enterpreneurship in india

8/7/2019 Enterpreneurship in India

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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