• Patent filings by Indian MSMEs have surged 310% in 5 years, reflecting rising innovation and IP awareness.

• Patents protect unique products and processes, helping MSMEs secure market share and prevent imitation.

• Patented innovations boost credibility and attract investors, strategic partners, and export opportunities. 

• Government schemes reimburse up to ₹1 lakh (India) and ₹5 lakh (foreign) for patent-related expenses. 

• A step-by-step filing process and new reforms (like reduced reporting frequency) have made patenting more accessible. 
   

In the past five years, India has witnessed a remarkable 310% increase in patent filings by MSMEs and startups—from 1,492 filings in 2018–19 to 6,120 in 2023–24¹. The surge highlights two key factors: the growing awareness of Intellectual Property Rights (IPR) as a strategic business asset, and its impact in actively promoting the creation, protection, and commercialization of IP assets across the nation. With India transitioning into a knowledge-based nation, patents are not just legal documents for MSMEs, but they also represent a significant opportunity to safeguard their innovation, expand their market reach, and achieve long-term success. It’s therefore imperative for small enterprises to explore how leveraging patents can unlock new avenues for growth and sustainability. 

To understand why patents play a significant role in the growth trajectory of Indian MSMEs, it’s crucial to first clearly know what they are and how they work.  

Understanding Patents

A patent is an official right granted by the government that allows an inventor to exclusively control the use of their invention for a fixed period—usually 20 years. During this time, the patent holder can prevent others from making, using, selling, importing, or offering the invention for sale. In essence, a patent safeguards new and useful inventions by giving inventors a limited-time monopoly to commercially benefit from their innovation. 

It is essential for MSMEs to understand the different types of patents available in India:   

• Utility Patents: These are the most common type and protect new and useful processes, machines, manufactures, or compositions of matter, or any new and useful improvement thereof. This is often the most relevant category for the technological innovations developed by MSMEs.   

• Design Patents: These protect the ornamental design of an article of manufacture. If an MSME has developed a unique and appealing visual design for its product, a design patent can prevent others from replicating its aesthetic appeal. 

• Plant Patents: These protect distinct and new varieties of asexually reproduced plants. While less common for typical MSMEs, this could be relevant for those in the agricultural or horticultural sectors. 

Understanding these categories helps MSMEs identify the most suitable form of protection for their innovations. Moreover, the safeguarding of innovation isn’t limited to organizations but also extends to individuals. This is achieved by the ‘Certificate of Inventorship,’ introduced in 2024 as part of the Patent (Amendment) Rules. The formal recognition acknowledges the individuals who contributed to the invention, even if they are not the patent applicants. This is particularly relevant for MSMEs where innovation might stem from various team members, ensuring due credit and potentially fostering a stronger culture of innovation. Before this Amendment, inventors were seldom recognized by the Indian patent certificates.   

The benefits of securing patents extend far beyond mere legal protection for MSMEs. They can be instrumental in driving growth and establishing a strong market presence: 

• Protection of Innovations: Patents provide MSMEs with the exclusive right to their unique products or processes, effectively preventing competitors from directly copying their hard-earned innovations. This exclusivity allows MSMEs to establish a strong foothold in the market without the immediate threat of imitation. 

• Revenue Streams: Patents open up opportunities for MSMEs to generate revenue through licensing agreements. By allowing other companies to use their patented technology for a fee, MSMEs can tap into new income streams without necessarily scaling up their own production or market reach. 

• Market Positioning: Holding patents enhances an MSME’s credibility and boosts its brand value. It signals to customers, partners, and investors that the MSME is innovative and possesses unique technological advantages, thereby strengthening its market position. 

• Investment Attraction: Intellectual property assets, particularly patents, can be powerful tools for attracting investment. Investors often view companies with strong IP portfolios as having higher growth potential and a greater competitive edge, making it easier for MSMEs to secure crucial funding for expansion or research and development. 

• Export Opportunities: In the global marketplace, patents provide a crucial layer of protection. Holding patents in international markets can facilitate an MSME’s entry into these markets with the assurance that their innovations are legally safeguarded, fostering greater confidence in pursuing export opportunities. 

The increasing significance of patents in business strategy is further underscored by the substantial growth in patent grants in India, which increased by an astounding 1,624% from 5,978 in 2014-15 to 103,057 in 2023-24². This demonstrates a clear trend towards recognizing and leveraging the value of patented innovations in the Indian business ecosystem. 

Now that the basics of what patents are and the role they play in MSME success are covered, understanding the process to file them is equally crucial.  

Patent Filing Process: A Step-by-Step Guide for MSMEs 

Navigating the patent filing process might seem daunting, but breaking it down into manageable steps can make it more accessible for MSMEs: 

Step 1: Assess Patentability – Is the Idea Novel and Useful? The first crucial step is to determine if the invention is indeed patentable. To qualify for a patent, the idea must be novel (new and not previously disclosed anywhere in the world) and useful (have a practical application). MSMEs should conduct an initial assessment of their invention against these criteria. 

Step 2: Conduct a Patent Search – Check for Existing Patents using Indian Patent Advanced Search (IPAS) System. Before investing further, an MSME must conduct a thorough patent search to ensure that a similar invention does not already exist. The Indian Patent Office provides access to the IPAS system, which allows users to search through published patent applications and granted patents in India. This step can save significant time and resources by identifying potential conflicts early on. 

