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  • 8/7/2019 Enterpreneurship in India

    1/59

    EntrepreneurialIndia

    SculptingtheLandscape

    21-23December,2009-Mumbai

    KPMG IN INDIA

  • 8/7/2019 Enterpreneurship in India

    2/592009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.

    Foreword

    EntrepreneurshipisthekeytoIndiaachievingherpromise

    asaneconomyandasacountry.Unleashedafterdecades

    ofslowgrowthandgovernmentcontrol,Indias

    entrepreneurshavebeguntotakeadvantageofmanyofthe

    opportunitiespresentedbythepostliberalizationbusiness

    environment.However,foritssize,Indiahasstillhasmuch

    todoinordertoharnessentrepreneurshiponabroader

    level.Theentrepreneurialecosystemcandofarmorethan

    todaytospurtheentrepreneurtogreaterheights.AkeypillarofthisecosysteminIndiaaregovernmentscentral,

    stateandlocal.Governmentpolicies,incentivesand

    programsplayasubstantialroleininfluencing

    entrepreneurs.Thisplacesagreatresponsibilityon

    governmentbodiestoenactpoliciesandlawsthat

    encourageentrepreneurshipwhichinturncanleadtothe

    countryseconomicascent.

    KPMG,oneoftheleadingprovidersofadvisoryservicesin

    IndiaandTiE,theworldslargestorganizationof

    entrepreneursaspartoftheircommitmenttofoster

    entrepreneurshipinIndiaarebringingoutthethirdeditionof

    EntrepreneurialIndia2009.Thewhitepaperendeavorsto

    assesstheinitiativesofselectIndianstatestoencourage

    entrepreneurialgrowthandputforthbestpractices,raise

    theprofileofdiscussionsonentrepreneurshipdevelopment

    andcontributetoshapingpolicy.

    KPMGandTiEembarkedonthisuniquestudy,which

    profilestheentrepreneuriallandscapeofIndiaandaimsto

    uncoverfactorsleadingtoappropriatelevelsofentrepreneurship.Thestudyevaluatestheperspectiveof

    Indianstatesandtheirinitiativestowardsentrepreneurial

    developmentononehandwhileevaluatingtheperception

    ofentrepreneursontheseinitiativesthroughtheirviewson

    nationalstrengthsandweaknessesasacontextfor

    entrepreneurshipontheother.Theentrepreneursindicate

    whatpolicyorprogramchangestheybelievewouldenhance

    thecountrysenvironmentforentrepreneurship.Italso

    attemptstoestablishthebestpracticesacrossIndiato

    fosterentrepreneurshipwhilealsobenchmarkingwithsome

    oftheglobalbestpracticesinentrepreneurialeconomies

    suchasSingapore,PhilippinesandIsrael.

    UnlikepasteditionsofthisstudyonIndianentrepreneurship

    whichsurveyedentrepreneursacrossthecountry,this

    whitepaperstudiesselectIndianstatesindetailandbring

    forththestatesperspective.Thestudyhasrevealedthat

    Indiansareclearlybullishandforwardthinkingabout

    entrepreneurshipandthattheyrecognizetheimportanceof

    entrepreneurship.Butthereisstillalotofroomfor

    improvement.Wehavealongwaytogotodevelopabroad

    basedandorganizedentrepreneurialcommunity.Thispapershouldallowustoreassessandrenewoureffortsin

    addressingthesituation.Thestudyalsobringstogetherthe

    datathatcanbefurtherstudiedforpursuingaspecialpolicy

    focus.

    AsacountryIndiashouldsustainapositivemomentumin

    harnessingthebusinesseswehave,identifyingthegrowth

    areasoftomorrowandsupportingmorepeopletobecome

    entrepreneurs.Throughthisstudy,TiEandKPMGhopeto

    contributetocraftingmoremeaningfulpoliciesand

    programsthatwillcontinuetoinspiremoreandmore

    Indianstohaveanentrepreneurialmindsetanddevelopa

    strongercapacitytograbtheopportunitieswehavenow.

    VikramUtamsingh

    Head-Markets

    KPMGinIndia

    JehilThakkar

    ExecutiveDirector,Markets

    KPMGinIndia

    SridharIyengar

    President

    TiEMumbai

  • 8/7/2019 Enterpreneurship in India

    3/592009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.

    ExecutiveSummary

    HowsupportiveistheecosysteminIndiadoinvestors,

    thegovernment,andsocietyprovideafoundationonwhich

    entrepreneurscangrowandflourish?Itisaquestionworth

    exploringindept.

    Theemergenceofopportunitiesinmanysectorsandthe

    lackofopportunityinothershasdrivenmanyyoungpeople

    tostrikeoutontheirown.Manyareleavingtheirwell

    payingjobstoestablishtheirownsmallventures.Entrepreneurshipishotandrisktakingabounds.The

    promiseofwealthinthelongrunandthefreedomto

    choosetheirownpathare,majorfactorsbutdoingthings

    forapassionandfindingfulfillmentarekeydriversaswell.

    Today,thescopeandvarietyofself-generatedworkis

    unlimited.

    However,despitethegreatinitiativesundertakenbymany

    Indianentrepreneurs,Indiaremainsatoughplacetobean

    entrepreneur.Governmentregulations,cumbersome

    proceduresandrestrictedaccesstocapitalmakestarting

    andrunninganewbusinessachallengingproposition.

    Inmanycases,governmentsaremovingtowardsfriendlier

    policiesbutmorerapidchangeisnecessary.

