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Introduction………………………………………………….. … .....2
Growth of entrepreneurship in
Current scenario of entrepreneurship in India
Scope of entrepreneurship development in India…………………… 11 Conclusion………………………………………………………… 12
While India has traditionally been an entrepreneurial country. as a vast majority of new businesses fail. and Ready to eat Foods are all examples of entrepreneurial ideas that got converted into products or services. "It is the process by which the individual pursue opportunities without regard to resources currently controlled.’ -. Credit Cards. reliability. Innovation is the basic tool of entrepreneurs. it fares poorly in numerous global studies exploring the entrepreneurial and business potential of countries but. across diverse sectors internationally. Entrepreneurship is often a difficult undertaking. from current levels – perhaps. and confusion. The pursuit of these opportunities requires an indomitable spirit of entrepreneurship. ENTREPRENEURSHIP ‘A systematic innovation. Entrepreneurship is considered to be a significant determinant of economic development. the world is now our market and our opportunity. employment. and with the virtual removal of all trade barriers. which consists in the purposeful and organized search for changes. Motor Bikes.Peter Drucker Entrepreneurship is the practice of starting new organizations or revitalizing mature organizations. on the other hand on the most conservative basis. Entrepreneurship is a creative human act involving the mobilization of resources from one level of productive use to a higher level of use. the means by which they exploit change as an opportunity for different business of service. or treble. valued for quality. Courier Service. responds to it and exploits it as an opportunity. Another ingredient of entrepreneurship is sensing opportunities. just to catch up with a country like China. in virtually any sector. has the potential to at least double." Entrepreneurship involves a willingness to take responsibility and ability to put mind to a task and see it through from inception to completion. particularly new businesses generally in response to identified opportunities. there is the entire global opportunity. organizes resources needed for exploiting that opportunity and exploits it. the "Made in India" tag is now an increasingly respected brand. New entrepreneurial activities play a vital part in the process of creative destruction that fosters innovation.INTRODUCTION ENTERPRENEUR “An entrepreneur is one who always searches for change. Essence of Entrepreneurship is going against time with maturity and serving as a change agent. contradiction. mobile phone.” --Peter Drucker To put it very simply an entrepreneur is someone who perceives opportunity. while others see chaos. Entrepreneurial activities are substantially different depending on 1 3 . Then. Truly. with economic reforms in the country. and it is the systematic analysis of the opportunities such changes might offer for economic and social innovation. Laptops . and growth. our domestic consumption. and competitiveness.
the type of organization that is being started. Many "high-profile" entrepreneurial ventures seek venture capital or angel funding in order to raise capital to build the business. Angel investors generally seek returns of 20-30% and more extensive involvement in the business 1 3 . Entrepreneurship ranges in scale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities.
organized industrial activity was observable among the India artisans in a few recognizable products in the cities of Banaras. Allahabad. Low priced British made goods produce on large scale which reduced the competing capacity of the product of the Indian handicrafts. 3. The growth of entrepreneurship in India is. form the immemorial till the earlier years of the 18th century. 4. To quote. 1 3 . presented into two sections viz. Bengal enjoyed worldwide celebrity for Corah. therefore. Thus. The elaborated cast based diversion of workers consisted of farmers. 2. Evidently. Unfortunately. towards the Indian crafts. The majority of the artisans were treated as village servants. Ahmadabad for dupttas. Disappearance of the Indian royal courts who patronized the crafts earlier. Such compact system of village community effectively protecting village artisans from the onslaughts of external competition was one of the important contributing factors to the absence of localization of industry in ancient India. Development of transport in Indian facilitating the easy access of British product even to far-flung remote part of the country. durability beyond doubt and appeal to the eye of the individual were the distinguishing qualities inherent in the Indian craftsmanship that brought much everlasting laurels of name and fame of the illustrious India in the past.GROWTH OF ENTREPRENEURSHIP IN INDIA The proper understanding of the growth of entrepreneurship of any country would evolve within the context of the economic history of the particular country becomes the subject matter of this section. artisans and religious priests. 5. These artisan industries flourished over the period because the Royal patronage was to them to support them. The craftsmen were brought into an association pronounced as ‘guild system’. Very possibly this was because the rivers served as a means of transportation facilities. Puri & Mirzapur which were established on their river basins. so much prestigious Indian handicraft industry. On the whole. and was nurtured by the craftsman as a part of their duty towards the society. Lucknow for chintzes. India enjoyed the prestigious status of the queen of the international trade with the help of its handicrafts. Before India came into contact with west. Then. The lukewarm attitude of the British colonial govt. These may be listed as1. declined at the end of the 18th century for various reasons. and dhotis. • Entrepreneurship during Pre-Independence • Entrepreneurship during Post-Independence ENTREPRENEURSHIP DURING PRE-INDEPENDENCE The evolution of the Indian entrepreneurship can be traced back to even as early as Rigveda. Imposition of heavy duties on the imports of the Indian goods in England. when metal handicrafts existed in the society. which was basically a cottage and small sector. The Indian towns were mostly religious and aloof from the general life of country. perfection in art. The workshops called ‘kharkhanas’ came into existence. Gaya. Nagpur for silk boarded cloth. the village community featured the economic scene in India. Kashmir for shawls and Banaras for metal wares. people were organized in a particular type of economic and social system of the village community. This would bring the point home that handicrafts entrepreneurship in India was as old as the human civilization itself.