Step 3: Draft a Patent Application – Detailed description, claims, and diagrams. A well-drafted patent application is critical for securing patent rights. This typically includes a detailed description of the invention, clear and concise claims defining the scope of legal protection sought, and any necessary drawings or diagrams to illustrate the invention. It is often advisable for MSMEs to seek the assistance of a patent attorney or agent at this stage to ensure the application is technically and legally sound. 

Step 4: File the Application – Online through the Indian Patent Office or via a patent attorney. Once the application is prepared, it needs to be filed with the Indian Patent Office. This can be done online through the official IP India website or physically by submitting the documents. Patent attorneys or agents can also handle the filing process on behalf of the MSME. 

Step 5: Examination and Publication – Review and publication of the application. After filing, the patent application undergoes examination by the Patent Office to determine its patentability. The application is also typically published in the official gazette after 18 months from the date of filing. 

Step 6: Grant and Maintenance – Pay fees to maintain the patent for its full term. If the examiner finds the invention to be patentable, a patent is granted. To maintain the patent in force for its full term (typically 20 years from the date of filing for utility patents), the patent holder needs to pay periodic renewal fees. 

A recent policy update offers some relief to patent holders, including MSMEs, by reducing the filing frequency of ‘working statements of patents’ from once a year to once every three years. This eases the administrative burden associated with maintaining granted patents. 

Challenges and Solutions for MSMEs in Patent Filing 

While the benefits of patents are clear, MSMEs often face specific challenges in the patent filing and management process: 

Challenge: High costs associated with patent filing and legal fees. Patent filing, prosecution, and maintenance can involve significant costs, including application fees, attorney charges, and renewal fees, which can be a deterrent for resource-constrained MSMEs. 

Solution: Government schemes and subsidies, such as the MSME IP Facilitation Centre. The government recognizes this challenge and offers various schemes to support MSMEs in IP protection. For instance, the MSME IP Facilitation Centre provides assistance and guidance on IP matters. Furthermore, there are schemes offering reimbursement of patent costs, with reports indicating reimbursements of up to ₹1 lakh for Indian patents and ₹5 lakh for foreign patents under specific MSME support programs. MSMEs should actively explore and leverage these financial assistance opportunities. 

Challenge: Lack of awareness and expertise in IP management. Many MSMEs lack the in-house expertise to understand the intricacies of patent law, conduct effective patent searches, or draft comprehensive patent applications. 

Solution: To address this, initiatives focused on capacity building and awareness are crucial. The Controller General of Patents, Designs and Trademarks (CGPDTM) has partnered with the World Intellectual Property Organization (WIPO) to enhance capabilities in IP analytics and management. MSMEs should take advantage of workshops, training programs, and resources offered through such collaborations to build their IP knowledge. 

Challenge: Time-intensive process and regulatory complexities. The patent filing and grant process can be lengthy and involve navigating complex regulatory procedures, which can be challenging for MSMEs with limited time and resources. 

Solution: The government has taken steps to streamline the patent filing process. The Startup India portal offers a fast-track patent examination for eligible startups, which can significantly reduce the time taken for grant. Additionally, the IP India online platform simplifies the application filing and management process, making it more accessible for MSMEs. 

The provision of patents, along with the supportive solutions discussed earlier, creates a range of tangible advantages for MSMEs. These benefits extend beyond legal protection and contribute directly to business growth and competitiveness. Here’s how: 

1. Enhanced Market Share through Exclusive Innovation 

Patents give MSMEs exclusive rights to commercially exploit their innovations. This legal exclusivity means competitors cannot manufacture or sell the same product or use the same process without permission. As a result, MSMEs can offer unique solutions that are not easily replicable in the market. This uniqueness often translates to stronger customer loyalty, premium pricing, and a greater share in their niche or target market. It also reduces the risk of price wars, allowing MSMEs to grow sustainably. 

2. Stronger Appeal for Strategic Partnerships and Collaborations 

Patents signal to other businesses that an MSME has valuable, original technology or design. This makes them attractive candidates for joint ventures, licensing deals, or technology-sharing agreements. For instance, a larger company may prefer to partner with a patent-holding MSME rather than develop a similar product from scratch, saving both time and cost. This can open doors to co-development opportunities, entry into new markets, or the scaling up of production with a trusted partner. 

3. Higher Valuations in Fundraising or Mergers & Acquisitions Scenarios 

Patents are intangible assets that add value to a company’s overall worth. When seeking investment or undergoing valuation for mergers and acquisitions, a strong patent portfolio can significantly enhance an MSME’s credibility and financial appeal. Investors are more likely to fund businesses that have protected their innovations, as this reduces competitive risk and increases the potential for long-term returns. In acquisition deals, patents can even become key deciding factors, often fetching a higher purchase price for the patent-holding company. 

4. Improved Global Competitiveness through IP Protection Abroad 

For MSMEs looking to expand internationally, holding patents can make a critical difference. By filing for patent protection in target export countries, businesses can secure their products and technologies against duplication in those markets. This not only ensures regulatory compliance but also gives the MSME a competitive edge by demonstrating innovation and legal preparedness. Many global distributors, retailers, and clients prefer working with businesses that own IP rights, as it lowers the risk of legal disputes and confirms the originality of the offerings. 

As more MSMEs embrace the strategic use of patents, the overall innovation ecosystem in India is strengthened, leading to economic growth and job creation. This has in turn led to the significant surge in patent filings, signaling a growing understanding of the strategic value of intellectual property. By proactively engaging with the patent system, Indian MSMEs can unlock their full potential, secure their innovative edge, and contribute even more significantly to the nation’s economic progress in the Industry 4.0 era and beyond.