Boom of Entrepreneurship in India
Created on 15 Mar 2023
Wraps up in 7 Min
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Updated on 15 May 2023
The booming entrepreneurship culture in India is a relatively recent phenomenon, having taken off in the early 2000s. This is largely due to the growth of the Indian economy, which has opened up more opportunities for entrepreneurs to start their own businesses. The availability of venture capital, the emergence of incubators, and the availability of a large pool of talented individuals have all contributed to the growth of entrepreneurship in India.
As you read this, are you curious about what it means to be an entrepreneur?
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The quote by Ratan Tata captures the spirit of entrepreneurialism in India- "Entrepreneurialism in India is not just about creating successful businesses. It is about creating innovative solutions that bring benefits to both business and society. It requires foresight, dedication and most importantly, the willingness to take risks."
Entrepreneurship in India has been the driving force behind the country's rise to become a global economic powerhouse, with its potential to create jobs and stimulate economic growth. With its vast potential, entrepreneurship in India is an idea whose time has come and one that will continue to be an important part of the country's growth and development.
Rise of Entrepreneurship in India: A GEM Report
As per the Ministry of Skill Development and Entrepreneurship and the Global Entrepreneurship Monitor (GEM), you may be familiar with the Ministry of Skill Development and Entrepreneurship, but you may be thinking, "What is GEM?" Let me help you with a short description of it.
The Global Entrepreneurship Monitor (GEM) is an international project that aims to provide data on countries' entrepreneurial landscapes.
According to the GEM India Report (FY 21–22), India's entrepreneurial activity increased in 2021, with the country's total entrepreneurial activity rate (the percentage of adults (aged 18–64) who are starting or running a new business) rising to 14.4% in 2021, up from 5.3% in 2020.
Furthermore, the established business ownership rate (the percentage of adults (aged 18–64) who are currently the owner-managers of an established business, i.e., owning and managing a business that has paid salaries, wages, or any other payments to the owners for more than 42 months) rose to 8.5% in 2020 from 5.9%.
A surge in early-stage entrepreneurial activity in India in 2021 could be the result of pent-up demand and subsequent opportunities created by the reduction in COVID-19 risk, which harmed the Indian economy in 2020.
Government Initiatives to Support Startups
India is gradually establishing a robust startup ecosystem. The government set up a ministry (department) that focuses on helping new businesses in order to promote and support entrepreneurs. Furthermore, the Central Government of India has implemented numerous schemes to promote entrepreneurship in India and financially assist emerging startups.
The government has also launched a number of initiatives to provide seed capital and other financial assistance to startups. Incubators and accelerators have also been established by the government to assist startups with mentoring, networking, and resource access. These incubators and accelerators provide startups with the infrastructure and assistance they need to develop their ideas and products.
Programs Launched as Part of the Startup India Initiative
The following are the specifics of the government's various programmes to promote startups across the country as part of the Startup India initiative:
1. Startup India Action Plan: On January 16, 2016, a Startup India Action Plan was unveiled. The Action Plan comprises 19 action items spanning across areas such as "simplification and handholding", "funding support and incentives" and "industry-academia partnership and incubation". The Action Plan laid the groundwork for the government's support, schemes, and incentives aimed at creating a thriving startup ecosystem in the country.
2. Fund of Funds for Startups (FFS) Scheme: To meet the funding needs of startups, the government established FFS with a corpus of ₹10,000 crore. The monitoring agency is DPIIT, and the operating agency is the Small Industries Development Bank of India (SIDBI). Based on the progress of the scheme and the availability of funds, a total corpus of ₹10,000 crore is expected to be provided over the 14th and 15th Finance Commission cycles. It has not only made capital available for startups at the seed and growth stages, but it has also acted as a catalyst in terms of facilitating the raising of domestic capital, reducing reliance on foreign capital, and encouraging homegrown and new venture capital funds.
3. Credit Guarantee Scheme for Startups (CGSS): The government has set up the Credit Guarantee Scheme for Startups to provide credit guarantees on loans made to DPIIT-recognised startups by Scheduled Commercial Banks, Non-Banking Financial Companies (NBFCs), and Venture Debt Funds (VDFs) under SEBI-registered Alternative Investment Funds. The purpose of CGSS is to provide credit guarantees up to a certain limit against loans extended by member institutions (MIs) to finance eligible borrowers, namely DPIIT-recognised startups.
4. Regulatory Reforms: Since 2016, the government has implemented over 50 regulatory reforms to improve the ease of doing business, the ease of raising capital, and the compliance burden on the startup ecosystem.
