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Sculpting the Landscape
21-23 December, 2009 - Mumbai
KPMG IN INDIA
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.
Head - Markets KPMG in India
President TiE Mumbai
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.
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.
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.
Punjab Gujarat Delhi Tamil Nadu Karnataka Maharashtra
05 12 19 25 32 38
Creating an Entrepreneurship Culture
Conclusion and Policy Recommendations
About the study
Lengthy court proceedings and slow judicial enforcement of property rights and private contracts have led to sub-optimal business practices. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. lock up precious capital which should have been deployed to grow the business. In modern open economies. recent Global Entrepreneurship Monitor studies found that entrepreneurship in India has predominantly been necessity based rather than opportunity based. entrepreneurship is argued to be far more important than it ver was. . several constraints to quick technology adoption by Indian companies.01 Introduction The central role of entrepreneurship in the economic growth of nations is increasingly coming into focus. However. especially in the recent troubled times. amongst the types of entrepreneurship there is necessity based entrepreneurship at one end of the spectrum to opportunity based entrepreneurship at the other. © 2009 KPMG. Our research into the barriers and facilitators of entrepreneurship in the previous editions of Entrepreneurial India has revealed many facets of this problem. While high growth businesses have to use their entrepreneurial ingenuity to overcome the environmental constraints or render them irrelevant. the accent on liberalization and globalization in the last two decades has brought about mitigating effects in many of the areas cited above. Poor infrastructure has led entrepreneurs to create their own and in the process. All rights reserved. that seeks to revolutionize the world by leveraging new technology and creating new markets. a Swiss cooperative. high growth businesses have a crucial role to play. and owner-occupant friendly policies has led to the diversion of scarce capital towards unproductive investments in land and buildings. Formidable barriers exist to entrepreneurship continue to exist in India for high growth entrepreneurship. It is evident that entrepreneurial ventures are driving the growth of economies – developed and emerging. Inconsistent Indirect tax rules and enforcement issues that limit the ability to scale quickly. as evidenced by centuries of business and commercial activity and the existence of generations old business groups and families. As pointed out in a recent article in The Economist. policy makers are demonstrating a renewed interest in entrepreneurship and innovation. Labor laws that limit the mobility of labor forced entrepreneurs to fear growth in employee strength. Several examples cited in interviews include. A discussion with some of the established entrepreneurs points to a positive role played by the new economic policies in opening up areas. public policy has a significant and decisive role to play in minimizing. Given the ambitious economic growth targets that India has set for itself. and preferably. even as governments are busy trying to save their economies. completely removing the constraints that hobble high growth entrepreneurship. . While India has a long history of entrepreneurship. Inadequate availability of land with clear titles. Despite all odds.
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. There are many avenues open to policy makers to address the issue. innovative new businesses. Against this backdrop.picking the right set of issues and sequencing them to achieve significant and quick pay-off. 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. . All rights reserved. © 2009 KPMG. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.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. but the challenge would be in prioritization . a Swiss cooperative.
an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. there are various organizations at the country level and state level offering support to entrepreneurs in various ways. is testimony to the drive our potential as an entrepreneurial nation. KPMG and TiE plan to act as a catalyst for governments and entrepreneurs to come together to refine ideas. in a country. However. a Swiss cooperative. © 2009 KPMG. As these perceptions and challenges evolve. 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. Our research focuses on understanding the key policy initiatives of these states to promote business and industry. The following pages will profile the initiatives by six Indian states to foster entrepreneurial and business growth. enable better policy implementation and foster growth. various management colleges have incorporated entrepreneurship as part of their curriculum. The scope for entrepreneurial development in the country is tremendous. The Government of India and various State Governments have been implementing various schemes and programmes aimed at nurturing entrepreneurship over the last few decades. The success of Indian entrepreneurs around the world. we have deep technical and knowledge based resources to take up the entrepreneurial challenge. 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. . It further analyses the entrepreneurs’ perception of these initiatives and the States’ challenges in promoting entrepreneurial growth. At present.04 The Assessment Today in India. 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. Incidentally. All rights reserved. opportunity abounds. While GDP growth seems to be back on track. and increasingly in India. This is indeed a good development. it is simply impossible for any government alone to drive entrepreneurial and business growth – a productive partnership with all stakeholders is critical and necessary. In India.
Punjab’s economy is primarily an agro-based economy and its industrial base is dominated by small and medium enterprises. Punjab.520 million (67.3 percent Wheat and 31. the state government has framed a new Industrial Policy directed at attracting industrial investment in the state. However. It was the first Indian state to use agricultural technology to engineer a “Green Revolution” 1 . 1 Confederation of Indian Industry. 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.Punjab Population 24 million (as per 2001 census) The state had about 0. a Swiss cooperative. Northern Region. Other industrial sectors in the state include chemicals and chemical products and transport equipment. June 2009 © 2009 KPMG. textiles and apparel. with the fast changing global economic scenario. All rights reserved.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. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. . The easy availability of raw material has attracted agro-based industries like food & food products.2 percent Rice. In 2006-07 it contributed 75.26 percent) employees in public sector and rest of the 0.
institutional.6 billion (USD 4.3 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. IT units and parks will be charged for the actual units consumed. farm tourism. Northern Region.6 million direct and indirect jobs by 2018. Punjab. All rights reserved. industrial or agriculture use zone notified under the master plan • Capital subsidy at 20 percent of fixed capital investment in the project. a Swiss cooperative. Punjab. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. June 2009 3 Confederation of Indian Industry. commercial. Punjab. SIDBI and various state corporations for IT/ Knowledge Industry • IT Parks notified by PICTCL will be exempted from statutory power cuts.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 4 Confederation of Indian Industry.6 billion) and 0. 2 Confederation of Indian Industry. It also targets the exports of IT/Knowledge industry worth INR 214. 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.) • 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. restrictions on peak load hours and weekly load shedding. 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. Northern Region. Northern Region. June 2009 © 2009 KPMG. . health tourism.
a Swiss cooperative.07 The Assessment | Punjab Agro. 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. having all necessary facilities at one place. June 2009 6 Public Private Partnership in India. . Muktsar and Ferozepur • Setting up of new educational and training institutes for making skilled technical workforce available to the industry. 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. apparel parks and integrated textile parks. Northern Region. 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. 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. Punjab. All rights reserved. with assistance from the Government of India as well as private sector participation. Faridkot. Bathinda. Sangrur. 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. the policy has made provision of: • Interest subsidy would be granted to units availing term loan from scheduled/nationalized Banks/FIs. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. • Creation of infrastructure through clusters. Moga. Punjab.Policy5 In order to develop the agro sector. State Policy © 2009 KPMG. Mansa. 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.
. a Swiss cooperative. Punjab.938 NA Production Value (INR Million) 250950 252000 NA Source: Government of Punjab and CII. 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.08 The Assessment | Punjab • Promotion of public-private partnerships in agriculture extension.934 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. All rights reserved. June 2009 8 IBEF © 2009 KPMG. which will act as a biotechnology development centre to meet R&D. 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. subject to ceiling of INR 2 million.205 0.204 0. 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.8 Small Scale Industries in Punjab Units (in million) 2004-05 2005-06 2006-07 0. 60 percent of exports and 21 percent of the investment for the industrial sector in 2008. crop diversification and organic farming in the state • Establishing a new biotechnology institute. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Northern Region.205 Fixed Investment (INR Million) 48350 48550 55000 Employment (In Million) 0. 2007-08 7 Confederation of Indian Industry.
