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Enterpreneurship in India

Enterpreneurship in India

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Sections

  • Introduction
  • The Assessment
  • Punjab
  • Gujarat
  • Delhi
  • Tamil Nadu
  • Karnataka
  • Maharashtra
  • Creating an Entrepreneurship Culture
  • About the study

Entrepreneurial India

Sculpting the Landscape
21-23 December, 2009 - Mumbai

KPMG IN INDIA

Foreword

Entrepreneurship is the key to India achieving her promise as an economy and as a country. Unleashed after decades of slow growth and government control, India’s entrepreneurs have begun to take advantage of many of the opportunities presented by the post liberalization business environment. However, for its size, India has still has much to do in order to harness entrepreneurship on a broader level . The entrepreneurial ecosystem can do far more than today to spur the entrepreneur to greater heights. A key pillar of this ecosystem in India are governments – central, state and local. Government policies, incentives and programs play a substantial role in influencing entrepreneurs. This places a great responsibility on government bodies to enact policies and laws that encourage entrepreneurship which in turn can lead to the country’s economic ascent. KPMG, one of the leading providers of advisory services in India and TiE, the world’s largest organization of entrepreneurs as part of their commitment to foster entrepreneurship in India are bringing out the third edition of Entrepreneurial India 2009. The white paper endeavors to assess the initiatives of select Indian states to encourage entrepreneurial growth and put forth best practices, raise the profile of discussions on entrepreneurship development and contribute to shaping policy. KPMG and TiE embarked on this unique study, which profiles the entrepreneurial landscape of India and aims to uncover factors leading to appropriate levels of entrepreneurship. The study evaluates the perspective of Indian states and their initiatives towards entrepreneurial development on one hand while evaluating the perception of entrepreneurs on these initiatives through their views on national strengths and weaknesses as a context for entrepreneurship on the other. The entrepreneurs indicate what policy or program changes they believe would enhance the country’s environment for entrepreneurship. It also attempts to establish the best practices across India to foster entrepreneurship while also benchmarking with some of the global best practices in entrepreneurial economies such as Singapore, Philippines and Israel.

Unlike past editions of this study on Indian entrepreneurship which surveyed entrepreneurs across the country, this white paper studies select Indian states in detail and bring forth the state’s perspective. The study has revealed that Indians are clearly bullish and forward thinking about entrepreneurship and that they recognize the importance of entrepreneurship. But there is still a lot of room for improvement. We have a long way to go to develop a broad based and organized entrepreneurial community. This paper should allow us to reassess and renew our efforts in addressing the situation. The study also brings together the data that can be further studied for pursuing a special policy focus. As a country India should sustain a positive momentum in harnessing the businesses we have, identifying the growth areas of tomorrow and supporting more people to become entrepreneurs. Through this study, TiE and KPMG hope to contribute to crafting more meaningful policies and programs that will continue to inspire more and more Indians to have an entrepreneurial mindset and develop a stronger capacity to grab the opportunities we have now.

Vikram Utamsingh
Head - Markets KPMG in India

Sridhar Iyengar
President TiE Mumbai

Jehil Thakkar
Executive Director, Markets KPMG in India

© 2009 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Executive Summary

How supportive is the ecosystem in India – do investors, the government, and society provide a foundation on which entrepreneurs can grow and flourish? It is a question worth exploring in dept.

The Entrepreneurs’ Viewpoint
Availability of Finance Financial support was cited as the most limiting factor for

The emergence of opportunities in many sectors and the lack of opportunity in others has driven many young people to strike out on their own. Many are leaving their well paying jobs to establish their own small ventures. Entrepreneurship is hot and risk taking abounds. The promise of wealth in the long run and the freedom to choose their own path are, major factors but doing things for a passion and finding fulfillment are key drivers as well. Today, the scope and variety of self-generated work is unlimited. However, despite the great initiatives undertaken by many Indian entrepreneurs, India remains a tough place to be an entrepreneur. Government regulations, cumbersome procedures and restricted access to capital make starting and running a new business a challenging proposition. In many cases, governments are moving towards friendlier policies but more rapid change is necessary. TiE and KPMG as a part of their as part of their commitment to foster entrepreneurship in India bring out this third edition of Entrepreneurial India 2009. The white paper endeavors to assess the initiatives of select Indian states to encourage entrepreneurial growth and put forth best practices, raise the profile of discussions on entrepreneurship development and contribute to shaping policy.

entrepreneurship. Most entrepreneurs cited the lack of appropriate financial help, resources and the inaccessibility of available financing. There is a deficiency of sufficient debt, equity and venture capital funding, government subsidies and funding available through governement agaencies. Most entrepreneurs expressed the need for sufficient funding, both debt and equity aimed at helping new and struggling businesses. They also stressed that the evaluation for loans should be focused on the viability of the business proposal and not just the quantum of collateral or asset size. The Policy Framework Entrepreneurs across the six states profiled mentioned the lack of strong government policy support for entrepreneurship. They cited bureaucracy and corruption, poor implementation of existing policies and inadequate support mechanisms as part of the limiting factors to entrepreneurship. On the other hand, they generally agreed that the support for new and growing businesses is a high priority for state governments and acknowledged it as a thrust area for policy. But they completely disagreed that resulting policies were being implemented in a manner that benefited new and entrepreneurial businesses. The rather ambivalent view of professionals and

The study evaluates the perspective of Indian states and their initiatives towards entrepreneurial development as well as evaluating the perception of entrepreneurs .The entrepreneurs indicate what policy or program changes they believe would enhance the country’s environment for entrepreneurship.

entrepreneurs on whether government policy is categorically limiting or contributing to entrepreneurship suggests that they view the government policy having a limited effect. While the government is perceived to be focusing on entrepreneurship, much needs to be done at the ground level in order for government policy to become a true catalyst for entrepreneurship.

© 2009 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Entrepreneurs stressed that implementing government policies should be more efficient. They recommended local policies should also be crafted to help the businesses in rural areas and that both national and state government agencies should proactively engage in seamless partnerships and assistance in effecting policies for entrepreneurship. Access to Markets Formidable barriers to high growth entrepreneurship continue to exist in India. Our research into the barriers and facilitators of entrepreneurship in the previous editions of Entrepreneurial India has revealed many facets of this problem.

Partnership Approach Entrepreneurship according to governments is not purely a function of individual or state’s policy regime. It is rather a collaboration of entrepreneurs, educational institutes, independent agencies, the media and the government, where government is a facilitator and an enabler. The government would like to see more proactive partnership from entrepreneurs and business in addressing the overall developmental challenges that face India. Cost Benefit Matrix While government is often criticized for not providing enough support. With limited resources, each state also needs to be convinced of the cost benefit before investing in a policy or a specific development program. The government’s need to evaluate carefully every request for assistance or policy enactment to take into account the overall resource picture and goals for the region. Prioritization Each state in the country has a set of developmental challenges and priorities to raise the overall profile of its citizens. With more than 30 percent of country’s population below poverty line, the state’s priorities are often clear and may not fit with the priorities of some entrepreneurs and that sometimes limits opportunities. Although the governments acknowledge that opportunity creation will have a domino effect and could lead to long term economic upliftment, many short term priorities and needs often take precedence over long term goals.

State’s Viewpoint
The six states profiled for the purpose of this study have been moving in the right direction to promote business growth. The government is increasingly becoming receptive to entrepreneurial demands and expectations and rolling out programs to provide support to new as well as existing enterprises. However, implementation of some of the programs is either limited or focused at larger enterprises. In some cases, the governments across these states are increasingly adopting newer approaches. While the states are moving in the right direction, albeit at a cautious pace, they too have their set of challenges.

© 2009 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

Contents

Introduction

01

The Assessment
Punjab Gujarat Delhi Tamil Nadu Karnataka Maharashtra

04
05 12 19 25 32 38

Creating an Entrepreneurship Culture

44

Conclusion and Policy Recommendations

48

About the study

50

© 2009 KPMG, an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.

and owner-occupant friendly policies has led to the diversion of scarce capital towards unproductive investments in land and buildings. and preferably. A discussion with some of the established entrepreneurs points to a positive role played by the new economic policies in opening up areas. All rights reserved. policy makers are demonstrating a renewed interest in entrepreneurship and innovation. especially in the recent troubled times. completely removing the constraints that hobble high growth entrepreneurship. Poor infrastructure has led entrepreneurs to create their own and in the process. As pointed out in a recent article in The Economist. lock up precious capital which should have been deployed to grow the business. Labor laws that limit the mobility of labor forced entrepreneurs to fear growth in employee strength. Despite all odds. entrepreneurship is argued to be far more important than it ver was. even as governments are busy trying to save their economies. the accent on liberalization and globalization in the last two decades has brought about mitigating effects in many of the areas cited above. . In modern open economies. public policy has a significant and decisive role to play in minimizing. © 2009 KPMG. While high growth businesses have to use their entrepreneurial ingenuity to overcome the environmental constraints or render them irrelevant. However. recent Global Entrepreneurship Monitor studies found that entrepreneurship in India has predominantly been necessity based rather than opportunity based.01 Introduction The central role of entrepreneurship in the economic growth of nations is increasingly coming into focus. a Swiss cooperative. Inconsistent Indirect tax rules and enforcement issues that limit the ability to scale quickly. . Our research into the barriers and facilitators of entrepreneurship in the previous editions of Entrepreneurial India has revealed many facets of this problem. Formidable barriers exist to entrepreneurship continue to exist in India for high growth entrepreneurship. several constraints to quick technology adoption by Indian companies. amongst the types of entrepreneurship there is necessity based entrepreneurship at one end of the spectrum to opportunity based entrepreneurship at the other. It is evident that entrepreneurial ventures are driving the growth of economies – developed and emerging. Lengthy court proceedings and slow judicial enforcement of property rights and private contracts have led to sub-optimal business practices. Given the ambitious economic growth targets that India has set for itself. high growth businesses have a crucial role to play. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Inadequate availability of land with clear titles. Several examples cited in interviews include. that seeks to revolutionize the world by leveraging new technology and creating new markets. While India has a long history of entrepreneurship. as evidenced by centuries of business and commercial activity and the existence of generations old business groups and families.

© 2009 KPMG. . a Swiss cooperative.02 The challenge for policy makers in India can thus be articulated as one of creating the right framework of conditions to enable the establishment of fast growing. Against this backdrop. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. There are many avenues open to policy makers to address the issue. innovative new businesses. All rights reserved. TiE and KPMG have studied select Indian states to understand their regulatory and policy framework and suggest best practices that could help the country to create a truly conducive entrepreneurial ecosystem focused at fostering high growth entrepreneurial activity not limited to necessity but one emerging from a plethora of opportunities. the Entrepreneurial India 2009 focuses on how to redesign India's entrepreneurial ecosystem so India can finally unleash what Prime Minister Singh called "the animal spirit" of Indian entrepreneurs. but the challenge would be in prioritization .picking the right set of issues and sequencing them to achieve significant and quick pay-off.

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in a country. The following pages will profile the initiatives by six Indian states to foster entrepreneurial and business growth. As these perceptions and challenges evolve. The success of Indian entrepreneurs around the world. . and increasingly in India. Our research focuses on understanding the key policy initiatives of these states to promote business and industry. we have deep technical and knowledge based resources to take up the entrepreneurial challenge. While GDP growth seems to be back on track. various management colleges have incorporated entrepreneurship as part of their curriculum. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. it is simply impossible for any government alone to drive entrepreneurial and business growth – a productive partnership with all stakeholders is critical and necessary. the country is faced with tremendous challenges including creation of widespread employment and reducing poverty. Various Chambers of Commerce & apex institutions have started organizing seminars & workshops to promote entrepreneurship. It further analyses the entrepreneurs’ perception of these initiatives and the States’ challenges in promoting entrepreneurial growth. This is indeed a good development. enable better policy implementation and foster growth. In India. is testimony to the drive our potential as an entrepreneurial nation. The scope for entrepreneurial development in the country is tremendous. KPMG and TiE plan to act as a catalyst for governments and entrepreneurs to come together to refine ideas. © 2009 KPMG. there are various organizations at the country level and state level offering support to entrepreneurs in various ways. Creating an environment and an ecosystem that encourages and facilitates the entrepreneurship takes advantage of opportunity can be critical in the nation meeting its overall development goals. Incidentally. At present. However. The Government of India and various State Governments have been implementing various schemes and programmes aimed at nurturing entrepreneurship over the last few decades. This shows the commitment of the Government and the various organizations towards developing entrepreneurial qualities in the individuals. where over 300 million people are living below the poverty line. a Swiss cooperative. opportunity abounds.04 The Assessment Today in India. All rights reserved.

2008-09 The Policy Framework New industrial policy to push the state’s economy Punjab is one of the largest producers of food grains in India with food grains contributing 68 percent to the annual food production of India. .2 percent Rice. a Swiss cooperative. In 2006-07 it contributed 75. June 2009 © 2009 KPMG.520 million (67. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Punjab’s economy is primarily an agro-based economy and its industrial base is dominated by small and medium enterprises. 1 Confederation of Indian Industry.3 percent Wheat and 31.253 million employees was in private sector in 2005 (Source: Government of Punjab) Per Capita Net State Domestic Product Source: Directorate of economics and statistics and state government. with the fast changing global economic scenario.26 percent) employees in public sector and rest of the 0. However. All rights reserved.Punjab Population 24 million (as per 2001 census) The state had about 0. textiles and apparel. Punjab. the state government has framed a new Industrial Policy directed at attracting industrial investment in the state. Northern Region. It was the first Indian state to use agricultural technology to engineer a “Green Revolution” 1 . The easy availability of raw material has attracted agro-based industries like food & food products. Other industrial sectors in the state include chemicals and chemical products and transport equipment.

