BUSINESS ENVIRONMENT PROJECT

TOPIC-
Business Environment and Entrepreneurship

SUBMITTED TO:-
Ms. Aanchal Gupta

SUBMITTED BY:-
Raveesh Jasuja
08/BBS/7139
Nikhil Manocha
08/BBS/7130
 Acknowledgement

We would like to acknowledge our teacher Ms.

Aanchal gupta, our parents and friends for
their constant support and guidelines because
of which this project has been successful.

Raveesh Jasuja
08/BBS/7139

Nikhil Manocha
08/BBS/7130
 Index

 Introduction
 Ease of Starting and Operating Business
 Taxation
 Legal System
 Infrastructure
 Entrepreneurship Education within India’s
Higher Education System
 Current Status, Challenges and Lessons
 Creating an Entrepreneurship Environment
 Reasons for the lack of entrepreneurship in India
 Social Entrepreneurship in India
 Does the State facilitate Entrepreneurship?
 Bibliography
 References
Introduction
It is extremely important for entrepreneurs to understand the business
environment i.e. the bureaucratic set up, growth prospects, political stability,
judiciary effectiveness etc in their region of business. This article focuses on
India from this perspective and will provide an overview of some pertinent
factors.

In the last few years, India has consistently registered impressive GDP
growth rates and is touted to be one of the largest economies of the world in
the coming decades.

Apart from providing a pool of well trained and high skilled work force,
India also houses a 350 million strong middle class which commands a
formidable spending power.

The increasing affluence – it has the fourth largest billionaire population in

the world – makes it even more attractive as a high end products and luxury
goods market. In addition, thanks to a vibrant democracy, it has enjoyed
relatively higher stability than other regions in its neighborhood. From an
entrepreneur's perspective, bureaucratic issues like company registration
period, paper work, licensing issues and tax and other incentives also
assume importance.

The procedures for incorporation of a company in India listed briefly can be

found here. It takes about 11 steps and on an average about 35 days for
incorporation in India. To circumvent certain bureaucratic procedures, single
window clearances are also available for certain industries. The procedures
are not very different for foreign citizens looking to establish business in
India. However, there might be a cap on the amount of 'foreign investment'
in certain sectors.

As a market, India's spending power makes it easily one of the most

lucrative Asian markets and even globally it remains an attractive market. It
has only recently joined the 'trillion dollar GDP' club. However, if PPP
(purchasing power parity) is considered it has been a member of this club for
a long time now. Its growth rate has been hovering at around 8.5% over the
past few years and many sectors of the economy are now opening up.

This opening up of sectors traditionally occupied by government owned

monopolies has created a void which can be filled by entrepreneurs. Many
sectors like retail, infrastructure, banking, insurance etc are now being hotly
pursued. Apart from these sectors, opportunities also exist for small to
medium entrepreneurs operating in a niche.

The Indian judiciary has an unimpressive record of law enforcement.

Contract enforcement and legal recourse is usually cumbersome and the
procedures are long winded and plagued by red tape and corruption.
Although political will is being garnered to overcome these issues and set up
courts exclusively catering to consumer concerns and business issues it may
be long before these set ups become functional.

Entrepreneurs would be advised to reduce their reliance on contracts if

damages from violation are expected to be very high. As far as intellectual
property is concerned, the scope of recognition of patents is restricted. Thus,
entrepreneurs may have to use other legal resources to protect their
innovation. On the brighter side, the litigation costs – insurance and liability
costs – in India are extremely low as consumer courts do not usually award
ridiculous damages thereby reducing the 'cost of doing business'.
Entrepreneurs also need to be aware of the vast lingual and cultural diversity
in India which one needs to be aware of in order to expand.

Various comparative studies on business regulations in India, as well

as in other countries are also quite revealing.149 While these studies
recognize India’s comparative advantage in human resources, skills,
demographic profile and growing domestic demand, India fares
poorly vis-à-vis its business environment. For instance, in the ‘Doing
Business 2008’ report (See Box 6.1), which is published by World
Bank and the International Finance Corporation, India ranks 120th
out of 178 countries – even behind countries such as The Maldives
(60th), Pakistan (76th), Sri Lanka (101st), Bangladesh (107th),
and Nepal (111th). The OECD draft report on regulatory framework
in market for goods and services places India behind various
countries, including Chile and Brazil.150 The Global Competitiveness
Report 2007-08 of the World Economic Forum places India in the
48th position among 131 countries.151 Clearly, there appears to be need for
qualitative improvement in the business facilitation environment.

Ease of Starting and Operating Business

Difficulty and delays in meeting various government requirements
such as registration of company, obtaining licences and registering
property still confront entrepreneurs. The World Bank report, ‘Doing
Business in South Asia 2007’ says that, it takes 35 days (in Mumbai)
to 52 days (in New Delhi) to start a business in India. The official
costs of starting a business are high and the process quite complex,
involving no less than 13 procedures.158 A large number of separate
registrations – Tax Account Number (TAN), Permanent Account Number
(PAN), Value Added Tax (VAT), Employees Provident Fund Organization
(EPFO), Employees State Insurance Corporation (ESIC), among others –
are required for any business to start operations. Registering property
itself requires six procedures and an average of 62 days.159 Different
rates of stamp duty and transfer charges exist across states. Apart from
these initial procedural hurdles, an entrepreneur also has to obtain
other permits and clearances, both at the central and state levels.
These include land use approvals, building permits, power connections,
water and sewerage connections, and so on. Even in states where the
Single Window System has been put in place, most entrepreneurs
do not find them satisfactory; ‘there is a single window but many
ventilators’, as an entrepreneur from Hyderabad aptly put it.160 About
50% of the entrepreneurs interviewed claimed to have problems while
applying for and obtaining various clearances and licences. However,
the perception regarding licences has gradually improved over the
years.
Corruption: Almost 60% of the entrepreneurs interviewed said they
faced corruption at some time during their entrepreneurial journey
while dealing with governmental procedures and officials. That is a
very disturbing statistic.

Initiatives Already Underway-MCA-21: One of the key

reforms
undertaken to ease the process of starting a business in India includes
MCA-21, the e-governance project of the Ministry of Company Affairs
aims to fully automate processes of compliance and enforcement. The
objective of this initiative is to make services such as registration of
companies transparent. The key benefits of this project are expected to
include online incorporation of companies; simplifying the processes
of filing of forms and returns; registration as well as verification
of charges from any location; inspection of public documents of
companies; and establishing a centralized database repository of
companies.
Single Unique Company Number: Another idea that needs to be
explored is the proposal of a Single Unique Company Number that a
new business can use for company, tax and social security registrations.
This has also been suggested by the World Bank Report, ‘Doing Business
in South Asia 2007.’ Once such a number is adopted, the relevant
registration information could be forwarded directly by the registry of
companies to the tax administration offices, the EPFO and the ESIC.

