Everything you need to know about entrepreneurship development in India. Entrepreneurship development is concerned with the study of entrepreneurial behavior, the dynamics of business set-up, development and expansion of the enterprise.
Entrepreneurship development (ED) refers to “the process of enhancing entrepreneurial skills and knowledge through structured training and institution-building programmes”.
It basically aims to enlarge the base of entrepreneurs in order to hasten the pace at which new ventures are created. This accelerates employment generation and economic development.
Learn about:-
1. Meaning of Entrepreneurship Development 2. Sustainable Entrepreneurship Development 3. Phases 4. Emergence of Entrepreneurial Class in India 5. Locational Mobility of Entrepreneurs 6. Factors in Favour of Entrepreneurship Development
7. Factors Affecting Entrepreneurship Growth 8. Entrepreneurial Performance in India 9. Entrepreneurship Development Cycle 10. Institutions for Entrepreneurship Development 11. Entrepreneurship Development Programmes 12. Ingredients of Entrepreneurial Development Programmes and Other Details.
Entrepreneurship Development in India: Meaning, Phases, Locational Mobility of Entrepreneurs, Factors and Other Details
Entrepreneurship Development in India – Meaning
Entrepreneurship development is concerned with the study of entrepreneurial behavior, the dynamics of business set-up, development and expansion of the enterprise.
Entrepreneurship development (ED) refers to “the process of enhancing entrepreneurial skills and knowledge through structured training and institution-building programmes”.
It basically aims to enlarge the base of entrepreneurs in order to hasten the pace at which new ventures are created. This accelerates employment generation and economic development.
Entrepreneurship development focuses on the individual who wishes to start or expand a business. Small and medium enterprise (SME) development, on the other hand, it also focuses on developing the enterprise, whether or not it employs or is led by individuals who can be considered entrepreneurial. Furthermore, entrepreneurship development concentrates more on growth potential and innovation, than SME development does.
Entrepreneurship is promoted with the aim:
a. To help alleviate the unemployment problem
b. To overcome the problem of stagnation
c. To increase the competitiveness and growth of business and industries.
Various attempts have been made to promote and develop entrepreneurship, by giving specific assistance to improve the competence of the entrepreneur and his/her enterprise, so as to enhance his entrepreneurial objectives and accommodate more people to become entrepreneurs as well.
Entrepreneurship Development in India – Sustainable Entrepreneurship Development
There is a pervasive tendency to equate entrepreneurship development (ED) with self-employment. Many self-employed individuals are indeed entrepreneurs, but all self-employed people cannot be called as entrepreneurs. Their businesses are simply microenterprises in the informal sector, with little growth potential.
The promotion of self-employment is a worthwhile objective, but it should not be confused with ED. Entrepreneurship development programmes that in reality focus only on self-employment are less likely to succeed in creating economic growth.
Features of Sustainable Entrepreneurship Development:
(i) Entrepreneurship development is about helping people start and grow dynamic businesses that provide high value added.
(ii) It looks at potential growth sectors or geographic areas and to explore criteria for selecting beneficiaries who are entrepreneurial.
(iii) An analysis of high-growth economic sectors enables more focused support to entrepreneurs in the most promising sectors of the economy.
(iv) Entrepreneurship development programmes are formulated to identify risks and determine the likelihood of success, identify the factors that affect the levels of entrepreneurship.
(v) An entrepreneurship development programme helps aspiring entrepreneurs to recognize and design unique, innovative business opportunities, based on an analysis of local conditions and their own special skills.
(vi) The programme helps the entrepreneur to diversify based on his/her basic knowledge of a product or skill in a certain sector without distorting the local markets.
Entrepreneurship Development in India – Phases of Entrepreneurship Development: Initial, Development and Support Phase
The three phases of entrepreneurial development are:
i. Initial Phase.
ii. Development Phase.
iii. Support Phase.
i. Initial Phase:
Based on the survey and research an awareness is created on entrepreneurial opportunities. This awareness programme once created motivate the prospective entrepreneurs to come forward to take up some or the other venture.
ii. Development Phase:
Here, the entrepreneurs are thoroughly trained in their chosen field and in various management skills, so that they can manage their business / enterprise profitably and successfully.
iii. Support Phase:
Along with awareness and motivation, necessary support is provided to the entrepreneurs so that they can start their enterprises without any obstacles. Support is provided to various entrepreneurs in the form of financial assistance, infrastructural facilities, counselling etc.
Entrepreneurship Development in India – Emergence of Entrepreneurial Class in India
Some scholars hold the view that manufacturing entrepreneurship in India emerged as the latent and manifest consequence of East India Company’s advent in India. This company introduced various changes in Indian economy through exports of raw materials and import of finished goods to India.
Particularly, the Parsis established good rapport with the company and were much influenced by the Company’s commercial operations. The Company established its first shipbuilding industry in Surat where from 1673 onwards the Parsis built vessels for the Company.
The most important was shipwright Lowjee-Nushirvan, who migrated to Bombay around 1935. He belonged to a Wadia family which gave birth to many leading ship-builders of Bombay. In 1677, Manjee Dhanjee was given a contract for building the first large gunpowder-mill in Bombay for the East India Company.
Besides, a Parsi foreman of a gun factory belonging to the Company established a steel industry in Bombay in 1852. On the basis of these facts, it can be stated that the East India Company made some contribution towards entrepreneurial growth in India. But, whether the Company did it deliberately for the growth of entrepreneurship in India or it was just a coincidence that people came in contact with the Company and entered the manufacturing, nothing can be said with certitude.
The actual emergence of manufacturing entrepreneurship can be noticed in the second half of the nineteenth century. Prior to 1850, some stray failure attempts were, indeed, made by the Europeans to set up factories in India. In the beginning, the Parsis were the founder manufacturing entrepreneurs in India.