Punjab. Punjab.06 The Assessment | Punjab Highlights of the Industrial Policy2 • The primary objective of the new industrial policy is to bring synergy between the agriculture and industrial sector to grow the state’s economy • No CLU charges and License fee for change of land use from agriculture to industry anywhere in the state • Dedicated annualized fund of INR 1500 million will be created for the purposes of creation of clusters & upgradation of Industrial Infrastructure • State Government will create land banks to develop Industrial Areas for the relocation of existing industries from residential areas and for location of new industries • Extended several policy incentives and concessions to areas like hotel and resort projects. June 2009 3 Confederation of Indian Industry. June 2009 © 2009 KPMG. a Swiss cooperative.6 million direct and indirect jobs by 2018. Northern Region. Northern Region. institutional. Punjab.6 billion) and 0. 2 Confederation of Indian Industry. IT units and parks will be charged for the actual units consumed. It also targets the exports of IT/Knowledge industry worth INR 214. .3 The incentives given to IT/TIES Industry include:4 • Exemptions from stamp duty and registration fee for land transfer/allotted by PICTCL (Punjab Information & Communication Technology Corporation Ltd. commercial. multiplexes and textile industry Industry specific Policies IT Policy IT Policy intends to create an enabling environment in the state for IT/Knowledge Industry to attract investment from the private sector. June 2009 4 Confederation of Indian Industry. industrial or agriculture use zone notified under the master plan • Capital subsidy at 20 percent of fixed capital investment in the project. SIDBI and various state corporations for IT/ Knowledge Industry • IT Parks notified by PICTCL will be exempted from statutory power cuts. All rights reserved.6 billion (USD 4. health tourism. subject to ceiling of INR 2 million to be given to first 10 SME units in IT Park notified by PICTCL • Punjab Venture Capital Fund has been created by Government of Punjab.) • Stamp duty reimbursement on land acquired by developer for building IT park or IT units developing their own campuses • VAT on all IT products rationalized to be at par with the minimum floor rate of 4 percent • IT units can be set up in residential. farm tourism. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. restrictions on peak load hours and weekly load shedding. Northern Region.

• Creation of infrastructure through clusters. Muktsar and Ferozepur • Setting up of new educational and training institutes for making skilled technical workforce available to the industry.07 The Assessment | Punjab Agro. Northern Region. which fall under the purview of the Reserve Bank of India • 5 percent back ended subsidy for 5 years on the interest on term loan subject to a ceiling of INR 2 million per year per unit will be provided subject to the conditions specified • Interest subsidy will be available to agro industrial units making fixed capital investment ranging from INR 100 million to less than INR 250 million and availing term loan upto INR 150 million. Key Highlights of the Textile Policy are: • Apparel Training and Design Centre in Ludhiana and participation of the private sector is being encouraged to strengthen apparel-related courses of Industrial Training Institutes and Polytechnics in the state • Assistance in land acquisition by the state government for setting up of mega textile units • Creation of infrastructure in the form of textile clusters. Sangrur. Punjab. The cost of land for the computation of fixed capital investment will not be more than 20 percent of fixed capital investment • Assistance for preparation of detailed project report and for patent registration in agro-industries up to 50 percent • CLU charges would be waived off while EDC charges are to be reviewed • VAT and other taxes/levies would be rationalized Notification Textile Policy 20066 Textiles are a focus area of Industry policy in Punjab. apparel parks and integrated textile parks. Punjab. Bathinda. All rights reserved. developed mainly through private sector participation • Reduction in electricity duty to half the existing rate for mega textile projects for a period of five years and full waiver of electricity duty for a period of seven years for mega textile projects in the districts of Patiala.Policy5 In order to develop the agro sector. with assistance from the Government of India as well as private sector participation. Moga. . having all necessary facilities at one place. Faridkot. Key initiatives under this policy include: • Conducting workshops and training sessions on application of clean biotech technologies to create public awareness about biotechnology • Set up the Punjab Biotech Promotion Board to attract investment in the sector 5 Confederation of Indian Industry. the policy has made provision of: • Interest subsidy would be granted to units availing term loan from scheduled/nationalized Banks/FIs. Mansa. June 2009 6 Public Private Partnership in India. State Policy © 2009 KPMG. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. educational and training institutions • Reduction of electricity duty for projects • Assistance in land acquisition Biotech Policy 20066 The policy intends to facilitate the growth of biotech industries and development of clean biotech technologies in the state. a Swiss cooperative.

subject to ceiling of INR 2 million. June 2009 8 IBEF © 2009 KPMG.8 Small Scale Industries in Punjab Units (in million) 2004-05 2005-06 2006-07 0. Small and Medium Enterprise Policy highlights7 • Interest subsidy will be available to existing small/medium agro industrial units undertaking modernization and/or technology up-gradation for installing new equipments and availing term loan upto INR 50 million for the purpose • Interest subsidy at 5 percent for 5 years on the interest on term loan subject to ceiling of INR 2 million per year per unit to agro-industrial units. agri-infrastructure projects and also to existing small/medium agro-industrial units for modernization • Capital subsidy at 20 percent of fixed capital investment in a project. Northern Region. .934 0.938 NA Production Value (INR Million) 250950 252000 NA Source: Government of Punjab and CII. 60 percent of exports and 21 percent of the investment for the industrial sector in 2008.205 0. All rights reserved.205 Fixed Investment (INR Million) 48350 48550 55000 Employment (In Million) 0.08 The Assessment | Punjab • Promotion of public-private partnerships in agriculture extension. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. which will act as a biotechnology development centre to meet R&D. Punjab. pilot scale testing and validation requirements of the biotechnology industry • Creating agri-clinics and agri-business centres throughout the state to serve as nodal centres for information dissemination and kisan call centres to provide immediate and first-hand information to farmers Micro. 2007-08 7 Confederation of Indian Industry.204 0. a Swiss cooperative. crop diversification and organic farming in the state • Establishing a new biotechnology institute. to be available to first 10 approved SME units in the IT Parks notified by PICTCL • The State Government would encourage existing small/medium agro industrial units to undertake modernization and/or technology upgradation to meet the challenges of marketing The Policy Impact Strong agricultural and well developed small/medium scale industrial base The small scale industries lead the industrial performance of the state with 47 percent of production.

The new policy is likely to strengthen the existing small scale 58.82 86. Industrial Park. Ltd. Mandi Gobindgarh are likely to be benefit from the policy. Batala. Amritsar. June 2009 © 2009 KPMG.08 sector such as hand tools. Bicycles and Bicycle Parts at Ludhiana.09 The Assessment | Punjab Investment intentions in terms of IEMs filed. Jalandhar and Ludhiana Quarkcity India Pvt. Jalandhar. Leather industry (Jalandhar). Monthly Magazine. Amritsar.IT specific SEZ in Mohali. the state government is encouraging the development of Parks. Sewing Machine & parts (Ludhiana).46 114. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.72 94. Diesel Engines at Phagwara. Punjab Industrial review. a Swiss cooperative.9 Some of the industrial parks coming up in near future in the state are as follows: Industries Infrastructure Apparel Exporters Association of Ludhiana and the Punjab Small Industries Corporation jointly developing an apparel park in 85 acres with 102 plots Textiles Ludhiana Integrated Textile Park (for knitting and garmenting) in Ludhiana.09 51.. Agricultural implements (Moga). Source: Department of Industrial Policy and Promotion. Mohali The pharma SEZ covers an area of 32 hectares Source: United Nations Industrial Development Organization. Machine Tools at Batala. in Dhaula. September 2009 Not only the small scale sector but also the IT Industry and agro-sector are expected to attract investment to the state. This SEZ covers an area of 20 hectares SEZ Ranbaxy Laboratories Ltd. Northern Region. Handicrafts at Hoshiarpur Automobiles and Auto Parts in Ludhiana and Wooden Furniture at Kartarpur Electronics Township (ELTOP). Mohali.66 billion have been approved by State Government for implementation during 2007-08. casting and textile located in several parts of the State. and Lotus Integrated Texpark. 2008 Industrial Clusters Information Technology Parks 9 Confederation of Indian Industry. . forging. The policy reforms to create land banks to provide land at affordable prices to new industries are also likely to increase the fresh investment in the state. Growth Impetus Proposed Industrial infrastructure Considering that the Industrial parks for the IT. spanning 365 acres in Mohali forms the hub of the IT industry in Punjab IT parks are also planned for Patiala. Multiplex and Hotel Projects with proposed investment of INR 614. District Barnala have been approved for Punjab under the SITP Scheme in 2007 Food Parks Sirhind in Fatehgarh Sahib district Textile (Ludhiana). Small scale industrial hubs including Ludhiana. All rights reserved.. steel. About 273 Mega Industrial Manufacturing. Gems and Jewellery at Amritsar. Biotech and Textile industries are the primary catalyst for the growth of the industry. Re rolling Steel Mills at Mandi Gobindgarh. Punjab. Kapurthala. LOIs/DILs issued in Punjab Numbers 2005 2006 2007 2008 2009 (till Aug) 203 214 105 102 42 Proposed Investment (INR Billion) Focus on increasing the existing industrial base The new industrial policy has unveiled reforms such as cluster approach which includes development and upgradation of infrastructure.

Punjab Infotech. While the entrepreneurs appreciate the agro initiatives and the IT industry development. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.8 percent (2001 census). 2008-09 © 2009 KPMG.7 percent. with 2. PFC and SIDBI. It is felt that a considerable number of manufacturing units have moved to nearby states like Himachal that may offer a more welcoming environment. All rights reserved. the entrepreneurs expressed a need for a region wise policy and a cluster based approach rather than one single policy for the entire State.11 Source: Government of Punjab. entrepreneurs find a gap between academia and industry and a need for industry ready professionals.000 120 1. Economic Survey. While the entrepreneurs acknowledge the initiatives of the government. With regards to educational development. they express a need to consciously boost the manufacturing sector. there is a general perception that the state lacks the political will to focus on entrepreneurial development. the entrepreneurs are keenly awaiting an effective single window clearance.180 literacy rate of 69. However. There seems to be a need for increased focus on vocational training and skills based education. Industrial Policy. A Seed and Venture fund co created by the government and established entrepreneurs is also expected to provide opportunities to the state’s aspiring entrepreneurial population. 10 Government of Punjab.10 State’s emphasis on the development of skilled work Faculty Engineering Management Hotel Management & Catering Technology MCA Institutions 38 57 2 25 Students 9455 force The state has a strong educational infrastructure. entrepreneurs admit larger enterprises are critical to the ecosystem to act as a customer base for MSMEs Further. a Swiss cooperative. They also express the need to migrate most processes online to ensure faster turnarounds and promote standardization. not undermining the need to attract large enterprises. This has been funded jointly by PSIDC. however. They acknowledge the initiatives towards promoting IT industry in the state. 2009 11 Maharashtra Government. when probed on a wishlist. The entrepreneurs can be part of the overall development strategy if they are considered at the time of formulating the strategy.10 The Assessment | Punjab Venture Capital fund for IT industry The state has launched a Venture Capital Fund dedicated to IT Industry with a corpus of INR 200 million. The entrepreneurs also acknowledge that there is a need for proactive and useful interaction between government and industry associations to arrive at a mutually agreeable policy framework which is long-term and practical. . A general perception is that strategies are usually made keeping the larger entrepreneurs in mind thus not benefiting smaller enterprises. Education The Entrepreneurs’ Viewpoint The entrepreneurs in Punjab are aware of the new industrial policy and admit that the state has taken some initiatives and is moving in the right direction. which is above the national average of 64.

it is felt that in many cases. the state government realizes and recognizes the need for development on other factors like land development. good roads. Acknowledging the demands of entrepreneurs. They are also involved while developing the curricula. should surplus funds be made available. The Government also looks forward to a communication and feedback mechanism with its entrepreneurs and is open to initiatives that will increase communication and partnership potential with private industry. workshops and talks. 35 percent by industry. if given a choice they would enhance their focus on SME sector as the larger enterprises can avail of external help. © 2009 KPMG. On financial incentives to promote industry. the state feels that its focus is commensurate with the sectors contribution to GSDP Taking the example of power – Approx 32 percent of power is consumed by Agriculture. With regards to specific entrepreneurial education and development. However. . Initiatives have also been started for collaboration between the government and industry players with bigger organizations like TATA and L&T taking the lead. development of labor skills and land development. The state believes that there is an enormous level of innovation at the grass root level but this innovation is not commercially exploited in an efficient manner. There is also continuous effort to enable and increase interaction with the industry and bridge the gap between what is taught in these institutes and what the industry requires. the entrepreneurs limit themselves and do not push for scale after reaching a certain level. From the state’s perspective. People from Industry are called for interactions.11 The Assessment | Punjab The Government’s Viewpoint The state government praises the people of Punjab for their entrepreneurial qualities. The State is moving in the right direction but policy implementation needs to increase the momentum of entrepreneurial growth. the state will focus on infrastructure development. a Swiss cooperative. . proper water management and industry clusters comprising similar concerns and expertise to be set up. VC fund. Rapid technology adoption is also a challenge as voiced by the government. the state has courses on entrepreneurship where the objective is to provide the knowledge for job creation as well as self employment. The State does cite the need for additional financial resources to implement these policies though. However. There is no planned expenditure on industries. industry specific infrastructure like cold storage. The government however admits that the support system may not be sufficiently robust to give entrepreneurs the leverage they need to get them to the next level. All rights reserved. industry contributes only 15 percent of the GSDP . 19-20 percent is lost and balance used for domestic purpose. The government also feels the mentoring in the state is minimal or absent which further leads to opportunity loss or stagnation. the state government stated that limited funds constrain it from giving many exemptions and subsidies. Justifying the state’s focus on Agriculture and Agro based industries. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. However.