    TiEandKPMGasapartoftheiraspartoftheircommitment

    tofosterentrepreneurshipinIndiabringoutthisthirdedition

    ofEntrepreneurialIndia2009.Thewhitepaperendeavorsto

    assesstheinitiativesofselectIndianstatestoencourage

    entrepreneurialgrowthandputforthbestpractices,raisetheprofileofdiscussionsonentrepreneurshipdevelopment

    andcontributetoshapingpolicy.

    ThestudyevaluatestheperspectiveofIndianstatesand

    theirinitiativestowardsentrepreneurialdevelopmentaswell

    asevaluatingtheperceptionofentrepreneurs.The

    entrepreneursindicatewhatpolicyorprogramchangesthey

    believewouldenhancethecountrysenvironmentfor

    entrepreneurship.

    TheEntrepreneursViewpoint

    Availability of Finance

    Financialsupportwascitedasthemostlimitingfactorfor

    entrepreneurship.Mostentrepreneurscitedthelackof

    appropriatefinancialhelp,resourcesandtheinaccessibility

    ofavailablefinancing.Thereisadeficiencyofsufficientdebt,

    equityandventurecapitalfunding,governmentsubsidies

    andfundingavailablethroughgovernementagaencies.

    Mostentrepreneursexpressedtheneedforsufficient

    funding,bothdebtandequityaimedathelpingnewand

    strugglingbusinesses.Theyalsostressedthattheevaluation

    forloansshouldbefocusedontheviabilityofthebusiness

    proposalandnotjustthequantumofcollateralorassetsize.

    The Policy Framework

    Entrepreneursacrossthesixstatesprofiledmentionedthe

    lackofstronggovernmentpolicysupportfor

    entrepreneurship.Theycitedbureaucracyandcorruption,

    poorimplementationofexistingpoliciesandinadequate

    supportmechanismsaspartofthelimitingfactorsto

    entrepreneurship.

    Ontheotherhand,theygenerallyagreedthatthesupport

    fornewandgrowingbusinessesisahighpriorityforstate

    governmentsandacknowledgeditasathrustareafor

    policy.Buttheycompletelydisagreedthatresultingpolicies

    werebeingimplementedinamannerthatbenefitednewandentrepreneurialbusinesses.

    Theratherambivalentviewofprofessionalsand

    entrepreneursonwhethergovernmentpolicyis

    categoricallylimitingorcontributingtoentrepreneurship

    suggeststhattheyviewthegovernmentpolicyhavinga

    limitedeffect.Whilethegovernmentisperceivedtobe

    focusingonentrepreneurship,muchneedstobedoneat

    thegroundlevelinorderforgovernmentpolicytobecomea

    truecatalystforentrepreneurship.

  • 8/7/2019 Enterpreneurship in India

    4/592009KPMG,anIndianPartnershipandamemberfirmoftheKPMGnetworkofindependentmemberfirmsaffiliatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.

    Entrepreneursstressedthatimplementinggovernment

    policiesshouldbemoreefficient.Theyrecommendedlocal

    policiesshouldalsobecraftedtohelpthebusinessesin

    ruralareasandthatbothnationalandstategovernment

    agenciesshouldproactivelyengageinseamless

    partnershipsandassistanceineffectingpoliciesfor

    entrepreneurship.

    Access to Markets

    Formidablebarrierstohighgrowthentrepreneurship

    continuetoexistinIndia.Ourresearchintothebarriersand

    facilitatorsofentrepreneurshipinthepreviouseditionsof

    EntrepreneurialIndiahasrevealedmanyfacetsofthis

    problem.

    StatesViewpoint

    Thesixstatesprofiledforthepurposeofthisstudyhave

    beenmovingintherightdirectiontopromotebusiness

    growth.Thegovernmentisincreasinglybecomingreceptive

    toentrepreneurialdemandsandexpectationsandrollingout

    programstoprovidesupporttonewaswellasexisting

    enterprises.However,implementationofsomeofthe

    programsiseitherlimitedorfocusedatlargerenterprises.

    Insomecases,thegovernmentsacrossthesestatesare

    increasinglyadoptingnewerapproaches.Whilethestates

    aremovingintherightdirection,albeitatacautiouspace,

    theytoohavetheirsetofchallenges.

    Partnership Approach

    Entrepreneurshipaccordingtogovernmentsisnotpurelya

    functionofindividualorstatespolicyregime.Itisrathera

    collaborationofentrepreneurs,educationalinstitutes,

    independentagencies,themediaandthegovernment,

    wheregovernmentisafacilitatorandanenabler.The

    governmentwouldliketoseemoreproactivepartnership

    fromentrepreneursandbusinessinaddressingtheoveralldevelopmentalchallengesthatfaceIndia.

    Cost Benefit Matrix

    Whilegovernmentisoftencriticizedfornotproviding

    enoughsupport.Withlimitedresources,eachstatealso

    needstobeconvincedofthecostbenefitbeforeinvesting

    inapolicyoraspecificdevelopmentprogram.The

    governmentsneedtoevaluatecarefullyeveryrequestfor

    assistanceorpolicyenactmenttotakeintoaccountthe

    overallresourcepictureandgoalsfortheregion.

    Prioritization

    Eachstateinthecountryhasasetofdevelopmental

    challengesandprioritiestoraisetheoverallprofileofits

    citizens.Withmorethan30percentofcountryspopulation

    belowpovertyl