Particularly. developing craziness of foreign products. The company established its first ship building industry in Surat where from 1673 onwards the parsis built vassals for the company. it can also be attribute to their conservative attitude to change from commercial entrepreneurship to industrial entrepreneurship. The spirit of 1 3 . Secondly. emphasis on indigenous goods. Besides. In his second attempt. The Swadeshi campaign. Ranchodlal chotalal. a Nagar Brahman.. also Jamshedjee Tata was the first Parsi entrepreneur who established the first steel industry in Jamshedpur in 1911. This proves the commercial activity more lucrative during the period. Firstly. Later. it can be stated that the east India company made some contribution towards entrepreneurial growth in India. who migrated to Bombay around 1935. the Parsis were the founder manufacturing entrepreneurs in India. The credit for the expansion of textile industries upto 1915 goes to the Parsis. made by the Europeans to setup factories in India. He belonged to a Wadia family which gave birth to many leading ship-builders of Bombay. It was the influence of Swadeshi that Jamshedji Tata even named his first mill 'Swadeshi Mill'. 43% (41) were set up by parsis. he succeeded in setting up a textile mill in 1861 at Ahmadabad. indeed . all others hailed from non-commercial communities. The company injected various changes in the Indian economy through export of raw materials and import of finished goods in India.6. provided. Some scholars hold the view that manufacturing entrepreneurship in India emerged as the latent and manifest consequence of east India company advent in India. In the first wave of manufacturing entrepreneurship. The actual emergenced of manufacturing entrepreneurship can be noticed in the second half of the 19th century. some stay failure attempts were. namely. i. But before this. Why the well-known commercial communities. but failed. Out of 96 textile mills existing in 1915. except parsis. the parsis established good rapport with the company and were much influenced by the company’s commercial operations. 24% (23) by Hindus. Cowasjee Nanabhoy Dabar in Bombay in 1854 fallowed by Nawrosjee wadia who open his textile mill in Bombay in 1880. Unwillingness of the Indian craftsmen to adapt to the changing tastes and needs of the people. mainly iron and steel industry. 10% (10) By Muslims and 23% (22) by British citizens. lagged behind in entrepreneurial initiative throughout the nineteenth century can be explained by two factors. In 1677. The most important was shipwright Lowjee Nushirvan. the Parsis invaded other fields. 7. Manjee Dhanjee was given a contact for building the first large gun powder mill in Bombay for the east-India company. a Parsi foreman of a gun factory belonging to the company established a steel industry in Bombay in 1852. the improvement of business climate in the countryside during this period results in an increase in the quantum of trade which assumed quick returns on investments. the first cotton textile manufacturing unit was already setup by a Parsi. Changes in the tastes and habits of the Indian. Jains and Vaishyas of Ahmadabad and Baroda.e. indeed. Prior to 1850. nothing can be said with certitude. a proper seedbed for inculcating and developing nationalism in the country. In the beginning. But whether the company did it deliberately for the growth of entrepreneurship in India or it was just a coincident that people came in contact with the company and entered the manufacturing. On the basis of these facts. was the first Indian to think of setting up the textile manufacturing on the modern factory lines in 1847.