Ranchodlal Chotalal a Nagar Brahman, was the first Indian to think of setting up the textile manufacturing on the modern factory lines in 1847, but failed. In his second attempt, he succeeded in setting up a textile mill in 1861 at Ahmedabad. But before this, the first cotton textile manufacturing unit was already set up by a Parsi—Cowasjee Nanabhoy Davar—in Bombay in 1854 followed by Nawrosjee Wadia, who opened his textile mill in Bombay in 1880.
The credit for the expansion of textile industries up to 1915 goes to the Parsis. Out of 96 textile mills existing in 1915, 43 per cent (41) were set up by Parsis, 24 percent (23) by Hindus, 10 per cent (10) by Muslims and 20 per cent (22) by foreigners, i.e., British citizens. Later, the Parsis invaded other fields, mainly iron and steel industry, also. Jamshedjee Tata was the first Parsi entrepreneur who established the first steel industry in Jamshedpur in 1911.
The Swadeshi Movement gave a much needed fillip to indigenous entrepreneurship. The second wave of entrepreneurial growth began after the First World War. The Government adopted the policy of discriminating protection. It stipulated that companies receiving protection should be registered in India with rupee capital and some Indians as directors. These measures helped the growth of manufacturing industries in the country. In 1813, the East India Company lost its monopoly. European and Indian managing agents emerged to provide venture capital and entrepreneurial talent. Partition of the country in 1947 caused some harm to the growth of entrepreneurship.
During post-independence era, entrepreneurship began to grow faster. The Government of India spelt out through industrial policy statements for rapid and balanced industrialisation of the country. It recognised the responsibility of the State to promote, assist and develop industries in the national interest. It also recognised the vital role of the private sector in accelerating industrial development.
The Government decided to pursue the following objectives:
(i) To maintain a proper distribution of economic power between private and public sectors;
(ii) To encourage the tempo of industrialisation by spreading entrepreneurship from the existing centres to other cities, towns and villages; and
(iii) To disseminate the entrepreneurial acumen concentrated in a few dominant communities to a large number of industrially potential people of varied social strata.
In order to achieve the above objectives the Government decided to encourage the development of small scale industries. It began to provide various incentives and concessions to small scale industries in the form of capital, technical knowhow, markets and land to establish industries particularly in the backward regions of the country.
To conclude, industrial entrepreneurship prior to 1850 was negligible lying dormant in artisans. The artisan entrepreneurship could not develop due to inadequate infrastructure and negative attitude of the colonial rulers. From 1850 onwards, the East India Company, the managing agency houses, the Swadeshi Movement and the policy of encouraging small scale industries after independence provided seedbed for the emergence of manufacturing entrepreneurs. The family entrepreneurship units like Tata, Birla, Mafatlal, Dalmia, Singhania, Kirloskar and others grew to immense size.
Entrepreneurship Development in India – Locational Mobility of Entrepreneurs
Locational or geographical mobility of entrepreneurs represents the drive and initiative to move to other places in search of better opportunities. For example, Marwaris and Sindhis in our country have moved to almost every corner of India to carry on business activities. Such a spirit helps to reduce regional imbalances in economic growth.
Every entrepreneur has a ‘spatial horizon’ depending upon his resources, experience and information-gathering capacity. In the initial stages of industrialisation, the spatial horizon is narrow due to weak communication network, poor information systems, limited capital resources and absence of institutional arrangements. Therefore, most of the entrepreneurs set up industries at or near their places.
For example, entrepreneurs from Bombay and Ahmedabad set up cotton textiles plants at these places. That is why there has been heavy regional concentration of industrial and commercial activity in India. New and small entrepreneurs generally have a limited spatial horizon and, therefore, form their businesses in the close proximity of their centres of activity.
This facilitates management of their enterprises. Location of new unit at a distance from the existing unit is likely to dilute effective control over the new unit. Moreover, the new enterprise may have backward or forward industry linkage and so will be set up near the existing unit. Language barriers, unfamiliarity with labour conditions, feeling of alienness at a strange place, political uncertainties and local property also inhibit entrepreneurial mobility.
Even after gaining some experience entrepreneurs mainly remain confined to a limited area. Some of them ambitious to build empires carve out their own political status and wield as much influence in the area as the political authority.
When resources expand, experience and information flows increase, entrepreneurs are likely to become mobile. Instead of “local”, he now becomes cosmopolitan entrepreneur. Instead of spatial horizon industry choice decides the location now. The entrepreneur is willing to move out over long distances from his usual place of working to exploit and seize opportunities. The entrepreneur may move to other States or even abroad.
Thus, there are three stages of entrepreneurial mobility. In the initial stage entrepreneurs are tied to their usual places of working. With gradual growth, they are likely to become relatively mobile within a limited area. When they become highly resourceful, greater degree of mobility occurs. This implies that in any country only a handful of entrepreneurs will be mobile. If entrepreneurial class is limited and unevenly distributed, there will be strong regional imbalances in industrial development.
The key factors influencing the mobility of entrepreneurs are as follows:
1. Resources:
An individual with limited resources is willing to take limited risks. Therefore, he starts an enterprise within a zone he can easily manage. Setting up of a plant at a distance will require his staying away from his usual place of working or handing over management to others. But the entrepreneur with larger resources can assume greater risks and collect better information. He does not mind locating a plant at distant places. Thus, larger the resources at the entrepreneur’s command, the greater the degree of mobility.
2. Experience:
An experienced entrepreneur is more mobile than the new entrant. He has better perception or opportunities, greater access to sources of information and better analytical tools to judge the efficacy of an enterprise at a distant place. He better understands the problem of alienation, regional barriers, etc., at a new place. The experience may be technical, business, industry or any other.
The most mobile entrepreneur is one who is familiar with working of industry as he has acquired risk-taking attitude, knowledge of markets, rapport with Government officials, etc. The individual with business experience is less mobile as he is less prone to assume risks elsewhere. The entrepreneur with technical experience is likely to make a start at a place where he obtained practical experience or at his usual place of living.
