Entrepreneurship management.

Concept of Entrepreneur, Entrepreneurship and Enterprise

( Define the concept- Entrepreneur and entrepreneurship)

Entrepreneur - The word is derived from a French word meaning ‘between

taker’ or ‘go between’. The word typically describes the role of traders such as
Marco Polo, who would transfer the goods produced from producers to the
actual buyers. In the given process the merchants were the risk bearers and
profit sharing was 75:25 between producers and merchants.

In 17th century persons who entered into a contract to perform stipulated

product at a predetermined price were referred as entrepreneurs. Richard
Cotillion, an economist is considered as the founder of the term. All risk
bearers such as farmers, merchants are taken as entrepreneurs as they buy at
a certain price but sell under uncertain conditions. From 18th century onwards
entrepreneurs are differentiated from capital providers. In 19th and 20th century
entrepreneurs were those who organize and operate for personal gains.

The term entrepreneur is defined in a variety of ways. In fact the meaning of

the term has changed from country to country and time to time. The term
entrepreneur was applied to business by a French economists Cantillion to
describe a dealer who purchase means of production to convert them into
marketable products. Another French economist J.B.Say further refined the
idea by describing entrepreneurs as the ‘one who shifts economic resources
out of an area of lower and into an area of higher productivity and greater
yield.’

Dr. Joseph Schumpeter defined Entrepreneurs as those who lead enterprises

and role of an innovator entrepreneur is to set in dynamic disequilibrium,
which is the norm of healthy economy and is the central reality of economic
theory.

Peter Drucker while describing entrepreneurs state that usually entrepreneurs

do not bring about any change themselves, they always search for change,
respond to it and exploit it as an opportunity.
 Entrepreneur can be defined in terms of three distinguishing tasks that
they perform
1. Initiative
2. Organization of resources
3. Risk bearing

Entrepreneurs are self starters and are quick to identify the needs and have
strong desire for achievement.

Concept of Entrepreneurship is comparatively new and is used in a broad

domain. Entrepreneurship can be defined as doing new things or doing the
things in a new way

Definition evolved from work done at Harvard Business school –

Entrepreneurship is the process of creating or seizing opportunity and pursuing
it regardless of the resources currently controlled.

Importance of entrepreneurship –
(Benefits to the nation)

Entrepreneurship has power to bring a radical change in the economic, social

and political status of a family, state or nation.

Economic history indicates a strong correlation between economic

development and entrepreneurship development. The countries with more
number of entrepreneurs have developed at a faster rate than others. Peter
Druker has explained American development in 1960 - 1980s as a
development due to increasing number of startups that registered in the given
time span.

Three centuries prior to World War most of the jobs were created by high
technology industries. Economic expansion after World War II was fuelled by
Automobiles, steel, rubber and petroleum industries. According to Peter
Drucker they perfectly fit into Kondratieff cycle. Kondratieff – Russian
economist was executed in mid 1930s because his econometric model
predicted that Collectivization of farming would lead to sharp fall in agricultural
production. Kondratieff cycle of fifty years was based on dynamics of
technology. The cycle has first 20 years of expansion and last 20 years of
stagnation, where neither industries nor government can do anything for the
correction. Kondratieff theory fails to provide explanation for the 40 million
jobs created in the American economy, at the time of so called long term
stagnation.

Entrepreneur economy helped America to support increasing number of job

seekers and kept economy on a fast moving track. The need to develop
entrepreneurship in India can discussed on the same line.

1. Entrepreneurships generate value and enhance personal, social,

national and global wealth.
2. Entrepreneurship generates employment opportunities. India with more
than 1000 million populations needs to generate the job opportunities as
the top priority.
3. Entrepreneurship promotes innovation- Innovations are either cost saving
or demand rising. Innovations promote economic development of the
family, business and the nation.
4. Entrepreneurship encourages social change, transforming society into self
reliant and confident one.
5. Entrepreneurship enhances export possibilities.

Growth of entrepreneurship is unevenly distributed. Some nations have

prospered more than others only because of difference in entrepreneurship
development. Even within a given nation, the difference in the growth of
entrepreneurship has led to regional disparities.

Factor affecting growth of entrepreneurship

(Social, cultural, political, economic factors affecting entrepreneurship)
Development of entrepreneurship requires strong personal desire, encouraging
environment, appropriate social cultural system and proper support from
concerned institutions. These are the major factors that encourage the growth
of entrepreneurship.
1. Individual motivation. – This is the basic requirement for
entrepreneurship development. The individual must have a strong
desire to be a successful entrepreneur. Achievement motivation, power
motivation develops desire to lead or start an oraganisation. Personal
efficiency is again an important factor for individual motivation.
Efficiency implies power of decision making, leadership, project planning
and high levels of energy. Efficiency relating to manage financial,
marketing, personnel and technical activities. The individual need to
posses coping ability i.e. tackling the stressful situations. The success
of an enterprise depends upon a capable entrepreneur who will lead the
enterprise even during most stressful times. All entrepreneurs are highly
motivated.

2. Environment :- Economic and political environment, government

policies and infrastructure plays an important role in development of
entrepreneurship. Availability of raw material power supply transport and
communication marketing facilities financial institutions is prerequisites of a successful
enterprise. Government policies regarding taxation and subsidies effects profitability of an
enterprise, consistence government policies give encouragement to development of
entrepreneurship.