Diesel Engines at Phagwara. in Dhaula. Multiplex and Hotel Projects with proposed investment of INR 614. 2008 Industrial Clusters Information Technology Parks 9 Confederation of Indian Industry. Industrial Park. Biotech and Textile industries are the primary catalyst for the growth of the industry. Mandi Gobindgarh are likely to be benefit from the policy. and Lotus Integrated Texpark. District Barnala have been approved for Punjab under the SITP Scheme in 2007 Food Parks Sirhind in Fatehgarh Sahib district Textile (Ludhiana). Monthly Magazine.IT specific SEZ in Mohali. This SEZ covers an area of 20 hectares SEZ Ranbaxy Laboratories Ltd.66 billion have been approved by State Government for implementation during 2007-08. The new policy is likely to strengthen the existing small scale 58. 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.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. Small scale industrial hubs including Ludhiana.72 94. a Swiss cooperative.. 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. Punjab. About 273 Mega Industrial Manufacturing.08 sector such as hand tools.82 86. Northern Region. Punjab Industrial review. June 2009 © 2009 KPMG. spanning 365 acres in Mohali forms the hub of the IT industry in Punjab IT parks are also planned for Patiala. All rights reserved. forging. Ltd. casting and textile located in several parts of the State. the state government is encouraging the development of Parks. Amritsar.09 The Assessment | Punjab Investment intentions in terms of IEMs filed. steel. Source: Department of Industrial Policy and Promotion. Agricultural implements (Moga). Mohali The pharma SEZ covers an area of 32 hectares Source: United Nations Industrial Development Organization. Jalandhar and Ludhiana Quarkcity India Pvt.09 51. Leather industry (Jalandhar). September 2009 Not only the small scale sector but also the IT Industry and agro-sector are expected to attract investment to the state. Gems and Jewellery at Amritsar. Amritsar. Jalandhar. Re rolling Steel Mills at Mandi Gobindgarh.46 114. Mohali.. . Sewing Machine & parts (Ludhiana). Kapurthala. Machine Tools at Batala. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Bicycles and Bicycle Parts at Ludhiana. Handicrafts at Hoshiarpur Automobiles and Auto Parts in Ludhiana and Wooden Furniture at Kartarpur Electronics Township (ELTOP). Batala.
10 Government of Punjab.000 120 1. All rights reserved.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. 2009 11 Maharashtra Government. the entrepreneurs are keenly awaiting an effective single window clearance. however. While the entrepreneurs appreciate the agro initiatives and the IT industry development. A general perception is that strategies are usually made keeping the larger entrepreneurs in mind thus not benefiting smaller enterprises. which is above the national average of 64. The entrepreneurs can be part of the overall development strategy if they are considered at the time of formulating the strategy. 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. Economic Survey.8 percent (2001 census). With regards to educational development. . PFC and SIDBI.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.180 literacy rate of 69. There seems to be a need for increased focus on vocational training and skills based education. Industrial Policy. with 2. the entrepreneurs expressed a need for a region wise policy and a cluster based approach rather than one single policy for the entire State. they express a need to consciously boost the manufacturing sector. entrepreneurs find a gap between academia and industry and a need for industry ready professionals. However.7 percent. there is a general perception that the state lacks the political will to focus on entrepreneurial development. While the entrepreneurs acknowledge the initiatives of the government. They acknowledge the initiatives towards promoting IT industry in the state. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. 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. It is felt that a considerable number of manufacturing units have moved to nearby states like Himachal that may offer a more welcoming environment. They also express the need to migrate most processes online to ensure faster turnarounds and promote standardization. a Swiss cooperative. 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. not undermining the need to attract large enterprises. when probed on a wishlist. 2008-09 © 2009 KPMG. This has been funded jointly by PSIDC.11 Source: Government of Punjab. Punjab Infotech.
good roads. Rapid technology adoption is also a challenge as voiced by the government. People from Industry are called for interactions. 19-20 percent is lost and balance used for domestic purpose. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. All rights reserved. . Acknowledging the demands of entrepreneurs. Justifying the state’s focus on Agriculture and Agro based industries. industry specific infrastructure like cold storage. should surplus funds be made available. However. development of labor skills and land development. 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. it is felt that in many cases. VC fund. the state has courses on entrepreneurship where the objective is to provide the knowledge for job creation as well as self employment. the state government stated that limited funds constrain it from giving many exemptions and subsidies. if given a choice they would enhance their focus on SME sector as the larger enterprises can avail of external help. 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. Initiatives have also been started for collaboration between the government and industry players with bigger organizations like TATA and L&T taking the lead. There is no planned expenditure on industries. 35 percent by industry. the state will focus on infrastructure development. industry contributes only 15 percent of the GSDP . proper water management and industry clusters comprising similar concerns and expertise to be set up. . However. On financial incentives to promote industry. 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. The State is moving in the right direction but policy implementation needs to increase the momentum of entrepreneurial growth. They are also involved while developing the curricula.11 The Assessment | Punjab The Government’s Viewpoint The state government praises the people of Punjab for their entrepreneurial qualities. 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. The government also feels the mentoring in the state is minimal or absent which further leads to opportunity loss or stagnation. a Swiss cooperative. workshops and talks. With regards to specific entrepreneurial education and development. From the state’s perspective. © 2009 KPMG. However. 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. the state government realizes and recognizes the need for development on other factors like land development. the entrepreneurs limit themselves and do not push for scale after reaching a certain level. The State does cite the need for additional financial resources to implement these policies though.
2008–2009 2 Industries and Mines Department of Gujarat. The main objective of the policy is to facilitate investment in the state. 2008–2009 Source: Socio Economic Review. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. As per the norms of the policy. 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. Gujarat State.6 million (as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Socio Economic Review. . 2009 © 2009 KPMG.Gujarat Population 50. To provide impetus to the growth of the industrial units in Gujarat. create large scale employment opportunities and achieve global competitiveness by improving productivity among industrial units. Gujarat State. All rights reserved. The state has achieved growth in the industrial sector and contributes nearly 16. the state hopes to do the following2: 1 Socio Economic Review. a Swiss cooperative. 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.1 percent to the country’s industrial output1. the state government has reviewed and updated the Industrial Policy and announced the Gujarat Industrial Policy 2009. Gujarat State. Industrial Policy.
13 The Assessment | Gujarat • Focus on Special Investment Regions (SIR) and Investment Regions (IR) with convergence of industrial. 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. The state government has notified IT Policy 2006 – 2011 in November 2006. 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. 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. 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. Projects with investment of more than INR 10 billion and capacity to provide employment to 2. As per the policy. IT/ Knowledgebased industries. Industrial Policy. fisheries. Investment Opportunities(Vision 2010 for Proposed Investment Program) © 2009 KPMG. 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. anchor institutes. social and urban infrastructure. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. 2009 4 Industries and Mines Department of Gujarat. All rights reserved. a Swiss cooperative. . gems and jewellery. nano technology. biotechnology. 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.
Biotechnology. the state government has introduced various schemes: • Financial assistance by way of interest subsidy in technical textiles. and marine for the development in biotechnology • Facilitate private partnerships for developing biotechnology parks. Sector Profile. 2009 8 Government of Gujarat. weaving. 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. Textile and Apparel Sector. Gems and Jewellery Sector. exclusive technical textile parks. To further enhance its dominance in the sector. the GoG has formulated the State Biotechnology Policy 2007– 2012. testing. Investment Opportunities(Vision 2010 for Proposed Investment Program) © 2009 KPMG. . etc. apparel and machine carpeting • Financial assistance for technology acquisition and upgradation. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.14 The Assessment | Gujarat Biotechnology Policy5 The state of Gujarat consist of more than 50 biotechnology companies and 66 support organizations6. and accreditation • Financial assistance for the biotechnology parks at 50 percent of fixed capital investments in land. BT Policy 2007–2012 6 Gujarat The Growth Engine of India. the state government has formulated various schemes to make the state as the favorable destination of investment. The key highlights of the policy are: • Focus on thrust areas such as animal husbandry. January 2009 7 Government of Gujarat. Industries and Mines Department. All rights reserved. knitting. zones and other supporting infrastructure for research. 2009 9 Industries and Mines Department of Gujarat. To further augment the growth of the sector. training.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. • Proposed investment of about INR 4 billion to the sector9 • Assistance for establishing Apparel Training Institutions • Support for setting up apparel/sewing parks. • 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. To encourage new entrepreneurs and attract investments in biotechnology sector. on PPP basis 5 Government of Gujarat Science and Technology Department. weaving park for cotton/synthetic textiles. pharma and healthcare. The state accounts for 80 percent of the diamonds processed in India and has emerged as the major source of employment generation. agriculture. Industries and Mines Department. spinning. a Swiss cooperative.
