Industry: UPSC Previous Year Questions (Indian Economy)

Explanation

Investments can be categorized into tangible and intangible assets. Tangible assets have a physical presence, while intangible assets lack a physical form. Intangible assets derive their value from intellectual or legal rights.

Option (c) is correct:

Brand recognition is an intangible asset because it does not have a physical form but contributes significantly to a company’s value. Strong brand recognition enhances consumer trust, customer loyalty, and market competitiveness. Example: Coca-Cola’s brand value is estimated at billions of dollars, despite not being a physical asset. Intellectual property (patents, trademarks, copyrights, trade secrets) is intangible and provides significant competitive advantage. Example: Patents for pharmaceutical drugs are valuable intangible investments for pharma companies. Mailing List of Clients is an intangible asset because it enhances marketing capabilities and customer retention. Example: E-commerce companies leverage customer mailing lists for targeted marketing. Inventory consists of physical goods that a company holds for sale or production. It is a tangible asset because it has a physical form and can be seen, touched, and measured. Example: A company like Reliance Retail holds inventory in the form of clothes, electronics, and groceries, which are physical goods. The Companies Act, 2013 and accounting standards (Ind AS) classify inventory as a tangible asset.

Explanation

Statement I is incorrect: As of 2022 India’s share in global merchandise exports was approximately 1.8% and not 3.2%. This figure has seen a modest increase from 1.69% in 2014 to 1.82% in 2022.

Statement II is correct: The Production-Linked Incentive (PLI) scheme was introduced by the Indian government in 2020 to boost domestic manufacturing across various sectors. Both local and foreign companies have actively participated in this initiative including major global players like Dell, HP, Foxconn, Lenovo, etc.

Explanation

Statement 1 is incorrect: The MSMED Act, 2006 originally defined medium enterprises as those with investments in plant and machinery between 5 crore and 10 crore. As per the latest guidelines of 2020 a medium enterprise presently is defined as one where the investment in plant and machinery or equipment does not exceed 50 crore and turnover does not exceed 250 crore and not 15 crore to 25 crore. The following table provides the details of revised limits:

Category Old Capital Old Turnover New Capital New Turn-over Micro 25 Lakh 10 Lakh 1 Crore 5 Crore Small 5 Crore 2 Crore 10 Crore 50 Crore Medium 10 Crore 5 Crore 50 Crore 250 Crore

Statement 2 is correct: The Reserve Bank of India’s Master Directions on Priority Sector Lending (PSL) specify that bank loans to Micro, Small, and Medium Enterprises are eligible for classification under the priority sector but subject to certain conditions. While loans to micro and small enterprises are fully eligible, loans to medium enterprises are considered under PSL only up to a certain limit. Specifically, bank loans up to 10 crore per borrower to medium enterprises engaged in providing or rendering of services are eligible for PSL classification.