Gujarat State. a Swiss cooperative. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. The main objective of the policy is to facilitate investment in the state. 2008–2009 Source: Socio Economic Review. create large scale employment opportunities and achieve global competitiveness by improving productivity among industrial units.1 percent to the country’s industrial output1. 2008–2009 The Policy Framework Highlights of the Industrial Policy 2009 Gujarat is considered one of the leading industrial states in India and is often projected as an example of a business-friendly state. the state hopes to do the following2: 1 Socio Economic Review. the state government has reviewed and updated the Industrial Policy and announced the Gujarat Industrial Policy 2009.Gujarat Population 50. 2009 © 2009 KPMG. . 2008–2009 2 Industries and Mines Department of Gujarat. Gujarat State. Gujarat State. Industrial Policy. As per the norms of the policy. To provide impetus to the growth of the industrial units in Gujarat. All rights reserved. The state has achieved growth in the industrial sector and contributes nearly 16.6 million (as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Socio Economic Review. It accounts for 22 percent of the country’s total investment and contributes about 16 percent to the total value of output added by the manufacturing sector in the country1.

13 The Assessment | Gujarat • Focus on Special Investment Regions (SIR) and Investment Regions (IR) with convergence of industrial. a Swiss cooperative. fisheries. Investment Opportunities(Vision 2010 for Proposed Investment Program) © 2009 KPMG. The state government has notified IT Policy 2006 – 2011 in November 2006. non-conventional energy resources port and related industries and power sector • Providing financial assistance for the upgradation and improvement upon the status of infrastructure in the state • Development of new industrial estates in focus sectors to promote sector specific economic activity and generate employment. nano technology. . As per the policy. biotechnology. Industrial Policy. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. incubation centers Industry specific Policies The state is providing support to the key thrust sectors through specific policy initiatives: IT/ITES Policy3 The Government of Gujarat has undertaken initiatives to promote the IT/ITES industry in the state. All rights reserved. Projects with investment of more than INR 10 billion and capacity to provide employment to 2. social and urban infrastructure. agri-business.000 people are encouraged • Promotion of cluster development approach by providing financial assistance to the clusters • Special thrust to sectors such as textiles and apparels. The state government plans to provide financial assistance and incentives such as reimbursement of stamp duty on the cost of land • Development of new industrial estates through the Public Private Partnership model (PPP) framework • Emphasis on encouraging expansion of the skilled and educated manpower base • The Government of Gujarat (GoG) has incorporated Gujarat Knowledge Society and plans to set up knowledge corridors for higher education • It has proposed to set up training extension centers in industrial parks/clusters/ SEZs on a PPP basis. 2009 4 Industries and Mines Department of Gujarat. anchor institutes. the following incentives will be provided to augment the growth of the sector: • Exemption from payment of electricity duty for a period of five years and power cuts for all new IT units • Exemption of stamp duty for units in the IT Parks and IT SEZ • Financial assistance to IT park developer and allowing additional floor space index (FSI) for IT/ITES parks in urban centers • Proposed investment of about INR 114 million in 2009-20104 • Granting of SEZ status to the IT industry subject to the provision of SEZ Act/ rules 3 Industries and Mines Department of Gujarat. The state has legislated the Special Investment Region Act. IT/ Knowledgebased industries. 2009 (SIR Act) for facilitating development of SIR in Dedicated Freight Corridor (DFC) and Delhi Mumbai Industrial Corridor (DMIC) • Encourage setting up of mega projects to facilitate large scale economic activity in the state. gems and jewellery.

5 million • Establishment of jewellery parks by encouraging PPP in the sector • Financial assistance for the establishment of Hallmark Certification Centres and Gems Testing Centres Textile and Apparel8 The state contributes about 33 percent of mill-made fabric and 25 percent of power-loom fabric of the country. etc. a Swiss cooperative. agriculture. the state government has introduced various schemes: • Financial assistance by way of interest subsidy in technical textiles. the GoG has formulated the State Biotechnology Policy 2007– 2012. Investment Opportunities(Vision 2010 for Proposed Investment Program) © 2009 KPMG. Industries and Mines Department. January 2009 7 Government of Gujarat. • Financial assistance by way of interest subsidy to Modern Jewellery units at the rate of 3 percent per annum upto a maximum of INR 1. exclusive technical textile parks. 2009 8 Government of Gujarat. testing. 2009 9 Industries and Mines Department of Gujarat. training. The key highlights of the policy are: • Focus on thrust areas such as animal husbandry. spinning. The state accounts for 80 percent of the diamonds processed in India and has emerged as the major source of employment generation. pharma and healthcare. the state government has formulated various schemes to make the state as the favorable destination of investment. knitting. and accreditation • Financial assistance for the biotechnology parks at 50 percent of fixed capital investments in land. buildings and infrastructure facilities up to a maximum of INR 25 million • Promoting single window clearance by facilitating easy approvals by instituting a coordinating or liaison officer Gems and Jewellery Policy7 The GoG has identified the gems and jewellery sector as one of the thrust areas for development. apparel and machine carpeting • Financial assistance for technology acquisition and upgradation. Textile and Apparel Sector. weaving. All rights reserved.14 The Assessment | Gujarat Biotechnology Policy5 The state of Gujarat consist of more than 50 biotechnology companies and 66 support organizations6. . Gems and Jewellery Sector. Sector Profile. To further augment the growth of the sector. To further enhance its dominance in the sector. Biotechnology. on PPP basis 5 Government of Gujarat Science and Technology Department. and marine for the development in biotechnology • Facilitate private partnerships for developing biotechnology parks. • Proposed investment of about INR 4 billion to the sector9 • Assistance for establishing Apparel Training Institutions • Support for setting up apparel/sewing parks. Industries and Mines Department. To encourage new entrepreneurs and attract investments in biotechnology sector. BT Policy 2007–2012 6 Gujarat The Growth Engine of India. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. weaving park for cotton/synthetic textiles. zones and other supporting infrastructure for research.

100 people. • Interest subsidy at the rate of 7 percent and 5 percent for micro enterprises and small and medium enterprises.24 Medium 316 28. small and medium enterprises and about 37 .5 million per annum. 1.4 Source: India Stat and Ministry of Commerce and Industry. Gujarat 10 Government of Gujarat. a Swiss cooperative.27 Small 7911 114. All rights reserved.359 units were registered during January 2009 – June 2009.4 billion.7 Number 76 2008 Investment (INR billion) 13.4 2007 Number IEMs Implemented 223 Investment (INR billion) 74. Small and Medium Enterprise (MSMED) Act-2006.5 million for obtaining international patents The Policy Impact The introduction of the Industrial policy 2009 is seen to have helped industrial development in the state. . since August 1991 till August 2009. Industries and Mines Department. about 61 IEMs were implemented with an investment of INR 13. The implementation of policies has lead to an emergence of number of Industrial Entrepreneurs Memorandum (IEMs) in the state. the Micro. Small and Medium Enterprises. Government of India Further.2 0.4 0. In the first eight months of 2009. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. has also triggered the development of the micro.312 units have been registered with an investment of INR 201 billion and employment generation of approx 600 billion during October 2006– June 2009. Small and Medium Enterprise Policy highlights10 The state government has identified various incentives for the MSMEs. respectively • Interest subsidy is likely to be granted for a maximum amount of INR 2.5 0. Micro.15 The Assessment | Gujarat Micro. for a period of five years • Venture capital funding for the MSMEs upto INR 100 million during the operative period of the scheme • Allotment of 50 percent grant subject to maximum of INR 10 million to the MSMEs for the acquisition of technology in any form • Assistance to R&D institutions upto 60 percent of the project cost excluding land cost and building cost • Patent assistance upto 50 percent subject to maximum of INR 1 million for expenditure for obtaining domestic patent and upto INR 2.3 2009 (Upto August) Number 61 Investment (INR billion) 13.04 Source: Office of The Industries Commissionerate. 2009 11 Ministry of Commerce and Industry. SIA Statistics. Units Registered under the MSMED Act from October 2006 to June 2009 Micro Number of Units Registered Investment (INR Billion) Employment (milion) 29085 58. about 4. Also. September 2009 © 2009 KPMG. Further.11 .485 IEMs where implemented by the entrepreneurs with a total investment of INR 807 billion and generating employment for 209.

Vadodara with a total area of 1. The state is also encouraging specialized skill development institutions that can impart vocational skills in areas such as marine engineering.12 Investment Promotion Measures – The Government of Gujarat has taken a number of investment promotion measures for the overall development of the state. specialized pipe laying.405 4. Further. 2009. the Gujarat Industrial Development Corporation (GIDC) has approved 6 new proposals for industrial estates at the end of year 2008-09. the largest in the country.02 0.16 The Assessment | Gujarat Growth Impetus Infrastructural development initiatives – The state has taken a number of infrastructural development initiatives such as development of biotechnology parks. a Swiss cooperative.85 0.13 Sectors Manufacturing Infrastructure Investment Regions Urban Development Social Services Tourism Special Sectors MSME Announcements MoUs (Number) 576 194 101 261 145 99 1423 7252 15 Proposed Investment (INR Billion) 2. In January 2009.17 0. Gujarat State.00 Source: Socio Economic Review. Biotechnology.05 0.859 1.98 0.2009” to attract investors to establish projects in the state.7 million employment opportunities in the state. mining. 2008–2009 © 2009 KPMG. The state government has also proposed to set up biotech zones and parks at five locations in Gujarat12.13 0. . About 8690 MoUs were signed /announced in 28 different major sectors with total investment of INR 12215 billion and 2.967 1.14 12 Vibrant Gujarat. Gujarat State. Biotechnology Sector. Gujarat The Growth Engine of India. 2008–2009 14 Socio Economic Review. it has organized “Vibrant Gujarat Global Investors’ Summit . 2008–2009 State’s emphasis on the development of skilled work force – The state government has created incubation centers in partnership with private and corporate sector to support the potential of the youth in the state. logistic.30 0.17 0.012 301 440 721 68 444 Proposed Employment (Million) 0. The state is setting up Biotech SEZ at Savil.700 acres. industrial parks and estates. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. January 2009 13 Socio Economic Review. etc. All rights reserved. Sector Profile. Gujarat State.

It acts as an investment promotion agency of Gujarat state and provides single point of contact for all investment related activities in Gujarat. the implementation of some of these policies has been falling behind schedule. From an entrepreneur’s perspective. entrepreneurs have faced hindrances while dealing with the central authorities (Customs & excise and Income Tax) operating in the state.674 billion 1. easy communication with the government are cited as some of the motivating factors. According to entrepreneurs. healthcare and tourism to promote inbound tourism as well as manpower migration from other states.15 The Entrepreneurs’ Viewpoint Lauding the efforts of the state government. 2009) Proposed Investment by the Developer as well as Units in SEZs Proposed Employment INR 2. the entrepreneurs feel that while the state is proactive in announcing policies. Together with the resources. The state gives opportunity to transform ideas into activities. It has taken numerous steps to ensure entrepreneurial development.9 million persons Single window clearance facility – The state government has set up a single window clearance facility through INDEXTb (Industrial Extension Bureau). The state’s entrepreneurs take pride in the state’s proactive investment promotion programmes.83 hectares Source: Office of The Industries Commissionerate. they also expressed some of their concerns and expectations. Further. 15 INDEXTb © 2009 KPMG. while the availability of manpower is not an issue.17 The Assessment | Gujarat Major hub for SEZs units – Gujarat was the first state to implement the Special Economic Zone (SEZ) Act. the state’s focus on SME sector together with larger enterprises and foreign investment is much appreciated by its entrepreneurs. Further. There is ease in setting up an industrial unit through quick decisions and streamlined procedures. The state has a robust policy framework. As one of the entrepreneur in Gujarat commented “Gujarat has entrepreneurship in its DNA. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. while the state’s authorities are perceived to be supportive in many areas. land bank for small players and easy land transformations from Agriculture to Industry. a Swiss cooperative. Gujarat (SEZs) Proposed Investment and Employment in the 60 SEZs (May 30. availability of financial institutions and development banks. Further. the government only needs to provide opportunities” As entrepreneurs in the state recognise the state’s efforts and willingness to promote entrepreneurial development. . Gujarat is seen as having a very progressive outlook towards the industry and entrepreneurial development. The state’s strategic vision combined with efficient utilisation of its resources has led to various new growth opportunities in the state which the state’s entrepreneurs have tried to harness. an organization of Gujarat Government. the entrepreneurs in Gujarat truly believe in their state’s governing machinery. which is created with participation from all stakeholders. However. In addition. Proposed area of SEZs 29423. There is a need to create modern world-class social infrastructure in terms of education. while the state has an efficient single window mechanisms its entrepreneurs feel that that to a large extent this is only for select marquee projects and not all projects receive the same treatment and some still face delays. they also feel the need to create sustainable trade and business coordination agency across various Indian states and countries to foster business tie-ups. a thorough skill gap analysis is required from ground to top level to address the needs of specialised industries. All rights reserved. the state has set one of the best platforms for an entrepreneur. The state is ranked number one in terms of area covered under SEZs in India with 60 approved SEZs (as on May 2009). 2004.