an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.5 0.485 IEMs where implemented by the entrepreneurs with a total investment of INR 807 billion and generating employment for 209. 2009 11 Ministry of Commerce and Industry. respectively • Interest subsidy is likely to be granted for a maximum amount of INR 2.4 0.27 Small 7911 114. 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. All rights reserved. Industries and Mines Department. a Swiss cooperative.4 Source: India Stat and Ministry of Commerce and Industry.359 units were registered during January 2009 – June 2009. about 4.04 Source: Office of The Industries Commissionerate. Government of India Further. The implementation of policies has lead to an emergence of number of Industrial Entrepreneurs Memorandum (IEMs) in the state. has also triggered the development of the micro. 1. about 61 IEMs were implemented with an investment of INR 13.3 2009 (Upto August) Number 61 Investment (INR billion) 13. .7 Number 76 2008 Investment (INR billion) 13. Micro. Small and Medium Enterprise (MSMED) Act-2006. small and medium enterprises and about 37 .24 Medium 316 28. September 2009 © 2009 KPMG.312 units have been registered with an investment of INR 201 billion and employment generation of approx 600 billion during October 2006– June 2009. • Interest subsidy at the rate of 7 percent and 5 percent for micro enterprises and small and medium enterprises. the Micro. In the first eight months of 2009. Also.4 billion.5 million per annum.11 . SIA Statistics. since August 1991 till August 2009. Gujarat 10 Government of Gujarat. Units Registered under the MSMED Act from October 2006 to June 2009 Micro Number of Units Registered Investment (INR Billion) Employment (milion) 29085 58.2 0. Small and Medium Enterprise Policy highlights10 The state government has identified various incentives for the MSMEs.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.4 2007 Number IEMs Implemented 223 Investment (INR billion) 74.15 The Assessment | Gujarat Micro.100 people. Small and Medium Enterprises. Further.
All rights reserved.98 0.14 12 Vibrant Gujarat. About 8690 MoUs were signed /announced in 28 different major sectors with total investment of INR 12215 billion and 2. The state is setting up Biotech SEZ at Savil. Biotechnology. Sector Profile. 2008–2009 © 2009 KPMG. January 2009 13 Socio Economic Review. Gujarat State.05 0. logistic. it has organized “Vibrant Gujarat Global Investors’ Summit .00 Source: Socio Economic Review.12 Investment Promotion Measures – The Government of Gujarat has taken a number of investment promotion measures for the overall development of the state.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. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. .30 0. specialized pipe laying. 2009. industrial parks and estates.02 0.2009” to attract investors to establish projects in the state.7 million employment opportunities in the state.012 301 440 721 68 444 Proposed Employment (Million) 0. Gujarat State. etc.17 0. 2008–2009 14 Socio Economic Review. The state government has also proposed to set up biotech zones and parks at five locations in Gujarat12. The state is also encouraging specialized skill development institutions that can impart vocational skills in areas such as marine engineering.13 0. mining.859 1. 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.967 1. Biotechnology Sector.17 0. Gujarat The Growth Engine of India.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 2009.405 4.700 acres. Further. Gujarat State. Vadodara with a total area of 1.85 0. the largest in the country. a Swiss cooperative. the Gujarat Industrial Development Corporation (GIDC) has approved 6 new proposals for industrial estates at the end of year 2008-09.
easy communication with the government are cited as some of the motivating factors. 2004. The state is ranked number one in terms of area covered under SEZs in India with 60 approved SEZs (as on May 2009).674 billion 1. Further. Further. the entrepreneurs feel that while the state is proactive in announcing policies.17 The Assessment | Gujarat Major hub for SEZs units – Gujarat was the first state to implement the Special Economic Zone (SEZ) Act. Gujarat is seen as having a very progressive outlook towards the industry and entrepreneurial development. the state’s focus on SME sector together with larger enterprises and foreign investment is much appreciated by its entrepreneurs. a thorough skill gap analysis is required from ground to top level to address the needs of specialised industries. From an entrepreneur’s perspective.15 The Entrepreneurs’ Viewpoint Lauding the efforts of the state government. the government only needs to provide opportunities” As entrepreneurs in the state recognise the state’s efforts and willingness to promote entrepreneurial development. healthcare and tourism to promote inbound tourism as well as manpower migration from other states. 2009) Proposed Investment by the Developer as well as Units in SEZs Proposed Employment INR 2. an organization of Gujarat Government. Proposed area of SEZs 29423. which is created with participation from all stakeholders. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. entrepreneurs have faced hindrances while dealing with the central authorities (Customs & excise and Income Tax) operating in the state. while the state’s authorities are perceived to be supportive in many areas. Gujarat (SEZs) Proposed Investment and Employment in the 60 SEZs (May 30. According to entrepreneurs.9 million persons Single window clearance facility – The state government has set up a single window clearance facility through INDEXTb (Industrial Extension Bureau). they also expressed some of their concerns and expectations. 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. However.83 hectares Source: Office of The Industries Commissionerate. All rights reserved. a Swiss cooperative. . 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. It has taken numerous steps to ensure entrepreneurial development. availability of financial institutions and development banks. Together with the resources. In addition. while the availability of manpower is not an issue. they also feel the need to create sustainable trade and business coordination agency across various Indian states and countries to foster business tie-ups. the implementation of some of these policies has been falling behind schedule. the state has set one of the best platforms for an entrepreneur. the entrepreneurs in Gujarat truly believe in their state’s governing machinery. land bank for small players and easy land transformations from Agriculture to Industry. 15 INDEXTb © 2009 KPMG. There is ease in setting up an industrial unit through quick decisions and streamlined procedures. The state has a robust policy framework. The state’s entrepreneurs take pride in the state’s proactive investment promotion programmes. The state gives opportunity to transform ideas into activities. As one of the entrepreneur in Gujarat commented “Gujarat has entrepreneurship in its DNA. There is a need to create modern world-class social infrastructure in terms of education. It acts as an investment promotion agency of Gujarat state and provides single point of contact for all investment related activities in Gujarat. Further.
The government also encourages a dialogue between all stakeholders to create growth initiatives while focussing on the overall development of the state. 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. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. a Swiss cooperative. 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. © 2009 KPMG. 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.18 The Assessment | Gujarat The Government’s Viewpoint The state of Gujarat has been at the forefront of industrial and entrepreneurial development. . All rights reserved. The state has set many policies and initiatives which are now being replicated by other states to create similar effect. 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. However.
. All rights reserved.2 The state government intends to achieve consistent growth and has formulated industrial policy to attract investment in the state.6 million people. the state was ranked 16th in the All India ranking.Delhi Population 13. 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. 2009-2021 © 2009 KPMG. Department of Industries. of which 21 are under Delhi Development Authority (DDA) and the remaining are maintained by Delhi State Industrial & Infrastructure Development Corporation (DSIIDC). 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. 2008–2009 The Policy Framework Highlights of the Industrial Policy Delhi has a large presence of manufacturing units employing about 0. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. with globalization of economies and technology and advancement becoming the keystone of an economy development. with number of establishments contributing about 1. 2008–2009 2 Government Of National Capital Territory of Delhi. As per the 5th Economic Census held in Delhi during 2005. Draft Industrial Policy. 2008–2009 Source: Economic Survey of Delhi. the state government has formulated a new industrial policy 2009-2021 after 27 years of the last policy.647 acres.85 million (as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Economic Survey of Delhi. 1 Economic Survey of Delhi. a Swiss cooperative.80 percent of the total establishments in India.
IT enabled services. Department of Industries. 2000 © 2009 KPMG. etc. Internet. 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. The objective is to attract investments in the state through procedural simplifications and removing the need for approaching various departments for clearances and payments. pharmaceuticals and electronics • Promoting single window clearance through the ‘Business Facilitation Mission’ (BFM) program. a Swiss cooperative. training. 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 Policy. 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. empowering women. The state government has put forth the IT policy in 2000. software. • Encourage investment and accelerate growth in the IT hardware. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. which aims to explore new opportunities for employment. .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. telecom and e-commerce sectors 3 Government Of National Capital Territory of Delhi. efficiency and enhance factors for economic growth. 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. improving healthcare. research institutes and R&D units in engineering. All rights reserved.
The capital subsidy is limited to 12 percent of maximum loan of USD 86. Profile of Delhi © 2009 KPMG. All rights reserved. Transport Policy 6 Ministry of External Affairs. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. To foster the growth of the SEZ units in the state. introduction of strict inspection and certification systems • Strengthening the transport infrastructure by constructing flyovers. • Controlling pollution by providing CNG buses. a Swiss cooperative. 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. electric trolley buses. mini-buses. 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. 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. etc. Government of India. The key highlights of the policy are: • Provision of affordable modes of transport such as buses.703 under the scheme. • 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. bio-technology. the government is providing the following incentives: • Specific sectors such as electronic hardware and software including ITES. Industries Department. metros. SEZ Policy 5 Government Of National Capital Territory of Delhi. strengthening the pollution norms. nano-technology. Industries Department. ITP Division.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. .