3. Education:
An educated entrepreneur tends to be more mobile than an uneducated one. He is better able to comprehend the conditions at a distance and make his own studies of the area. He can better hold discussions with the authorities and better appraise the opportunities existing outside his area.
4. Language:
People speaking different languages see each other with suspicion as there often exists a communication gap among them. Labour having language affinity may combine against the outside entrepreneur or the local politicians may incite feelings against him. Local governments committed to regionalism may also pose threats. New and small entrepreneurs find it difficult to overcome these barriers. Only experienced and established entrepreneurs can assume such risks.
5. Culture:
The entrepreneurs uprooted from their traditional native places are more mobile than those who have not been, like a displaced person or a foreigner. They develop a more cosmopolitan outlook as they adjust themselves in new cultures and are free from the sanctions and bondages of their own culture.
6. Nature of Enterprise:
If the enterprise involves only expansion of the existing plant, the entrepreneur is likely to acquire additional land in the vicinity of the existing plant. Same will be the case when the enterprise has backward or forward linkages with the existing industry. But when the new unit cannot be started near the existing one, he will move out.
The above considerations are inter-related and influence simultaneously. However, the resources and experience of the entrepreneur play a decisive role and others may be considered as contributing factors.
Entrepreneurship Development in India – Factors in Favour of Entrepreneurship Development
Entrepreneurship is playing a vital role in the development of industrial culture. In developing economies the most required thing is balanced regional development, poverty alleviation, rural renovation, introduction to advance technology, innovation, human resource development and developed society.
In context to India, following facts are in favour to entrepreneurship development, these are:
(1) Enhancing the planned economic development.
(2) Providing opportunities of self-employment.
(3) Abolition of poverty.
(4) Removing regional imbalance.
(5) Proper use of natural and human resources.
(6) Helpful in capital formation.
(7) Maintaining conducive environment for industrial development.
(8) New research and product technology.
(9) Commercial use of scientific invention.
(10) Helpful in setup of socialist society and welfare society.
(11) Successful implementation of government’s economic policies and programme.
(12) Scouting new domestic and international market.
(13) Scouting the feasibility of industrial development and their implementation.
(14) Enhancing social changes and living standard.
Entrepreneurship Development in India – Factors Affecting Entrepreneurship Growth: Economic, Social, Personality, Psychological, Sociological and Cultural Factors
In the under developed countries there are certain factors that affect the growth of entrepreneurship.
Few of the major factors include-
1. Economic Factors.
2. Social Factors.
3. Personality Factors.
4. Psychological and Sociological Factors.
5. Cultural Factors.
The economic factors effecting the growth of entrepreneurs in under developed countries are-
i. Non-availability of capital
ii. Non-availability of quality raw materials and finished goods.
iii. Lack of adequate basic facilities.
iv. Greater risk involved in the business.
v. Non-availability of skilled labours.
i. Non-Availability of Capital:
To expand the business and grow in future research and development has to be conducted. To conduct a research either equipments have to be purchased or get exported from other developed countries, for this huge capital is required. Thus the non-availability of huge capital effects the growth of entrepreneurship in the country.
ii. Non-Availability of Quality Raw Materials and Finished Goods:
Since there is less availability of raw materials throughout the year, they have to be purchased in large quantity and stored during the period of its availability. To purchase heavy quality raw materials, capital has to be borrowed which involves heavy rate of interest. This effects the entrepreneurial growth.
iii. Lack of Adequate Basic Facilities:
Certain basic facilities such as power facilities, irrigational facilities, latest technology, transport and communication etc., are required for undertaking innovative activities which help in providing increased output and reduce the cost of production.
But in under developed country like ours there is in-adequate availability of these basic facilities. The entrepreneur have to get these facilities by themselves where heavy costs have to be beared. Thus again these factors causes hinderance in the growth of entrepreneurs.
iv. Greater risk involved in the business:
a. Due to seasonal fluctuations of demand there is instability in the market.
b. Instability in domestic and foreign economic policies.
c. An entrepreneur cannot make correct estimates for his proposed venture as there is lack of correct information, overhead facilities, market demand etc.,
Since lot of risks are involved the growth of entrepreneurship is affected.
v. Non-Availability of Skilled Labours:
As there are non-availability of skilled labours and no proper training facilities available, the entrepreneurs find it difficult to progress with these unskilled labours.
2. Social Factors:
Some of the social factors include-
i. Social system.
ii. Customs and traditions.
iii. Social set up
iv. Rationality of the society.
i. Social System:
The social system existing in the locality effect the growth of entrepreneurship in the country. If there is a joint family then one member of the family will not share his wealth with the other member of the family. Thus entrepreneurship cannot be developed.
ii. Customs and Traditions:
In few cases customs and traditions play a dominant role in the production decisions rather than critically assessing the facts.
iii. Social Set-Up:
In some societies very less importance in provided towards education, training, research etc., and more importance is given towards caste considerations. Thus no entrepreneurs can emerge from such societies who have great aptitude and skills.
iv. Rationality of the Society:
In under developed countries most of the societies are non-rational societies which is not suitable for the entrepreneurial growth.
3. Personality Factors:
In under developed countries, the entrepreneurs are looked up as a profit makers and exploiters of the resources and people. Thus causing a problem for the growth of entrepreneurs.
4. Psychological and Sociological Factors:
According to Mc Clelland, “need achievement motive induces entrepreneurship”.
According to Paul Wilken, “entrepreneurship becomes the link between need achievement and economic growth”.
Cole states that, “besides wealth, prestige, entrepreneurs seek power, security and serve the society”.
Rostow had conducted research on inter-generation changes in the entrepreneurial families and found that, the first generation believes in seeking wealth, the second generation in prestige and third generation in art and beauty.
On the basis of motives, Evens has distinguished three kinds of entrepreneurs:
i. Chief motive of managing entrepreneurs is security.
ii. Chief motive of innovating entrepreneurs is excitement,
iii. Chief motive of controlling entrepreneurs are power and authority.
