INDIA: Call for redesigning India's Entrepreneurial Ecosystem

INDIA: Call for redesigning India's Entrepreneurial Ecosystem
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Despite continued GDP growth, India's entrepreneurial ecosystem is challenged by regulation and lack of seed capital, mentors and diversification of industry sectors.

What must be done in the fields of education, regulation, innovation, infrastructure and finance to produce the next wave of Indian entrepreneurs?

Key Points

• Creating an entrepreneurial ecosystem requires a multistakeholder approach

• The Indian education system has to be reoriented to deliver effective teaching of entrepreneurship

• Entrepreneurship education should not be regarded as an option for those who have failed or not performed well in school; it can and should be taught in all types of schools

• Promoting role models of successful entrepreneurs through the media and other means will serve as inspiration to people to become entrepreneurs

• Regulation and tax regimes need to be reformed to provide incentives to encourage entrepreneurs to take risks and not fear failure

• Banks, especially the dominant state-owned institutions, need to make it easier for entrepreneurs to access capital

Synopsis

Despite the lack of an adequate ecosystem to promote entrepreneurship, India has nonetheless managed to produce numerous successful entrepreneurs, particularly in the IT sector, where the country has made its mark in the global market. If India is able to address the deficiencies in its enterprise support system, it could promote the creation of many more successful small and medium-sized enterprises and drive new long-term economic growth that is socially inclusive.

A key obstacle is the stigma still attached to becoming an entrepreneur in a society where traditional professions remain the most popular and respected options for entrants into the job market. For this reason, reshaping the education system is a critical priority.

Entrepreneurship education should not be regarded as an option only for those who fail or do not perform well in school. It should be available, if not compulsory, in all types of colleges, including the elite institutions. In general, young people must be taught how to take risks.

Entrepreneurship learning must become an integral part of school curricula. More broadly, the government needs to overhaul the education system. Privatization should be considered, with both for-profit and non-profit options available. The links between the business sector and academia must be strengthened. Foreign institutions should be allowed in. Such measures would very quickly widen the access to education, especially in rural areas.

Financing is also another bottleneck that needs to be addressed. Angel investor funding and venture-capital financing are weak in India. Efforts should be made to put together an extensive database of project proposals that would help match investors with enterprises. Networks need to be created to bring angel investors together with those seeking funding. Mentoring by more experienced entrepreneurs is crucial. Success stories should be promoted in the media to inspire people to become entrepreneurs and make becoming an entrepreneur socially acceptable.

Regulatory reforms should be implemented to require the dominant state banks to allocate funds to support entrepreneurs. Tax regimes should also be revised to provide tax breaks to entrepreneurs to mitigate the risks they face. The government should take further measures to make it easier to set up businesses, plan their growth and scale up enterprises. The application of e-governance systems could help streamline licensing and promote greater transparency. The government should demolish any structures that prevent entrepreneurs from adopting socially inclusive business models.

source: world economic forum