Foreign Direct Investment Inflow in Delhi (INR billion) 2000 – 2005 2006 2007 2008 2009 ( January to May) 220. It has acquired 1. . favourable government policies and highly-skilled and trained workforce. The investment inflow is likely to bring in new technology. Note: The data for Delhi includes Uttar Pradesh (UP) and Haryana Source: India Stat and Ministry of Commerce and Industry.8 138. 2008–2009 7 Ministry of Commerce and Industry.300 acres of land of which possession of 1. and transportation industry followed by chemicals. The state government has made Delhi Financial Corporation responsible for facilitating various clearances and loans required for setting up an industry.065 acres has been taken for developing new industrial estates. Infrastructural development initiatives – The state government is taking a number of infrastructural development initiatives such as development of industrial parks and estates. SIA Statistics. 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. It has also acquired 800 acres of land for the development of industrial areas. The implementation of policies has fostered the growth of foreign direct investment in the state. Development of urban transport infrastructure such as the Delhi Metro. the services sector. a Swiss cooperative. during August 1991 to August 2009. food processing industries. enhance the quality of human capital and create a strong competitive base for its overall development.8 97 .5 101. September 2009 © 2009 KPMG. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. the Delhi region (including parts of UP and Haryana) was the second most favored foreign direct investment destination after Mumbai. All rights reserved. In the first five months of 2009. the state has implemented only 50 Industrial Entrepreneur Memorandums (IEMs) with an investment to INR 6. Government of India Growth Impetus The state provides an environment conducive to business with quality infrastructure. 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. drugs & pharmaceuticals. During the period the largest investment attracting sectors have been electrical equipment.6 Further. freeways and better roads have also helped make Delhi a more attractive city for business in general.5 billion and generating employment for 4.22 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.880 people.1 emergence of public private partnerships projects in the state.7 The implementation of industrial policy has also triggered the 93. telecommunications.
with literacy rate of 81.8 percent. Source: Economic Survey of Delhi. The state is the hub for leading technical (IIT).3 percent in 2008-09 of the total plan expenditure.5 percent in 2007-08 to 10.8 Strong focus on the development of skilled work force9 – The state has a strong educational infrastructure. medical.67 percent. a Swiss cooperative. The Government of Delhi is focusing on the education sector and has increased the expenditure on the sector from 8. 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.93 percent.098).05 billion for the Commonwealth Games projects. 2008–2009 © 2009 KPMG. 2008–2009 360 1247 40 429 8 State Budget 2009–2010 9 Economic Survey of Delhi.753) on education sector was higher than all states (INR 1. an increase of 14.23 The Assessment | Delhi The state is hosting the 2010 Commonwealth Games. which is above the national average of 64. management. The government has also targeted utilizing more than INR 450 billion (during 2007-2012) for improving civic infrastructure and services in the state. The credit to deposit ratio of all scheduled commercial banks was 70. which is likely to provide it an opportunity to augment its infrastructure and facilities. and legal institutions. The state government has proposed an outlay of INR 21. in 2008-09. Strong financial infrastructure for collection of savings and disbursal of credit – The state has a sound financial infrastructure with 2.32 percent as compared to the previous year. All rights reserved.49 percent. very close to the all India ratio of 74.076 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. . an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Delhi per-capita expenditure (INR 1. Further.
24 The Assessment | Delhi The Entrepreneurs’ Viewpoint With Commonwealth Games 2010 around the corner. However. the state government emphasises the opportunities it has created across the NCR region in sectors such as infrastructure. sees vibrant economic activity without active promotion. Hence. The Government’s Viewpoint With the CWG 2010 preperations in full swing. transport etc. being the capital and the economic centre of the North. Neighbouring Haryana and UP are actively creating infrastructure to promote industry which has compelled the business to migrate from Delhi to these states. 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. 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. the new draft industrial policy 2009-21 is likely to be finalised by the end of 2009. However. the state of Delhi is perceived as not proactive in promoting business or industrial growth. the basic policy framework of the state has not been revised for the last 27 years. The policy is focused at creating opportunities in new cleaner sectors while simplifying procedures through a more robust and efficient e-governance framework. All rights reserved. . ‘entrepreneurship’ is not articulated in the current policy. The focus is to attract knowledge-based industries and redevelopment of industrial areas. 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. © 2009 KPMG. 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. While the state recognises that the focus on industry in terms of policy initiatives has lagged behind schedule. The entrepreneurs also feel the need for a state supported Venture / Seed Fund. According to entrepreneurs in the state. while new opportunities are being created in light of the CWG 2010. the reluctance may stem from the desire to move heavy industry out of Delhi and partly from the fact that Delhi. Further. However. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Partly. the state of Delhi is working to make many improvements and creating a plethora of opportunities in multiple sectors across the spectrum. a Swiss cooperative. hospitality. Further. 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. While discussing their wish list and concerns. 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. there was consensus amongst entrepreneurs for creating an enabling policy framework focused at inclusive growth and service sector development. construction.
including water supply. consumer durables. To further stimulate the growth of industrial development in the state. Industrial Policy. roads. a Swiss cooperative. 2008–2009 Source: Economic Survey of Delhi. the government introduced the Industrial Policy 2007 . garments and real estate. It is one of the most favored destinations by both the domestic and foreign investors. 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. 2007 © 2009 KPMG. etc to increase competitiveness in the industry 1 Tamil Nadu industrial Development Corporation Limited. especially in areas of Information Technology and related industries. power.Ta m i l N a d u Population 62. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. . All rights reserved. automobiles. and a major manufacturing centre. electronics. 2008–2009 The Policy Framework Highlights of the Industrial Policy 20071 Tamil Nadu is considered a leading industrial state in India. communication facilities. facilitate new manufacturing capacity and raise the competitiveness and efficiency of local industry. railways. The key objectives of the policy are to attract investment.4 million (as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Economic Survey of Delhi.
IT Policy 3 Government of Tamil Nadu Handloom and Textile Policy © 2009 KPMG.2 million. 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. • Granted 50 percent exemption of stamp duty for IT companies towards land registration and office construction • Promoting unrestricted movement of capital equipment including hardware. whichever is less • Encouragement of investments in research and development by manufacturing companies • Enactment of a ‘Business Facilitation Act’ for giving Single Window Committees. • 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. whichever is less • Financial assistance to technology innovators or stand alone R&D units or individuals for innovations capable of industrial application. captive power generation sets. a Swiss cooperative. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. 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. clusters. peripherals. etc. in 2005. contribute more to exports and to encourage textile . the state government has formulated the handloom and Textile Policy 2006 –2007 The policy aims at achieving global standards in product quality. The policy outlines certain concessions and incentives to encourage the growth of the sector. upto 50 percent of the cost of filing a patent or INR 0. at State and District level.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 Government of Tamil Nadu released an ITES policy.
The key highlights of the policy are: • Focus on Medical / Human & Animal Healthcare.27 The Assessment | Tamil Nadu Biotech Policy4 Tamil Nadu is rich in bioresources with one of the largest coastlines in the country.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. 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. Agriculturefood. Micro. Small and Medium Industries Policy 2008 © 2009 KPMG. Environment. All rights reserved. Small and Medium enterprises. Small and Medium Enterprise (MSMEs) Policy highlights5 To enhance the competitiveness of the Micro. 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. subject to a maximum of INR 0. representing opportunities for marine biotechnology. 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. To further augment the growth of the Biotechnology industry. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. the state government announced an exclusive Micro. . the state government has formulated a biotechnology policy. Small and Medium Enterprise Policy 2008.