The government has been receptive of the feedback provided by the industry at various forums and has been continuously devising ways to address the concerns of its entrepreneurs. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. The clarity of vision and objectives at the state level has enabled the state to become one of the most industrialised economies in the country today. © 2009 KPMG. All rights reserved. a Swiss cooperative. The Government has acknowledged a need for ongoing dialogue and interaction between the state and entrepreneurs to continually take into account the entrepreneurs’ needs while framing and implementing policies. However. the government also credits the state’s entrepreneurial culture for its success The government acknowledges its role as an enabler and facilitator for growth and endeavours to deliver by creating the right framework.18 The Assessment | Gujarat The Government’s Viewpoint The state of Gujarat has been at the forefront of industrial and entrepreneurial development. . The state has set many policies and initiatives which are now being replicated by other states to create similar effect. The government also encourages a dialogue between all stakeholders to create growth initiatives while focussing on the overall development of the state.

2 The state government intends to achieve consistent growth and has formulated industrial policy to attract investment in the state. 2009-2021 © 2009 KPMG. 2008–2009 2 Government Of National Capital Territory of Delhi. a Swiss cooperative. of which 21 are under Delhi Development Authority (DDA) and the remaining are maintained by Delhi State Industrial & Infrastructure Development Corporation (DSIIDC). Draft Industrial Policy. . All rights reserved. the state government has formulated a new industrial policy 2009-2021 after 27 years of the last policy.647 acres. As per the 5th Economic Census held in Delhi during 2005. with globalization of economies and technology and advancement becoming the keystone of an economy development.85 million (as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Economic Survey of Delhi. with number of establishments contributing about 1. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. 1 Economic Survey of Delhi. Department of Industries. However.1 The state has about 28 planned industrial estates spread over an area of 4. with majority of units operating in the unorganized sector.6 million people. 2008–2009 Source: Economic Survey of Delhi. 2008–2009 The Policy Framework Highlights of the Industrial Policy Delhi has a large presence of manufacturing units employing about 0. The first industrial policy for the National Capital Territory (NCT) was framed in 1982 with an objective of creating a manufacturing sector and employment opportunities in the state. the state was ranked 16th in the All India ranking.Delhi Population 13.80 percent of the total establishments in India.

Department of Industries. All rights reserved. Industry Specific Policies The state is providing support to the key thrust sectors through specific policy initiatives: IT/ITES Policy3 The Government of NCT of Delhi has undertaken initiatives to promote the information technology sector in the state. pharmaceuticals and electronics • Promoting single window clearance through the ‘Business Facilitation Mission’ (BFM) program. research institutes and R&D units in engineering. The focus is to attract knowledge-based industries • Redevelopment of industrial areas • Encouragement of cluster approach in new industrial areas • Promoting Public Private Partnership (PPP) for developing specialized industrial parks (such as Hi-Tech Park for IT/ITES) or Special Economic Zones (SEZ) with government as co-partner • Creation of R&D and education hubs in conjunction with educational universities. 2000 © 2009 KPMG. Internet. empowering women. which aims to explore new opportunities for employment. software. telecom and e-commerce sectors 3 Government Of National Capital Territory of Delhi.20 The Assessment | Delhi The new industrial policy is still under consideration by Government of National Capital Territory of Delhi (GNCTD) giving thrust on the following:2 • Focus on relocating and phasing out polluting units • Promoting high technology and skilled industries. improving healthcare. efficiency and enhance factors for economic growth. IT Policy. . a Swiss cooperative. etc. colleges and educational institutions in the state of Delhi • Promote entrepreneurship and increase IT's contribution to the economic growth of the state • Use the medium of information technology to promote equality by removing poverty. IT enabled services. The key highlights of the policy are: • Generate additional employment in the digital economy • Promote the usage of e-governance to support the government to deliver efficient services to its citizens • Encourage the use of IT in schools. The state government has put forth the IT policy in 2000. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. • Encourage investment and accelerate growth in the IT hardware. The objective is to attract investments in the state through procedural simplifications and removing the need for approaching various departments for clearances and payments. training.

metros. Industries Department. . Transport Policy 6 Ministry of External Affairs. The key highlights of the policy are: • Provision of affordable modes of transport such as buses.703 under the scheme. All rights reserved. a Swiss cooperative. ITP Division. The capital subsidy is limited to 12 percent of maximum loan of USD 86. Government of India. • Promoting single window clearance services • Simplifying procedures and introducing redressal of grievances and assistance mechanism • Establishing export promotion and quality control cell • Provision of financial assistance at lower interest rates • Focus on infrastructure facilities by providing developed plots and factories 4 Government Of National Capital Territory of Delhi. gems and jewellery and non-conventional energy are allowed to carry out activities in the SEZ units • IT/ITES SEZ units are likely to be exempted from environment clearance • Exemption from state and local taxes for transactions within the SEZ units • 100 percent exemption from payment of stamp duty on the lease/license deed regarding the land or built up space. bio-technology. the government is providing the following incentives: • Specific sectors such as electronic hardware and software including ITES. • Controlling pollution by providing CNG buses. mini-buses. electric trolley buses. Profile of Delhi © 2009 KPMG. strengthening the pollution norms. etc. nano-technology. however no exemption from payment of registration charges • Exemption from electricity duty or tax • All units established under the SEZ will be declared “public utility services'' under the jurisdiction of the Industrial Dispute Act 1947 Transport Policy5 The state government formulated the transport policy to provide cost-effective and efficient modes of transportation to the citizens.21 The Assessment | Delhi SEZ Policy4 The Government of NCT of Delhi has formulated a policy to provide various incentives and concessions for the promotion of SEZ units in the state. subways and expressways Small Scale Industries6 The state government has identified various incentives for the Small Scale Industries (SSI) in Delhi: • Provision of capital subsidy scheme for technology upgradation to the new and existing SSIs. Industries Department. To foster the growth of the SEZ units in the state. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. SEZ Policy 5 Government Of National Capital Territory of Delhi. introduction of strict inspection and certification systems • Strengthening the transport infrastructure by constructing flyovers.

It has acquired 1. freeways and better roads have also helped make Delhi a more attractive city for business in general. SIA Statistics.8 97 .880 people. a Swiss cooperative. the services sector. Development of urban transport infrastructure such as the Delhi Metro.8 138. . Total Number of Industrial Estate in Delhi ( as on March 31 of the respective years) 2002 29 2003 29 2004 29 2005 31 2006 31 2007 31 2008 28 2009 28 Source: Economic Survey of Delhi.1 emergence of public private partnerships projects in the state. The investment inflow is likely to bring in new technology. the Delhi region (including parts of UP and Haryana) was the second most favored foreign direct investment destination after Mumbai.7 The implementation of industrial policy has also triggered the 93. It has also acquired 800 acres of land for the development of industrial areas. telecommunications. All rights reserved. Foreign Direct Investment Inflow in Delhi (INR billion) 2000 – 2005 2006 2007 2008 2009 ( January to May) 220. During the period the largest investment attracting sectors have been electrical equipment.300 acres of land of which possession of 1. The state government has made Delhi Financial Corporation responsible for facilitating various clearances and loans required for setting up an industry. favourable government policies and highly-skilled and trained workforce. The implementation of policies has fostered the growth of foreign direct investment in the state. Infrastructural development initiatives – The state government is taking a number of infrastructural development initiatives such as development of industrial parks and estates. In the first five months of 2009.22 The Assessment | Delhi The Policy Impact The introduction of the Industrial policy helped industrial development in the state with increase in number of public private partnership projects and foreign direct investment (FDI) inflows in the state. drugs & pharmaceuticals. the state has implemented only 50 Industrial Entrepreneur Memorandums (IEMs) with an investment to INR 6. 2008–2009 7 Ministry of Commerce and Industry.5 101. The 2010 Common Wealth Games in New Delhi has provided an opportunity to the private sector to be involved on a large scale for the overall development of the state. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.065 acres has been taken for developing new industrial estates. during August 1991 to August 2009.6 Further. enhance the quality of human capital and create a strong competitive base for its overall development. Note: The data for Delhi includes Uttar Pradesh (UP) and Haryana Source: India Stat and Ministry of Commerce and Industry. and transportation industry followed by chemicals. Government of India Growth Impetus The state provides an environment conducive to business with quality infrastructure.5 billion and generating employment for 4. food processing industries. September 2009 © 2009 KPMG.

8 percent. management. The state government has proposed an outlay of INR 21. The credit to deposit ratio of all scheduled commercial banks was 70. with literacy rate of 81. medical. The government has also targeted utilizing more than INR 450 billion (during 2007-2012) for improving civic infrastructure and services in the state. Delhi per-capita expenditure (INR 1. Source: Economic Survey of Delhi.93 percent. . 2008–2009 Financial Institutions in Delhi (as on September 2008) State Bank of India and its Associates Nationalized Banks Foreign Banks Other Scheduled Commercial Banks Source: Economic Survey of Delhi.098).67 percent.32 percent as compared to the previous year.8 Strong focus on the development of skilled work force9 – The state has a strong educational infrastructure. in 2008-09. which is likely to provide it an opportunity to augment its infrastructure and facilities. and legal institutions. Further. The state is the hub for leading technical (IIT).076 branches (September 2008) of Scheduled Colleges Technical Institutes 175-degree colleges 46 AICTE approved technical education institutions Status of Educational Institutes Schools 5022 Commercial Banks.23 The Assessment | Delhi The state is hosting the 2010 Commonwealth Games.5 percent in 2007-08 to 10. very close to the all India ratio of 74. Strong financial infrastructure for collection of savings and disbursal of credit – The state has a sound financial infrastructure with 2. 2008–2009 © 2009 KPMG.753) on education sector was higher than all states (INR 1. All rights reserved. a Swiss cooperative. an increase of 14.3 percent in 2008-09 of the total plan expenditure. The Government of Delhi is focusing on the education sector and has increased the expenditure on the sector from 8. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.49 percent. 2008–2009 360 1247 40 429 8 State Budget 2009–2010 9 Economic Survey of Delhi. which is above the national average of 64.05 billion for the Commonwealth Games projects.

Further. © 2009 KPMG. However. being the capital and the economic centre of the North. a Swiss cooperative. However. the existing industrial infrastructure needs a facelift to enable investments in the state while creating a more focused regulatory framework to minimise process time and enhance clarity. There is also a dire need to create infrastructure in terms of office space and develop existing power and telecom infrastructure to foster business growth in the state. Hence. Partly. While the state recognises that the focus on industry in terms of policy initiatives has lagged behind schedule. entrepreneurs did cite the need for active government support and there seemed to be an overall lack of awareness of the State’s sector specific policies and incentive structures. sees vibrant economic activity without active promotion. the state government intends to achieve consistent and rapid growth and has formulated industrial policy to attract investment in the state by promoting high technology and skilled industries. there was consensus amongst entrepreneurs for creating an enabling policy framework focused at inclusive growth and service sector development. While discussing their wish list and concerns. construction. However. The policy is focused at creating opportunities in new cleaner sectors while simplifying procedures through a more robust and efficient e-governance framework. the new draft industrial policy 2009-21 is likely to be finalised by the end of 2009. the basic policy framework of the state has not been revised for the last 27 years. while new opportunities are being created in light of the CWG 2010. The focus is to attract knowledge-based industries and redevelopment of industrial areas. ‘entrepreneurship’ is not articulated in the current policy. . many entrepreneurs in the state are not aware of the policies and perhaps were not able to harness the benefits while starting their entrepreneurial journey. All rights reserved. the state government emphasises the opportunities it has created across the NCR region in sectors such as infrastructure. Neighbouring Haryana and UP are actively creating infrastructure to promote industry which has compelled the business to migrate from Delhi to these states. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. the reluctance may stem from the desire to move heavy industry out of Delhi and partly from the fact that Delhi. the state of Delhi is perceived as not proactive in promoting business or industrial growth. The entrepreneurs also feel the need for a state supported Venture / Seed Fund. hospitality. The Government’s Viewpoint With the CWG 2010 preperations in full swing. the state of Delhi is working to make many improvements and creating a plethora of opportunities in multiple sectors across the spectrum. transport etc.24 The Assessment | Delhi The Entrepreneurs’ Viewpoint With Commonwealth Games 2010 around the corner. The government is looking forward to showcasing Delhi to the world during the CWG 2010 and the games have become a catalyst for investment and growth oriented activity in the state. According to entrepreneurs in the state. Further.

roads. electronics. consumer durables. especially in areas of Information Technology and related industries. railways. etc to increase competitiveness in the industry 1 Tamil Nadu industrial Development Corporation Limited. including water supply. and a major manufacturing centre. communication facilities. All rights reserved. Other stated highlights of the policy are: • Increase manufacturing sector contribution in GSDP from 21 percent to 27 percent by 2011 • Develop an efficient and dependable industrial infrastructure • Upgrade infrastructure facilities by encouraging public private partnerships in all industrial clusters.Ta m i l N a d u Population 62.4 million (as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Economic Survey of Delhi. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Industrial Policy. To further stimulate the growth of industrial development in the state. power. automobiles. a Swiss cooperative. The key objectives of the policy are to attract investment. It is one of the most favored destinations by both the domestic and foreign investors. garments and real estate. facilitate new manufacturing capacity and raise the competitiveness and efficiency of local industry. 2008–2009 Source: Economic Survey of Delhi. the government introduced the Industrial Policy 2007 . 2007 © 2009 KPMG. . 2008–2009 The Policy Framework Highlights of the Industrial Policy 20071 Tamil Nadu is considered a leading industrial state in India.