Thus many psychological and sociological factors affect the growth of entrepreneurs.
If the cultural factors prevailing in the country does not attach great value to business talents, industrial leadership etc., then entrepreneurs, people may not prefer to start up a new venture. Thus entrepreneurship is not developed.
Entrepreneurship Development in India – Entrepreneurial Performance in India
According to Dr. Sharma entrepreneurial performance is a function of the following factors:
(i) Socio-cultural Background of the Entrepreneur (SB) – This implies the environment in which the entrepreneur was born and brought up. It conditions the values and attitudes of the entrepreneur.
(ii) Motivational Force (MF) – It implies the motives which prompt a person to undertake entrepreneurship, e.g., wealth, status, self-employment, etc.
(iii) Knowledge and Ability of the Entrepreneur (KA) – It refers to the education, training and experience of the entrepreneur.
(iv) Financial Strength (FS) – It means the funds which an entrepreneur can mobilise from internal and external sources.
(v) Environmental Variables (EV) – These consist of Government policies market conditions, availability of technology and labour situation. Symbolically,
EP = f (SB, MF, KA, FS and EV)
Where EP represents entrepreneurial performance.
Several studies have been conducted to judge the performance of Indian entrepreneurs.
The main criteria used to judge performance of entrepreneurs are as follows:
(a) Gestation Period:
It is defined as the time gap between the date of incorporation and the date of commencement of commercial production.
Financial institutions consider the performance of an enterprise as satisfactory if it starts commercial production within two to three years of its establishment. Generally executives, technicians and professionals had lesser gestation period than traders. Reasons cited for delay in project implementation were Government approvals, assistance from financial institutions, non-availability of suitable manpower, delayed supply of plant and machinery, delay in constitution of factory buildings, non-cooperation from collaborators, etc.
(b) Financial Results:
Total assets or gross block representing the physical expansion of an enterprise was used. In order to judge financial health of units, return on capital employed, net profit over sales, net profit over net- worth and other ratios were used.
(c) Capacity Utilisation:
It depends upon the availability of required inputs like raw materials, power, labour, etc., and market for the finished product. About 50 percent of the entrepreneurs utilised 80 percent capacity. Most of the entrepreneurs could break even at 60% of the installed capacity.
(d) Expansion and Diversification:
Expansion was defined as increase in the installed capacity. Diversification was defined as taking up production of new products. All the units achieving full capacity utilisation tried for expansion and some of them opted for diversification.
(e) Value Added by Manufacture:
It is a measure of a firm’s contribution to the national income. It implies gross value of output minus the value of raw materials and other intermediate inputs used in the production process. It can be used as an indicator of entrepreneurial abilities such as preparedness to assume higher degree of risk and ability to plan and operate relatively large firms.
(f) Growth of Offspring Enterprises:
The number of ancillaries that have originated from a unit was taken as a manifestation of growth. But it is not necessary that all entrepreneurs set up offspring enterprises for growth.
(g) Others:
Several other factors can be used to judge entrepreneurial performance. Sales turnover, size of employment generated, volume of exports, research and development activity, import substitution, rural development are some of these factors.
Entrepreneurship Development in India – Entrepreneurship Development Cycle: 8 Stages
Entrepreneurship Development Cycle has following stages:
Stage # 1. New Venture Development Stage:
New Venture Development stage involves Creativity and assessment, Resource base analysis, networking including vertical marketing, Vision, Mission, Objectives, and Strategies & Tactics.
Stage # 2. Start-Up Stage:
Start-up Stage includes Formal Business plan, searching for capital, Analysis of the risks, Marketing research, developing a working team and identifying any core competencies for Competitive advantage.
Stage # 3. Stimulatory Stage:
Stimulatory Phase involves Generating entrepreneurial awareness in. Identifying and selecting potential entrepreneurs and Helping them through training to raise their motivational level and improving their skills in modern management methods. Developing technical competence relevant to the product selected.
Stimulatory Phase also involves developing a data bank on new products and process available to target group. It also involves Making available techno-economic information and project profiles, helping them to develop project report, creating forums for entrepreneurs to discuss their mutual problems and success.
Stage # 4. Support Stage:
Support Phase includes all such activities that help entrepreneurs in establishing and running their enterprises. The activities in this phase may include- Registration of the unit, arranging finance of any type and fixed capital on working capital, Helping in purchase of plant and machinery, Providing land, shed, power, water, etc. for establishing the unit and Guidance for selecting and obtaining plant and machinery and layout.
Stage # 5. Growth Stage:
Growth Stage involves any modification on the operating strategy, Positioning and re-positioning, Knowing more details about the competitors and a firm belief that there is always a “Survival of the fittest”.
Stage # 6. Stabilization Stage:
Stabilization Stage involves increased competition, High bargaining power of customers, Saturation of the market, the entrepreneur needs to think where will the business be in the near future and it is a stage preceding a great dilemma that is “to innovate or exit the business”.
Stage # 7. Sustaining Stage:
Activities in this phase are all those that help the entrepreneur in continuous, efficient and profitable running of an enterprise. The sustaining activities may include helping in modernization/products substitution, Additional financing for full capacity utilization, Deferring repayment/interest depending on the situation and Help and guidance in diagnosing the cause of failure or low production.
Stage # 8. Innovation or Decline Stage:
Innovation or Decline means that without innovation the clear option is ‘death’ or Possibility of acquiring or being acquired. Therefore, it is good for the entrepreneur to design new products for new markets implying Diversification.
Entrepreneurship Development in India – Institutions for Entrepreneurship Development: NIESBUD, EDII, NAYE, ICC, TCOs, Commercial Banks and a Few Others
In India several organisations are engaged in entrepreneurship development programmes.
Some of these are given below:
1. The National Institute for Entrepreneurship and Small Business Development (NIESBUD) New Delhi:
It is an apex body for coordinating and over-seeing the activities of different agencies engaged in entrepreneurial development.