Window System: In order to facilitate the process of obtaining

clearances, many states have introduced the ‘single window clearance’
procedure. However, the power to accord approvals is still vested
with various departments and agencies under their separate statutes
and notifications. The existing legal framework does not allow one
consolidated department or agency to accord all requisite clearances.
Nevertheless, some state governments have taken initiatives to
overcome this problem. For instance, in Rajasthan, the rules of
business have been amended for specially empowered bodies to accord
approvals for subjects under different departments; significantly, the
amendments disallow any department to review the decisions of these
empowered bodies. Other similar legislations include the ‘Andhra Pradesh
Infrastructure Development Enabling Act, 2001’, the ‘Chhattisgarh
Audyogik Nivesh Protsahan Adhiiyam, 2002’ and the ‘Orissa Industries
Facilitation Act, 2004’.

Single Composite Application Form: Other simplifying actions

include the
introduction of a Single Composite Application Form (SCAF) which allows
an entrepreneur to submit a single application form for obtaining different
clearances and approvals from various departments and government
authorities. States that have introduced this initiative include Andhra
Pradesh, Gujarat, Karnataka, Kerala, Orissa, Punjab, Rajasthan, Tamil Nadu
and Uttar Pradesh.

Illustrative International Best Practices: Mexico, Thailand

and
Latvia have succeeded in limiting inspections to 10%, 15% and
20% of shipments respectively, by following a risk assessment policy
that calculates the probability of inspections based on profiles of
businesses.164 With the introduction of electronic filing of documents
for trading (import, export and trans-shipment permit applications),
the time for cargo clearances in Singapore fell from four days to 30
minutes; the number of shipments processed rose three-fold and cost to
businesses of handling trade documents fell by a third.165 Mauritius has
launched a virtual one-stop shop linking the commercial registry and
tax, and local authorities through a central electronic database.

Illustrative National Best Practices: The World Bank-IFC

Report, ‘Doing Business in South Asia 2007’, mentions some Indian cities
known for their respective best practices (see Box 6.2). Examples include
Jaipur
(for starting business), Bhubaneswar (for obtaining construction
clearances), Bangalore (for obtaining building permits) and Hyderabad
(for obtaining land use approvals and registering property). Maharashtra and
Karnataka have taken steps to ease the process of registering
property. While Maharashtra has taken steps to lower stamp duties,
Karnataka has reduced the time taken in the mutation and execution of
sale deeds. Further, regarding mode of payment of stamp duty, Karnataka
has discontinued the use of stamp paper and enabled payment through
bank draft. Chennai has a 24-hour online container tracking system while
Bangalore has an e-payment gateway for custom duties. The Mumbai
Port Trust has also started an Online Port Community System.167 In fact,
the ‘Doing Business in South Asia 2007’ report states that India can jump
55 places from its current rank if some of the local best practices are
adopted nationwide.

Taxation
Entrepreneurs also faced problems relating to cumbersome tax
procedures as well as multiplicity of taxes. According to the World
Bank-IFC Report, ‘Doing Business 2008’, India’s tax regime requires 60
separate payments every year.168 Collection of taxes through different
government agencies also increases the problems of complying with
tax regulation. There also exists a multiplicity of taxes. In addition to
service tax, CENVAT and custom duties that are imposed by the central
government, state and local levels of governments levy respective
state VAT/sales tax, entertainment tax and entry tax.169 As seen in
Figure 6.4 below, 27% of entrepreneurs interviewed said they had
faced problems because of multiplicity of taxes alone; 13% faced a
problem with complexity of procedures alone and 26% faced problems
with both. In other words, 66% of the entrepreneurs interviewed, i.e.
two out of every three entrepreneurs, faced difficulties with regard to
some aspect of taxation - the multiplicity of taxes or the complexity
of filing procedures, or both.
Process Re-engineering in E-governance: Entrepreneurs
were also of
the opinion that while online filing of taxes had been introduced,
tax compliance was still not easy since forms and procedures are
still complicated. For instance, an entrepreneur from Kolkata said
that almost one-third of his time was spent in doing paperwork and
complying with multiple tax requirements. This confirms NKC’s earlier
recommendations that e-governance initiatives should be more about
re-engineering government processes rather than only about front-end
computerization

Key Initiatives in Taxation: The introduction of Value Added Tax

(VAT) in April 2005 was a significant measure. With the VAT system
in operation, it has also been recently reported that Indian states
have, in principle, agreed to move towards a common classification of
all merchandise sold within the country - the ‘Harmonized System of
Nomenclature’ (HSN).171 Currently, the same product can be taxed at
different rates across states leading to problems of cost uncertainty
for entrepreneurs. A common classification of all merchandise sold
throughout the country, coupled with fixation of tax rates for all
classifications, is a move towards greater uniformity and thereby,
less cost uncertainty for entrepreneurs.172 A single HSN code for all
the products under VAT across the country could also help states
in making operational the Tax Information Network (TINXYS), an
online network intended to bring transparency to inter-state
transactions

There are also state-level initiatives to help entrepreneurs. Maharashtra

has, for instance, computerized registration procedures for sales tax/
VAT, which drastically reduces the time taken in filing tax returns.
Another reform measure whose feasibility needs to be explored is
reducing the frequency of payments by entrepreneurs from monthly to
a quarterly basis.174 The issue of consolidation of tax forms also needs
to be examined in detail. For example, an entrepreneur in Sweden can
file multiple taxes – corporate income tax, value added tax, labour
contributions as well as property tax – in a single form.