059. During 2008 –2009 about 11 new industrial estates have been established.558 million in 2007 – 2008.2 29.5 percent from 0. Government of India Further.2008 Further. which has stimulated the growth of micro. the policy also resulted in the establishment of a number of industrial estates.2 1.7 1991–2006 Number IEMs Implemented 438 Investment (INR billion) 96.9 billion in 2007 to INR 29.6 It also lead a number of Industrial Entrepreneurs Memorandum (IEMs) in the state.946 Source: Department of Economics and Statistics.1 Source: India Stat and Ministry of Commerce and Industry.9 58.539 168. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. a Swiss cooperative. Policy Note 2009 – 2010 7 Ministry of Commerce and Industry.039. Micro.8 Parameter Number of Registered MSMEs (Million) Investment in Fixed Capital (INR billion) Value of Output (INR billion) Employment (Million number) 2005–2006 0.4 Number 29 2007 Investment (INR billion) 15. about 521 IEMs have been implemented by the entrepreneurs with an investment of INR 137 billion and generating employment opportunities for 79.539 million in 2006 – 2007 to 0. Small and Medium Enterprise (MSMED) Act-2008. Policy Notes.0 51.28 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.737 billion to INR 5.8 billion till May 2009. Government of India The state has implemented the Micro. September 2009 8 Department of Economics and Statistics.511 161. small and medium enterprises in the state.7 . Small and Medium Enterprises Department.7 2009 (Upto August) Number 30 Investment (INR billion) 12. From August 1991 to August 2009.1 3. Industries Department.9 6 Government of Tamil Nadu.9 28. The implementation of these policies were an important contributor to the state increasing total investment 3 times from INR 1.0 1. . All rights reserved.6 Number 24 2008 Investment (INR billion) 13. SIA Statistics.703 2007–2008 0.2 3. The government plans to set up about three new industrial estates for the year 2009 –2010.593 2006–2007 0. Tamil Nadu Statistics at a Glance . 2000 –2005 Foreign Direct Investment 2006 2007 2008 2009 (Till May) 52.792 billion during June 2006 to March 2009. the implementation of policies has triggered the growth of Foreign Direct Investment (FDI) in the state.2008 9 Government of Tamil Nadu. The number of MSME has increased by 3. 2009 –2010 © 2009 KPMG.8 3. which has lead to an increase in the number of persons employed in the state.6 1.8 Source: Ministry of Commerce & Industry. The FDI inflow in the Chennai region (including Tamil Nadu and Pondicherry) increased from INR 28.084 people. Tamil Nadu Statistics at a Glance .558 193.147 .
SIPCOT and TANSIDCO with an objective of overall industrial development in the state. a Swiss cooperative. Policy Note 2009 –2010 11 Government of Tamil Nadu. The state has notified 47 SEZ units with a total area of 3972 hectares. The Government has made significant efforts to attract new investments in the state. 2009) Formal approvals 69 In-principle approvals 17 Notified SEZs 47 Source: Department of Commerce. Industries Department. The state ranks third in the number of approved SEZ units11. Industries Department. All rights reserved. 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.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.6 billion.145 355 317 60 605 753 Source: Government of Tamil Nadu. 12 were signed in the calendar year 2008 with a total investment of INR 251 billion. The government also issued structured packages of assistance for 7 projects for an investment of INR 54. Status of Educational Institutes Arts. Science and Other Colleges Engineering educational institutions Polytechnics Government it is Affiliated Private Industrial Training Centers Industrial Training Centers 1. 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. Industries Department. Within the new industrial policy. During 2006 – 2009. India.5 percent. the government has introduced a Common Application Form (CAF) to replace multiple forms. State-wise Distribution of Approved SEZs (as on March 31. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. To avoid procedural delays. It has designated a nodal agency Tamil Nadu Industrial Guidance & Export Promotion Bureau (Guidance Bureau) for the efficient functioning of the mechanism. the government has sanctioned structured packages of assistance for attracting new investments in the state. . Availability of skilled manpower – The state has a literacy rate of 73. which is higher than the national average of 64. Out of the 23 MOU. Policy Note 2009 –2010 © 2009 KPMG.11 10 Government of Tamil Nadu. The state government is taking a number of initiatives to enhance the quality of manpower . the state signed 23 Memorandum of Understanding (MOU) in addition to sanctioning structured packages of assistance for 9 projects.8 percent. It has initiated an Industrial Training Quality Improvement Project for the upgradation of educational institutions. 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.
However. investment opportunities etc through their portals. water. small and medium enterprises. automobiles and textile sectors. The state government has been proactive in identifying the key focus areas and accordingly implementing the policy framework to augment growth in specific sectors. 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. 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. . developed plots. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. All rights reserved. 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. The government has been proactive in providing support through development of industrial estates. 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. taxation. According to entrepreneurs. infrastructure support. provision of work sheds. infrastructure support like land in industrial parks. © 2009 KPMG. incentives etc) available while creating mentoring and guidance platforms. marketing assistance. The entrepreneurs expect the government to provide softer support through making critical information (schemes. The government is also proactively planning the Single Window Documentation Centre for major investment proposals and assist investors in getting all pre-project clearances. has also played a catalytic role in the promotion and development of Small Scale Industries and hastening the industrial dispersal throughout Tamil Nadu. The wish list also includes creation of state initiated funding mechanism for entrepreneurial development while ensuring creation of right infrastructure on the other hand. most entrepreneurs feel that this is an area where the scope of development is immense. 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. etc. export assistance and guidance to entrepreneurs.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. a Swiss cooperative. raw materials supply. 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. Further. The government also been organizing guidance seminars for entrepreneurs and creating training programmes to address their concerns. However from a smaller investor perspective. power. the state has created various apex bodies and supported chambers to promote the interest of small and tiny enterprise. despite these efforts. the government through Tamil Nadu Small Industries Development Corporation Limited (TANSIDCO).
31 The Assessment | Tamil Nadu The state government has taken a number of policy initiatives to propel growth in the manufacturing and services sectors. © 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. Policy measures such as single window clearance system have paved way for the foreigners to invest in the state. procedural simplification. infrastructure development.. The state has identified 5 critical action areas i. industrial promotion and investment packages towards significant developments in the industrial scene and hopes to engage with the entrepreneurial community more on these areas. Tamil Nadu has been constantly upgrading its infrastructure to meet the industrial need. industrial policy.e. All rights reserved. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. they also acknowledge the need for improved communication between entrepreneurs and the government. . Although the government takes pride in the various initiatives they have been rolling out to support industry and entrepreneurs. a Swiss cooperative.
2008–2009 Source: Economic Survey of Karnataka. the state government introduced the Industrial Policy 2006-2009. and generate additional employment for atleast 1 million persons in the manufacturing and service sectors. 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 .Karnataka Population 52. This policy was further revisited to form the latest Industrial Policy 2009-2014. .9 million ( as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Economic Survey of Karnataka. The key objectives of the policy are to increase the growth of GDP and exports. 2009-2014 © 2009 KPMG. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. service sector largely fuelling the overall economic growth.1 Aimed at propelling the overall socio-economic development of Karnataka. 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. strengthen manufacturing industries. a Swiss cooperative. All rights reserved.
a Swiss cooperative. 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 . 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. 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. 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. 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. . relaxation in labor laws.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. 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. during the implementation stage (upto 5 years) • Mega projects will be offered a unique package of concessions for a maximum period of 8 years. Furthermore. including captive generation sets. To upgrade and maintain infrastructural facilities on a sustainable basis. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.33 The Assessment | Karnataka • Thrust on provision of world-class infrastructural facilities for industries with active participation of private sector/industry. All rights reserved. concession on stamp duty and registration charges.
Small & Medium Enterprises Development Act. 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. 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. 2009-2014 © 2009 KPMG. 5 State Policy for Special Economic Zones 2009 6 Karnataka Industrial Policy. Small and Medium Enterprise (MSME) Policy Highlights6 The state government has proposed various measures and policies in the Micro. All rights reserved. . Micro. 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. 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. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. a Swiss cooperative.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.
