Entrepreneurship in India

India was second among all nations in Total Entrepreneurship Activity as per the Global Entrepreneurship Monitor Report of 2002. But after several years of data, India appears to have a TEA level rather close to the world average.

India is ninth in the Global Entrepreneurship Monitor (GEM) survey of entrepreneurial countries. It is highest among 28 countries in Necessity based entrepreneurship, while 5th from the lowest in opportunity based entrepreneurship.

The liberalization, which was started in 1991, and the Information Technology boom of the mid-late 90’s, have been significant factors, leading to a wave of entrepreneurship sweeping through the country.

Indians have entrepreneurial capacity. However the society and government are not very encouraging towards entrepreneurship. To a large extent, the Indian society is risk averse. People usually seek secure and long-term employment, such as government jobs. The physical infrastructure needs to be improved. Social Attitudes, lack of capital, inadequate physical infrastructure and lack of government support are major factors of hindrance.

India is the fifth largest economy in the world (ranking above France, Italy, the United Kingdom, and Russia) and has the third largest GDP in the entire continent of Asia. It is also the second largest among emerging nations. The liberalization of the economy in the 1990s has paved the way for a huge number of people to become entrepreneurs.

Over the years India and China have followed opposing strategies for development. While China’s growth has been fueled by the heavy dose of foreign direct investment, India has followed a much more organic method and has concentrated more on the development of the institutions that support private enterprise by building a stronger infrastructure to support it.

Its corporate and legal systems operate with greater efficiency and transparency than do China’s. The Government has encouraged entrepreneurship by providing training and also the facilities to succeed, particularly in the rural areas. One style of innovation that really works in a country as large and diverse as India, is grassroots innovation: this includes inventions for a milieu that is quintessentially Indian.

Moreover, in India, the post-liberalization and globalization era has brought with it a growing middle class – roughly estimated to be 250 million – and rising disposable incomes. This presents a huge potential, which if tapped can be a veritable gold mine. Entrepreneurs can make the best of this by catering to various demands of this segment. India, with its abundant supply of talent in IT, management, and R&D, has become the hot bed of outsourcing of services from all parts of the globe where companies can reduce their costs, but not their quality [If the foreign company chooses the right Indian partner].

In terms of improvement, there needs to be an increase in the quality and quantity of VC / Angel Investors in India. Also, the Governments need to still continue reducing the administrative burden on entrepreneurs, and coordinate among their agencies to ensure that the necessary resources are directed where they are needed. The physical infrastructure needs to be improved. Socially, the Indian society is adapting to a more risk friendly environment and also looking for jobs in the private sector.

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