Legal System
Of the entrepreneurs interviewed, 43% said they find the current legal
procedures and requirements to be either ‘extremely unsatisfactory’ or
‘somewhat unsatisfactory’ (see Figure 6.5). Their complaints largely
relate to procedures of law such as the slow pace of enforcing contracts
as well as the current bankruptcy and labour law procedures. 19% of
the entrepreneurs interviewed said they feel constrained by labour laws
(see Figure 6.1). According to the World Bank-IFC’s ‘Doing Business
2008’ report, it takes on an average, 10 years to complete bankruptcy
proceedings in India. Further, claimants can expect to recover an
average of less than 11.6 cents on the dollar. While official liquidators
are appointed to carry out liquidations, the procedures are often long
drawn. Another legal issue is that of unlimited liability for promoters in
partnership concerns and proprietorship businesses due to the absence
of Limited Liability Partnerships (LLPs) as a legal entity in India.
Suggested Improvements: Some of the legal reforms that would
facilitate a better environment for Entrepreneurship are as follows:

a. Specialized Commercial Courts: Since the debt recovery tribunals

in India have jurisdiction to entertain only debt related issues,
a possible reform for speedy enforcement of contracts would be
the establishment of separate specialized commercial courts, which
would deal with all types of commercial disputes.

b. Undertake Reforms in Bankruptcy Laws: Discussions are also

underway to change India’s bankruptcy laws. The draft Companies
Bill 2007 is expected to simplify rules and procedures. Establishment
of institutions such as the National Company Law Tribunal (NCLT)
and National Company Law Appellate Tribunal (NCALT) are also
expected to bring about improvements in dealing with cases
relating to insolvency, rehabilitation and liquidation and winding
up proceedings. RBI’s Advisory Group on Bankruptcy Laws has also
recommended the enactment of a new bankruptcy code to deal more
quickly with liquidations.
c. One Person Company/LLPs: The draft Companies Bill 2007 is also
expected to propose a new entity called a one-person company
(OPC) that would provide individual entrepreneurs the flexibility
and low cost of forming a proprietorship/partnership concern while
restricting their personal liabilities to that of a private limited
company.178 Similarly, the government is also expected to enact a
law on Limited Liability Partnerships soon.
Infrastructure

The reliability and availability of world-class infrastructure services is

critical for the growth of Entrepreneurship. India’s physical infrastructure
– roads/highways, railways, ports, airports, power, telecom – is seen as
a bottleneck to the smooth operation of all economic activity. The high
transport and supply-chain costs that poor infrastructure entails are
significant, particularly for a small entrepreneur. Enterprises surveyed
in the Global Competitiveness Report 2007-08, rated inadequate
infrastructure as ‘the most problematic factor’ for doing business in
India.180 In this report, while India scores well on ‘soft’ parameters such as
higher education, the rule of law and political legislation, it loses
out on the adequacy of infrastructure facilities. According to another
recent survey, 40% of Indian CEOs are worried about the quality of
infrastructure in the country

Availability of Work Space: Another crucial infrastructure issue

for
a new entrepreneur is the availability of adequate work space. There
are interesting differences based on family backgrounds as seen in
Figure 6.7 below. Among first generation entrepreneurs, only 15%
reported already having work space at the start-up stage. A majority
of second generation entrepreneurs in the same business (69%)
already had work space to start operations. However, this figure
dips significantly for second generation entrepreneurs, who pursue a
different business (33%).
Another pattern observed is that leasing of work space is more
prevalent among first generation and second generation entrepreneurs
pursuing a business different from that of their family. Of the
first generation entrepreneurs, 29% leased work space compared to
17% among second generation entrepreneurs in a different business.
Some Recent Initiatives: Since inadequate infrastructure is seen as
a critical bottleneck to economic growth, the government has given
high priority to quality infrastructure development, incorporating
various delivery mechanisms such as PPPs (see Box 6.3). The total
investment in infrastructure in 2006-07 is estimated to be around 5%
of GDP. The total investment in infrastructure in the Eleventh Five
Year Plan is projected at Rs. 20, 60, 193 crore or 7.65% of GDP.183
Among the key infrastructure development projects are the National
Highways Development Project (NHDP), Pradhan Mantri Gram Sadak
Yojana (PMGSY), National Maritime Development Programme, Bharat
Nirman for rural infrastructure, Jawaharlal Nehru National Urban
Renewal Mission (JNNURM), and Integrated Development of Small and
Medium Towns (IDSMT). At the same time, the private sector’s share for
investment in infrastructure is expected to increase from 20% to 30%
during the current Plan period.

Entrepreneurship Education within India’s Higher

Education System

Introduction: Background

In the 1990s, India exerted greater effort to promote and nurture

entrepreneurship. Attempts at various levels have taken place to directly or
indirectly promote entrepreneurship. The attempts fall under three main
categories: removal of state-imposed barriers for starting businesses;
availability of finances; education and nurturing.
First, entrepreneurship has been encouraged in India by systematic attempts
at removal of state-imposed structural and regulatory roadblocks. The
granting of licenses and policies on controls and taxation has been cited as
one of the major hurdles in setting up and running new businesses. More
progressive governments have tried to make it easier for entrepreneurs to set
up businesses. The growth of Bangalore and Hyderabad as hubs for IT
companies is a direct outcome of government support in the form of tax
holidays for start-ups and sector-region specific sops to start new ventures.
Second, there are attempts to make finances available to businesses. In the
current banking paradigm, it is easy for an established businessperson to get
loans for starting new ventures or expand current businesses. However, a
new entrepreneur wishing to start a new business finds it very difficult to
procure basic funds to set up and run a business. The Reserve Bank of India
has urged banks to provide funds to small and new businesses (Indian
Express, 31 December, 2002). The government of India is also increasing its
efforts in this direction. The Small Enterprise Development Bill of 2003
included guidelines for banks and other government agencies to ensure the
easy disbursement of loans for new ventures. Subsequently, the lowering of
borrowing rates from the banks has also made it worth the while of
entrepreneurs to run profitable businesses.
A third form of support is the development of entrepreneurial talent in
educational institutions. India’s higher education system generates a large
number of graduates every year. However, its economy is not in a position to
absorb the graduates passing out, leading to an increase in the educated
unemployed. In recent years, India’s population has grown very fast.
Because of the history of India and its multi-cultural composition, it seems
impossible to have a Family Planning policy like that of China in the near
future. It is likely that India’s population will continue to grow, which will
consequently worsen the employment situation. In India, most entrepreneurs
were single owners, nil employees, and one-person shows with little growth
prospects. The so-called entrepreneurs do business mainly for self-
employment and are not the “real” entrepreneurs.
In order to catch up with the pace of developed countries, India needs many
entrepreneurs willing to make their businesses bigger. If the university
students with high entrepreneurial potentials get proper training, they will
have the best prospects for becoming “real” entrepreneurs. Entrepreneurship
is a matter that involves everyone—the government, society, and the
educational institutions. If Entrepreneurship Education (EE) in India’s
higher education system cannot completely address major obstacles in the
pursuit of national economic development and employment, at least it can
offer a start

Entrepreneur, Entrepreneurship, and

Entrepreneurship Education

The core of EE among the educational institutions is entrepreneur training.

