Rule 2 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 2 of the Patents Rules, 2003 defines three applicant categories that matter for patent fees: the educational institution (clause (ca)), the small entity (clause (fa)) and the startup (clause (fb)). Clause (da) adds that a "person other than a natural person" includes a small entity. Rule 7 and Form 28 then turn these definitions into a working system of proof and fee scales.
A small entity is an enterprise whose investment stays within the medium-enterprise limit of the MSME Development Act, 2006. A startup is an entity recognised under the Startup India initiative, or a foreign entity meeting the same criteria and giving a declaration. An educational institution is a university set up by or under Central, Provincial or State Act, or another institution recognised by a designated authority. Each must file Form 28 with every document that carries a fee.
Why the three categories exist
The First Schedule fee table (as substituted in 2024) has separate columns: one for a natural person, startup, small entity or educational institution, and another for "others". The first column is lower. Rule 2 decides who qualifies for that column. Our guide on the Patents Rules definitions in rules 1 and 2 covers the other clauses of the rule.
If you are a young company deciding whether to claim a category, our patent drafting and filing service can check the claim before it is made.
Educational institution: clause (ca)
"Educational institution" means a university established or incorporated by or under a Central Act, a Provincial Act or a State Act, and includes any other educational institution recognised by an authority designated by the Central Government, a State Government or the Union territories in this regard.
Two things to notice. A university qualifies by its statute. Any other institution qualifies only if an authority designated by government has recognised it. The Rules do not name that authority, so the proof is whatever evidence of recognition the institution holds.
Person other than a natural person: clause (da)
Clause (da) says that "person other than a natural person" shall include a "small entity". The practical result is that a small entity is placed on the non-natural-person side of the Rules, even though it takes the lower fee column. The distinction is used in rule 7(3), discussed below.
Small entity: clause (fa)
A small entity is defined by reference to the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), in two limbs.
| Type of enterprise | Test in the Rules |
|---|---|
| Manufacture or production of goods | Investment in plant and machinery does not exceed the limit specified for a medium enterprise under clause (a) of sub-section (1) of section 7 of the MSME Development Act, 2006 |
| Providing or rendering services | Investment in equipment is not more than the limit specified for medium enterprises under clause (b) of sub-section (1) of section 7 of that Act |
The Rules do not repeat the rupee limits. They point to the MSME Act, so the current limit is whatever that Act and its notifications provide. Our posts on MSME classification and the revised investment and turnover limits cover that side.
Three Explanations sit under the clause.
- Explanation 1 defines "enterprise": an industrial undertaking, business concern or other establishment, by whatever name called, engaged in manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 (65 of 1951), or engaged in providing or rendering any service in such an industry.
- Explanation 2 says that, in calculating investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and other things specified by notification under the MSME Development Act, 2006 is excluded.
- Explanation 3 says the reference rates of foreign currency of the Reserve Bank of India prevail.
Startup: clause (fb)
Clause (fb)(i) defines "startup" as:
- (a) an entity in India recognised as a startup by the competent authority under the Startup India initiative; or
- (b) in the case of a foreign entity, an entity fulfilling the criteria for turnover and period of incorporation or registration as per the Startup India initiative and submitting a declaration to that effect.
The clause has an Explanation: in calculating turnover, the reference rates of foreign currency of the Reserve Bank of India prevail. A drafting point: the clause is numbered "(fb) (i)" but no sub-clause (ii) follows in the text consulted.
An Indian startup's proof is its recognition under the initiative. See our guides on Startup India DPIIT recognition and the eligibility criteria. A foreign entity must show it meets the turnover and incorporation criteria and must give a declaration.
How rule 7 puts the definitions to work
The definitions matter because of what rule 7 requires. Our article on rule 7 on fees, mode of payment and refund covers the whole rule; two parts are relevant here.
- Second proviso to rule 7(1). In the case of a small entity, startup or educational institution, every document for which a fee has been specified shall be accompanied by Form 28.
- Rule 7(3). If an application processed by a natural person, startup, small entity or educational institution is fully or partly transferred to a person other than such a person, the new applicant pays the difference in the scale of fees along with the request for transfer.
The Explanation to rule 7(3) gives relief: where a startup or small entity that has filed an application ceases to be one because the period of recognition by the competent authority lapses, or because its turnover later crosses the financial threshold notified by the competent authority, no difference in the scale of fees is payable.
Form 28: the declaration of status
Form 28 is headed "To be submitted by a small entity / startup / educational institution" and cites rules 2(fa), 2(fb), 2(ca) and 7. In it the applicant or patentee, naming the patent application number or patent number, declares that it is a small entity under rule 2(fa), a startup under rule 2(fb) or an educational institution under rule 2(ca), and submits proof. The proof listed in the form is:
| Status claimed | Indian applicant | Foreign entity or institution |
|---|---|---|
| Small entity | Evidence of registration under the MSME Development Act, 2006 | Any other document |
| Startup | Any document as evidence of eligibility, as defined in rule 2(fb) | Any other document |
| Educational institution | Any document as evidence of eligibility, as defined in rule 2(ca) | Any other document |
The form is to be signed by the applicant, the patentee or an authorised registered patent agent, and records the name of the natural person who signed. Form 28 is not a request for expedited examination; that request is made under rule 24C (see our article on rule 24C).
A worked example
Veda Agri Sensors Pvt Ltd is recognised as a startup under the Startup India initiative and files an application. Because it claims the startup category, each fee-bearing document it files, including the application itself, must travel with Form 28 and the recognition certificate as proof. Two years later its recognition period ends. Under the Explanation to rule 7(3), if the company then transfers the application to a larger group, no difference in fee scale is payable on account of that lapse.
The Act link
The categories flow from the fee power in section 142 of the Patents Act, 1970. See our article on section 142 (fees).
Need help with claiming the right category?
Choosing the wrong applicant category can mean a deficient fee or a document that is not accepted. Our patent professionals can check eligibility, prepare Form 28 and align the filing with your recognition certificate through our patent drafting and filing support.
Key takeaways
- Rule 2 defines educational institution (ca), person other than a natural person (da), small entity (fa) and startup (fb).
- A small entity is tested against the MSME Development Act, 2006 medium-enterprise limit, by investment in plant and machinery or equipment.
- A startup is an entity recognised under Startup India; a foreign entity must meet the same criteria and give a declaration.
- Form 28 must accompany each fee-bearing document filed by these categories (second proviso to rule 7(1)).
- Rule 7(3) requires payment of the fee-scale difference on transfer to another kind of applicant, subject to its Explanation.
- Amendments after the Second Amendment Rules, 2024 should be checked.
Read next
- Rules 1 and 2: short title, commencement and definitions
- Rule 7: fees, mode of payment and refund
- Startup India DPIIT recognition: complete guide
- Section 142 of the Patents Act, 1970: fees
Disclaimer: Based on the Patents Rules, 2003 as consolidated up to 21 September 2021 and as amended by the Patents (Amendment) Rules, 2024 and the Patents (Second Amendment) Rules, 2024, as consulted on 2 October 2026. Later amendment rules, forms and fees should be checked in their current form. This article is general information, not legal advice; check the official text before acting.