peripherals. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. the state government has formulated the handloom and Textile Policy 2006 –2007 The policy aims at achieving global standards in product quality. All rights reserved. The key highlights of the policy are : • Focus on handloom exports by encouraging the weavers to bring out export-oriented products • Registering handloom products such as ‘Kancheepuram Silk Sarees’ and "Bhavani Jamakkalamunder’ under the Geographical Indications Act • Setting up of Apparel and Hi-tech Weaving Parks 2 Government of Tamil Nadu. etc. a Swiss cooperative. whichever is less • Financial assistance to technology innovators or stand alone R&D units or individuals for innovations capable of industrial application. formal authority and clear time lines for each approval • Implementing a ‘Business Facilitation e-Governance System’ for enabling investors to apply for Single Window Clearance on-line and to monitor clearances • Promoting cluster development action plan for upgrading the quality of infrastructure in industrial clusters Industry specific Policies The state endeavors to support key thrust sectors through specific policy initiatives: ITES Policy2 • To promote the sector. at State and District level. in 2005. . the Government of Tamil Nadu released an ITES policy.26 The Assessment | Tamil Nadu • Upgradation of educational institutions by initiating an Industrial Training Quality Improvement Project to invest substantially in the ITI/ITC infrastructure development and capabilities • Financial assistance to industrial parks upto the maximum of INR 20 million or 25 percent of the investment in eligible fixed assets. The policy outlines certain concessions and incentives to encourage the growth of the sector. • Granted 50 percent exemption of stamp duty for IT companies towards land registration and office construction • Promoting unrestricted movement of capital equipment including hardware. contribute more to exports and to encourage textile .2 million. captive power generation sets. upto 50 percent of the cost of filing a patent or INR 0. • Relaxation of FSI (Floor Space Index) upto 100 percent will be given in designated IT Parks • Allotment of ‘Industry Status’ to all software industries including services and training institutions in ITES • Creation of ITES Parks in Chennai and other Tier II/Tier III cities Handloom and Textile Policy3 To stimulate the growth of the textile industry. IT Policy 3 Government of Tamil Nadu Handloom and Textile Policy © 2009 KPMG. clusters. whichever is less • Encouragement of investments in research and development by manufacturing companies • Enactment of a ‘Business Facilitation Act’ for giving Single Window Committees.

The policy focuses on all initiatives to be taken by the state government for the development of MSMEs • Encourage agro-based industries to provide better income to the farmers • Promote entrepreneur development and sector specific skill development training programmes • Establishment of new industrial estates by allotting 20 percent land in all new / expansion schemes undertaken by State Industries Promotion Corporation of Tamil Nadu Ltd (SIPCOT) to MSMEs • Rebate of 50 percent on stamp duty and registration at the time of original allotment • Encouragement of privately developed estates by providing 25 percent of the total project cost. a Swiss cooperative. Small and Medium enterprises.375 million • Financial assistance by way of capital subsidy for Thrust Sector manufacturing enterprises set up anywhere in the State 4 Biotechnology Policy Of Government Of Tamil Nadu 5 Government of Tamil Nadu. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. . subject to a maximum of INR 10 million as assistance • Financial assistance by way of capital subsidy at the rate of 15 percent on eligible plant and machinery. representing opportunities for marine biotechnology. Micro. and Industrial Products • Creation of Biotechnological Enterprises Zones (Bio-Valleys) in the state • Regulatory facilitation for establishing a Biotech entity research centres • Facilitating single window facility for Biotech enterprises and entities to obtain clearances from the various Central agencies • Enhancement of human resource pool for the development of the sector • Facilitating establishment of an emerging technology fund for the sector • Allotment of industry status to the biotechnology units undertaking commercial production Micro. subject to a maximum of INR 0. Small and Medium Industries Policy 2008 © 2009 KPMG. The key highlights of the policy are: • Focus on Medical / Human & Animal Healthcare. Agriculturefood. To further augment the growth of the Biotechnology industry. the state government has formulated a biotechnology policy. Small and Medium Enterprise (MSMEs) Policy highlights5 To enhance the competitiveness of the Micro. All rights reserved.27 The Assessment | Tamil Nadu Biotech Policy4 Tamil Nadu is rich in bioresources with one of the largest coastlines in the country. Small and Medium Enterprise Policy 2008. the state government announced an exclusive Micro. Environment.

SIA Statistics. The implementation of these policies were an important contributor to the state increasing total investment 3 times from INR 1.703 2007–2008 0.2 1. From August 1991 to August 2009.511 161.792 billion during June 2006 to March 2009. . Tamil Nadu Statistics at a Glance . Tamil Nadu Statistics at a Glance .8 Parameter Number of Registered MSMEs (Million) Investment in Fixed Capital (INR billion) Value of Output (INR billion) Employment (Million number) 2005–2006 0.8 Source: Ministry of Commerce & Industry. about 521 IEMs have been implemented by the entrepreneurs with an investment of INR 137 billion and generating employment opportunities for 79. the implementation of policies has triggered the growth of Foreign Direct Investment (FDI) in the state.2 29. The FDI inflow in the Chennai region (including Tamil Nadu and Pondicherry) increased from INR 28. Policy Note 2009 – 2010 7 Ministry of Commerce and Industry. Government of India Further.059. 2000 –2005 Foreign Direct Investment 2006 2007 2008 2009 (Till May) 52. which has stimulated the growth of micro. During 2008 –2009 about 11 new industrial estates have been established.539 million in 2006 – 2007 to 0.1 Source: India Stat and Ministry of Commerce and Industry.946 Source: Department of Economics and Statistics.7 .7 2009 (Upto August) Number 30 Investment (INR billion) 12.558 193.2008 9 Government of Tamil Nadu.6 It also lead a number of Industrial Entrepreneurs Memorandum (IEMs) in the state.4 Number 29 2007 Investment (INR billion) 15.593 2006–2007 0.8 3. 2009 –2010 © 2009 KPMG.8 billion till May 2009.147 .0 1.6 1.2008 Further.2 3.5 percent from 0. which has lead to an increase in the number of persons employed in the state. small and medium enterprises in the state.737 billion to INR 5.9 6 Government of Tamil Nadu. Government of India The state has implemented the Micro. Micro. a Swiss cooperative. All rights reserved.28 The Assessment | Tamil Nadu The Policy Impact The introduction of the Industrial policy 2007 has played a critical role in enhancing the growth of industrial development in the state. Small and Medium Enterprises Department.9 billion in 2007 to INR 29.0 51.9 28. Small and Medium Enterprise (MSMED) Act-2008.7 1991–2006 Number IEMs Implemented 438 Investment (INR billion) 96. The government plans to set up about three new industrial estates for the year 2009 –2010.539 168. Policy Notes.039.9 58. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.084 people. Industries Department. September 2009 8 Department of Economics and Statistics.558 million in 2007 – 2008.6 Number 24 2008 Investment (INR billion) 13. the policy also resulted in the establishment of a number of industrial estates. The number of MSME has increased by 3.1 3.

Industries Department. The government also issued structured packages of assistance for 7 projects for an investment of INR 54. Policy Note 2009 –2010 11 Government of Tamil Nadu. It has also opened a number of industrial training centers and is supporting development of Centers of Excellence and incubation centers for the overall development of the entrepreneurs. Out of the 23 MOU. 12 were signed in the calendar year 2008 with a total investment of INR 251 billion. Industries Department.8 percent.145 355 317 60 605 753 Source: Government of Tamil Nadu. Availability of skilled manpower – The state has a literacy rate of 73. which is higher than the national average of 64. The state government is taking a number of initiatives to enhance the quality of manpower . India. Status of Educational Institutes Arts. the government has sanctioned structured packages of assistance for attracting new investments in the state. It has designated a nodal agency Tamil Nadu Industrial Guidance & Export Promotion Bureau (Guidance Bureau) for the efficient functioning of the mechanism. State-wise Distribution of Approved SEZs (as on March 31. It has initiated an Industrial Training Quality Improvement Project for the upgradation of educational institutions. The Government has made significant efforts to attract new investments in the state. The state has notified 47 SEZ units with a total area of 3972 hectares. 2009) Formal approvals 69 In-principle approvals 17 Notified SEZs 47 Source: Department of Commerce. Policy Note 2009 – 2010 Single window clearance facility – The state government has an effective single window clearance mechanism to facilitate smooth implementation of industrial projects. Industries Department.29 The Assessment | Tamil Nadu Growth Impetus Infrastructural development initiatives – The state has taken a number of infrastructural development initiatives such as development of industrial parks and SEZ units to disperse the industries. The state ranks third in the number of approved SEZ units11.5 percent. Within the new industrial policy. the state signed 23 Memorandum of Understanding (MOU) in addition to sanctioning structured packages of assistance for 9 projects. Policy Note 2009 –2010 © 2009 KPMG. the government has introduced a Common Application Form (CAF) to replace multiple forms. .6 billion. All rights reserved. SIPCOT and TANSIDCO with an objective of overall industrial development in the state. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Special Economic Zones (SEZs) and Export Oriented Units (EOUs) Investment Promotion Measures10 – The Government of Tamil Nadu has put in place specific industrial promotional agencies such as TIDCO. During 2006 – 2009.11 10 Government of Tamil Nadu. Science and Other Colleges Engineering educational institutions Polytechnics Government it is Affiliated Private Industrial Training Centers Industrial Training Centers 1. a Swiss cooperative. To avoid procedural delays.

the government acknowledges the need to provide better information dissemination on schemes and incentives and a more proactive approach to the SME segment The government also claims significant progress in enabling information and lead sharing on export enquiries and other measures to promote exports. raw materials supply. However. infrastructure support. infrastructure support like land in industrial parks. small and medium enterprises. The government also been organizing guidance seminars for entrepreneurs and creating training programmes to address their concerns.30 The Assessment | Tamil Nadu The entrepreneurs Viewpoint The state of Tamil Nadu is undoubtedly one of the most industrialized states in the country with specific focus on Information Technology. most entrepreneurs feel that this is an area where the scope of development is immense. despite these efforts. The wish list also includes creation of state initiated funding mechanism for entrepreneurial development while ensuring creation of right infrastructure on the other hand. developed plots. automobiles and textile sectors. the government through Tamil Nadu Small Industries Development Corporation Limited (TANSIDCO). The entrepreneurs expect the government to provide softer support through making critical information (schemes. The state acknowledges the need for information dissemination and is committed to providing comprehensive information on support to investors about federal and State Government policies. water. All rights reserved. taxation. provision of work sheds. However from a smaller investor perspective. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. The Government’s Viewpoint The government of TN is focused on creating and attracting industrial projects and promote investments in Tamil Nadu. The entrepreneurs in the state acknowledge that the state has been moving in the right direction with the industrial policy being business friendly and measures being taken specifically for the micro. the state has created various apex bodies and supported chambers to promote the interest of small and tiny enterprise. power. export assistance and guidance to entrepreneurs. The state has also been one of the first in the country to specifically focus on promoting industry and business growth in Tier II and Tier III cities thus aiming for the holistic development of the state. has also played a catalytic role in the promotion and development of Small Scale Industries and hastening the industrial dispersal throughout Tamil Nadu. . The state government has been proactive in identifying the key focus areas and accordingly implementing the policy framework to augment growth in specific sectors. a Swiss cooperative. incentives etc) available while creating mentoring and guidance platforms. The government has been proactive in providing support through development of industrial estates. etc. According to entrepreneurs. A specific example cited was with specific reference to SEZs where the infrastructure at the SEZ is ready but perhaps the connecting roads are still not ready thus delaying the possible usage of the ready infrastructure. investment opportunities etc through their portals. Further. marketing assistance. © 2009 KPMG. There have also been specific measures to promote IT and ITES industries and the state’s government machinery has been extremely supportive and has played a vital role in establishing the IT/ITES sector in the state. The government is also proactively planning the Single Window Documentation Centre for major investment proposals and assist investors in getting all pre-project clearances.

procedural simplification. industrial promotion and investment packages towards significant developments in the industrial scene and hopes to engage with the entrepreneurial community more on these areas. © 2009 KPMG. It has one of the lowest power tariffs in the country and is one of the few states to sell electricity to neighbours. Tamil Nadu was one of the first to formulate policies for the ITES and biotech industries. they also acknowledge the need for improved communication between entrepreneurs and the government.. Tamil Nadu has been constantly upgrading its infrastructure to meet the industrial need. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. industrial policy. All rights reserved.e. a Swiss cooperative. The state has identified 5 critical action areas i. infrastructure development. Policy measures such as single window clearance system have paved way for the foreigners to invest in the state.31 The Assessment | Tamil Nadu The state government has taken a number of policy initiatives to propel growth in the manufacturing and services sectors. Although the government takes pride in the various initiatives they have been rolling out to support industry and entrepreneurs. .

the state government introduced the Industrial Policy 2006-2009. 2008–2009 The Policy Framework Highlights of the Industrial Policy 2009 – 2014 Known as the “Silicon Valley of India” Karnataka is amongst the top five industrially developed states in India with the . The key objectives of the policy are to increase the growth of GDP and exports. . strengthen manufacturing industries.9 million ( as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Economic Survey of Karnataka. All rights reserved. This policy was further revisited to form the latest Industrial Policy 2009-2014. a Swiss cooperative.Karnataka Population 52.1 Aimed at propelling the overall socio-economic development of Karnataka. service sector largely fuelling the overall economic growth. Other stated objectives and highlights of the policy include2: • Increasing the share of industry to the state GDP to 20 percent by the year 2014 • Development of sector-wise industrial zones for optimal utilization of local natural and human resources 1 India Brand Equity Foundation (IBEF) 2 Karnataka Industrial Policy. and generate additional employment for atleast 1 million persons in the manufacturing and service sectors. 2008–2009 Source: Economic Survey of Karnataka. 2009-2014 © 2009 KPMG. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.

