Growing culture of entrepreneurship

Every day, there is a story on e-commerce startups. This would lead most to believe that India has made its mark on the world’s entrepreneurship landscape. This can be analysed by seeking answers to two key questions: Is entrepreneurship thriving[thrI-ving(growing,पनपना)] in India? Is entrepreneurship sustainable in India?

A large number of startup enterprises are classified as Micro, Small and Medium Enterprises (MSMEs). According to the MSME ministry’s projections, India had 4.88 crore MSMEs at the end of 2014 (35 per cent growth since 2006-07), employing about 11 crore people.

There were more than 17 lakh new firm registrations from 2007 to 2014 clocking a healthy annual growth rate almost 1.5 to 2.5 times the GDP.

A study of the last seven years’ data on new MSME registration across States suggests thatTamil Nadu, Gujarat, Maharashtra and Karnataka recorded among the highest increases in the number of new enterprises. However, there are regional imbalances as nearly 93 per cent of the new enterprises were registered in 10 States in 2013-14.

The reason for this imbalance is the ascendancy[u'sen-dun(t)-see(dominance,प्रभुत्व)] of large States due to their favourable climate for business. India’s federal system of government gives panoptic[pan'óp-tik(extensive,व्यापक)] power to State governments since land, an integral requirement for industrial activity, remains a State subject.

This gives the impression that India does have spirit and momentum for entrepreneurship.

India’s rank of 142 out of 189 countries in ease of doing business (World Bank, 2014-15) carries the unambiguous[ún,am'bi-gyoo-us(Clear,सुस्पष्ठ)] message that there is an urgent need to improve India’s image as a business destination. The Centre has realised that this initiative can be made palmy[paa-mee(successful,सफल)] only by engaging the State governments. It has roped in the department of industrial policy and promotion (DIPP) to initiate a process by which States will be ranked on ease of doing business. This is expected to encourage them to compete with each other for investments.

The State-level mapping is important because it can help investors make a much more informed decision on attractive locations within the country. Although this step was taken only recently, the consequences[ 'kón-si-kwunts(results,परिणाम)] are keenly awaited.

For India to have a sustainable entrepreneurship culture, it is important that its MSMEs continuously innovate. While it appears that India has a gigantic[jI'gan-tik(large,बड़ा)] base of MSMEs, and every year several firms are being set up, India’s rank of 66 out of 142 countries (Global Innovation Index 2013) is a reality check of where Indian entrepreneurism is.

Indeed, business models of many upcoming enterprises in the e-commerce space are a simple replica of existing ones elsewhere in the world; most are aggregation models.

These aggregation-based business models are a phase and in the absence of real innovation at the ground level it will not sustain: after all, entrepreneurship is not just a halo of aggregation.

One point that needs to be kept in mind is that Indian social systems are highly sensitive to failure as we have progressively stigmatised[stig-mu,tIz(defame,कलंकित)] failure.

This is largely due to the resource constraints, which put emphasis on continuous success as the only method of measurement of individual or family success. Although this is slowly changing, we still have to evolve as a society to encourage innovation!

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