Its main functions are as follows:
(i) Evolving effective training strategies and methodology;
(ii) Formulating scientific selection procedures;
(iii) Standardising model syllabus for training various target groups;
(iv) Developing training aids, manuals and other tools;
(v) Facilitating and supporting agencies engaged in entrepreneurship development;
(vi) Conducting such programmes which are not undertaken by other agencies;
(vii) Maximising their benefits and accelerating the process of entrepreneurship development;
(viii) Organising all those activities that help develop entrepreneurial culture in society. NIESBUD is also the secretariat for the National Entrepreneurship Development Board (NEDB) the apex body which determines policy for entrepreneurship development in India.
2. Entrepreneurship Development Institute of India (EDII) Ahmedabad:
It is an all India institution set by public financial institutions and the Gujarat Government.
Its entrepreneurship development programme is quite comprehensive and successful consisting of the following steps:
(i) Selecting potential entrepreneurs
(ii) Achievement motivation training
(iii) Product selection and project report preparation
(iv) Business management training
(v) Practical training and work experience
(vi) Post training support and follow up.
EDII also conducts research and publications in the area of entrepreneurship development.
3. National Alliance of Young Entrepreneurs (NAYE):
NAYE has sponsored several schemes of entrepreneurial development in collaboration with public sector banks.
Some of these schemes are as follows:
(i) Bank of India-Naye – This scheme known as BINEDS was sponsored in August 1972. It is operative in the Slates of Punjab, Rajasthan, and Himachal Pradesh, J&K, Chandigarh and Delhi.
(ii) Dena Bank-Naye – This scheme is designed to promote ancillary units and small scale firms in Madras.
(iii) Punjab National Bank – This entrepreneurial assistance scheme was started in March 1977 in the States of West Bengal and Bihar
(iv) Central Bank of India-Naye – This entrepreneurial development programme is implemented in Maharashtra.
(v) Union Bank of India-Naye – This scheme was introduced in June 1975 in Tamilnadu.
The main objective of these schemes are to help young entrepreneurs in identifying investment and self-employment opportunities, securing proper arrangements for their training including development of their manufacturing capacities, providing necessary financial assistance on the basis of properly prepared reports, securing package of consultancy services on appropriate terms and arranging for all possible assistance, facilities, incentives being extended to young entrepreneurs by Government and other institutions.
4. Indian Investment Centre (IIC):
It is an autonomous non-profit organisation financed and supported by the Government of India. It seeks to promote mutually rewarding joint ventures between Indian and foreign entrepreneurs. It acts as a clear house of information to foreign investors, who want to make investment in India. It functions as a link between Indian and foreign industrialists and assists them in entering into collaborations.
The IIC has set up an Entrepreneurial Guidance Bureau (EGB) to guide entrepreneurs in identifying investment opportunities, assisting them in selecting location, preparing project profiles, arranging financial assistance, etc. It maintains direct contacts with technically qualified persons and small entrepreneurs to promote entrepreneurial development.
5. Technical Consultancy Organisations (TCOs):
All India financial institutions and State Governments have set up a network of technical consultancy organisations in the country. These organisations provide a comprehensive package of services to potential entrepreneurs.
Their main functions are as follows:
(i) Conducting surveys on industrial potential
(ii) Preparing project profiles and feasibility studies
(iii) Undertaking techno-economic appraisal of projects
(iv) Evaluating projects referred by financial institutions
(v) Carrying out marketing research
(vi) Providing technical and managerial assistance to entrepreneurs
(vii) Assisting entrepreneurs in modernisation, technology up gradation and rehabilitation programmes
(viii) Organising information cell and Data Bank concerning industrial and economic activities and providing information for the development of industries to entrepreneurs
(ix) Advising on setting up and organising laboratories, design centres and Machine shops and Workshops, standardisation units, etc.
In the field of entrepreneurial training TCOs identify potential entrepreneurs, train them and render post-training counselling and guidance in selecting projects and establishing industrial units.
6. Commercial Banks:
Most of the public sector banks are conducting entrepreneurship development programmes with a view to identify potential entrepreneurs especially in backward area, and training and monitoring them in starting new ventures. Some banks have created entrepreneurship service cells or guidance bureaus, for this purpose. Commercial banks prepare several functions to assist and encourage small entrepreneurs.
Some of these are:
(i) Assistance in judging the technical and commercial viability of project proposals.
(ii) Assistance in preparing and evaluating project reports
(iii) Practical training in the selected industry
(iv) Assistance in obtaining Government clearances
(v) Assistance in procuring machinery and equipment
(vi) Assistance in raising the required funds
(vii) Assistance and guidance in implementing the project, etc.
7. In addition to the above, the following institutes also offer facilities for training and developing entrepreneurs in India:
(i) National Institute for small Industry Extension Training (NISIET), Hyderabad
(ii) Indian Institute of Entrepreneurship (IIE), Guwahati
(iii) Centre for Entrepreneurship Development
(iv) Small Industry Service Institute (SISI) located in each of the states
(v) Entrepreneurship Development Cells in various IITs, Engineering Colleges, ITIs and Polytechnics
(vi) Science and Technology Entrepreneurship Development Park (STEP) sponsored by the Department of Science and Technology, Govt., of India
(vii) District Industry Centres (DICs) at district level
(viii) NGOs at district sub-division, block and village levels.
These institutions create awareness about entrepreneurship, provide necessary information and skills to aspiring entrepreneurs and provide support to them till they can stand on their own feet.
8. Incubators:
Indian Institutes of Technology (IITs) and Indian Institutes of Management (IIMs) have set up Incubation and Entrepreneurship Centres to foster student entrepreneurs. A large number of students start enterprises during or after studies. In case start-ups fail students can opt for placement afterwards. For example, IIT-Bombay has a Society of Innovation and Entrepreneurship (SINE) and IIM-Ahmedabad has a Centre for Innovation Incubation and Entrepreneurship (CIIE).