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. During the April–September 2008.7 2008 (Apr.517 4.984 123. .) 113 377 . 118 IEMs have been issued as against 113 IEMs for the same period during the previous year. to Sept. All rights reserved.862 7 .961 persons. Proposed Investment (in billions) 2. acts as the single point of clearance for SEZ developers and co-developers. during April to November 2008. to Sept.027 Source: Technical Consultancy Services Organization of Karnataka (TECSOK) Further. Single Window Clearance Facility .44 9 4.68 2007 (Apr.a. The state government heavily focuses on developing an equipped workforce supported by a well-defined industrial and financial policies. 2002 the state constituted the State High Level Clearance Committee which.3 8.2 12.13 5 0.49 10 1.29 10 . an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. however.In the Karnataka Industries (Facilitation) Act. about 9.289 63.) 118 223.IEMs Filed b.0 Growth Impetus Karnataka provides a transparent policy framework and a supportive business environment which is designed to encourage entrepreneurship and industrialization. entrepreneurs continue to cite infrastructure as constraining factor in Karnataka.398 76. Proposed Investment (in billions) 2006-2007 277 718.961 6.7 14.399 11. Particulars 1.06 2007-2008 208 1676. a Swiss cooperative.580 57 . © 2009 KPMG. Letters of Intent and Direct Industrial Licenses b.289 small scale industries were registered generating employment for 63.a. 2006-07 2007-08 2007 SSIs Registered Employment Investment (INR billion) Source: Economic Survey of Karnataka 2008-09 April to November 2008 9.
information technology. a Swiss cooperative. the state has set up six training institutes10. 2008-2009 9 The State Budget.36 The Assessment | Karnataka The State High Level Clearance Committee approved 1. Of these. are intensely focused on financing schemes for infrastructural development projects including tourism.2 billion in 2007-08. power. Active Focus on Skill Development and Training . 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. set out several sectoral policies for developing roads. These institutes impart periodical training to sericulturists. there are 5. an increase of 19. healthcare.46 Employment (In No.23 103.818 projects with an aggregated investment of INR 255.5 billion as against INR 3. Economic Survey of Karnataka.s) 731750 349665 86546 Source: Industry Overview. Economic Survey of Karnataka. Projects Approved by the State Level Single Window Clearance Committee from 2006-2008 (Oct. and ports.) Year 2006-2007 2007-2008 2008-2009 Approved Projects 881 728 209 Investment (in billion) 119. 2008-2009 © 2009 KPMG. entrepreneurs and licensed seed preparers. 7 Institutional Finance Overview.7 billion as of March 20088.09 33. 3. which primarily engage in developing MSMEs and large scale industries.280 of bank braches located across state as against 755 branches at the time of nationalization (1969). It is anticipated that the loans made by KSFC will reach INR 6. All rights reserved. 2008-2009 8 Institutional Finance Overview. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. The Karnataka State Financial Corporation (KSFC) and the Karnataka State . Initiatives Focused on Infrastructure Development .78 billion which is expected to provide employment opportunities for about 1. As a part of this.304 bank branches are located in rural and semi urban areas.The state government is investing in creating the required facilities for training people on certain key skills.2 million persons upon implementation. textiles.27 per cent9. food processing. insurance.Industrial Investment & Development Corporation (KSIIDC).As a part of the infrastructure policy 2007 the state government has . As of March 2008.0 billion against INR 336. and agro-based insurance. indicating a well distributed credit delivery system7. reelers. 2008-2009 10 Industry Overview. Economic Survey of Karnataka. Economic Survey of Karnataka.
All rights reserved. informatics. Roads and power at competitive prices and creation of infrastructure ahead of development. The state proposes to create employment opportunities through industrial growth in the state and several sectors have been identified as thrust areas. 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. Karnataka has been the forerunner in the field of IT/ITES. 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.37 The Assessment | Karnataka The Entrepreneurs’ Viewpoint One of India’s fastest growing states. The entrepreneurs recognize the proactive attitude of the state government and appreciate the sector friendly policies specifically in the IT/ITES sector. a Swiss cooperative. precision tooling and tool room industries. The entrepreneurs also acknowledge various programmes to help entrepreneurs set up new businesses in rural areas by providing funds. While the entrepreneurs understand that the state has many more critical issues to tackle on the overall development. The state is focused at achieving growth through industrial development and has the right vision. It has been proactive in inviting the private sector and was among the first to invite private investment in the education sector. The Government’s Viewpoint Karnataka is focused on improving its investment climate. availability of basic infrastructure – Water. 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. 10 Industry Overview. units manufacturing pollution control and effluent treatment plants. The government is initiating schemes and simplification of processes to enable domestic and foreign investment and provide an enabling environment. the state has attracted investors and has seen a steady increase in Foreign Direct Investment (FDI) inflow in recent years. telecommunication. The wish list of entrepreneurs includes clarity and faster resolution of land titles. With its encouraging policies and favourable environment. The state offers incentives such as tax exemptions for investment in these sectors. the implementation of these has been questioned by the entrepreneurs. 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. These sectors are electronics. they expect the government to create an enabling environment for people to harness opportunities. equipment and appliances and biotechnology. 2008-2009 © 2009 KPMG. ready made garments including leather garments. 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. However. The state is believed to be well intentioned with initiatives. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. . Economic Survey of Karnataka. Karnataka is keen to promote itself as the destination for domestic and foreign investment to catalyse industrial growth.
1 Sectors which have largely gained by the FDI in the State include automobiles and auto components. pharmaceuticals and biotechnology. engineering. petrochemicals. consumer durables. Economic Survey. 2008-09 Source: Maharashtra Economic Survey. a Swiss cooperative. 2008-09 © 2009 KPMG. information technology. 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. financial services. All rights reserved. . To achieve this consistent and impressive growth by creating a favorable environment for investment. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. the Maharashtra State Government has issued the industrial policy.Maharashtra Population 96. chemicals.9 million (as per 2001 census) Per Capita Net State Domestic Product Job creation Trend Source: Maharashtra Economic Survey. 1 Directorate of Economics & Statistic Maharashtra.96 billion during 19912008. electronics hardware. Its strong financial infrastructure has also made it one of the most attractive states for FDI in India. It has received an investment of INR 750.
elimination of octroi on telecom equipment for units built in IT Parks • Lower Property Taxes . research and development and technology up gradation for strengthening the SME sector • New industries establishing in C. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. permitting software industry in residential areas. IT/ITES. suitable permissions to develop communication • Permission of flexibility in working hours and relaxation of Labor laws 2 Government Of Maharashtra. 2006 3 Government Of Maharashtra. Biotechnology and Infrastructure as thrust areas for the industrial policy • It will provide quality competitiveness. 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. 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. IT and ITeS Policy. . D. D. 2003 © 2009 KPMG. Industrial Policy Of Maharashtra.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. a Swiss cooperative.same as residential rates • Minimal Sales Tax rates on locally procured capital goods • Power supply at 'industrial rates' • Non-fiscal incentives including additional FSI.
The action points of the policy also include strengthening of Bed and Breakfast schemes and conservation of World heritage sites. octroi refund • Development of Biotech Parks and Biotech Resource Centre • Special incentives to promote setting up of biotechnology parks. a Swiss cooperative. technology up-gradation. 2006 © 2009 KPMG. 2006 6 Government Of Maharashtra. upgradation of skill sets of those employed in MSME enterprises and marketing. .5 0.10 0. stamp duty and registration fees exemption. 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. SEZ policy of Maharashtra provides attractive incentives as follows: • Hundred percent exemption from Stamp Duty and Registration Fees • Permission for Captive Power Generation Micro. Tourism Policy. 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. encouraging private participation in capacity building related to tourist accommodation. hosiery and knitwear SSI units Incentives to promote quality competitiveness.50 4 Government Of Maharashtra. Bio Tech policy. Small and Medium Enterprise Policy highlights6 Government is planning to initiate measures for availability of cheap and timely finance. All rights reserved.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.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. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. etc. • 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. and the Maharashtra Biotechnology Commission • Fiscal benefits including electricity duty. 2008-09 Subsidy (%) 5 50 25 50 Limited to (INR Million) 2. recreation facilities. 2001 5 Maharashtra Tourism Development Corporation.50 0. Industrial Policy Of Maharashtra.
