Entrepreneurial Eco System in India
CA S S Nayak
B.Com., F.C.A., L.L.B., (Gen)
“Entrepreneurship is about turning what excites you in life into capital, so that you can do more of it and move forward with it.” – Richard Branson
In India, entrepreneurship has become more than just a buzzword—it’s a way of life. From the bustling streets of Mumbai to the tech hubs of Bengaluru, the country’s entrepreneurial ecosystem is alive with innovation, creativity, and a burning desire to build something extraordinary.
India has become a beacon of entrepreneurship in recent years, with an increasingly vibrant ecosystem that fosters innovation, creativity, and business growth. The MSME Ecosystem, Startup Ecosystem, Banking Ecosystem, and Tax Ecosystem in India have developed significantly over the past decade, creating an environment conducive to the growth of entrepreneurship in the country.
The entrepreneurial ecosystem in India is identified as the third largest and fastest growing in the world (World Economic Forum, 2020).
What makes the Indian “entrepreneurship ecosystem” stand out is its robust support infrastructure designed to aid entrepreneurs and start-ups. This includes various incubators and accelerators offering mentorship and resources to foster growth. With the number of Indian start-ups escalating from 733 in 2016 to over 112,718 by now, the Indian entrepreneurship ecosystem is on an upward trajectory. The MSME sector encompasses almost 63 million enterprises, making a 30% contribution to India’s GDP, 45% to the manufacturing sector, and 40% to exports. Furthermore, it provides employment to 113 million plus individuals.
As per the 2023 Global Innovation Index rankings, India stands at the 40th position. India’s ease of doing business rank improved from 142 in 2015 to 63 in 2020. Start-ups are spearheading the Indian economy with technology and innovation at their forefront. Since India’s first unicorn in 2011, India is now home to 113 startup unicorns, who are collectively valued at $350 Bn.
“People think that Entrepreneurship is very risky. But one should know that not taking risk is itself a big risk”.
“Desire changes nothing, Decision changes something whereas dedication changes everything”
Have you ever heard of a deer coming and entering the mouth of a lion while it sleeps? In that case, why are we led to believe that we can achieve success by merely thinking about it or coveting it?
One can achieve success only by working hard and through dedication.)
Thus, with the right mix of risk-taking, innovation, hard work and support, there is no limit to what Indian entrepreneurs can achieve.
Opportunities
One of the most significant opportunities for entrepreneurs in India lies in its vast and diverse market. With a population of over 1.4 billion, the country is home to a wide range of consumer needs and preferences. This diversity presents entrepreneurs with a wealth of opportunities to identify niche markets and create products and services that cater to specific demographics. Moreover, India’s rapidly growing middle class is driving demand for a wide range of goods and services, from technology and healthcare to education and entertainment. Moreover, initiatives like the Startup India program, PMEGP, CGTMSE, and various central & state-level policies have made it easier for entrepreneurs to set up and scale their ventures, even from the smallest street vendors to many MSME entrepreneurs at large.
Here are some central government initiatives designed to promote MSMEs
- PM SVANidhi : It provides collateral-free working capital loans in 3 tranches of Rs. 10,000, Rs.20,000 and Rs.50,000 respectively with interest subsidy.
- Mudra Loan: Under PM MUDRA Yojana collateral free loans for small businesses up to Rs.10 lakh are easily available from Banks & FIs.
- PMEGP: The Prime Minister’s Employment Generation Programme is a credit-linked subsidy scheme initiated by the Government of India. The scheme provides financial assistance in the form of a subsidy on the project cost. For the manufacturing sector, the maximum loan of is
₹50 lakhs, while for the business/service sector, it’s ₹20 lakhs. For the general category entrepreneurs, the subsidy is 15% (Urban) and 25% (Rural). For special categories entrepreneurs (including SC/ST/OBC/Minorities/Women, Ex-servicemen, Physically handicapped,NER, Hill and Border areas), the subsidy is higher at 25% (Urban) and 35% (Rural).
- CGTMSE: Collateral free credit facilities is available to Micro & Small Enterprises. Under CGTMSE, guarantee cover is provided by the Credit Guarantee Fund Trust for Micro and Small Enterprises for the collateral free credit facilities to an extent of Rs 5 Crore to eligible new and existing Micro and Small Enterprises (both manufacturing as well as services).
- Hybrid CGTMSE: CGTMSE has recently modified the scheme by introducing the Hybrid Security product wherein loans sanctioned to MSE units with partially collateral coverage and partially under the CGTMSE scheme.
Similarly, some of the initiatives available to Startups are as follows:
- Startup India: Startup India aims to simplify the process of starting a business by streamlining regulations and reducing red tape. It provides a single-window clearance system and a dedicated online portal for startup registration. The initiative also offers various handholding services, including mentorship, legal and accounting support, and access to incubators and accelerators.
- Atal Innovation Mission: It was launched in February 2016 under the NITI Aayog, the government’s premier policy think tank. AIM aims to promote innovation among students, entrepreneurs, and researchers by providing them with the necessary support, resources, and infrastructure.
- A Scheme For Promotion Of Innovation, Rural Industries & Entrepreneurship (ASPIRE): A government initiative launched in March 2015 by the Ministry of Micro, Small & Medium Enterprises (MSME). The scheme aims to promote entrepreneurship and innovation in rural areas by providing support to rural entrepreneurs, MSMEs, and traditional industries.