Entrepreneurship Development in India – Entrepreneurship Development Programmes
Entrepreneurs are not necessarily born they can be developed through education, training and experience. Development of entrepreneurs means inculcating entrepreneurial skills required for setting up and operating business units. Entrepreneurial development is an organised and on-going process. Its basic purpose is to motivate persons for entrepreneurial career and to make them capable of perceiving and exploiting business opportunities. Entrepreneurship development is not merely a training programme.
It is the process of:
(i) Enhancing the motivation, knowledge and skills of potential entrepreneurs;
(ii) Arousing and reforming the entrepreneurial behaviour in their day- to-day activities; and
(iii) Assisting them in developing their own ventures.
An entrepreneurial development programme consists of the following phases:
(i) Pre-training Phase – This phase involves the following activities –
(a) Selection of persons with the required potential in terms of knowledge, attitudes and motivation
(b) Creation of infrastructure for training
(c) Preparing contents of the training programme
(d) Designing techniques for training
(e) Selection and training of the trainers
(f) Survey of environment.
(ii) Development Phase – During this phase the training programme is launched in order to carry out the necessary changes in the skills, attitudes and behaviour of the participants.
(iii) Post-training Phase – This phase involves assessing the effectiveness of the training. Monitoring and follow up will reveal shortcomings in the training programme. Steps can then be taken to make the programme more effective. In this phase infrastructural support, counselling and assistance in establishing enterprises can be reviewed.
Entrepreneurship Development in India – Ingredients of Entrepreneurial Development Programmes
Fostering entrepreneurship involves ensuring that markets for capital, labor, goods and services are working well. It also requires that impediments to entrepreneurship be removed and that conditions be established in which innovation and risk-taking can flourish of finance, and seek to create positive attitudes towards entrepreneurial activity.
Following are essential ingredients of an entrepreneurial development programme:
(i) Entrepreneurship orientation and awareness
(ii) Development of the competencies such as skills, experience and attitudes, which are necessary to recognize a market opportunity and organize the resources to meet it.
(iii) Improvement of business performance for growth and competitiveness
(iv) Helping them through training to raise their motivational level
(v) Improving their skills in modern management methods
(vi) Developing technical competence relevant to the product selected
(vii) Helping them to develop project report
(viii) Making available techno-economic information and project profiles
(ix) Helping entrepreneurs to select new products
(x) Developing a data bank on new products and process available to target group
(xi) Creating forums for entrepreneurs to discuss their mutual problems and success.
(xii) Evolving new products and processes available to the local situation
(xiii) Public recognition of entrepreneurial excellence
(xiv) Stimulatory Support sustaining Registration of the unit.
(xv) Offering management consultancy and Assisting in marketing the products either through reservation or assigning government quota purchase etc.
(xvi) Helping in modernization/products substitution.
Entrepreneurship Development in India – Entrepreneurial Support System in India
Support System for Entrepreneurs:
The most important development in the post-independence period has been the growth of a number of key institutions to promote, assist and develop entrepreneurs to initiate industrial growth in the country. The country has laid a strong foundation broad based its infrastructure and provided much needed support and assistance.
The Institutional support system is necessary to provide all help needed by the small scale industries, as small industries lack information about the existing support systems developed by the Central Government as well as the State Governments. They also lack the technical and managerial skills, strong financial background, knowledge about Government sponsored infrastructural facilities, subsidies and tax incentives.
These institutions include Government owned agencies, statutory corporations, semi-autonomous and autonomous organisations. In our country, these authorities and agencies are Government sponsored organisations and entrusted with sufficient powers to regulate and promote SSIs in specific areas of activities.
Institutional support to small and medium enterprises is necessary at three stages of enterprise development:
(a) Inception or Promotion
(b) Day-to-Day Management
(c) Expansion and Diversification
The Ministry of Small Scale Industries is the nodal Ministry for formulation of policy, promotion, development, protection and coordination of central assistance for the promotion and development of small scale industries in India.
This ministry designs and implements the policies through its field organisations for the promotion and growth of small scale industries. The Ministry also performs the functions of policy advocacy on behalf of small scale industries (SSI) sector with other Ministries/Departments.
The Ministry was bifurcated into two separate ministries:
(a) Ministry of Small Scale Industries (SSI)
(b) Ministry of Agro and Rural Industries (ARI)
The Ministry of Small Scale Industries designs policies, programmes, and schemes for the promotion and growth of SSIs. The Small Industries Development Organisation (SIDO), also known as the Office of the Development Commissioner (SSI) which is attached to this ministry is responsible for implementing and monitoring various policies and programmes formulated.
The Ministry of Agro and Rural Industries is the prime agency for coordination and development of Village and Khadi industries, tiny and micro enterprises in both urban and rural areas. The various policies, programmes and schemes related to agro and rural industries are implemented by the ministry with the help of its various bodies.
The ARI Division looks after the administration of two statutory bodies called the:
i. Khadi and Village Industries Commission (KVIC), Coir Board
ii. And a newly created organisation called Mahatma Gandhi Institute of Rural Industrialisation (MGIRI).
They also supervise the implementation of the Prime Minister’s Employment Generation Programme (PMEGP). The Ministry of Small Scale Industries (SSI) and the Ministry of Agro and Rural Industries (ARI) were merged together to form the Ministry of Micro, Small and Medium Enterprises.
This Ministry is duly assisted in its efforts by Office of the Development Commissioner (MSME) {O/o DC (MSME)}; the Khadi and Village Industries Commission (KVIC); the Coir Board; the Mahatma Gandhi Institute for Rural Industrialization (MGIRI); the National Small Industries Corporation (NSIC) Ltd.
Entrepreneurship Development/Training Institutes:
The three autonomous national level entrepreneurship development/ training institutes to provide aid to MSMEs are:
(i) National Institute for Micro, Small and Medium Enterprises (NI-MSME), Hyderabad;
(ii) National Institute for Entrepreneurship and Small Business Development (NIESBUD), NOIDA
(iii) Indian Institute of Entrepreneurship (HE), Guwahati.
