Why Does India Need Entrepreneurship Culture?

Posted in Entrepreneurship & Startups Articles, Total Reads: 698
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An idea coupled with rigorous efforts makes a person an entrepreneur. Entrepreneurship is basically creating a business from naught – generating an idea and converting it into a profitable venture. Quoting this definition is very easy but the actual implementation is equally difficult. In India, we have a number of examples of successful startups like Zomato, Flipkart, Paytm, Ola, Snapdeal, Redbus and many more. As per Nasscom report, India is the third largest country when it comes to ranking on the basis of number of startups. Every day, a number of startups take birth most of which do not remain into existence after few months. But some entrepreneurs take the pain to sustain for long and make it happen. The average age of a founder in India is about 37 years which is lower as compared to other countries.


India is a labor intensive economy which has laid foundation for entrepreneurship culture. In India, people have great skills. They are full of innovative ideas. But they do not have huge financial resources. The population of India is growing at rate of around 1.2%. With increase in population, the unemployment also increases. The solution to the massive unemployment in India lies in the spirit of entrepreneurship. Entrepreneurship helps in creating more jobs and thus removes the issue of unemployment. As per a recent survey in Gurgaon by The Entrepreneurship School, a startup creates around 5 jobs initially which increases upto 50 if it survives in long run. Micro, Small and Medium Enterprises (MSME) contribute nearly 8 percent of GDP of India and also contribute majorly to the exports. This clearly shows that the entrepreneurship culture has a lot of potential in India. We do not have much capital to start with big businesses directly. But through small startups, the economy of India can thrive in a healthy manner.


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In India from food to shoes, there are ample opportunities for business in all. There are a lot of areas still untapped which can be turned into profitable opportunities. To make use of these opportunities, India needs entrepreneurs. The environment is also becoming very conducive towards entrepreneurship culture. The costs of starting a business have decreased by 5.5% since 2005 and also the average time period spent has decreased from 56 days to 29 days only. A lot of investors are taking interest in startups. So getting funds for initial investment is not very difficult in the current scenario. The bank loans are also easily available thanks to the number of schemes the government has implemented for small new ventures. . In the Union Budget 2014-15, the finance minister created a fund of Rs. 10,000 crore to fulfil the funding requirement of start-up companies.


India provides a thriving platform for entrepreneurship culture. India is the fifth largest country in the world on the basis of growing number of startups counting over 4200. The entrepreneurs work as change-agents in the economy of a country. They help in stimulating the growth process by influencing macroeconomic variables through micro ventures. They have the capability of creating a spark to transform the economy which is required for an emerging economy like India. The countries like United States of America, Japan etc. are developed because they have a countless examples of successful entrepreneurial ventures. Their entrepreneurial development has helped them in becoming the powerful economies in the world. While on the other hand, the countries like Nepal, Bangladesh etc. are lagging behind because of poor entrepreneurial development. In India, the states such as Punjab, Gujarat are growing well because of the efforts put by the entrepreneurs while states like Odisha, Bihar etc. are very backward owing to absence of entrepreneurship culture there.


India is a very big economy where equitable distribution of income is a big challenge. The startups started in small, rural and remote areas help in balanced regional development. They help in removing the concentration of resources in a few hands. They help in proper redistribution of the economic resources of the country. A lot of resources lay unutilized which can be used profitably for the development of people. Entrepreneurs help in proper utilization of such resources. Clearly India needs more and more entrepreneurs to ensure all round development.


To further promote entrepreneurship spirit in India which is actually the need of the hour, a lot of initiatives can be taken. To build an entrepreneurial ecosystem, the schools and colleges should launch entrepreneurship related programmes and courses to develop the seed of entrepreneurship in the young hearts. Ever college should have separate centers for creativity and innovation. India has vast talent but the people are risk averse. Entrepreneurship is the plan which sprouts out from the seed of risk. If people are not risk lovers, they would never ever be able to run a startup. We learn from our past. So it would be very helpful if the success stories of startups are shared with the people. A lot of new ideas get generated but to turn them into reality, there is a need of investment. So the government should take some additional steps to ensure that no good idea is put to death due to lack of funds. The government should simplify the process of setting a new business. The government can also provide certain tax exemptions for such startups at nascent stages. An effective policy with clearly defined goals is the need of the hour which will go a long way in establishing entrepreneurship culture in every nook and corner of India.


Realizing these huge challenges in the path of entrepreneurship, the Prime Minister Narendra Modi laid the foundation of “Start Up India, Stand Up India” on January 2016. The current government development agenda is sought to be assisted by this programme. To remove the obstacles which the entrepreneurs generally face while opening a start-up, the government has come up with an action plan encompassing nineteen points for the purpose. The objective of this comprehensive action plan is to simply make the path of the entrepreneurs trouble free. The herculean task of opening a startup will be smoothened by these action plans.


After the Start Up India, Stand Up India programme, the entrepreneurs had high hopes from the upcoming union budget 2016-17. In the new budget, the government has planned to amend the company laws to make the registration of a startup possible in one day. There is a provision of hundred percent deductions for startups for the first three years. The government has also planned to encourage entrepreneurship especially among SC/ST students. However the budget did not talk much about the startups. There are a lot of hurdles which are still left in the smooth functioning of the startups. The startups should be freed from the fixed burden of Minimum Alternate Tax (MAT). This will reduce the cash outflows of the startups during the initial phase. There is a dire need of more transparency and clarity regarding the income tax procedures. There is a need of proper methods of identifying the startups. A lot has already been done by the government but a lot is yet to be done. The combined efforts of the government and entrepreneurs will go a long way resulting in the sustained economic growth.


This article has been authored by Swagat Kumar from IIM Raipur


References:

http://paraschopra.com/blog/entrepreneurship/quick-statistics-o-indian-entrepreneurs-and-indian-startups.htm

http://timesofindia.indiatimes.com/business/india-business/India-ranks-third-globally-in-number-of-startups-Nasscom-report/articleshow/49338236.cms

http://yourstory.com/2015/04/startup-funding-report-for-2015-q1/

https://en.wikipedia.org/wiki/Demographics_of_India

http://yourstory.com/2015/05/reserve-bank-capital-for-startups/


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