The following words are usually ascribed to an entrepreneur: innovation
(Kirzner, 1973; Schumpeter, 1934; Bolton, W.K., 1986; Timmons, 1978);
moderated risk-taking (Timmons, 1978; Lynskey, 2002); alertness (Kirzner,
1973); decision-making and responsibilities- seeking (Brockhaus and
Horwitz, 1986; Sutton, 1954; Welsh and White, 1981); ambition, desire for
independence, responsibility and self-confidence (Gorman, Hanlon, and
King, 1997; Timmons, 1978; Sexton, 1980; Dunkelberg and Cooper, 1982);
need for power (Dunkelberg and Cooper, 1982); and personal value
orientation (Gasse, 1977; Timmons, 1978).
For the purpose of this study, we define an entrepreneur as “an individual
who establishes and manages a business for profit and growth.” Being an
entrepreneur, he/she is perhaps described as a mix of these attributes,
although it is difficult to identify which trait is stronger, in what situation it
is stronger, etc.
Entrepreneurship is a multi-faceted phenomenon. Definitions of
entrepreneurship focus on different aspects of the phenomenon (Davidson,
2003) and originate from different disciplines. Shane and Venkataraman
(2000) used the word “hodge-podge” to describe the situation of current
studies on entrepreneurship.
Entrepreneurs do entrepreneurship. From the definition of an entrepreneur,
we can see that entrepreneurship is more than the mere creation of business.
It is a dynamic process of vision, change, and creation. It requires an
application of energy and passion towards the creation and implementation
of new ideas and creative solutions.

Current Status, Challenges and Lessons

Current Status

Courses in entrepreneurship are the core activity of EE in India. Over 100

different departments of universities offer courses in entrepreneurship. For
instance, NMIMS conducts a two-year, fulltime program on family business
management. Most of the courses cover the legal and managerial aspects of
entrepreneurship. But the motivational aspect taught at NMIMS is equally
important, since it creates an aspiration and improves confidence levels. This
program has equipped students with the skills, knowledge, and mind-set to
run their family business. ISB in Hyderabad affiliated to non-profit
organization Wadhwani Foundation (committed to promoting
entrepreneurship), offers entrepreneurial and incubation assistance. ISB has
knowledgeable instructors equipped with business experience.

In India, many entrepreneurship centers have been founded to coordinate the

broad array of activities, programs, and resources within the educational
institutions. For example, the NS Raghavan Center for Entrepreneurial
Learning in IIM Bangalore (NSRCEL—IIMB) carries out international
collaboration projects. The Global Entrepreneurship Monitor (GEM) Project
with the London Business School, the Ewing Marion Kaufmann Foundation,
and Babson College has been a major project for the last three years. In the
case of IIM Calcutta, activities on innovation and entrepreneurship are more
practical and driven by students, along with the faculty advisors. The IIMC’s
entrepreneurship cell holds one of the biggest business plan contest in Asia,
i2I—ideas to implementation with Yale University’s Yale Entrepreneurial
Society (YES).

These partnerships and centers are also happening in the technical schools as
much as in the business schools. The notable names include the Technology
Business Incubation Unit Delhi, the SIDBI Innovation and Incubation
Centre in IIT Kanpur, and the Society for Innovation and Development
(SID) at the India Institute of Science Bangalore, one of the oldest centers in
India. In fact SID-IISc’s notable achievement is a project called SUTRA--
Sustainable Transformation of Rural Areas--which uses non-edible oils from
indigenous neem trees as a substitute for fuel generation. Many ideas are
focused on solving the problems of rural poverty, since “innovation is
getting compassionate, too.”

The Entrepreneurship Development Program (EDP) in India has a long

history. It is designed to help an individual in strengthening his/her
entrepreneurial motivation and in acquiring skills and capabilities necessary
for playing his/her entrepreneurial role effectively.

In the early 1960s, an idea called the Industrial Campaign took shape,
enlarging itself through the years to become a countrywide movement
presently known as the EDP. Entrepreneurship development and small-scale
industries are inter-related. Most provinces have Small Industries Service
Institutes that provide EDPs. The trainees are provided with financial
support to start their businesses. They also receive exemptions from taxes
and are protected from undue competition from big business. A variety of
trade associations, in addition to the National Small Industries Corporation
and Small Scale Development Organization, promote and lobby for small
business interests.
Challenges for EE in India
Cultural barriers

Entrepreneurship can develop only in a society in which cultural norms

permit variability in the choice of paths of life. Unfortunately, the Indian
culture consists of a network of benefits that in many ways run counter to
entrepreneurship (Leo Paul Dana, 2000). For example, Indians believe that
being passive and content with the status quo is healthier for the inner soul
than striving to improve one’s situation. They believe that peace of mind can
be achieved from spiritual calm rather than from materialism. People in
India are more sensitive to emotional affinity in the workplace than to work
and productivity.

Moreover, the caste system has impeded class mobility for centuries. The
caste system and its series of obligations reinforce the practice of following
a family occupation rather than launching a new venture. An entrepreneur
needs to work around the clock and this has kept some people away from
their own start-ups. After all, compared with other countries, family life in
India is more important.

People, even today, think that taking up a job is much better than taking a
risk and starting a venture. If a job is taken up after college, the person will
soon have a comfortable existence. The other scenario could be starting a
venture after working for four to five years. This requires a lot of
commitment and courage to leave the present job. As time passes by, the
risk-taking capacity goes down.

Difficulties towards Start-ups

Starting a business in India is costly in terms of the time required and the
cost involved. While it takes just five days to start a business in the United
States and just two days in Australia, in India it takes as long as 89 days.
What really hurts is that even in neighbors Pakistan, Nepal, and Bangladesh,
it takes just 24, 21, and 35 days respectively to do so. The reason for such
delay is bureaucratic--too many rules and regulations, and too much

paperwork (Ashish Gupta, 2004). On average, it would cost an entrepreneur

nearly half of his/her total income (49.5% of the gross national income per
capita) to set up a business, which is 100 times more than what is needed to
set up a business in the United States. Again poorer cousins Bhutan,
Pakistan, and Sri Lanka are better off.

Doing business in India is an extremely difficult proposition (Ashish Gupta,

2004). The absence of an appropriate entrepreneurial climate, the lack of
required infrastructure facilities, and the lack of access to relevant
technology hinder rapid industrial development. Most of the time, the Indian
entrepreneurs have to tackle electricity, transportation, water, and licensing
problems.

Incomplete Entrepreneurship Education

A survey done by the Entrepreneurship Development Institute, India (EDII)

in 2003 shows that young people are afraid to start their own business
because they are not confident, not capable, and lack knowledge in starting a
business. Many people have the opportunity to change jobs or become an
entrepreneur if they are properly trained. The students in India are not
satisfied with the “hands-on” support of their university in the founding
process.