by British Government." These measures helped in establishing and extending the factory manufacturing in India during the first four decades of the twentieth century. It is stated that the Managing Agency Houses were the real entrepreneur for that period particularly in Eastern India. The credit for this initiation goes to an Indian. And. 5. who encouraged others to form joint-stock companies and invented a distinct method of management in which management remained in the hands of the 'firm' rather than of an 'individual' . the Indian Government agreed to 'discriminating' protection to certain industries. assumed the management of Calcutta Steam Tug Association. the European Managing Agency Houses entered business. 1. No facilities for technical education: there were almost any facilities for technical education which alone could strength Indian industrial entrepreneurship. Exorbitant tariffs: The British imposed exorbitant tariffs on India made goods. 4. Historical evidences also do confirm that after the East India Company lost monopoly in 1813. Reasons for slow growth of entrepreneurship in During British period in India. these houses markedly influenced eastern India's Industrial scene. High railway freight charges: The railway freight charges were higher for locations not nearer to the ports. 6. For various reasons. Dwarkanath Tagore. The advantages of these measures were mostly enjoyed by the Indians. Constantly harassed for getting licenses: Entrepreneurs were constantly harassed for getting licenses and finance to established and run industries. Tagore & Co. The Europeans failed to harness the protectionist policies to their interests. trade and banking." The second wave of entrepreneurial growth in India began after the First World War. During these decades. The emergence of Managing Agency System which made its own contribution to the Indian entrepreneurship can be traced back to 1936 when Carr.indigenousness strengthened its roots so much in the country that the Krishna Mills in its advertisement of Tribune of April 13 made the following appeal: "Our concern is financed by native capital and is under native management throughout". even requiring that companies receiving its benefits should be registered in India with rupee capital and have a proportion of their directors as Indians. Brimmer" holds the opinion that Agency Houses emerged to overcome the limitations imposed by a shortage of venture capital and entrepreneurial acumen though all may not agree squarely with this view. the relative importance of Parsis declined and Gujaratis and Marwari Vaishyas gained that pendulum in India's entrepreneurial scene. Discouragement by British Government: Only those industries in which the British Government put their own capital were given encouragement. 1 3 . This proved that the transportation of the goods manufactured for the Indian markets were more expensive than goods meant for exports. 3. Not given proper protection: The enterprises were not given proper protection 2.
grouping of Indian merchants into joint stock associations for the purpose of managing the supply of textiles to European companies was very significant. Lack of transportation and communication facilities: Lack of transportation and communication facilities acted as the stumbling blot in the way of industrial growth. glass and chemical industries) in Pakistan.India was at loss whereas Muslims possessed these skills who migrated to Pakistan. Entrepreneurs faced fierce competition from abroad: The Indian indigenous entrepreneurs faced fairs competition from machine made goods exported to India from abroad. the export trade of textile in 17th century was on ascending trend. Mineral and Natural Resources : 97% of total value of minerals in India in which major deposits of coal. Inspite of the above problems. etc. Iron & Steel and Paper industries) in India whereas 10% of total industrial establishments with 7% of industrial workers (Cotton textile. 1 3 . whereas 3% of total value of minerals with major deposits of Gypsum. 10. iron. Political turmoil: Political turmoil and abolition of princely courts discouraged the growth of entrepreneurship. 11. Following are some major effects of partition on 15th August 1947 on the Indian industrial economy:Demographic Effects : 77% of area & 82% of population get remain in India whereas 23% of area & 18% of population converted into Pakistan. Multi-currency system: Prevalence of multi currency system affected the business environment and blocked the growth. During this period. in Pakistan. Manpower and Manager skill :. cement. Industrial Activity : 90% of total industrial establishment with 93% of industrial workers (Jute. iron and steel which are necessary for rapid industrialization. etc. This helped in exporting huge volume of textiles to the European markets leading to favorable terms of trade. 9. PARTITION OF UNDIVIDED INDIA ON 15th AUGAST 1947 Before we skip our review of entrepreneurial growth to the post-Independence era. sugar. mica. it will be in the fitness of the things to shed some light on effects of partition on India's industrial economy so as to depict Independent India's industrial background. 8. manganese. Not encouraged the establishment of heavy industries: The British Government did not encourage the establishment of heavy industries like heavy machinery. rock salt.7.