an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. including captive generation sets. Furthermore. relaxation in labor laws. The state will allocate INR 10 billion for acquiring 1000 to 2000 acres of land for establishing small and medium enterprise colonies • Emphasis on the development of skilled manpower with a special focus on upgrading emerging skill sets and developing skill sets in women • Promotion of self employment by local youth is likely to be focused on through proper backup support and facilitation • A cluster development approach will be encouraged for the state to productively target resources and develop a stateof-art industrial infrastructure • Enhance the effectiveness of the single window clearance mechanism and reduce the transaction costs of doing business • Promotion of Public Private Partnership (PPP) framework for the development of new industrial estates Industry Specific Policies The state endeavors to promote investments in certain key focus sectors through specific policies: IT/BPO Policy . To upgrade and maintain infrastructural facilities on a sustainable basis. All rights reserved. and easy facilitation through the single window agency • Venture capital and assistance from government for start-ups Biotechnology Policy The main objectives of the biotechnology policy are to spread awareness about the investment opportunities in biotechnology and related sectors. . during the implementation stage (upto 5 years) • Mega projects will be offered a unique package of concessions for a maximum period of 8 years. They will also be offered upto 50 percent concession on stamp duty and registration charges for first sale and first lease • Total exemption from electricity tax for a period of five years • Upto 50 percent exemption from the payment of stamp duty and registration charges for biotech parks 3 Industry Overview.33 The Assessment | Karnataka • Thrust on provision of world-class infrastructural facilities for industries with active participation of private sector/industry. a Swiss cooperative.No longer the de facto choice for the IT/ITES industry The state government is pursuing numerous efforts to regain growth and expansion in the sector through favorable policies3: • Exemption to IT companies from payment of entry tax on certain capital goods. and rebates on cost of land • Continuous and uninterrupted supply of power at industrial rates to IT units • Pollution control clearances. Economic Survey of Karnataka 2008-2009 4 The Millennium Biotech Policy © 2009 KPMG. concession on stamp duty and registration charges. the policy outlines a set of incentives and concessions for attracting investments4: • Exemption from the payment of entry tax on all inputs as well as capital goods. it is proposed to have a dedicated Infrastructure Development Fund of INR 5 billion • Lucrative employment and performance linked package of incentives and concessions to attract investments to backward regions and the Micro Small Medium Enterprises (MSME) sector.

34 The Assessment | Karnataka Special Economic Zone Policy Highlights5 The Karnataka government announced a state policy for expediting the growth of Special Economic Zones (SEZ) and as a part of this. 2009-2014 © 2009 KPMG. 5 State Policy for Special Economic Zones 2009 6 Karnataka Industrial Policy. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. . Micro. and Cluster Development Programme for MSMEs will be merged for the benefit of these enterprises • Attractive incentive packages will be offered especially in backward areas to provide competitive edge to the sector with emphasis on the industrialization of border taluks. 2002 enabling them to function as self governing and autonomous municipal bodies • An exemption of 50 percent on stamp duty and registration fees for registration of lease deeds/sub-lease deeds in respect of industrial land/built-up space and loan/credit documents in the processing area • Exemption of 1percent of labor welfare cess on construction cost incurred by the SEZ unit • Exemption of electricity duty or taxes on sale of self generated or purchased electric power for use in the processing area of a SEZ • All purchases excluding purchase of petroleum products by SEZ units located in the processing areas from domestic tariff area or SEZ area for its set up shall be exempted from state and local body taxes or levies or cess. a Swiss cooperative. 2006 to facilitate the growth of MSMEs: • While developing industrial areas at least 20 percent of the land will be earmarked for the MSME sector • A price preference of 15 percent will be allowed for the goods manufactured by industrial MSMEs located in the state in case of purchases made by the government departments and state owned PSUs • Market development and promotion of MSME manufactured products will be supported through setting up virtual and physical exhibition centers at state & district levels • Relevant support schemes such as Credit Guarantee Fund Trust Scheme. Small and Medium Enterprise (MSME) Policy Highlights6 The state government has proposed various measures and policies in the Micro. All rights reserved. key benefits to SEZs include: • Single point clearance which will be given for SEZ proposals before recommending to the Government of India for approval • SEZs will be declared as industrial townships under the Karnataka Municipalities (Third) Amendment Act. Small & Medium Enterprises Development Act.

entrepreneurs continue to cite infrastructure as constraining factor in Karnataka.13 5 0.68 2007 (Apr.2 12. Proposed Investment (in billions) 2.984 123. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. a Swiss cooperative.) 118 223. about 9.398 76.862 7 .580 57 . 2006-07 2007-08 2007 SSIs Registered Employment Investment (INR billion) Source: Economic Survey of Karnataka 2008-09 April to November 2008 9. however. All rights reserved. © 2009 KPMG.In the Karnataka Industries (Facilitation) Act.399 11.) 113 377 . during April to November 2008.44 9 4. Letters of Intent and Direct Industrial Licenses b.IEMs Filed b.289 63. 118 IEMs have been issued as against 113 IEMs for the same period during the previous year.961 persons.027 Source: Technical Consultancy Services Organization of Karnataka (TECSOK) Further.517 4.29 10 . Proposed Investment (in billions) 2006-2007 277 718.49 10 1. The state government heavily focuses on developing an equipped workforce supported by a well-defined industrial and financial policies. Single Window Clearance Facility .0 Growth Impetus Karnataka provides a transparent policy framework and a supportive business environment which is designed to encourage entrepreneurship and industrialization.06 2007-2008 208 1676.a. . to Sept.35 The Assessment | Karnataka The Policy Impact The introduction of the Industrial Policy 2006-2009 has played an important role in accelerating the pace of industrialization and trade in Karnataka.a.961 6.289 small scale industries were registered generating employment for 63.7 14. 2002 the state constituted the State High Level Clearance Committee which. During the April–September 2008.7 2008 (Apr.3 8. to Sept. acts as the single point of clearance for SEZ developers and co-developers. Particulars 1.

As a part of this. are intensely focused on financing schemes for infrastructural development projects including tourism.As a part of the infrastructure policy 2007 the state government has .0 billion against INR 336. . All rights reserved. Projects Approved by the State Level Single Window Clearance Committee from 2006-2008 (Oct. 2008-2009 8 Institutional Finance Overview.s) 731750 349665 86546 Source: Industry Overview. Economic Survey of Karnataka. Of these.7 billion as of March 20088.2 million persons upon implementation.2 billion in 2007-08.78 billion which is expected to provide employment opportunities for about 1.36 The Assessment | Karnataka The State High Level Clearance Committee approved 1.09 33. The developmental expenditure budgeted for 2008-2009 is of the order of INR 401. Economic Survey of Karnataka 2008-2009 A Strong Financial System – Karnataka has a developed banking network system which extends to both the urban and rural areas. an increase of 19. indicating a well distributed credit delivery system7. The Karnataka State Financial Corporation (KSFC) and the Karnataka State .Industrial Investment & Development Corporation (KSIIDC). which primarily engage in developing MSMEs and large scale industries. reelers. Active Focus on Skill Development and Training . Economic Survey of Karnataka.46 Employment (In No. These institutes impart periodical training to sericulturists.5 billion as against INR 3. textiles. It is anticipated that the loans made by KSFC will reach INR 6. and ports. Economic Survey of Karnataka.818 projects with an aggregated investment of INR 255. a Swiss cooperative. 2008-2009 9 The State Budget. 3.304 bank branches are located in rural and semi urban areas. power. 2008-2009 10 Industry Overview.280 of bank braches located across state as against 755 branches at the time of nationalization (1969). information technology.27 per cent9. there are 5. Economic Survey of Karnataka. healthcare. insurance. food processing. and agro-based insurance. 2008-2009 © 2009 KPMG. Initiatives Focused on Infrastructure Development . entrepreneurs and licensed seed preparers.The state government is investing in creating the required facilities for training people on certain key skills. As of March 2008. 7 Institutional Finance Overview.) Year 2006-2007 2007-2008 2008-2009 Approved Projects 881 728 209 Investment (in billion) 119. set out several sectoral policies for developing roads.23 103. the state has set up six training institutes10. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.

The government is initiating schemes and simplification of processes to enable domestic and foreign investment and provide an enabling environment. The wish list of entrepreneurs includes clarity and faster resolution of land titles. precision tooling and tool room industries.37 The Assessment | Karnataka The Entrepreneurs’ Viewpoint One of India’s fastest growing states. It has been proactive in inviting the private sector and was among the first to invite private investment in the education sector. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. . The state is focused at achieving growth through industrial development and has the right vision. While the entrepreneurs understand that the state has many more critical issues to tackle on the overall development. The entrepreneurs recognize the proactive attitude of the state government and appreciate the sector friendly policies specifically in the IT/ITES sector. The Government’s Viewpoint Karnataka is focused on improving its investment climate. The government is also focused on streamlining procedures for investors and entreprneurs in the state through single window nodal agency called 'Karnataka Udyog Mitra' at state level and district level for necessary clearances. Karnataka has been the forerunner in the field of IT/ITES. Roads and power at competitive prices and creation of infrastructure ahead of development. All rights reserved. However. The state is believed to be well intentioned with initiatives. Infrastructure – a major pain point for entrepreneurs – is being recognized as an urgent issue and that something that will be dealt with on a priority basis in the short to medium term. 2008-2009 © 2009 KPMG. These sectors are electronics. ready made garments including leather garments. a Swiss cooperative. The state offers incentives such as tax exemptions for investment in these sectors. equipment and appliances and biotechnology. With its encouraging policies and favourable environment. 10 Industry Overview. Karnataka is keen to promote itself as the destination for domestic and foreign investment to catalyse industrial growth. Economic Survey of Karnataka. The state’s incubation facilities specifically in the knowledge based industries are also recognized while the state’s funding of start ups is also appreciated. The entrepreneurs also acknowledge various programmes to help entrepreneurs set up new businesses in rural areas by providing funds. With regards to availability of finance and information the entrepreneurs are willing to create their own networks but expect the government to stimulate funding by private players. early stage and seed funding are still seen to be lacking and entrepreneurs have expressed a need for a state supported (through incentives & tax benefits) seed fund organized by a network of angel investors and established entrepreneurs. the state has attracted investors and has seen a steady increase in Foreign Direct Investment (FDI) inflow in recent years. the implementation of these has been questioned by the entrepreneurs. telecommunication. availability of basic infrastructure – Water. they expect the government to create an enabling environment for people to harness opportunities. units manufacturing pollution control and effluent treatment plants. informatics. The state proposes to create employment opportunities through industrial growth in the state and several sectors have been identified as thrust areas.

the Maharashtra State Government has issued the industrial policy. Its strong financial infrastructure has also made it one of the most attractive states for FDI in India. pharmaceuticals and biotechnology.9 million (as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Maharashtra Economic Survey. information technology. chemicals. engineering. Economic Survey. To achieve this consistent and impressive growth by creating a favorable environment for investment. consumer durables. petrochemicals. 2008-09 Source: Maharashtra Economic Survey. All rights reserved. It has received an investment of INR 750. 1 Directorate of Economics & Statistic Maharashtra. 2008-09 © 2009 KPMG.96 billion during 19912008.Maharashtra Population 96. a Swiss cooperative. . financial services. 2008-09 The Policy Framework Policy reforms to create the conducive industrial climate in the State Maharashtra is one of the leading industrialized and urbanized states in India.1 Sectors which have largely gained by the FDI in the State include automobiles and auto components. electronics hardware. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.

2006 3 Government Of Maharashtra. 2003 © 2009 KPMG. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.39 The Assessment | Maharashtra Highlights of the Industrial Policy2 • The policy seeks to build quality infrastructure and nurture industrial clusters to ensure sustainable industrial growth • It has defined sectors such as Textiles. . All rights reserved. elimination of octroi on telecom equipment for units built in IT Parks • Lower Property Taxes . IT and ITeS Policy. suitable permissions to develop communication • Permission of flexibility in working hours and relaxation of Labor laws 2 Government Of Maharashtra. research and development and technology up gradation for strengthening the SME sector • New industries establishing in C. IT/ITES.same as residential rates • Minimal Sales Tax rates on locally procured capital goods • Power supply at 'industrial rates' • Non-fiscal incentives including additional FSI. D+ areas and non industry districts are exempted from payment of electricity duty for a period of 15 years • Waiver of stamp duty for industries in C. Biotechnology and Infrastructure as thrust areas for the industrial policy • It will provide quality competitiveness. Industrial Policy Of Maharashtra. permitting software industry in residential areas. D+ areas and non industry districts • Special capital incentives for small scale industries are provided IT Policy to make Maharashtra the most favoured destination for investments in the IT and ITES Key Features3 • Guide the implementation of the policy by establishing an Empowered Committee and a Directorate of Information Technology • Exemption in stamp duty and electricity duty. D. a Swiss cooperative. D.

