enterpreneurship in india
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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