units from payment in the initial years.
(iii) Water Water is supplied on no-profit, no-loss basis or with 50 percent concession or exemption from water charges for a period of 5 years.
(iv) Sales Tax In all Union Territories, industries are exempted from sales tax, while some states extend exemption for 5 years period.
(v) Octroi Most states have abolished octroi. 
(vi) Raw Materials Units located in backward areas get preferential treatment in the matter of allotment of scarce raw materials like cement, iron, steel, etc.
(vii) Finance Subsidy of 10-15 percent is given for building capital assets. Loans are also offered at concessional rates.
(viii) Marketing Assistance Government tries to solve their marketing problem by improving information and also provide guarantee for sale of goods.
(ix) Tax Holiday Exemption from paying taxes for 5 or 10 years is given to industries established in backward, hilly and tribal areas.

Question. What do you mean by intellectual property rights?
Also, explain its importance.
Answer : Intellectual property rights are the intellectuals emerged from the human mind and the legal right on these human intellects. It is used to protect brand name, design, technology.
Importance of Intellectual Property Rights is as follows
(i) Exclusive right on the use of IP is the biggest motivation behind creation of intellectual property.
(ii) Customers get improved goods and services due to IPR.
(iii) Entrepreneurs are enabled to earn more revenue due to IPR.
(iv) It is cost saving mechanism for society through effectively utilisation of resources.
(v) In India, the union cabinet on 13th May, 2016 approved the national intellectual property right policy to promote entrepreneurs.

Question. According to ILO’s latest report, the number of the unemployed in country will increase to 18.6 million in 2018 and 18.9 million in 2019 against 18.3 million in 2017. The International Labour Organisation (ILO) has said in its latest report that India could witness a higher unemployment rate of 3.5% in 2018, a little more than that of 3.4% as projected earlier. Exports are saying that unemployment is up because “Make in India”, “Start-up India” and other official schemes are not working in proper manner due to lack of entrepreneurial skills among the youth.
(i) Identify the concept which can reduce theunemployment problem of India.
(ii) State the need of this concept in India.
Answer : (i) Entrepreneurship development can reduce the unemployment problem in India.
(ii) For a developing economy like India, need of entrepreneurship development arises due to the following reasons
(a) Eliminates Poverty and Unemployment The basic problem of India is poverty and unemployment, Entrepreneurship development can help the unemployed youth to opt for self-employment and entrepreneurial as a career.
(b) Capital Formation The various development banks like IDBI, IFCI, SIDBI take initiative in promoting entrepreneurship through fund. Entrepreneurship development encourage the
establishment of new industries in economy which is a cause of capital formation.
(c) Improvement in Per Capita Income Entrepreneurship development encourages new startups which is big cause of increase in per capita income of India.
(d) Defuses Social Tension Entrepreneurship development can help channelising the talent and energies of frustrated unemployed youth of India. In other words, it can raise harmony
within society.
(e) Discovering New Markets It helps the entrepreneurs in discovering new market in country and outside country.
(f) Helpful in Selection of Project and Product It helps entrepreneurs in evaluating various projects and products and choose the most suitable one which can be established and
started easily, gives maximum profit with least possible risk and which have scope for further development.

Question. Small scale industries play a pivotal role in rural economy of a country. Comment.
Answer : The role of small scale industries in rural India is explained in the following points
(i) Non-farm Employment Traditionally, rural households in India were exclusively engaged in agriculture. But now, rural households have varied and multiple sources of income, and participate in a wide range of non-agricultural activities alongwith the traditional rural activities of farming and agricultural labour. This can be largely attributed to the setting up of agro-based rural small industries. 
(ii) Employment for Artisans Cottage and rural industries play an important role in providing employment opportunities in the rural areas, especially to the traditional artisans and the weaker sections of society.
(iii) Prevention of Migration Development of rural and village industries can also prevent migration of rural population to urban areas in search of employment.
(iv) Poverty Alleviation Village and small industries are significant as producers of consumer goods and absorbers of surplus labour, thereby addressing the problems of supply, poverty and unemployment. 
(v) Promoting SSI and Rural Industrialisation Promotion of small scale industries 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.” 
(vi) Socio-economic Aspects These industries contribute towards socio-economic aspects such as reduction in income inequalities, dispersed development of industries and linkage with other sectors of the economy.

Question. Preet food Industries set up food and beverages processing plant in the rural area of Haryana and opted for labour intensive technique due to easy availability of labour and to provide employment to local people. Board of director decided to invest 50 lakhs to acquire plant & machinery, Rs. 1 crore to buy land, Rs. 20 Lakhs to buy raw material and Rs. 20lakhs to maintain day to day expenses.
(a) Name the Act of Industries which is applicable to the above industry.
(b) which category of part (a) will the above industry came?
(c) State the investment limit in this category.
(d) what value have been followed by the above company.
[Hints:-MSMED Act, 2006, Small Scale Industry, Rs. 5 crores, Employment Generation, Balanced Regional Development, concern for social
Answer :
a) The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 addresses these issues relating to definition, credit, marketing and technology upgradation. Medium scale enterprises and service related enterprises also come under the purview of this Act. The MSMED Act, 2006 came into force w.e.f., October, 2006. Accordingly, enterprises are classified into two major categories viz., manufacturing and services
b) It is a small scale industry
c) In the case of enterprises engaged in the manufacture or production of goods pertaining to any industries specified in the first schedule to the Industries (Development and Regulation) Act, 1951, Small enterprise: investment in plant and machinery is more than twenty-five lakh rupees but does not exceed five crore rupees
d)Values followed by the company are as follows:
1. Employment generation: The company opted for labour intensive technique due to easy availability of labour and to provide employment to local people
2. Balanced Regional Development: The company set up food and beverages processing plant in the rural area of Haryana thereby helping in balanced regional development
3. Concern for society: The company opted for labour intensive technique thereby showing concern towards the society