The Government took three important measures in her industrial resolutions:(i) to maintain a proper distribution of economic power between private and public sector.INDEPENDENCE After taking a long sign of political relief in 1947. markets and land to the potential entrepreneurs to establish industries in the industrially potential areas to remove the regional imbalances in development. for this. For this purpose. the Government started to provide various incentives and concessions in the form of capital. (ii) to encourage the tempo of industrialisation by spreading entrepreneurship from the existing centres to other cities." The Government in her various industrial policy statements identified the responsibility of the State to promote.Transport Facilities: 83% of total route mileage in India whereas 07% of total road mileage in Pakistan. the Government accorded emphasis on the development of small-scale industries in the country. and (iii) to disseminate the entrepreneurship acumen concentrated in a few dominant communities to a large number of industrially potential people of varied social strata. technical know-how. Major Ports: India lost major ports which adversely affects India’s exports. Khanka) ENTERPRENEURSHIP DURING POST. (Source: Entrepreneurial Development by S. To achieve these adumberated objectives. the Government of India tried to spell out the priorities to devise a scheme for achieving balanced growth. Several institutions like Directorate of Industries. Financial Corporations. 1948 which was revised from time to time.S. This was. Small-Scale 1 3 . indeed. Particularly since the Third Five Year Plan. assist and develop industries in the national interest. It also explicitly recognised the vital role of the private sector in accelerating industrial development and. enough field was reserved for the private sector. towns and villages. the Government came forward with the first Industrial Policy. a major step taken by the Government to initiate interested people of varied social strata to enter the small-scale manufacturing field.
Dalmia. Mafatlal. the Managing Agency Houses and various socio-political movements like Swadeshi campaign provided. The fact remains that even the small entrepreneurship continued to be dominated by business communities though at some places new groups of entrepreneurs too emerged. Notwithstanding. Similarly. However. the average number of companies formed per year was 33. leads us to conclude that prior to 1850. since the Third Five Year Plan. The family entrepreneurship units like Tata. Since then the entrepreneurs have increased rapidly in numbers in the country. he added.619 in 1966 to 190. Liberalisation also reduced entry barriers for new entrepreneurs as it dispensed with or reduced regulatory measures such as industrial licensing.727 in 1970 registering an increase of 17. improved availability of financial support from both official and private sources boosted the growth of entrepreneurship. Kirloskar and others grew beyond the normally expected size and also established new frontiers in business in this period. the manufacturing entrepreneurship was negligible lying dormant in artisans.” Dr Mani told Business Line. there are examples that some entrepreneurs grew from small to medium-scale and from medium to large-scale manufacturing units during the period. liberalisation itself kick-started the growth of entrepreneurship in India for it presented businesses in the country with new market opportunities.835. Particularly.Industries Corporations and Small Industries Service Institute were also established by the Government to facilitate the new entrepreneurs in setting up their enterprises. proper seedbed for the emergence of the manufacturing entrepreneurship from 1850 onwards. all this happened without the diversification of the entrepreneurial base so far as its socio -economic ramification is concerned. And knowledge-intensive entrepreneurship in sectors such as IT and biotechnology has also increased since the economic liberalization process started in 1991. “Liberalization was catalyst for growth of Entrepreneurship in India” “Post-liberalization. one way or the other. the small-scale units emerged very rapidly in India witnessing a tremendous increase in their number from 121. The number of new companies formed during the 1980-2006 period points to a possible growth in entrepreneurship. Also. small entrepreneurs have experienced tremendous increase in their numbers. thus.379. entrepreneurship in India could have grown much faster if the capital market had been strengthened to support the system. however. they lacked entrepreneurial ability. The artisan entrepreneurship could not develop mainly due to inadequate infrastructure and lukewarm attitude of the colonial political structure to the entrepreneurial function. the average number of companies formed each year was 14. Birla. 1 3 . The wave of entrepreneurial growth gained sufficient momentum after the Second World War. while from 1992 to 2006. Figures from the Ministry of Corporate Affairs show that from 1980 to 1991. According to the paper. entrepreneurship has generally increased in India.000 units per year during the period under reference. But. The recapitulation of review of literature regarding entrepreneurial growth in India. The East India Company. Expectedly.