etc.13 million. Apart from this.4 Job creation (in million) 0. Mumbai is emerging as a global financial hub and back office for major companies like Morgan Stanley. 2008-09 9 Directorate of Economics & Statistic Maharashtra. the separate policy for bio-tech has enabled the development of bio-Tech parks in the State at Jalna and Hinjewadi (Pune).8 Private IT Parks Functional Development stage (LOI) Number 53 300 Investment (INR billion) 22. a Swiss cooperative. about 16 biotech SEZs are proposed in the State with likely investment of INR 64 billion and estimated employment generation of 0. Credit Suisse. removed restrictions on investments and facilitated easy access to foreign technology and direct investments. 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.48 billion during same period. Maharashtra received 384 proposals for IEMs with an investment of INR 509.41 The Assessment | Maharashtra The Policy Impact Maharashtra is one of the leading states in terms of the investment received during Jan-Aug 2009. About 36 public IT parks have been developed by MIDC and CIDCO and 353 private IT parks have been approved. JP Morgan. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. the state captured almost 21 percent of total investment proposals made in the country. Economic Survey.43 Employment 423. All rights reserved.7 The implementation of a specific policy for IT has lead to an emergence of IT parks in the state.65 Source: Maharashtra Economic Survey. .9 Growth Impetus Maharashtra provides a business-friendly environment. 2008-09 10 Directorate of Economics & Statistic Maharashtra. Maharashtra -One of the most industrialized state The State’s industrial policy has minimized the industrial licensing requirements.10 The industrial investments in the state are as follows: Approved Projects Category Number MOU 113 Investments (INR Billion) 1234. Monthly Magazine . quality infrastructure with proactive government policies and highlyskilled and trained workforce in the industrial units. Economic Survey. September 2009 8 Directorate of Economics & Statistic Maharashtra. 7 Department of Industrial Policy and Promotion. 2008-09 Additionally.811 Source: Maharashtra Economic Survey. 2008-09 © 2009 KPMG.122 0. The CAGR for investment in projects registered and commissioned during 2004-05 to 2008-09 is 16. 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 2008-09.49 158.1 percent.
497 Capacity Admitted students 11. there is limited awareness among entrepreneurs of these incentives. These SEZs are likely to require an investment of INR 1487 billion with an . mentoring opportunities initiated both by established entrepreneurs. 2008-09 SEZs 52 17 64 The Entrepreneurs’ Viewpoint The state government is seen as taking increased interest in promoting the growth of entrepreneurship. . Even though the private sector is doing its bit in the area of funding.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.22 employment creation of 6. Economic Survey.12 Industries IT sector multi-product single product Source: Maharashtra Economic Survey.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.130 120 120 416 71.595 121 121 337 61. Further. All rights reserved. roads. buildings. Individuals are being encouraged to form new businesses and are being provided such government support as tax incentives. 2008-09 Institutions 37 2 2 10 407 14. and a communication system to facilitate this creation process. Economic Survey. However. Entrepreneurial growth in the state is also not uniform with limited reach in rural areas and wide disparity between the rural and urban areas. 2008-09 © 2009 KPMG. There are too many regulatory hurdles which an entrepreneur goes through. The entrepreneurs believe that the environment is still not conducive for entrepreneurs.63 billion for higher & technical education in 2008-09. the entrepreneurs expect the state to create an innovation fund where the government sets aside a non-refundable innovation corpus or seed fund.11 Faculty Engineering Management Sciences Hotel Management & Catering Technology Pharmaceutical Science Industrial Training Institutes Source: Maharashtra Economic Survey. The state government has created a budget provision of INR 24. Funding and mentoring are seen as key to entrepreneurial growth. the government is not seen as doing much to help them. while the state government is developing its own innovative industrial strategies for fostering entrepreneurial activity. independent bodies and government are seen as a dire need that is key to creating a lasting entrepreneurial impact in the state. Government is seen as lagging behind in its role as a facilitator. 2008-09 12 Directorate of Economics & Statistic Maharashtra. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International.104 million jobs. a Swiss cooperative. 11 Directorate of Economics & Statistic Maharashtra.
. textiles. orderly growth in industrial areas in the state. IT and ITES sectors are concerned. The government is focussing on specific sectors and formulating its growth strategies. is creating a policy framework to foster business growth. However. it aims to create sufficient employment opportunities by encouraging wider geographic spread of these industries. a Swiss cooperative. it needs to involve its entrepreneurs and business community at large to truly transform itself. It provides developed plots with necessary infrastructure facilities like internal roads. the lack of information dissemination and the expectation from entrepreneurs are still not met. Maharashtra with its strong position as the financial hub of the country and the reputation of being one of the most industrialized states. © 2009 KPMG. the government's strategy involves systematic efforts to keep up the current industrial momentum. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. As far as the financial services. the state government plans to strengthen these sectors and develop a strong customer base. automobiles and auto components. petroleum.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. which provides useful information required by entrepreneurs interested in setting units in different parts of Maharashtra. water. engineering. Addressing the concerns of its entrepreneurs. All rights reserved. While the state has the appropriate impetus. Regarding the tourism and biotechnology sector of Maharashtra. It has been proactive in developing a website. Maharashtra Industrial Development Corporation (MIDC) has been trying to foster rapid. In respect of its existing industries which includes chemicals. electricity and other internal services to entrepreneurs in the industrial areas. It has developed sector specific industrial areas.
highly-regulated economy to a high-growth country is now well known.44 Creating an Entrepreneurship Culture A snapshot of entrepreneurial leading practices India exerted greater effort to promote and nurture entrepreneurship. All rights reserved. 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. The leading practices listed below are specific to a particular state. however. education and nurturing. . Businesses. India’s journey from a slow growth. 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. While this is not an exhaustive list. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. but many impediments to starting and growing a business remain well entrenched – if not in policy. within its region and with itself. 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’. 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. Many policies and regulations have fallen by the wayside over the last two decades. inclusive growth. 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. a Swiss cooperative. these can be replicated by other states in the country to foster entrepreneurial growth. The attempts fall under three main categories: removal of stateimposed barriers for starting businesses: availability of finances. then in practice. 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. D. D. these initiatives undertaken by various states exemplify their respective will to create opportunities for growth by enabling cross sector development. improved efficiency or market alignment. Attempts at various levels have taken place to directly or indirectly promote entrepreneurship. India now competes with the world.
.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. 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. upto 50 percent of the cost of filing a patent or INR 0. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. All rights reserved. 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. 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. introduction of strict inspection and certification systems The state is hosting the 2010 Commonwealth Games. a Swiss cooperative.2 million. 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. 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. Financial assistance to technology innovators or stand alone R&D units or individuals for innovations capable of industrial application. 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. strengthening the pollution norms.
a study shows that every year.000 of them would ultimately become high-growth companies. 4 out of 10 adult Filipinos. These economies have created a very conducive environment for entrepreneurship. and AMEX equity markets. Similarly in the Phillipines. The key practices mentioned in the following table have been used in these economies to establish a robust entrepreneurial ecosystem. There are over 100 Israeli ” businesses that trade on the NYSE. The smaller companies and start-ups in Singapore enjoy the world’s lowest effective tax rates. 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.2 percent) of the whole country population. In America. Outside of Canada. SMEs account for 2/3 of jobs created and more than half of their GDP . Singapore and the Philippines As we understand the good practices being followed in Indian states. © 2009 KPMG. Singapore has been ranked by the World Bank as the world’s easiest place to do business for three years running.46 Global Experience: A snapshot of entrepreneurial leading practices in Israel. It takes less than 15 minutes and USD 300 to register a company in Singapore. NASDAQ. . These practices are set out as examples of practices that can be incorporated by India. Israel is at the forefront of technology. a Swiss cooperative. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. there were 600.000 new firms formed and 1. This ranks the Philippines second among countries with most individuals owning a business according to the Global Entrepreneurship Monitor Further. contributing to 1/3 of the GDP growth. In Singapore. aged 18 to 64 are engaged in business. 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. All rights reserved. These countries have benefited greatly from promoting entrepreneurial growth. which approximates around 19 million (39. Israel is known as “Silicon Valley II. there is no other country that has more companies represented This is a tremendous achievement for a small country like Israel.
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. Government seed fund . It takes less than 15 minutes and USD 300 to register a company in Singapore. Providing up to 85 percent of the approved R&D expenditure. . 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. Magna Carta for Small Enterprises is a landmark legislation. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Singapore has been ranked by the World Bank as the world’s easiest place to do business for three years running. 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).Incubators that provide a supportive framework for technological ideas by entrepreneur. a Swiss cooperative.Coordination of government efforts Promotion of mutually beneficial linkages among small and large firms: Promotion of industrial-subcontracting exchange schemes.government matching investment in a startup company. This Law is guided by three principles in setting the pace for small and medium enterprise development: . establishment of linkages and cooperation between small. and.Participation of private sector in the implementation of SME policies and programs .Minimal set of rules and simplification of procedures and requirements. All rights reserved. which provides equity financing with third-party investors to small start-ups. . medium and large firms Improving access to finance: Innovative financing schemes using non-traditional sources and schemes such as cooperatives and associations. equity financing and venture capital. strengthening of SME associations. respectively.47 Leading Practice Technological incubators . proportional to the investment of an investing entity Entrepreneur friendly procedures.