The EE in the higher education system should, therefore, satisfy the need for
entrepreneurship by: selecting + motivating + training + supporting.
Unfortunately, the present EE in India just concentrates on related courses.
Moreover, the so-called entrepreneurship courses are similar to the general
business courses. But general business management education has no
significant influence on entrepreneurial propensity (Hostager and Decker
1999). The findings of a survey on business owners in India suggest that
management education is not an important driver of entrepreneurial attitudes
(Gupta 1992). There is a demand for education programs specifically
designed to expand students’ knowledge and experience in entrepreneurship.
The contents and teaching methods have to be differentiated between
entrepreneurship and traditional business courses.

Besides offering the courses in entrepreneurship, some educational

institutions also organize entrepreneurship related activities. But these
activities are not much different from each other and are not supportive of
their educational programs. For example, almost every IIM has its own
incubator, but those incubators are mainly designed for outside
entrepreneurs.

Lessons Learned
Lessons from the EDP

Although the EDP is mainly designed for self-employed people, some

lessons may also be learned from Indian and Chinese universities. Since not
everyone has the potential to become an entrepreneur, the proper
identification and selection of potential entrepreneurs is the first step in the
EDP. Those with high entrepreneurial potentials are selected through
particularly designed procedures. Tests, group discussions, and interviews
may be used in the selection of entrepreneurs. Empirical findings indicate
that the conviction to start up a new venture is to some extent a question of
personality structure and attitude towards entrepreneurship (Brockhaus and
Horwitz 1986; Shaver and Scott 1991; Lüthje and Franke 2001).

For selected candidates, development of achievement motives is essential in

the EDP. A motivation development program may create self-awareness and
self-confidence among the participants and enable them to think positively
and realistically. Without achievement motivation training, entrepreneurship
education becomes an ordinary executive development education. Carefully
designed programs will be offered based on the situation of the trainees.

After the proper training of the selected candidates, essential mechanisms

such as financial assistance will be offered to help them succeed. Likewise,
the EE teaching staff should also be selected carefully. In theory, a lecturer
of entrepreneurship education, first of all, must be a successful or
experienced entrepreneur. A qualified EE teacher should also have some
entrepreneurial practices especially in risk taking and opportunity perceiving
as well as entrepreneurial qualities such as good communications skills.
Otherwise, teaching quality cannot be guaranteed. A program in specialized
training and professional development in entrepreneurship will be needed.

In fact, EE needs a group of teachers who have different backgrounds and

expertise. A valuable experience for the EDP in India is its teachers/trainers
who are qualified and who come from different universities, industries,
government agencies, etc. Those teachers/trainers are well organized by the
training institutes.

Lessons from the UEE in China

In the late 1990s, the Chinese government started to pay attention to the
development of small and medium sized enterprises (SMEs). Some research
has been done on this topic. An MBA education is currently popular in
China. Some MBA lecturers who were trained abroad came into contact
with EE in the developed countries. Back in China, they taught similar
courses in the MBA programs. Later, with the increase of employment
pressure on university graduates, entrepreneurship education grew in
popularity among the undergraduates.

One can learn many lessons from China’s UEE. The first lesson is the direct
support

of the government. Government paid much attention to the UEE in China.

For example, the local and central governments have given some incentives
to student entrepreneurs, e.g. tax deductions and other forms of financial
support. The Annual National Business Plan Competition will be held this
year. This competition is organized by a university (different each year) but
co-organized by the Ministry of Science and Technology of China and other
related government organizations. This competition starts at the university
level, and then goes on to the provincial level, and finally, the national level.
Students from almost all relevant universities in China join this competition.

In China, many universities have their own incubator for the students’ start-
ups. In each city, incubators are also available to other young people. These
incubators are mainly set up by government organizations and offer services
to entrepreneurs at favorable prices. Many intermediary firms facilitate the
entrepreneurs’ activities.

The second lesson is China’s favorable entrepreneurship environment. In the

past, young people stick to their original jobs but today, it is already
common for them to move from one job to another. Parents have also
become broad-minded. Unlike before, they no longer object to their children
starting their own business. Moreover, parents try to support their children
financially, such as providing the seed fund, and through other means such
as sharing their business experiences and network. Even if their children do
not succeed at first, the parents still think it is a good experience that will
help their children in their future careers. All of these would create demand
for a good university entrepreneurship education.

Compared with the Indian entrepreneurial culture, that of the Chinese is

generally more open to risk-taking and advocates an entrepreneurial spirit.
Entrepreneurs are respected in Chinese society. The modern private business
has a history of only about 20 years in China; the young entrepreneurs
usually have no family business background, which means there are a bigger
number of people who are the first in the family to establish a business.

Conclusions and Suggestions

Entrepreneurship education for the educated young people has a history of
only several years, but it has already developed fast. Employment pressure
has made EE in India’s higher education system absolutely important, but
the cultural barriers and the difficulties towards start-ups prevent EE from
being successful. The following are recommended for the development of
EE in India’s higher education system:

Fostering Entrepreneurship Culture

The formation of an entrepreneurship culture is the prerequisite of a

successful EE in India’s higher education system. Students and faculty
members will participate in EE more actively only if the whole society
advocates entrepreneurship and risk-taking, and entrepreneurs are respected.
The formation of an entrepreneurship culture can be done through a host of
interventions like the use of media, the creation of literature for inculcating
entrepreneurial values, documentation of cases, success stories, video films,
and behavioral exercises, etc. Since the formation of an entrepreneurship
culture acts in accordance with the development of the national economy, it
will be a long and hard process in India.

Creating an Entrepreneurship Environment

In India, although many business regulations were removed during the

1990s, many of the old bureaucrats remain. The improvement of
infrastructure in India will take a long time because of its less developed
economy. But at least the state policies (both central and state governments)
can be made more entrepreneurship friendly. For example, the “single
window scheme” needs to be implemented. With the deepening of reform, a
favorable entrepreneurship environment will be formed, and this in turn will
benefit EE in the higher education system.

Refining Techniques of Entrepreneurship Education

Entrepreneurship education is different from a typical business education.

Business entry is a fundamentally different activity from managing a
business. EE must address the equivocal nature of business entry. To this
end, the EE must include skill-building courses in negotiation, leadership,
new product development, creative thinking and exposure to technology
innovation. Other areas identified as important for EE include an awareness
of entrepreneur career options; sources of venture capital; idea protection;
ambiguity tolerance. These are characteristics that define the entrepreneurial
personality from which one draws when faced with the challenges associated
with each stage of venture development. The following learning tools are
useful in EE: business plans; student business start-ups; consultation with
practicing entrepreneurs; computer simulations; behavioral simulations;
interviews with entrepreneurs, environmental scans; “live” cases; field trips,
and the use of video and films.