5. Ease of Procurement: To facilitate procurement, central ministries and departments have been directed to relax the prior turnover and prior experience in public procurement requirements for all DPIIT-recognized startups, subject to meeting quality and technical specifications. Additionally, the Government e-Marketplace (GeM) Startup Runway has been created, which is a dedicated section for startups to sell products and services directly to the government.
These are the five major Startup India schemes. Startup India schemes are offering a wealth of opportunities to young entrepreneurs. With these schemes, they can acquire specialised skill sets, find new job prospects and create businesses that will benefit not only their own lives but also the economy. This will lead to increased foreign investment, a higher GDP, and a heightened standard of living. With each new startup, the number of job opportunities and the specialised skill sets available will be expanded, resulting in greater economic growth and development.
Importance and Working of Entrepreneurship
Entrepreneurship is critical for economic growth and development because it drives innovation, creates jobs, and boosts competitiveness. Entrepreneurs take risks in order to start and operate new businesses, developing new products or services that meet consumers' needs and desires.
Entrepreneurship has played a significant role in India's economic growth. It has created jobs for millions of people and contributed to the diversification of the economy. It has also created new markets and opportunities for foreign investment.
For example, Flipkart, founded by Sachin Bansal and Binny Bansal, began as an online bookstore and has since grown to become one of India's largest e-commerce companies.
Another example is Ola, which was founded by Bhavish Aggarwal and Ankit Bhati and has revolutionised the Indian transportation industry by offering affordable ride-hailing services.
Entrepreneurship works by identifying opportunities and taking calculated risks to capitalise on them. Entrepreneurs must be visionary, creative, and open to learning and adapting to changing market conditions. They must also be able to effectively manage resources and build a strong team to support their business.
The Essential Traits of an Entrepreneur
Some traits of successful entrepreneurs, along with examples of Indian startups:
1. Resilience: Entrepreneurs who are successful are resilient and able to recover from setbacks. They possess the capacity to persevere through difficulties and continue forward motion.
Example: Byju's, an Indian ed-tech startup, faced multiple challenges in its early years, including difficulty securing funding and building a user base. However, the company remained resilient and is now valued at over $16 billion.
2. Innovation: Entrepreneurs who are able to innovate and think outside the box can create unique products or services that stand out in the market.
Example: Example: Ola, an Indian ride-hailing platform, was founded in 2010 as an alternative to traditional taxis. The company's innovative business model has helped it become one of India's most successful startups.
3. Customer Focus: Successful entrepreneurs are often customer-focused, understanding the needs and preferences of their target audience.
Example: Zomato, an Indian food delivery platform, has built its business on providing customers with a seamless and convenient experience. The company has expanded rapidly in recent years and is now worth more than $5 billion.
4. Risk-taking: Entrepreneurs who are willing to take risks and pursue bold ideas can create new opportunities and disrupt established industries.
Example: Paytm, an Indian digital payments platform, was founded in 2010 when digital payments in India were still in their infancy. The founders of the company took a risk on a new and untested business model, which has paid off handsomely. Paytm is now one of the most valuable startups in India.
5. Adaptability: Entrepreneurs who are successful must be able to adapt to changing circumstances and respond to new challenges.
Example: during the COVID-19 pandemic, PharmEasy, an Indian healthcare startup, was able to pivot its business model to meet the growing demand for online medical consultations and prescription delivery.
These are just a few examples of Indian startups that demonstrate some of the characteristics of successful entrepreneurs. Each of these companies has demonstrated the ability to innovate, adapt, and take risks in order to achieve its objectives.
The Bottom Line
To start a business, we require four essential components: land, labour, capital, and an entrepreneur. Everyone works, but what makes an entrepreneur stand out is their capacity to take chances, spot opportunities, and spot gaps in the market.
This is what distinguishes an entrepreneur from the crowd and places them in a position to inspire the populace with their ideas, thereby boosting the nation's economy and labour force.
Entrepreneurs' ability to solve creative problems sets them apart from the competition. Because they constantly push the envelope and create new opportunities, business owners are critical for economic growth.
Entrepreneurs come from a variety of backgrounds and industries, and their ideas and innovations can benefit everything from small local businesses to massive multinational corporations.
However, the effects of entrepreneurship go beyond monetary gain and job creation. By promoting sustainability, social responsibility, and ethical practices, entrepreneurs can also act as catalysts for social change.
Additionally, entrepreneurship can have a snowball effect, inspiring and enabling others to follow their passions and create new career paths.
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