2006 6 Government Of Maharashtra. upgradation of skill sets of those employed in MSME enterprises and marketing. • Setting up of a special institution for the SMEs • New small scale industries are eligible for capital subsidy • Special capital incentives (grants) are offered for setting up Small-scale industries in backward units • Interest subsidy is also offered to new textile. research and development centres and pilot plant facilities for undertaking contract research • All BT units will get incentives applicable to IT units Tourism Policy The State’s Tourism Policy 2006 emphasises on the development of in infrastructural facilities at tourist destinations. Small and Medium Enterprise Policy highlights6 Government is planning to initiate measures for availability of cheap and timely finance. 2008-09 Subsidy (%) 5 50 25 50 Limited to (INR Million) 2. technology up-gradation.5 0. research and development and technology up-gradation Incentives Capital equipment Expenses incurred for quality certification Cleaner production measures Expenses incurred for patent registration Source: Maharashtra Economic Survey. The action points of the policy also include strengthening of Bed and Breakfast schemes and conservation of World heritage sites.5 SEZ Policy The SEZ Policy aims at creating a simple and transparent system and procedures to attract large foreign and domestic investment in infrastructure for SEZ’s in Maharashtra. Bio Tech policy. etc. Tourism Policy. .10 0. SEZ policy of Maharashtra provides attractive incentives as follows: • Hundred percent exemption from Stamp Duty and Registration Fees • Permission for Captive Power Generation Micro. recreation facilities. 2001 5 Maharashtra Tourism Development Corporation.40 The Assessment | Maharashtra Biotech Policy to promote the growth of the biotech industry in the state and make it globally competitive Key Features4 • Creation of institutions such as the Maharashtra Biotechnology Board.50 0. octroi refund • Development of Biotech Parks and Biotech Resource Centre • Special incentives to promote setting up of biotechnology parks. Industrial Policy Of Maharashtra. hosiery and knitwear SSI units Incentives to promote quality competitiveness. 2006 © 2009 KPMG. stamp duty and registration fees exemption. and the Maharashtra Biotechnology Commission • Fiscal benefits including electricity duty. encouraging private participation in capacity building related to tourist accommodation.50 4 Government Of Maharashtra. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. a Swiss cooperative. All rights reserved.

2008-09 10 Directorate of Economics & Statistic Maharashtra.4 Job creation (in million) 0.811 Source: Maharashtra Economic Survey.49 158. JP Morgan. Economic Survey. About 36 public IT parks have been developed by MIDC and CIDCO and 353 private IT parks have been approved. Credit Suisse.8 Private IT Parks Functional Development stage (LOI) Number 53 300 Investment (INR billion) 22. 2008-09 9 Directorate of Economics & Statistic Maharashtra.13 million. All rights reserved.122 0. 7 Department of Industrial Policy and Promotion.65 Source: Maharashtra Economic Survey. Apart from this. about 16 biotech SEZs are proposed in the State with likely investment of INR 64 billion and estimated employment generation of 0.1 percent. The state also accounts for 14 percent of the national bank deposits and more than 90 percent of merchant banking transactions are carried out in Mumbai.10 The industrial investments in the state are as follows: Approved Projects Category Number MOU 113 Investments (INR Billion) 1234. etc. a Swiss cooperative.48 billion during same period. Maharashtra -One of the most industrialized state The State’s industrial policy has minimized the industrial licensing requirements. 2008-09 Additionally. 2008-09 Strong financial infrastructure serves as an entry point for global financial institutions According to the study published by Reserve Bank of India (RBI) in 2008-09. Mumbai is emerging as a global financial hub and back office for major companies like Morgan Stanley.41 The Assessment | Maharashtra The Policy Impact Maharashtra is one of the leading states in terms of the investment received during Jan-Aug 2009. Economic Survey.7 The implementation of a specific policy for IT has lead to an emergence of IT parks in the state. 2008-09 © 2009 KPMG. Monthly Magazine . an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. the separate policy for bio-tech has enabled the development of bio-Tech parks in the State at Jalna and Hinjewadi (Pune).9 Growth Impetus Maharashtra provides a business-friendly environment. September 2009 8 Directorate of Economics & Statistic Maharashtra. quality infrastructure with proactive government policies and highlyskilled and trained workforce in the industrial units.43 Employment 423. the state captured almost 21 percent of total investment proposals made in the country. The CAGR for investment in projects registered and commissioned during 2004-05 to 2008-09 is 16. . removed restrictions on investments and facilitated easy access to foreign technology and direct investments. Maharashtra received 384 proposals for IEMs with an investment of INR 509.

690 Infrastructure Development initiatives The Central government has approved 133 Special Economic Zone proposals under the State SEZ Policy 2006 for creation of additional employment in the state. 2008-09 Institutions 37 2 2 10 407 14. 11 Directorate of Economics & Statistic Maharashtra. Further. the government is not seen as doing much to help them. The state government has created a budget provision of INR 24.497 Capacity Admitted students 11. while the state government is developing its own innovative industrial strategies for fostering entrepreneurial activity. mentoring opportunities initiated both by established entrepreneurs. The entrepreneurs believe that the environment is still not conducive for entrepreneurs.130 120 120 416 71. There are too many regulatory hurdles which an entrepreneur goes through. However. 2008-09 SEZs 52 17 64 The Entrepreneurs’ Viewpoint The state government is seen as taking increased interest in promoting the growth of entrepreneurship.11 Faculty Engineering Management Sciences Hotel Management & Catering Technology Pharmaceutical Science Industrial Training Institutes Source: Maharashtra Economic Survey.63 billion for higher & technical education in 2008-09. independent bodies and government are seen as a dire need that is key to creating a lasting entrepreneurial impact in the state. 2008-09 12 Directorate of Economics & Statistic Maharashtra. All rights reserved. 2008-09 © 2009 KPMG. Economic Survey. and a communication system to facilitate this creation process. . buildings. the entrepreneurs expect the state to create an innovation fund where the government sets aside a non-refundable innovation corpus or seed fund. Government is seen as lagging behind in its role as a facilitator. Entrepreneurial growth in the state is also not uniform with limited reach in rural areas and wide disparity between the rural and urban areas. Funding and mentoring are seen as key to entrepreneurial growth. roads. These SEZs are likely to require an investment of INR 1487 billion with an . a Swiss cooperative. Even though the private sector is doing its bit in the area of funding.595 121 121 337 61. Economic Survey. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.22 employment creation of 6.12 Industries IT sector multi-product single product Source: Maharashtra Economic Survey. there is limited awareness among entrepreneurs of these incentives. Individuals are being encouraged to form new businesses and are being provided such government support as tax incentives.104 million jobs.42 The Assessment | Maharashtra State’s emphasis on the development of skilled work force Skilled human resources contribute to the overall economic development of a state more effectively.

Regarding the tourism and biotechnology sector of Maharashtra. automobiles and auto components. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. In respect of its existing industries which includes chemicals. It has been proactive in developing a website. the state government plans to strengthen these sectors and develop a strong customer base. a Swiss cooperative. The government is focussing on specific sectors and formulating its growth strategies. it aims to create sufficient employment opportunities by encouraging wider geographic spread of these industries. it needs to involve its entrepreneurs and business community at large to truly transform itself. Maharashtra with its strong position as the financial hub of the country and the reputation of being one of the most industrialized states. the lack of information dissemination and the expectation from entrepreneurs are still not met. . is creating a policy framework to foster business growth. water. Maharashtra Industrial Development Corporation (MIDC) has been trying to foster rapid. All rights reserved. orderly growth in industrial areas in the state. It has developed sector specific industrial areas. © 2009 KPMG. While the state has the appropriate impetus. electricity and other internal services to entrepreneurs in the industrial areas. It provides developed plots with necessary infrastructure facilities like internal roads. which provides useful information required by entrepreneurs interested in setting units in different parts of Maharashtra. textiles. IT and ITES sectors are concerned. As far as the financial services. engineering.43 The Assessment | Maharashtra The Government’s Viewpoint The government of Maharashtra is making systematic effort to sustain economic growth by resorting to innovative methods to improve the entrepreneurial environment and develop potential sectors. petroleum. the government's strategy involves systematic efforts to keep up the current industrial momentum. However. Addressing the concerns of its entrepreneurs.

The leading practices listed below are specific to a particular state. inclusive growth. . Based on our secondary research and our interactions with the state governments and entrepreneurs we have attempted to identify some ‘leading practices’ across the six Indian states profiled in this edition of ‘Entrepreneurial India’. While this is not an exhaustive list. then in practice. D. but many impediments to starting and growing a business remain well entrenched – if not in policy. these can be replicated by other states in the country to foster entrepreneurial growth. within its region and with itself. D+ areas and non industry districts Minimal Sales Tax rates on locally procured Capital goods Maharashtra Futuristic development Punjab Market alignment and value addition Maharashtra Balanced Growth Internal demand creation © 2009 KPMG. D. a Swiss cooperative. Attempts at various levels have taken place to directly or indirectly promote entrepreneurship. All rights reserved. India now competes with the world. entrepreneurs and capital are mobile and can and are likely to move away to friendlier states and countries if doing business in any jurisdiction is difficult beyond a point. A positive development of economic growth and change in mindset within the government is that there is now recognition at the national and state level that a business friendly environment is a must to encourage growth. Leading Practice Leverage synergy between agro and industrial sector + Apply technology Owner State Focus Punjab Cross-Sector development Conducting workshops and training sessions on application of clean Punjab biotech technologies to create public awareness about biotechnology Creating agri-clinics and agri-business centres throughout the state to serve as nodal centres for information dissemination for maximizing RoI for farmers • New industries establishing in C. improved efficiency or market alignment. The attempts fall under three main categories: removal of stateimposed barriers for starting businesses: availability of finances. education and nurturing. Many policies and regulations have fallen by the wayside over the last two decades. highly-regulated economy to a high-growth country is now well known. D+ areas and non industry districts are exempted from payment of electricity duty for a period of 15 years • Waiver of stamp duty for industries in C.44 Creating an Entrepreneurship Culture A snapshot of entrepreneurial leading practices India exerted greater effort to promote and nurture entrepreneurship. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. these initiatives undertaken by various states exemplify their respective will to create opportunities for growth by enabling cross sector development. however. India’s journey from a slow growth. Businesses.

All rights reserved. introduction of strict inspection and certification systems The state is hosting the 2010 Commonwealth Games. SME policy: • Allotment of 50 percent grant subject to maximum of INR 10 million to the MSMEs for the acquisition of technology in any form • Assistance to R&D institutions upto 60 percent of the project cost excluding land cost and building cost Lucrative employment and performance linked package of incentives and concessions to attract investments to backward regions and the Micro Small Medium Enterprises (MSME) sector.2 million. whichever is less Creation of ITES Parks in Chennai and other Tier II/Tier III cities Apparel: Focus on handloom exports by encouraging the weavers to bring out export-oriented products Karnataka Economic enabler Tamil Nadu Futuristic development Tamil Nadu Balanced Growth Tamil Nadu Market Alignment © 2009 KPMG. upto 50 percent of the cost of filing a patent or INR 0. 2002 enabling them to function as self governing and autonomous municipal bodies Delhi Economic enabler Gujarat Mega development Economic enabler Gujarat Gujarat Futuristic Development Karnataka Balanced Growth Karnataka Futuristic development Karnataka Efficiency Karnataka has a developed banking network system which extends to both the urban and rural areas. Financial assistance to technology innovators or stand alone R&D units or individuals for innovations capable of industrial application. strengthening the pollution norms. . social and urban infrastructure The Government of Gujarat (GoG) has incorporated Gujarat Knowledge Society and plans to set up knowledge corridors for higher education Micro. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.45 Leading Practice Promote the usage of e-governance to support the government to deliver efficient services to its citizens Controlling pollution by providing CNG buses. a Swiss cooperative. They will also be offered upto 50 percent concession on stamp duty and registration charges for first sale and first lease SEZs will be declared as industrial townships under the Karnataka Municipalities (Third) Amendment Act. Biotech: Mega projects will be offered a unique package of concessions for a maximum period of 8 years. which is likely to provide it an opportunity to augment its infrastructure and facilities in turning itself into a "World Class City’ Owner State Delhi Focus Efficiency and transparency Delhi Environmental improvement Delhi Mega development Strong focus on the development of skilled work force Focus on Special Investment Regions (SIR) and Investment Regions (IR) with convergence of industrial.

Singapore has been ranked by the World Bank as the world’s easiest place to do business for three years running. Singapore and the Philippines As we understand the good practices being followed in Indian states. Israel is at the forefront of technology. a Swiss cooperative. The smaller companies and start-ups in Singapore enjoy the world’s lowest effective tax rates.2 percent) of the whole country population. . Similarly in the Phillipines. and AMEX equity markets. aged 18 to 64 are engaged in business. SMEs account for 2/3 of jobs created and more than half of their GDP . In America. Outside of Canada. It's for India now to adopt the relevant practices in a phased manner and start an entrepreneurial revolution across the length and breadth of the country. 4 out of 10 adult Filipinos.000 of them would ultimately become high-growth companies. These practices are set out as examples of practices that can be incorporated by India.46 Global Experience: A snapshot of entrepreneurial leading practices in Israel. All rights reserved. Israel is known as “Silicon Valley II. NASDAQ. there were 600. a study shows that every year. there is no other country that has more companies represented This is a tremendous achievement for a small country like Israel. © 2009 KPMG. The key practices mentioned in the following table have been used in these economies to establish a robust entrepreneurial ecosystem. it is imperative to benchmark our states with some of the more entrepreneurial economies around the world and understand their respective practices to foster entrepreneurial growth. It takes less than 15 minutes and USD 300 to register a company in Singapore. These economies have created a very conducive environment for entrepreneurship. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. These countries have benefited greatly from promoting entrepreneurial growth. which approximates around 19 million (39. contributing to 1/3 of the GDP growth. There are over 100 Israeli ” businesses that trade on the NYSE. This ranks the Philippines second among countries with most individuals owning a business according to the Global Entrepreneurship Monitor Further. In Singapore.000 new firms formed and 1.

