Entrepreneurship is a critical element in the growth of an economy. It is estimated that there are about 20 million entrepreneurs in the US. India ranked second in Total Entrepreneurship Activity (TEA) according to the Global Entrepreneurship Monitor Report for the year 2002. Subsequently, India slipped in TEA rankings.
For its size, India has lower number of startup entrepreneurs. In spite of the shortcomings, it ranked ninth in the survey of entrepreneurial countries by Global Entrepreneurship Monitor (GEM). India ranks the highest among a group of countries in necessity-based entrepreneurship, which is associated with developing countries. Conversely, it ranks fifth from the bottom in opportunity-based entrepreneurship.
Liberalization of economy started by the PV Narasimha Rao government in 1991 and the Information Technology boom of the mid and late 90’s have ushered in tremendous changes and set the stage for a wave of entrepreneurship taking India by storm. The capacity of Indians for entrepreneurship is substantial. However, the society and government have not been very encouraging towards entrepreneurship in India.
One of the major hindrances faced by the Indian entrepreneur is that of capital. It is worth noting that there is greater willingness among people to invest capital in enterprises that are already established than in startups. The number of venture capitalists or angel investors in India is very low. Another factor that has been hindering entrepreneurship in India is the lack of mentors – very few success stories which could inspire youngsters to become entrepreneurs.
By and large, the Indian society is averse to risk. People normally look for long-term and stable employment, such as government and public sector jobs. There is an urgent need to overhaul the physical infrastructure. Social Attitudes, lack of capital, inadequate physical infrastructure and lack of government support are major factors hindering entrepreneurship in India.
There are other factors that have been affecting entrepreneurship in India. The majority of young people coming out of college are inclined towards the IT sector, starving other sectors of critical talent. Most of the talent available in the country is considered to be mediocre and technical talent is scarce. Another factor weighing against entrepreneurship in India is that it is not perceived to be socially glamorous, though the concept is getting accepted slowly.
India’s economy has been growing at a scorching pace. Today, its economy ranks above that of France, Italy and the United Kingdom. Its GDP is the third largest in Asia. Among emerging nations, it has the second largest economy. The liberalization of the economy in the 1990s has enabled a huge number of people to become entrepreneurs. It is to India’s credit that its corporate and legal systems have been operating with greater efficiency. Government needs to make efforts and encourage entrepreneurship by providing training and also facilities, especially in the rural areas.
With a burgeoning middle class, India has a huge potential, which, if tapped, can be a vast market for products and services. Entrepreneurs can prosper by catering to the requirements of this segment. India, with its abundant pool of talent in the IT domain, management, manufacturing and pharmaceuticals, has become the choicest destination for outsourcing of services from all over the world. The scene for Indian entrepreneur is ideal. If he can seize the current opportunity, he can succeed not only in India but also globally.