Different educational institutions have different situations; a successful

model in one institution may not be available in other institutions. EE in the
different institutions may have characteristics peculiar to each institution,
but some key elements must be considered compulsory. Student selection is
the first step, and then those selected students need to be motivated. After
the motivation phase, they should be given special entrepreneurship training.

And finally, students have to be provided with proper and adequate support.
At present, besides the special entrepreneurship training, EE in Indian
educational institutions also needs to instill certain basic ideas in doing
business. For instance, in doing business, being punctual is very important.
University students need to be reminded of the importance of this basic trait.

Reasons for the lack of entrepreneurship in India

Lack of funding:

Is lack of funding that much of a big deal really ? The cost to do a

technology startup has gone down drastically. Reduced hardware costs,
bandwidth costs have dropped, cloud computing and open source
technologies make it really cheap to launch a technology startup. Unless you
are launching a capital intensive business, why should you really need
outside funding for doing a startup ?

Look at the Combinatory model – $5k – $10K per startup, which is literally
peanuts if you need to survive in Silicon Valley. Why cant Indian
entrepreneurs be cheap in a similar way ? Why not bootstrap ?

No Ecosystem:
If you would have made this argument 5 years back, I’d probably have
agreed. But over the last few years, the startup ecosystem has improved by
leaps and bounds. VC’s have entered the Indian market, events and
conferences are helping the startup community to network and converge, B-
plan competitions on various campuses are raising awareness, an active and
vibrant community is forming around entrepreneurship.

Bureaucratic red-tape:
While I agree that some things in this aspect are not as smooth as in other
countries. However, most of the entrepreneurs I talked to did not cite this as
a major hindrance as part of their entrepreneurial journey. Hire a chartered
accountant and he will take care of majority of the initial process of
incorporation, taxation and other legalities.

No Product Companies:
I for one dont really buy into this argument. While I agree that product
companies may offer long term sustainence value (while current outsourcing
focused services companies are simply benefiting from the cost advantage),
but then entrepreneurship is still entrepreneurship – be it a services or a
product company.

Below are some of the reasons that I personally think have a strong impact
on entrepreneurship in India:

Revamping Education:
If you look at the success of Silicon Valley, one of the key factors that was
instrumental in shaping it was Stanford & UC Berkeley. Ditto is the case
with Israel’s Technion. I strongly believe that education, innovation and
entrepreneurship go hand in hand – especially technology innovation. While
the IIT’s have immensely successful alumni, the IIT’s have not been able to
create a fertile hotbed of innovation & entrepreneurship in their own
backyard.

At the same time, we need to encourage out of the box thinking as part of
our education system. Rote learning can only get us so far. We need to ramp
up coursework so that student skills remain in sync with the rest of the
market. When Stanford and other universities are teaching iPhone and
Facebook app related courses, teaching Cobol & Fortran to Indian students
would be stupid in today’s age. Students should be encouraged to consider
entrepreneurship as a viable career option. I believe this to be the single
biggest factor that could foster entrepreneurship in India. Young college
graduates are at an age when their inherent risk is at the least to becoming an
entrepreneur. Educating them early enough would also give them ample
time to shape up their skills and experience that can prepare them for their
entrepreneurial journey. We also should make it easy and acceptable for
students to take sabbaticals from their degree coursework. Currently, this if
frowned upon in Indian society — we should try to make people more
accepting of it.
The NEN Foundation has done a good job at increasing entrepreneurship
awareness across various campuses. However, when you take a quick peek
at some of the questions that are asked by some of the student participants, it
just boggles your mind. Few are requesting ideas, several requesting funding
even before doing any analysis of the idea and several others simply leave
you in sheer disbelief. One common aspect across most of the questions is
that they are looking for handholding. And I think that really needs to
change. I’m not sure if we’re (including mainstream media that has
glamourized stories about entrepreneurship and VC fundings) sending them
the wrong signals – but if you think all information, market research and
other info will be served to you on a silver platter, then probably being an
entrepreneur is not in your best interests.
We missed out on the technology innovation bus, but if we dont really ramp
up our education system and associated R&D – innovation, we might end up
sitting on the sidelines of the cleantech wagon as well.

Lack of Good Mentors:

India does not have a large pool of successful entrepreneurs who have built
global level companies and are keen on mentoring the next generation of
entrepreneurs. From a lot of entrepreneurs that I’ve talked to — they were
more desperately seeking good mentors as opposed to funding.

We probably need someone to lead & pave the way just like what Yossi
Vardi did to Israel and what NR Murthy did to the outsourcing market in
India.

Lack of M&A activity:

This I say just from the technology market. M&A is just not happening in
the Indian market. Consequently, the already existing portals, news sites get
a chance to launch their own services without any strong startup getting an
opportunity to establish itself.

These are the three things that I think have the biggest impact — but then,
there’s a good chance that you might disagree. This is a highly subjective
topic and everyone has their own convictions about it. I think when it comes
to technology entrepreneurship, we should try and do a detailed case study
of Israel. The country has just a population of 7 million, hostile neighbors
and high taxes. Yet it boasts of the 2nd highest concentration of startups just
after the US. They’re definitely doing something right. And that’s what we
should try & emulate.

Social Entrepreneurship in India

The major boost in social entrepreneurship was given by the Nobel Prize
winner Dr. Mohammad Yunus when his brain-child Grameen bank became
successful in helping people lift themselves out of poverty in rural
Bangladesh by providing them with credit without requiring collateral.
Yunus developed his revolutionary micro-credit system with the belief that it
would be a cost-effective and scalable weapon to fight poverty. It was soon
realized that profits can be made along with serving the society, provided
you treat profits as a means and not the end result.

The impact of such enterprise largely depend on its successful

implementation to those that need it the most, those at the Bottom of the
Pyramid. And of course a discussion about the BOP wouldn’t be complete
without mention of India; where hundreds of millions critically need a
compelling movement in social entrepreneurship to improve their welfare.
There is a natural predilection towards rural areas as 70% of the population
lives in the hinterland. Recently, the rural scenario in the country has
emerged as a lucrative option for the mainstream economy. Various
organizations are viewing rural areas as potential markets, resulting in a
gamut of innovative solutions within the social entrepreneurship space that
focuses on and emerges from rural areas.