All rights reserved. That is.48 Conclusion and Policy Implications In summary. Entrepreneurship is rooted in education. entrepreneurs in the country still face tremendous challenges. a two-pronged policy effort should be considered in addressing enterprise development. policy and implementation should help support the following objectives: Improve the quality. thereby creating more opportunities. a general improvement of entrepreneurial frameworks is necessary to provide a more conducive environment. policies. While financing consistently emerges as the top challenge of firms. 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. Equal importance needs to be given to efforts focusing on future entrepreneurs. deliberate efforts are needed to make banks and angel networks more responsive to the particular needs of startup enterprises. availability and accessibility of financing In particular. Enhance business growth potential of existing companies There is a need to assist existing high potential businesses in realizing that potential. especially nascent businesses. programs and interventions should focus on both improving existing businesses and developing the capacity of future entrepreneurs. it needs to be imbibed and understood on the basis of its deeper significance beyond income generation. . a Swiss cooperative. 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. 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. culture. pride and good citizenship. there is a need. In both cases. 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. Thus. Accordingly. values and attitudes that must be nurtured from an early age. While the country has seen a surge in entrepreneurial activity in the recent past much scope remains for improving entrepreneurship quality and momentum. 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. It is incumbent on both. Strengthen entrepreneurial values and attitudes Emphasize the critical role of state governments State governments need to play a stronger role in enterprise promotion. A responsive . but to create wealth. For such transformation to happen there needs to be support both at the governmental and societal level. marketing and legal assistance in order to sustain themselves and grow. but to create jobs. © 2009 KPMG. Along with improved access to technology. in order to overcome some of the traditional barriers to enterprise development. support and development. 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. For the government it is important to realize that the goal of small business owners is to remain self-employed. While certain larger business support programs can be effectively run by the national government agencies. Consequently. state governements are better-placed to provide a conducive environment for enterprise development. . eliminate unnecessary obstacles to setting up a business and provide an encouraging environment for healthy business growth. As part of their efforts to expand their local economies and reduce poverty among their populace. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. a Swiss cooperative. state governments themselves would need training on how to effect such an entrepreneurial orientation.e. There should be a deliberate effort to transform the educational system at all levels to foster an entrepreneurship culture. 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. 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. not just earn incomes. governments need to take a proactive businesspromotion orientation. decisive and open government is critical to rapid entrepreneurial growth. On the other hand. through curriculum design and appropriate pedagogical approaches. Conclusion There are ample opportunities for enterprenurs in India and such opportunities if leveraged have the potential to transform India. trade and exchange rate policies) and assistance in export market promotion. the entrepreneur and the government. Schools must lead students to aspire not only to seek jobs upon graduation.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. this requires a deliberate mix of the appropriate macroeconomic policy environment (i. along with concrete approaches and mechanisms for creating a business-friendly environment. facilitate business opportunities. Several companies have markets beyond their regions that are currently underexploited. All rights reserved. Education must also instill a sense of innovation and risk-taking. to recognize that a symbiotic partnership is necessary to help the growth of business and of the nation.
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. 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. this white paper studies select Indian states in detail and bring forth the state’s perspective. The study also brings together the data that can be further studied for pursuing special policy focus. The entrepreneurs indicate what policy or program changes they believe would enhance the country’s environment for entrepreneurship. All rights reserved. Unlike past studies on Indian entrepreneurship which surveyed entrepreneurs across the country. 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. a Swiss cooperative. The study endeavors to uncover factors leading to appropriate levels of Entrepreneurship. This paper should allow us to reassess and renew our efforts in addressing the situation. 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. Philippines and Israel.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. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. © 2009 KPMG.
000 people working in member firms around the world. The firms in India have access to more than 2000 Indian and expatriate professionals. Kolkata. a Swiss cooperative. All rights reserved. Hyderabad. a Swiss cooperative. performance-based. in India. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. markets and competition. Chennai. many of whom are internationally trained. providing detailed knowledge of local laws. The Indian member firms affiliated with KPMG International were established in September 1993. Tax and Advisory services. KPMG has offices in India in Mumbai. regulations. industry-focused and technology-enabled services. Pune and Kochi. As members of a cohesive business unit they respond to a client service environment by leveraging the resources of a global network of firms. We operate in 140 countries and have 135.000 international and national clients. © 2009 KPMG. We provide services to over 2. . which reflect a shared knowledge of global and local industries and our experience of the Indian business environment. We strive to provide rapid.51 About KPMG in India KPMG is a global network of professional firms providing Audit. Each KPMG firm is a legally distinct and separate entity and describes itself as such. Delhi. The independent member firms of the KPMG network are affiliated with KPMG International. Bangalore.
Mentoring and Networking: • Educating . 15 TiE chapters in India collectively roll-out 300+ programs for entrepreneurs every year. Tech & Media. Human Capital. KPMG. All rights reserved. TiE offers a rich resource pool to an entrepreneur. Cleantech. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. e. SIDBI.52 About TiE (The Indus Entrepreneurs) TiE in its 17 years of existence. CII. Academia (IIT. SP Jain and many others). ICICI Bank. Welingakr. . 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. a Swiss cooperative. FICCI. service providers • Networking Holds regular conferences. With 53 chapter (15 in India) across 13 countries and 15. • Purpose above activity to constantly challenge status quo and build innovative. has today emerged as the world’s largest non-profit global network of Entrepreneurs and professionals. TiE’s mission is to foster conscious entrepreneurship globally by Educating.g. 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.Provides role models and one-on-one mentorship through experienced entrepreneurs and support system like VCs.000+ members worldwide. 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. Social Enterprise.g. workshops. dedicated to the advancement of entrepreneurship. and networking meetings providing a platform to forge relationships.Inspires and educates budding entrepreneurs • Mentoring . © 2009 KPMG. sustainable platforms /programs to foster entrepreneurship through advocacy.
an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Pradip Kanakia (KPMG in India). Pradeep Saluja (all from KPMG in India) and all TiE chapters in India. Manak Singh (all from TiE) To all government officials from the six states profiled in the study. R. Sameer Bhatnagar. Sridar Iyengar (President .TiE Mumbai) . a Swiss cooperative. Ruchika Anand. Pallavi Phatak.Ramaraj. Pradeep Udhas (Greater Pacific Capital). Jehil Thakkar (KPMG in India). Pradip Kanakia. Geetika Dayal.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. Vivek Atray. Anu Sutaria. . Neha Sangal (KPMG in India) © 2009 KPMG. All rights reserved. Manika Jauhari. Manish Agarwal. Pradeep Kar. Puneet Vatsayan. Manish Sharma. 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). Jiten Ganatra and Nisha Fernandes (KPMG in India) Special Thanks Editing and Report Creation Jehil Thakkar. Shivneet Singh. Chirag Mehta. Vimal Shah (Akruti City). Pradeep Gupta.
org +91 79 3294 3095 Bangalore info@tiebangalore. 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.com +91 484 324 8735 Kolkata tie. © 2009 KPMG.com KPMG Contacts Vikram Utamsingh Head .email@example.com +91 712 646 4066 Patna firstname.lastname@example.org The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity.com TiE Chapters in India Ahmedabad badri. a Swiss cooperative.tie.tie.org +91 40 6451 3397 Kerala tiekerala@yahoo. a Swiss cooperative.tie.org +91 22 4220 0100 Nagpur info.org +91 98842 84578 Delhi email@example.com +91 612 222 1374 Rajasthan zulfi@tiejaipur.Markets +91 22 3090 2320 firstname.lastname@example.org@email@example.com +91 80 4147 4567/69 Chandigarh info@tiechandigarh. an Indian Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International. Although we endeavor to provide accurate and timely information.com +91 33 6454 3361 Mumbai firstname.lastname@example.org +9198807 65246 Hyderabad email@example.com Jehil Thakkar Executive Director Markets +91 22 3090 1670 firstname.lastname@example.org@up. . No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.org +91 172 500 7000 Chennai sharon. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International.org +91 141 510 4464 UP email@example.com +91 120 406 6500 Hubli firstname.lastname@example.org.
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