Technopreneur Promotion Programme and business incubators in colleges and technology parks also facilitated the growth of entrepreneurship in India. Government-supported and public-private partnership ventures such as the National Science and Technology Entrepreneurship Development Board. private sector initiatives such as The Indus Entrepreneurs and National Entrepreneurship Network also supported India’s knowledge-intensive enterprises. he pointed out. the capital market is not a major source of finance for enterprises.Even today. A study of 588 start-ups that participated in a competition conducted recently by National Entrepreneurship Network revealed that 70 per cent relied on personal savings for initial funding. Simultaneously. 1 3 . which mostly rely on internal sources of funding or debt. The increased availability of technically trained people and programmes that offered formal training in entrepreneurship also bolstered the growth of entrepreneurship.
60 per cent). According to the 5th Economic Census conducted by the Central Statistical Organisation (CSO). scale of operation and finance) for carrying out their operation.83 million establishments in the country engaged in different economic activities other than crop production and plantation. These include registering one’s business. lack of clarity on information relating to legal and 1 3 . This is despite the extremely high levels of potential entrepreneurial activity as perceived by the non-entrepreneurially active population in the country.10 per cent). Maharashtra (10. Early-stage entrepreneurial activity in India is marked by low levels of growth expectation. where and when to produce) and economic independence (in respect of choice of market. Tamil Nadu (10. almost 50 per cent of all workers are self-employed – 57 per cent among males and nearly 62 per cent among females.CURRENT SCENARIO OF ENTREPRENEURSHIP IN INDIA According to the Global Entrepreneurship Monitor (2007) report. India performs poorly in these indicators. angel funding and private equity becoming increasingly popular. The same five states also have the combined share of about 50 per cent of total employment. As seen in the Doing Business 2008 rankings. paying taxes and complying with labour regulations. the following numbers are telling. Cumbersome paperwork. while China’s nascent and new entrepreneurs appear to be the most growth-oriented. Further. where bank finance is hard to obtain. This problem is particularly acute at the start-up stage. Five states viz. Moreover. While data on entrepreneurship is hard to come by. A study investigating the effect of regulation on entrepreneurship using the GEM dataset shows India to be having one of the worst regulatory indices. long delays and red tapism involved in such transactions create unnecessary burdens for entrepreneurs. West Bengal (10. Issues in the Current Framework Finance: Access to credit is considered to be one of the key problems faced by entrepreneurs in India. with more than 10 per cent of them anticipating high growth. Uttar Pradesh (9.56 per cent) together account for about 50 percent of the total establishments in the country. in rural India. obtaining government clearances and licenses. India’s High-Growth Expectation Early-Stage Entrepreneurship (HEA) rate is only one-fifth of that of China. According to the NSS 62nd round.05 per cent). Regulation and governance: An entrepreneur has to deal with a host of regulatory and compliance issues. institutional finance is still not able to meet the current entrepreneurial demands. there are 41. while the corresponding figures in urban India are 42 for males and 44 for females.61 per cent) and Andhra Pradesh (9. The essential feature of the selfemployed is that they have autonomy (decide how. among medium and low income countries. The NSSO defines a self-employed person as one who has worked in household enterprises as own-account worker. constraining their productivity and their ability to do business. Despite new sources of finance such as venture capital. worked in household enterprises as an employer or worked in household enterprises as helper.