- Startup India Seed Fund Scheme: This scheme aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialization. This would enable these startups to graduate to a level where they will be able to raise investments from angel investors or venture capitalists or seek loans from commercial banks or financial institutions.
- Standup India: The initiative aims to facilitate bank loans between ₹10 lakh and ₹1 crore to SC/ST and woman entrepreneurs for setting up greenfield enterprises in manufacturing, services, or in the trading sector with reduced promoters margin at 15%
- Nidhi Prayas Grant: An umbrella program pioneered by the Department of Science & Technology (DST), GOI, for nurturing ideas and innovations into successful startups. It aims to support innovators to build prototypes of their ideas by providing a grant up to Rs.10 lakhs.
- SIDBI Schemes: SIDBI offers Working Capital Assistance, Term Loan Assistance, Foreign Currency Loan, Support against Receivables, equity support, Energy Saving scheme for the MSME sector & Start ups under its various direct finance loan schemes on easy terms.
- Credit Guarantee Scheme for Startups : Under CGSS, upto 10 crores collateral free loans are available to eligible borrowers from Banks & FIs.
- The Ministry of Food Processing Industries is implementing three major schemes – PMKSY, PMFME scheme, and PLI Scheme – to promote the food processing, thereby reducing food losses and promoting sustainability.
The Indian government has established a few portals specifically designed to address grievances related to Micro, Small, and Medium Enterprises (MSMEs). Here are some of them:
- MSME Samadhaan
- MSME Sambandh
- Champions Portal
- Udyami Mitra
- GEM portal
In addition to this, each State has its own Industrial policy which is instrumental in fostering a favourable environment for entrepreneurship. They provide various incentives, support, and infrastructure to encourage the growth of Startups & MSMEs
The entrepreneurial landscape in India is fertile with a myriad of opportunities across diverse sectors. India’s tech startup ecosystem is growing due to IT infrastructure, a skilled workforce, and supportive policies, particularly in fintech, edtech, healthtech, and e-commerce. With the government’s push for digitalization and initiatives like Digital India, the tech startup ecosystem is poised for further expansion. AgriTech startups are leveraging technology to address challenges in
farming, such as access to information, market linkages, and efficient supply chain management. From precision farming to farm-to-fork models, the scope for innovation in agriculture is vast.
India’s tourism industry is a rich and promising sector, offering diverse experiences to domestic and international travelers. Entrepreneurs in this field have the chance to create unique offerings that highlight India’s cultural heritage, natural beauty, and culinary diversity, ranging from “ heritage homestays to adventure tourism”.
India’s focus on renewable energy and sustainability is creating opportunities in cleantech. Entrepreneurs can innovate in solar, wind, hydro power, energy storage, and efficiency technologies. Telemedicine, digital health, and preventive wellness are areas ripe for innovation, as are solutions that address the unique healthcare needs of India’s diverse population.
India’s rich cultural heritage offers entrepreneurial opportunities in traditional crafts, handloom fabrics, and cuisine. Entrepreneurs can blend traditional techniques with modern aesthetics, catering to a growing demand for products rooted in Indian culture and tradition. Collaborations with designers and brands can help these crafts reach a global audience.
Challenges
Despite the opportunities,India’s entrepreneurial ecosystem faces challenges such as funding access, complex regulations, obsolescence, and talent shortages. Despite a growing investor pool, many startups, particularly non-tech ones, struggle with funding. Complex regulatory processes and tax laws can be intimidating, and obsolescence due to technological advancements is a constant threat. While India has a large pool of graduates, there is a gap between the skills demanded by startups and the skills possessed by the workforce. This has led to a talent crunch, with startups competing for a limited pool of skilled professionals. However the ‘Skill India’ mission has been launched by the Government of India with the goal of enhancing the skills of the Indian workforce to tackle this challenge.
India’s entrepreneurial ecosystem is set for significant growth. Government initiatives like Make in India, Digital India, Atma Nirbhar Bharat and Startup India, along with the rise of accelerators, incubators, and co-working spaces, will further fuel startup growth. With increasing domestic and international funding, startups can have access to capital needed to scale. As India’s economy grows steadily, there are ample opportunities for entrepreneurs to capitalize on emerging market trends. Overall, India’s entrepreneurial landscape offers fertile ground for entrepreneurs to thrive, and by addressing challenges, they can make a significant global impact.
उद्योगी, साहसं, धैर्यं, प्रज्ञा, शक्तिः, दृढता च : ये, एते षट् गुणाः सन्ति, ते सफलाः उद्यमिनः भविष्यन्ति
(Industrious, Courage, Patience, Wisdom, Power and Perseverance: Those, who possess these six qualities, will be successful entrepreneurs.)
Budding Entrepreneurs are scared to take risks. They have fear psychosis in their mind. Ups and downs are part of entrepreneurial journey. Its said in Subhashitha “दैवं मण्डले गच्छति, यथा भ्रमरचक्रस्य पङ्क्तयः “which means “Fate moves in a circle, just like the rows of a spinning wheel.” An Entrepreneurial journey is like a bicycle. In order to maintain balance, don’t take a pause. Always move on. Finally, my message to youngsters would be “Be job providers, not job seekers”.
CA S S Nayak
B.Com., F.C.A., L.L.B., (Gen)
Partner: S S Nayak & Associates
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