The popularity of SE is growing at a very high pace in India even through

the current economic downturn. In the last three years more and more youth
are developing interest in this field including those from prestigious
Stanford, MIT and Oxford. This new evolving field has also got early
venture capitalist interested in funding with many seeking out such
enterprises that hold out huge potential. Earlier, organizations solving social
problems were often assumed to be idealistic, philanthropic and lacking
business acumen or the ability to be entrepreneurial. However, as the social
sector has been coming in touch with the private sector, both have begun to
realize that just one approach either pure philanthropic or pure capitalist is
inadequate to build sustainable institutions.
In recent years, ‘not-for-profit’ has been pushed to the back partly because
of responsible lenders and social enterprises are being run more like
businesses today. The focus is on enterprising micro groups which want to
transform their own, and the community’s, circumstances but can’t access
any finance.

Fast company in their March 2010 listed “top 10 by Industry”. And four of
the top 10 most innovative companies in India were standalone social
enterprises or have socially entrepreneurial initiatives.

In India alone social entrepreneurship space has a countless mixture of

models with a one billion thinking structure. One billion thinking requires
cost-effective models involving the bottom of the pyramid. The majority of
these models are scalable and replicable.
Few for-profit Social Business Models

Company Activities Impact Future Plan

Makes telecom
equipment that
Replicating and
helps mobile 70 station in
VNL scaling it
operators reach Rajasthan
worldwide
rural markets
profitably

Delivering
5000 bed facility Health city with
Narayan affordable
completed in 30,000 bed
Hospital India healthcare to the
phase 1 facility by 2016
masses worldwide

Touch a billion
Empowering micro
Customer base people through
A little world business through
crosses 3 million innovative
micro banking
technologies

solar energy,
1,000 Barefoot
water, education,
experts in 1,000
health care, rural
villages, reaches
handicrafts,
500,000 people 10,00,000 people
Barefoot people’s action,
with basic by the end of
College communication,
services such as 2016
women’s
drinking water,
empowerment and
health care, and
wasteland
education
development

Childline Country’s first toll- 9.6 million calls, 600 + districts by

free tele-helpline 3 million 2013
for street children children, 73
 in distress cities, 10 years

Sustainable
Over a million
livelihoods to the
BASIX India and a half -
rural poor and
customer
women

A bridge between To tap 6 million

customers village people
CraftsBridge worldwide and N/A associated with
crafts persons, the handicrafts
designers sector

In last year alone

Eliminating
2.5 million
needless blindness
Arvind Eye patients were To replicate it in
by taking its
Hospital treated and over all states of India
services to rural
3 lakh surgeries
India
were performed

Empowering rural Deliver Citizen

citizens by creating records and
local Government
75,000 by the end
COMAT economies and benefits to over
of 2011
enabling access to 50,000 rural
information and citizens every
services day

High quality
solutions for
50 million by
D light families living 10 million
2015
without reliable
electricity
 Providing long-
Ending poverty in
term solutions to
IDE India 19 million the developing
poverty, hunger
world
and malnutrition

Sustainable
livelihoods for
artisans and
farmers, by
Approximate Employ 5000 by
RangSutra creating top quality
2500 artisans 2015
hand-made
products based on
the principles of
fair trade

Women 4600 women Plans to employ

Lijjat Papad
Empowerment employed 6000 by 2010

Sustainable energy
Bring down the
solutions and
Selco Solar 95,000 villages cost of solar
services to under-
India covered equipment by
served households
75% by 2012
and businesses.

Each of the World where

Angel investor and projects has, on individuals take
Unltd India incubator for social average, created action to bring
entrepreneurs 1.6 new jobs in about positive
the economy social change

Take Micro
SKS Small loans 5.3 Million
finance to every
Microfinance without collaterals Customers
village
 Internationally Premium crop
Suminter
certified organic price to more Scale this model
India
agricultural than 7000 nationally
Organics
produce farmers

One ATM/
Vortex Rural Solar
750 ATM Village i.e
Engineering Powered ATMs
6,50,000 ATMs

The other notable change is the involvement of mainstream financial

institutions in social entrepreneurship. Various venture capital firms are
investing in for-profit entities with social objectives. Interestingly,
specialized social investors provide capital, networking, marketing and
business expertise to such ventures.

This trend was kick-started in the area of microfinance when Sequoia

Capital invested in SKS Microfinance.

Social venture funds measure their investments on social, environmental and

the traditional financial returns. Acumen fund expects to make an impact on
million people with every investment in a five-year time frame. The fund
measures returns in terms of financial, operational (internal processes and
systems) and social impact (outcome and output). Output is number of
people who are impacted and outcome is how it has affected them. For
example, if 1,000 people have had access to clean drinking water, the
investors also check if the rate of diarrhea has come down. More heartening
is the fact that the mainstream venture capitalists are also recognizing this as
a business opportunity. So far, VCs have invested $220 million in 77 social
businesses in India. But there hasn’t been a single exit. In conventional
commercial ventures, VCs work with a holding period of 3-5 years. In social
businesses, the holding period is longer — typically, 6-8 years.

Funds Currently Available

Acumen Fund : It supports sustainable enterprises providing the poor with

critical goods and services at an affordable price. Primary focus on
healthcare, housing, water, energy and agriculture Companies invested in:
12 Fund size: $40 million (approx)

VenturEast: It builds profitable businesses that cater to under-served

markets. Focuses on meeting India’s domestic needs (primarily rural and
semi-urban markets) by backing early-stage / rapid-growth businesses
Companies invested in Over 50 (including 25 social enterprises) Fund size
$250 million

Oasis Fund: It supports enterprises that develop innovative solutions that

provide the poor with better access to critical goods and services. Invests
mostly equity, with some debt. Investments generally range between $1
million to $6 million Companies invested in 4 Fund size $30 million (still
raising)

Song: It supports entrepreneurs in high-growth sectors like education and

training, agriculture and food, healthcare, financial services, basic utilities
(waste, water, rural telecom, affordable housing, etc) that are aligned with
inclusive growth Companies invested in None Fund size $17 million

Aavishkaar India Micro Venture Capital: It creates sustainable change by

increasing economic activity at the bottom of the pyramid and boosting the
entrepreneurial spirit. Investments to date have focused heavily on the rural
and agro technology sectors Companies invested in 17 Fund size Rs 60 crore
(approx $14 million)

Gray Matters Capital: It invests in the information, communication and

technology space to bridge the urban-rural digital gap Companies invested in
4 Fund size $12 million

Elevar Equity II: It creates market-based solutions for poverty eradication.

Focuses on sectors like healthcare, education and information Companies
invested in 1 (another two in micro-finance ventures) Fund size $40 million
(additional fund-raising on)

The above figures simply state that there is an estimated $100 million (Rs
400 crore) chasing deals in India’s social enterprise space.
But there is a divide between those that have access to mainstream and/or
commercial funds and those that rely on personal connections and
grants/donations to raise money. The ratio is about 50/50.