procedural aspects of starting an enterprise. World Bank. increasingly education is being seen as part of the larger ecosystem that impacts entreprene-urship and entrepreneurial motivations. skilled manpower emerged as the second most important factor for fostering entrepreneurial growth. The high transport and supply chain costs that poor infrastructure entails can be affect competitiveness to a great extent. ports. Further parameters reflecting labour market efficiency and flexibility are dismal. incubation and mentoring. entrepreneurship curriculum. India’s Ranking in Doing Business 2008 Starting a Business -111 Dealing with Licenses -134 Employing Workers -85 Registering Property -112 Paying Taxes -165 Trading Across Borders. Manpower: Availability of skilled manpower is another crucial issue for entrepreneurs. in a survey of entrepreneurs conducted by KPMG and TiE in 2008. Enterprises surveyed in the Global Competitiveness Report 2007-08. as well as those relating to clearances. 1 3 . industry-research linkages can help in fostering entrepreneurship. critical analysis.79 Enforcing Contracts -177 Closing a Business -137 2008) (Source: Doing Business. rated inadequate infrastructure as ‘the most problematic factor’ for doing business in India. Education: While the influence of education on entrepreneurship is considered debatable. For example. rail. licenses and government schemes further aggravates the problem. and telecom – is also considered to be a bottleneck to the smooth operation of entrepreneurial activity. In the Global Competitiveness Index. Infrastructure: India’s physical infrastructure – roads. India ranks 102nd in hiring and f ring practices and 85th in employing workers in the Doing Business 2008 report. Greater practical exposure. particularly for a small and medium enterprise. power.
one million more Indian joined the rank of the unemployed between 200506 & 2007-08. This shows the commitment of the Govt. Incidentally. increasing the entrepreneurial activities in the country is the only solace. The Govt. Incidentally. there are various organizations at the country level & state level offering support to entrepreneurs in various ways. The scope of entrepreneurship development in country like India is tremendous. At present.) in India has resulted in growing frustration among the youth. of India & various State Governments have been implementing various schemes & programmes aimed at nurturing entrepreneurship over last four decades. Our problem is we do not stretch ourselves. For example. The success of Indian entrepreneurs in Silicon Valley is evident as proof.9 million. What is more important than the skill and knowledge base is the courage to take the plunge. 1 3 . This is indeed a good development. In addition there is always problem of underemployment. Recognizing the importance of the entrepreneur development in economic growth & employment generation. sponsored scheme for the budding entrepreneurs. which demands high level of entrepreneurship development programme through out the country for the growth of Indian economy. MCED in Maharashtra provides systematic training. Results of the 57th round of the National Sample Survey Organization (NSSO) show that unemployment figures in 2003-04 were as high as 8. it is appreciative that the current generations of youth do not have hang-ups about the previous legacy and are willing to experiment. Maharashtra Economic Development Council (MEDC) has identified entrepreneurial development as the one of the focus area for Council activities two years ago. As a result. Especially since there is widespread concern that the acceleration in GDP growth in the post reforms period has not been accompanied by a commensurate expansion in employment. Various Chambers of Commerce & apex institutions have started organizing seminars & workshops to promote entrepreneurship. & the various organizations towards developing entrepreneurial qualities in the individuals. Then there are various Govt. We have all the requisite technical and knowledge base to take up the entrepreneurial challenge.SCOPE OF ENTREPRENEURSHIP DEVELOPMENT IN INDIA In India there is a dearth of quality people in industry. The only thing that is lacking is confidence and mental preparation. However. various management colleges have incorporated entrepreneurship as part of their curriculum. We are more of a reactive kind of a people. These are the people who will bring about entrepreneurship in India. both the reports prepared by Planning Commission to generate employment opportunities for 10 crore people over the next ten years have strongly recommended self-employment as a way-out for teaming unemployed youth. The rising unemployment rate (9. We need to get out of this and become more proactive. Incidentally. dissemination of the information & data regarding all aspects of entrepreneurship & conducting research in entrepreneurship.2% 2008 est.
CONCLUSIONS There are ample opportunities in small businesses in India and such opportunities will transform India in the coming future. 1 3 . Such people may not need financial assistance but they will need marketing and legal assistance in order to sustain themselves. For the government it is important to realize that the goal of small business owners will be to remain selfemployed. 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. poverty and to prepare ourselves for globalization in order to achieve overall Indian economic-progress. For such transformation to happen there needs to be support both at the governmental and societal level. Entrepreneurship development is the key factor to fight against unemployment.
blogspot.thehindubusinessline.articlesbase. Entrepreneurial Development by S.com/sol3/ 1 3 .html 6.ssrn. http://papers.in/ 5.com/2006/02/scope-of-entrepreneurshipdevelopment. http://knowledgeportal.com/ 7. http://www.S. Khanka 2. http://www. http://dobato. Dynamics of Entrepreneurial Development and Management Millennium Edition by Vasant Desai 3.com/entrepreneurship-articles/ 4.REFERENCES 1.
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