Concept & Relevance of Finance for the Entrepreneur:
Finance is the life and blood of business and a function of business enterprise which is primarily concerned with the procurement of required amount of capital and then its effective utilization. In order to accomplish these goals successfully it is necessary that the financial manager should assess the exact requirement and sources of procuring the finances.
(i) Estimating the amount of capital required
(ii) Determining the capital structure
(iii) Laying down policies for procuring funds
Objectives of Financial Planning for the Entrepreneur:
(i) To remove uncertainties and to paves way for effective functioning & managing of finance.
(ii) To eliminate wastage of resources.
(iii) To help financial control
(iv) To serve as a guide to the firm in achieving its primary objectives.
(v) To ensure availability of adequate funds to the enterprise at all times
(vi) To make sure that there is Minimum cost at all cost centres of the venture
(vii) To maintain balance between profitability & liquidity to ensure smooth running of the enterprise
(viii) To ensure simplicity, Flexibility and Optimum use of funds
(ix) To have foresight for predicting status of the venture in future
(x) To have consideration for environment as this is initially an expensive proposition
Financial Policies of the Entrepreneur:
The entrepreneur must lay down policies with respect to:
(i) Determination of amount of seed capital required.
(ii) Selection of the sources of funds
(iii) Amount of funds to be invested in various Fund current assets
(iv) Use of debt & equity capital
(v) Control of management by parties who furnish capital.
(vi) Determination and distribution of income.
(vii) Credit and collection
Factors Influencing Financial Planning for an Entrepreneur:
(i) Nature of Business
(ii) Status of business unit
(iii) Growth and expansion plans
(iv) Nature of capital market
(v) Government Regulations
(vi) Government subsidies offered to entrepreneurs
Estimation of Capital Requirements:
(i) Seed capital requirement
(ii) Expenses of promotion
(iii) Cost of capital assets
(iv) Cost of Current Assets
(v) Cost of financing
(vi) Cost of development
(vii) Cost of intangible assets
Marketing Assistance to Entrepreneurs:
The term “market” originates from the Latin word “Marcatus” which means a ‘a place where business is conducted’. In the definition of Phillip Kotler the term market means “an arena for potential exchange”.
A market is one of many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services, including labour, in exchange for money from buyers. It can be said that a market is the process by which the prices of goods and services are established.
For a market to be competitive there must be more than a single buyer or seller, therefore it is important that at least there are t two people to trade, but it takes at least three persons to have a market.
Types of Markets Available to an Entrepreneur:
(i) Physical retail markets, such as local markets, which are usually held in smaller places from Monday to Sunday evenings, then some bigger markets such as shopping centres and shopping malls
(ii) Virtual markets such as internet markets
(iii) Markets for intermediate goods – These markets provide goods used in production of other goods and services
(iv) Street markets – Street markets are popular all over the world. Here the seller does not have a fixed place. On a particular day the sellers put their commodities on the pavements and move to another colony or block the next day.
(v) Prediction markets – These markets deal with research and development work and carry out analysis for companies in order to make correct predictions for them.
Technology & Industrial Accommodation:
The word Technology is derived from Greek word “techne” which means “science of craft”, art, skill, cunning of hand”; and “Iogia” which means the collection of techniques, skills, methods and processes used in the production of goods or services or in the accomplishment of objectives, such as scientific investigation. Technology can be called as the knowledge of techniques, processes, and the like, or it can be embedded in machines which can be operated without detailed knowledge of their workings.
Developments in historic times, including the printing press, the telephone, and the Internet, have lessened physical barriers to communication and allowed humans to interact freely on a global scale. The steady progress of military technology has brought weapons of destructive power such as nuclear weapons. Technology has many effects. It has helped develop more advanced economies.
Technology – Meaning & Concept:
Technology is defined as “the application of scientific knowledge for practical purposes, especially in industry. It can also be viewed as “machinery and devices developed from scientific knowledge”.
In a nutshell, Technology is the branch of knowledge dealing with engineering or applied sciences.
Definitions of Technology Entrepreneurship:
(i) According to Nicholas and Armstrong “technology entrepreneurship is Organization, management, and risk bearing of a technology based business”
(ii) In the opinion of Jones-Evans “it is the Establishment of a new technology venture”
(iii) As per Liu “it means Ways in which entrepreneurs draw on resources and structures to exploit emerging technology opportunities”
(iv) According to Garud and Karnae “it is an agency that is distributed across different kinds of actors, each of which becomes involved with a technology and, in the process, generates inputs that result in the transformation of an emerging technological path”
To sum up, technology entrepreneurship is about:
(a) Operating small businesses owned by engineers or scientists
(b) Finding problems or applications for a particular technology
(c) Launching new ventures, introducing new applications, or exploiting opportunities that rely on scientific and technical knowledge
(d) Working with others to produce technology change.
Need for Technology for Entrepreneurs:
Following is a list of reasons of why entrepreneurs should incorporate technology in their businesses:
(i) For Effective Communication:
Good communication is necessary to allow efficient flow of information in a business. Technology provides multiple channels for businesses to communicate both internally and externally. Employees can interact and develop ideas, or connecting to international businesses through the use of video conferencing, technology can be used as an outlet which allows businesses to collect feedback from their customers, which can used to improve or alter a product to suit the needs of the customers better.
(ii) For Research and Development:
Through the use of technology, businesses can research the market through the use of secondary data. This is extremely useful as it provides businesses with in-depth knowledge about markets before penetrating them. Along with secondary research, businesses can use technology to conduct primary research in addition to using online surveys and customer feedback.
(iii) To Aid Web Based Advertising:
One the most beneficial use of technology is advertising to millions of people around the globe just at a click of a button. Web based advertising consists of websites and social media. Unlike websites, social media accounts are very easy to build for the business and provide exposure on a wide variety of platforms such as Facebook, Twitter and YouTube.