All rights reserved. establishment of linkages and cooperation between small. Information sharing: Strengthening of primary focal points for delivering information services related to export such as the Philippine Trade Information and Network Systems (PHILTINS) and. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. One Stop Export Information Assistance Center (EXPONET) Owner Country Focus Israel Financial Enabler Israel Financial Enabler Singapore Efficiency Singapore Market alignment Singapore Futuristic Development Singapore Financial Enabler Philippines Overall economic development Philippines Innovative growth Philippines Innovative growth Philippines Market alignment © 2009 KPMG. Singapore has been ranked by the World Bank as the world’s easiest place to do business for three years running. respectively. which provides equity financing with third-party investors to small start-ups. Providing up to 85 percent of the approved R&D expenditure.government matching investment in a startup company.Coordination of government efforts Promotion of mutually beneficial linkages among small and large firms: Promotion of industrial-subcontracting exchange schemes. proportional to the investment of an investing entity Entrepreneur friendly procedures. equity financing and venture capital. It takes less than 15 minutes and USD 300 to register a company in Singapore. strengthening of SME associations. Government seed fund . The Technology Enterprise Commercialization Scheme (TECS) USD 50 million to help start-ups create their first prototypes for market trials and acceptance Young Entrepreneur Scheme (YES) funds to help schools develop entrepreneurship learning contents Start-up Enterprise Development Scheme (SEEDS). This Law is guided by three principles in setting the pace for small and medium enterprise development: . a Swiss cooperative. Magna Carta for Small Enterprises is a landmark legislation.Minimal set of rules and simplification of procedures and requirements.Participation of private sector in the implementation of SME policies and programs . medium and large firms Improving access to finance: Innovative financing schemes using non-traditional sources and schemes such as cooperatives and associations.Incubators that provide a supportive framework for technological ideas by entrepreneur.47 Leading Practice Technological incubators . and. . .

Accordingly. Policies and interventions should take account of the resources and market characteristics of specific regions and utilize these to maximum advantage in order to focus governments’ efforts © 2009 KPMG. Equal importance needs to be given to efforts focusing on future entrepreneurs. a Swiss cooperative. policy and implementation should help support the following objectives: Improve the quality. deliberate efforts are needed to make banks and angel networks more responsive to the particular needs of startup enterprises. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. entrepreneurs in the country still face tremendous challenges. including its role in fostering greater independence. to develop viable approaches that will Despite positive business sentiment in the country and a bullish attitude towards enterprise. Establishment of angel networks – perhaps as partnerships between government and entrepreneurs – can play a critical role in financing as well as understanding the unique needs of young enterprises. especially nascent businesses. While financing consistently emerges as the top challenge of firms. a two-pronged policy effort should be considered in addressing enterprise development. Enhance business growth potential of existing companies There is a need to assist existing high potential businesses in realizing that potential. Thus. policies. availability and accessibility of financing In particular. In both cases. a general improvement of entrepreneurial frameworks is necessary to provide a more conducive environment. .48 Conclusion and Policy Implications In summary. values and attitudes that must be nurtured from an early age. thereby creating more opportunities. Entrepreneurship is rooted in education. there is a need. it needs to be imbibed and understood on the basis of its deeper significance beyond income generation. pride and good citizenship. programs and interventions should focus on both improving existing businesses and developing the capacity of future entrepreneurs. All rights reserved. culture. While the country has seen a surge in entrepreneurial activity in the recent past much scope remains for improving entrepreneurship quality and momentum. That is. make provision of start-up financing more attractive to banks while at the same time making it more attractive for businesses to make use of the banking system. An improved balance and planned approach to industry incentives and promotion across industries and a shift to value addition should be encouraged to appropriately respond to the needs of the market and eventually expand with its opportunities.

For the government it is important to realize that the goal of small business owners is to remain self-employed. It is incumbent on both. Along with improved access to technology. Conclusion There are ample opportunities for enterprenurs in India and such opportunities if leveraged have the potential to transform India. addressing future entrepreneurs entails interventions focused on education and training to improve both attitudes for successful and effective entrepreneurship and skills for enterprise management and operations. governments need to take a proactive businesspromotion orientation. a Swiss cooperative. but to create wealth. this requires a deliberate mix of the appropriate macroeconomic policy environment (i. not just earn incomes. the entrepreneur and the government.e. . state governements are better-placed to provide a conducive environment for enterprise development. A responsive . While certain larger business support programs can be effectively run by the national government agencies.49 Promote wider geographic penetration Efforts are needed to encourage and equip enterprises to move beyond the domestic or regional markets and tap the opportunities in the export markets. For such transformation to happen there needs to be support both at the governmental and societal level. Consequently. As part of their efforts to expand their local economies and reduce poverty among their populace. trade and exchange rate policies) and assistance in export market promotion. marketing and legal assistance in order to sustain themselves and grow. support and development. along with concrete approaches and mechanisms for creating a business-friendly environment. Education must also instill a sense of innovation and risk-taking. Strengthen entrepreneurial values and attitudes Emphasize the critical role of state governments State governments need to play a stronger role in enterprise promotion. eliminate unnecessary obstacles to setting up a business and provide an encouraging environment for healthy business growth. © 2009 KPMG. state governments themselves would need training on how to effect such an entrepreneurial orientation. Increased contact between entrepreneurs and schools and colleges will partly enhance the entrepreneurial mindset students and allow them to consider the possibilities of entrepreneurship at an early age. in order to overcome some of the traditional barriers to enterprise development. Practical and cost effective programs need to be developed to address their needs because self-employed people will represent an important segment in economic revitalization. Several companies have markets beyond their regions that are currently underexploited. There should be a deliberate effort to transform the educational system at all levels to foster an entrepreneurship culture. to recognize that a symbiotic partnership is necessary to help the growth of business and of the nation. On the other hand. All rights reserved. Schools must lead students to aspire not only to seek jobs upon graduation. but to create jobs. facilitate business opportunities. through curriculum design and appropriate pedagogical approaches. decisive and open government is critical to rapid entrepreneurial growth. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Such people may not need financial assistance but they are definitely likely to need regulatory.

an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. The entrepreneurs indicate what policy or program changes they believe would enhance the country’s environment for entrepreneurship. Unlike past studies on Indian entrepreneurship which surveyed entrepreneurs across the country. The white paper aims to provide a platform to discuss on entrepreneurship development and contribute to shaping policy by bringing together the views of entrepreneurs and state governments. Through this study. The study evaluates the perspective of Indian states and their initiatives towards entrepreneurial development on one hand while evaluating the perception of entrepreneurs of these initiatives through their views on national strengths and weaknesses as a context for entrepreneurship on the other. The study also brings together the data that can be further studied for pursuing special policy focus. It also attempts to establish the best practices across India to foster entrepreneurship while also benchmarking with some of the global best practices in entrepreneurial economies such as Singapore. . All rights reserved. a Swiss cooperative. © 2009 KPMG. Philippines and Israel. TiE and KPMG hope to contribute to crafting more meaningful policies and programs that will continue to inspire more and more Indians to have an entrepreneurial mindset and develop a stronger capacity to grab the opportunities we have now. this white paper studies select Indian states in detail and bring forth the state’s perspective. The study endeavors to uncover factors leading to appropriate levels of Entrepreneurship.50 About the study The third edition of Entrepreneurial India 2009 is a research paper which assesses the initiatives of select Indian states to encourage entrepreneurial growth and put forth the best practices. This paper should allow us to reassess and renew our efforts in addressing the situation.

Each KPMG firm is a legally distinct and separate entity and describes itself as such. performance-based. Kolkata. markets and competition. Delhi. which reflect a shared knowledge of global and local industries and our experience of the Indian business environment. a Swiss cooperative. Hyderabad. a Swiss cooperative. The firms in India have access to more than 2000 Indian and expatriate professionals. providing detailed knowledge of local laws. © 2009 KPMG. in India. Tax and Advisory services. Chennai. Pune and Kochi. The Indian member firms affiliated with KPMG International were established in September 1993. We strive to provide rapid. We provide services to over 2. The independent member firms of the KPMG network are affiliated with KPMG International. We operate in 140 countries and have 135. regulations. KPMG has offices in India in Mumbai. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. many of whom are internationally trained.000 international and national clients. Bangalore. As members of a cohesive business unit they respond to a client service environment by leveraging the resources of a global network of firms. industry-focused and technology-enabled services. All rights reserved.000 people working in member firms around the world. .51 About KPMG in India KPMG is a global network of professional firms providing Audit.

52 About TiE (The Indus Entrepreneurs) TiE in its 17 years of existence. © 2009 KPMG. 15 TiE chapters in India collectively roll-out 300+ programs for entrepreneurs every year. Social Enterprise. ICICI Bank. KPMG. workshops.Inspires and educates budding entrepreneurs • Mentoring . Human Capital. dedicated to the advancement of entrepreneurship. • Purpose above activity to constantly challenge status quo and build innovative. Tech & Media.000+ members worldwide.Provides role models and one-on-one mentorship through experienced entrepreneurs and support system like VCs. Cleantech. and various other private and Public sector agencies / bodies • MENTORING a robust and focused program called Entrepreneur Nurturing Program (ENP) with a dedicated and active voluntary base of Mentors guiding a growing base of Mentees (Entrepreneurs) • Special Interest groups such Women Entrepreneurship. sustainable platforms /programs to foster entrepreneurship through advocacy. TiE offers a rich resource pool to an entrepreneur.g. FICCI. a Swiss cooperative. SIDBI. . SP Jain and many others). e. TiE’s mission is to foster conscious entrepreneurship globally by Educating. has today emerged as the world’s largest non-profit global network of Entrepreneurs and professionals. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Welingakr. Mentoring and Networking: • Educating . Academia (IIT. With 53 chapter (15 in India) across 13 countries and 15. service providers • Networking Holds regular conferences. CII. awareness and assistance • 50+ programs annually through voluntary collaboration and participation from a vibrant and inclusive membership • Active partnerships with organisations with a shared focus on the SME segment e. All rights reserved. and networking meetings providing a platform to forge relationships. About TiE Mumbai TiE Mumbai is among the most vibrant and fastest growing entrepreneurial eco-systems in the Global TiE Network with a fast expanding and diverse member base of 150+ Charter Members and 700+ members.g.

Ruchika Anand.Ramaraj. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Nishtha Satyam (KPMG in India) Overall Leadership Design and Brand & Regulatory Compliance Valuable guidance was provided in preparing this report by Vikram Utamsingh (KPMG in India). Pallavi Phatak. Geetika Dayal. Sameer Bhatnagar. Pradeep Saluja (all from KPMG in India) and all TiE chapters in India. Pradeep Gupta.TiE Mumbai) . All rights reserved. Vimal Shah (Akruti City). Pradeep Udhas (Greater Pacific Capital). Neha Sangal (KPMG in India) © 2009 KPMG. Chirag Mehta. Sridar Iyengar (President . Shivneet Singh. Pradip Kanakia (KPMG in India). Anu Sutaria.53 Acknowledgment This report has been prepared by TiE and KPMG in India to be launched at the TiE Entrepreneurial Summit (TES) on 21-23 December 2009 in Mumbai Secondary Research Kunal Jain. Jiten Ganatra and Nisha Fernandes (KPMG in India) Special Thanks Editing and Report Creation Jehil Thakkar. Manak Singh (all from TiE) To all government officials from the six states profiled in the study. Vivek Atray. Pradip Kanakia. Manish Sharma. Pradeep Kar. Puneet Vatsayan. Manish Agarwal. . Jehil Thakkar (KPMG in India). Manika Jauhari. R. a Swiss cooperative.

wahie@up.org +91 141 510 4464 UP rajesh. a Swiss cooperative.org +91 40 6451 3397 Kerala tiekerala@yahoo.com TiE Chapters in India Ahmedabad badri.com Jehil Thakkar Executive Director Markets +91 22 3090 1670 jthakkar@kpmg. © 2009 KPMG.tie.com +9198807 65246 Hyderabad info@tiehyderabad.mahapatra@ahmedabad.kolkata@gmail.org +91 712 646 4066 Patna tie_bihar@yahoo.Markets +91 22 3090 2320 vutamsingh@kpmg.in.henry@chennai.com +91 612 222 1374 Rajasthan zulfi@tiejaipur. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.org +91 80 4147 4567/69 Chandigarh info@tiechandigarh.com KPMG Contacts Vikram Utamsingh Head .org +91 98842 84578 Delhi info@tienewdelhi. there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future.org +91 172 500 7000 Chennai sharon.tie.org +91 79 3294 3095 Bangalore info@tiebangalore.tie.nagpur@nagpur.com +91 484 324 8735 Kolkata tie.org +91 120 406 6500 Hubli santosh@nsinfotech. a Swiss cooperative. All rights reserved. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. .org The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.kpmg.tie. Although we endeavor to provide accurate and timely information. KPMG and the KPMG logo are registered trademarks of KPMG International.com +91 33 6454 3361 Mumbai info@tiemumbai.org +91 22 4220 0100 Nagpur info.

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