Question. Write notes on the following:
a) NABARD
b) SFURTI
c) RSBDC
d) DIC’S
e) SIDBI
f) NCEUS
Answer : 
a) National Bank for Agriculture and Rural Development (NABARD): It has been adopting a multi-pronged, multi-purpose strategy for the promotion of rural business enterprises in the country. Apart from agriculture, it supports small industries, cottage and village industries, and rural artisans using credit and non-credit approaches. It offers counselling and consultancy services and organizes training and development programmes for rural entrepreneurs
b) Scheme of Fund for Regeneration of Traditional Industries (SFURTI): To develop clusters of traditional industries in various parts of the country. To build innovative and traditional skills, improve technologies and encourage public-private partnerships, develop market intelligence etc., to make them competitive, profitable and sustainable. To create sustained employment opportunities in traditional industries.
c) The Rural Small Business Development Centre (RSBDC): It aims at providing management and technical support to current and prospective micro and small entrepreneurs in rural areas. RSBDC has organized several programmes on rural entrepreneurship, skill upgradation workshops, mobile clinics and trainers training programmes, awareness and counselling camps
d) The District Industries Centers (DICs): 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.
e) Small Industries Development Bank of India (SIDBI): It is set up as an apex bank to provide direct/indirect financial assistance under different schemes, to meet credit needs of small business organisations. It coordinate the functions of other institutions in similar activities
f) The National Commission for Enterprises in the Unorganised Sector (NCEUS): To recommend measures considered necessary for improving the productivity of small enterprises in the informal sector. To generate more employment opportunities on a sustainable basis, particularly in the rural areas. To enhance the competitiveness of the sector in the emerging global environment. To develop linkages of the sector with other institutions in the areas of credit, raw materials, infrastructure, technology upgradation, marketing and formulation of suitable arrangements for skill development.

Question. On the basis of capital contribution identify the type of SSI from the following:
a) Capital contribution on plant and machinery is Rs. 9 lakh.
b) Capital contribution on plant and machinery is Rs. 7.5crore
c) Capital contribution on plant and machinery is Rs. 2650000/-
Answer :
a) Capital contribution on plant and machinery is Rs. 9 lakh is a Micro enterprise specified in the first schedule to the Industries (Development and Regulation) Act, 1951
b) Capital contribution on plant and machinery is Rs. 75000/- is a Medium enterprise specified in the first schedule to the Industries (Development and Regulation) Act, 1951
c) Capital contribution on plant and machinery is Rs. 2650000/- is a Small enterprise specified in the first schedule to the Industries (Development and Regulation) Act, 1951

Question. Expain in detail the problems faced by the small business?
Answer :
Finance:
- Many of the units in the small sector lack the credit worthiness required to raise as capital from the capital markets.
- They are exploited by the money lenders
- These units frequently suffer from lack of adequate working capital, either due to delayed payment of dues to them or locking up of their capital in unsold stocks
Raw Material:
- If the required materials are not available, they have to compromise on the quality or have to pay a high price to get good quality materials
- They cannot afford to take the risk of buying in bulk as they have no facilities to store the materials
Managerial Skills
- Promoted and operated by a single person, who may not possess all the managerial skills required to run the business
- They may not find enough time to take care of all functional activities. At the same time they are not in a position to afford professional managers
Labour
- They cannot afford to pay higher salaries to the employees, which affects employee willingness to work hard and produce more
- Unskilled workers join for low remuneration but training them is a time consuming process
Marketing
- These organisations have to depend excessively on middlemen, who at times exploit them by paying low price and delayed payments
- They lack the necessary infrastructure for direct marketing
Quality
- They concentrate on cutting the cost and keeping the prices low.
- They do not have adequate resources to invest in quality research and maintain the standards of the industry, nor do they have the expertise to upgrade technology
Capacity Utilisation
- They 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.
Technology
- Use of outdated technology is often stated as serious lacunae in the case of small industries, resulting in low productivity and uneconomical production.
Sickness
- The causes of sickness are both internal and external.
- Internal problems include lack of skilled and trained labour and managerial and marketing skills.
- Some of the external problems include delayed payment, shortage of working capital, inadequate loans and lack of demand for their products.
Global Competition
- Competition is not only from medium and large industries, but also from multinational companies which are giants in terms of their size and business volumes
- It is difficult to withstand the quality standards, technological skills, financial creditworthiness, managerial and marketing capabilities
- There is limited access to markets of developed countries due to the stringent requirements of quality certification like ISO 9000