Foreign grants: 8%

Domestic grants: 8%

Debt (credit loans): 11%

Government Funding: 3%

Charitable Organization: 5%

Bank Loan: 13%

Loan from Family and friends: 21%

Equity Investors: 21 %

Others: 10%

As per Beyond Profit survey, Forty-five percent of respondents obtained

funds from commercial sources whereas 21% of respondents source their
funds from personal connections such as family members and friends;
another 21% rely on grants and donations from charitable organizations.
Arranging finances for a social enterprise in India is still very difficult. And
knowing in which sector to finance is even more difficult. In bar diagram
mentioned below is a mention of profitable sectors and a trend which clearly
states areas to divert funds.
Social Entrepreneurship in India – Profitable Sectors

Education: Sector with a track record of profit: The Education sector has
shown a marked degree of financial stability and growth potential. There are
two key elements. First, the sector represents the highest number of profit-
making enterprises (38%) among others, and also has one of the lowest
numbers of loss-making entities (24%). Second, the observation says that
there is a good growth potential; 38% of education enterprises are breaking
even — which means the number of profit-making enterprises in this sector
could increase in the coming years.

Health: Sector with large growth potential: Although the sector currently
produces a very small number of profit-making entities, it has the lowest
percentage (13%) of loss-making enterprises. Most importantly, at 73%, the
Health sector has the largest segment of break-even businesses. If/when
these enterprises begin to turn a profit, the Health sector could sustain a
multitude of successful, profit-making enterprises.

Rural Development: Sector to watch out for future growth: Despite the fact
that the largest number of social enterprises are in this field, it is the biggest
loss-making sector at the moment. However, Rural Development
demonstrated the largest revenue increases last year, so there could be more
surprises in store.
There are more enterprises that are loss-making (34%) than those earning a
profit (25%). And 41% percent of enterprises are currently breaking even. If
you look at the profitability by measure of years in operation, you can
clearly see that making profit through social enterprise is no easy task.

It is true that the percentage of loss-making enterprises steadily goes down

as the companies get older. But there is virtually no disparity in the number
of profit-making entities across age categories. Many enterprises stop
making losses as they grow older but do not begin to turn a profit; they
merely start breaking even. Surprisingly, even after 11 years or more of
operations, the percentage of profit-making enterprises is only 27%.

Social entrepreneurship in India is emerging primarily because of what the

government has not been able to do. The government is very keen on
promoting social entrepreneurship – not necessarily by funding it or by
advising on it or enabling it. What they do do, is not disable it.

For example, in Mumbai alone, non-profit organizations educate more than

250,000 children on a daily basis. The government has not told these
organizations not to do it. Whereas in some countries, when someone takes
it into their own hands to start a facility for education or healthcare or
empowerment, the government often puts in place barriers to prevent this
from happening.

Our country does not have a homogenous people or geography, so the

impact largely remains regional. With the current economic climate, it is
very likely that social needs will increase and, consequently, the number of
people committed to addressing them will increase. Definition of social
entrepreneurship has changed over time. From corporate philanthropy to
non-profit and now to self-sustainability, Social Entrepreneurship has
evolved and will keep evolving with time and needs of the world.

Does the State facilitate Entrepreneurship?

General Government Facilitation: The NKC Study found a
significant
majority of entrepreneurs saying that the government is generally
‘not helpful’. In the interviews, 61% of the entrepreneurs rated
‘helpfulness of government’ as ‘extremely unsatisfactory’ or ‘somewhat
unsatisfactory’ (see Figure 6.8). Some entrepreneurs said that while the
government has some very significant policies to help entrepreneurs,
the implementation of these policies is extremely poor. Some were of
the view that government schemes and initiatives are not publicized
adequately. Others said that corruption and red-tapism result in the
schemes not reaching the targeted people. Currently, there are a number of
policies and schemes in place to promote and assist entrepreneurs
in India, at central and state levels.184 The Ministry of Micro, Small
and Medium Enterprises also provides a package of incentives
and subsidies for the promotion of micro and small enterprises
(See Box 6.4). The challenge is to make the policies into catalysts for
driving Entrepreneurship in India.
ntrepreneurs, 2007
1. Legislation: The Micro, Small and Medium Enterprises Development
Bill, 2006 has been enacted for the promotion and development of micro,
small and medium enterprises. The Government is also expected to enact
relevant law on Limited Liability Partnerships.

2. Credit Support: RBI has issued guidelines to the public sector banks
to ensure 20% year-on-year growth in credit to the SME sector. The State
Industrial Development Bank of India (SIDBI) is expected to upscale
its credit operations for micro enterprises and cover 50 lakh additional
beneficiaries over five years beginning 2006-07. The Union Government
to provide grants to SIDBI to augment its Portfolio Risk Fund and enable
it to create a Risk Capital Fund. To strengthen the Credit Guarantee Fund,
the corpus of the fund is expected to be raised from Rs. 1189 crore as of
01 April 2006 to Rs. 2500 crore over a period of 5 years.

3. Fiscal Support: The Government is expected to examine the feasibility

of increase in the General Excise Exemption (GEE) limit and the existing
eligibility limit for GEE; also consider extending the time limit for payment
of excise duty by micro and small enterprises and extending the GEE
benefits to small enterprises on their graduation to medium enterprises
for a limited period.

4. Support for Cluster Based Development: Accelerate the holistic

development of clusters, including provision of Common Facility Centres,
developed sites for new enterprises, upgradation of existing industrial
infrastructure and provision of Exhibition Grounds/Halls and also for
creation and management of infrastructure-related assets in the public
private partnership mode. The ceiling on project cost is expected to be
raised to Rs. 10 crore.

5. Technologies and Quality Upgradation Support: Four

Trainingcum-
Product Development Centres (TPDCs) for agro & food processing
industries to be set up. A Technology Mission to be set up to assist
MSMEs in technology upgradation, energy conservation and pollution
mitigation.

6. Support for Entrepreneurial and Managerial Development:

50,000
entrepreneurs to be trained in information technology, catering, agro
and food processing, pharmaceuticals, biotechnology, etc., during the
Eleventh Plan; a new scheme to be formulated to provide financial
assistance to select management/business schools and technical
institutes, to conduct tailor-made courses for new as well as existing
micro and small entrepreneurs; a new scheme to be also be formulated
to provide financial assistance to five select universities/colleges to run
1200 entrepreneurial clubs.
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2010
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 http://www.paggu.com/entrepreneurship/nurturing-entrepreneurship-
in-india-entrepreneurship-and-india/ - August 29, 2010

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