Role of Technology in Entrepreneurship:
Small and Medium-Sized Enterprises (SMEs) have emerged as the most dynamic and vibrant sector and proved to be the backbone of a national economy. Although the globalisation and the changing economic environment have posed certain challenges to the development of SMEs, they have provided opportunities for SMEs as well.
(a) Increased competition
(b) Shorter life cycle of products and technology
(c) Reduced protection due to lower tariffs
(d) Market determined rate of interest
(ii) The opportunities are:
(a) Access to better technology
(b) Availability of a variety of raw materials and components
(c) Impetus to quality and efficiency
(d) Opportunities to restructure and diversify
To face these challenges and to seize these opportunities, today’s entrepreneurs are forced to develop innovative products, efficient production techniques and effective technology management for sustainability of their units. Indeed, the entrepreneurial innovative approach is expected to contribute to sustainable growth of SMEs, and to economic development.
Entrepreneurship is the essence of economic development, but it cannot exist without technological innovation. Science Parks, Innovation Centres and Technology Business Incubators are similar initiatives in creating an environment for innovation and entrepreneurship. These initiatives foster interactions between academia and industry for sharing ideas and experiences and for developing new technology in order to transfer it to the end-users through SMEs.
Merely creating such facilities, planning programmes and delivering training is not sufficient; equally important is the vision and strategy that educate entrepreneurs and empower them for change. Therefore, there is a need for faculty and educators to generate entrepreneurs for the twenty-first century that are agile and professional.
Entrepreneurship Development in India – Reasons for Slow Development of Entrepreneurship in India
There are numerous factors responsible for the development of entrepreneurship.
Following evidences prove that in India entrepreneurship development speed is very slow. These are:
1. Social Evils – Indian society is full of several social evils i.e., conservatism, superstitious, castism, family evils, dowery, show off tendency, and illiteracy etc. These factors are thoroughly responsible for the lack of entrepreneurship development in India.
2. Non-progressive Thinking – In India there is lack of trust towards creative thinking and lack of research tendency in society, so these factors are responsible for lack of creative ability in Indian society.
3. Lack of capital – In India per capita income is very less in comparison to foreign countries. In Indian society people do not invest their saving in industries while they invest in unproductive areas. This one is the main cause of less capital formation in India.
4. Lack of Technical and vocational education – Our education system only provides general knowledge about subject. It mostly affects the entrepreneurship tendency of youngsters and in India there is lack of technical and vocational educational institutes which is the main obstacle factor in the path of entrepreneurial development.
5. Lack of training and Motivation centres – There is lack of training and motivation centres in India. Most of training centres are located or situated in urban areas rather than rural and backward areas. So, it is also an important obstacle factor in path of entrepreneurship development.
6. Inadequate government facilities and Incentives – For encouraging entrepreneurial tendency among society, there is lack of proper government facilities and incentives. Government has not given full attention towards infrastructure facilities for industrial development along with lack of enthusiastic policy or programmes regarding raw material, techniques, market finance etc.
7. Fear of competition – There are numerous large industries situated in India and they have captured domestic and international market very efficiently. This is also an obstacle factor for entrepreneurship development in India.
8. Administrative lacunas – Inefficient Govt. department, bureaucracy, red tapism, corruption, delay and complexity of rules and norms are the cause of slow development of entrepreneurship.
9. Lack of entrepreneurial spirit – Today’s younger generation believe in high salary or income so they are attracted towards service sector rather than industrial sector.
10. Competition by the public sector – Governments has been providing incentives and preferences to public enterprise. Whereas small units lack of these facilities have not been compete to public units. So competition of PEs is an impeding factor to small units for creating their supremacy in market.
(1) High taxes
(2) Complexity of legal formalities, i.e., Registration, project approval, license, other legal formalities.
(3) Technical backwardness.
(4) Limited to local market.
(5) Defective government policy
(6) Competition with Multinational Corporation.
(7) Lack of adaptable environment.
(8) Lack of external facilities.
Entrepreneurship Development in India – Remedies for Rapid Development of Entrepreneurship in India
Development of entrepreneurship is a new concept in India. For rapid implementation of this concept, government, financial institutions, banks and other agencies should give proper attention towards it.
According to Udai Pareek and Monohar Nadkarni, “Entrepreneurship development would mean development of entrepreneurs and promotion of increased flow of individuals to entrepreneurial ranks.”
In India, there are lots of potential in youngster but due to lack of proper motivation, incentives and training they cannot remark their identity at local and global.
Broadly Speaking “Think local, act global.”
For rapid and faster development of entrepreneurship, government should take following steps.
These are:
(1) Industrial feasibilities in each area should be searched and on the basis of received data and information, perspective Industrial maps should be prepared.
(2) Education system should be made employment and venture oriented.
(3) In backward area to identify the entrepreneurs, Identifying Mechanism system should be developed.
(4) The number of technical and vocational education centres should be increased.
(5) Training and motivational facilities should be arranged for entrepreneurs.
(6) Self-employment plans should be diffused among peoples
(7) Expansion of consultancy services for entrepreneurs.
(8) All information about Government provide incentives and facilities should be generated amongst public.
(9) Research project regarding entrepreneurship should be encouraged.
(10) The working system of central co-ordinating agency should be made effective for entrepreneurship development.
(11) Bureaucracy tendency in government departments, financial institutions and other allied institution should be removed.
(12) Government should emphasise more on making of industrial estate and improving infrastructure facilities in backward areas.
(13) Government should be made tax-structure in accordance to entrepreneur relief.
(14) Government should make conducive business environment within India.
(15) Government should conduct specific development promotional plan for rural and small entrepreneurs.
(16) Some other suggestions –
(i) Strong capital market.
(ii) Economic stability
(iii) Co-ordination between public and Private sector.
(iv) Creative change in social structure.
(v) Sound legal and judiciary system.