3. Social – Cultural systems: - Entrepreneur gets encouragement from society. Some

societies groom entrepreneur right from childhood and shape values and attitude of
individuals. Risk bearing approach, desire for independence is results of family and social
atmosphere. Social institutions affect individuals thinking and attitude. Peer pressure, social
pressure influence individual decisions. If society assigned high values to entrepreneurs
then individuals are automatically motivated to become entrepreneurs.

4. Family:- Goals and expectation of an individuals are framed by family expectations.

Individuals respond to this pressure normally in positive manner. Usually children born in
business family tend to become businessmen , they are groomed to take risk and taught to
be self- reliant, they value work and are willing to work with endurance.

5. Supports from concerned institution:-Several agencies and organizations operate to help

and support the entrepreneur. Following are the examples of support systems. Corporations
 specially set-up to develop entrepreneurship and small industries in a region, Financing
institutions including banks, extension services of the department of industries (including
SISIs), non- government organizations of small industries or entrepreneurs, consultants,
private agencies doing research or providing services to entrepreneur, and similar training
institutions. Educational institutions working in the field of entrepreneurship like Institutes
of Technology, Institutes of Management, Universities, and engineering Colleges also
encourage and support entrepreneurship. Development of administration in the district and
large industrial establishment interested developing ancillary industries also promote
entrepreneurship. They help small units to grow and develop.

Entrepreneurial Behavior (EB) is a function of an individual personality characteristics and

environmental factors. This could be represented as:-
EB = f (P,E)
Where
P = Personality characteristics
E = Environmental factors.
This environmental factor could be either nutrant or impediments to entrepreneurial
development.

One really cannot draw any conclusion regarding following points that how they promote
entrepreneurship. There are examples of entrepreneurs coming from varied educational
background, age and family background.
1. Education
2. Age
3. Family
4. Community
5. Technology
6. Resources

1. Education:- Educational background of individual and family plays an important role in

placing entrepreneurship development. Proper education especially education in field of
management is believed to encourage entrepreneurial ventures. However, on the other hand we
have instances where children born in poor and uneducated family have strong desire to excel in
their career and life.
2. Age:- This is an important factor in choosing the career. Usually the entrepreneur set their
enterprise after having some field experience. Some start their business immediately after
completing their education whereas some decide to take some industry experience before starting
the enterprise. However, majority of the entrepreneur make up their minds before 30. Individuals
in the age group 40 to 50 rarely take the risk of entrepreneurial venture and such thoughts are
postponed till retirement and we observe that there are some successful entrepreneurs who have
stated the business after attaining their retirement age. One can understand the psychology of a
retired person when he decides to jump into a new venture after generating sufficient funds and
after fulfilling family responsibilities.

3. Family: - Family background as well as the financial status play and important role in
shaping the decision of investments. Parents are the role models for children. Their advice and
attitude ultimately shape the behavior of children naturally enterprising parents encourage
entrepreneurship whereas risk adverse parents discourage entrepreneurship. Study of financial
status indicates that more than 60% of the first generation enterprises are started by entrepreneur
belonging to middle income group, very few entrepreneur have come from low income group. This
implies that the financial status is an important factor in deciding upon the entrepreneurial venture.

Cooperation from the spouse is a very vital element in development entrepreneurship it is

observed that male entrepreneur are supported by educated and working wives and women
entrepreneur get moral / financial support from parents, husbands and other family members.

4. Community:- Pre-entrepreneur background is a key factor in grooming the necessary skills.

Some communities are famous for entrepreneurship venture such communities value
business spirits and inculcate the same spirit among the children such communities follow the
established trade. Some communities, under some threats try to prove themselves by taking
risky ventures for example in India Marvadi and Sindhi community is famous for business
venture.

5. Technology:- Advanced technology does motivate entrepreneurs in their new ventures however
technology cannot deter the spirit of entrepreneurs. In many cases technology develops as a
response to the need and requirements of business.

6. Resources- Easy availability of resources encourage busines growth. The best example for
this factor is development of Tata Iron & Steel Co. ( TISCO) at Jamshedpur.
 Qualities of a successful entrepreneur
(Critical attributes of a successful entrepreneur)
1. Need for Achievement- All successful entrepreneurs have a very strong need for achievement.
This strong urge leads to absolute passion for the goal and the person gathers enormous energy to
work and push the entire team to the goal. Kiran majumdar, Narayan Murthy as first generation
entrepreneurs have exhibited this strong desire to establish the enterprise and untiring energy to
take the organization to higher levels.
2. Vision – The entrepreneurs feel the change before it actually occurs. So they prepare for the
change in advance and thus make huge profit if their predictions proved to be correct. They
prdict market response to a given change and offer the products and services as per the
changed requirements.
3. High level of motivation- This class of people is highly motivated and in turn motivates
many more to achieve their goals. Failures cannot stop them. They are very energetic and
carry positive vibes whwrever they go.
4. Risk bearing capacity- Entrepreneurs are risk bearers and they are ready to risk their
money, time and resources for the business. They all strongly believe that profit emerge
only if risks are properly managed.
5. Perseverance – Stories of early struggles and failures are very common in the case of all
entrepreneurs. The business enterprises require proper care and nurturing at the early stages,
entrepreneurs wait patiently to let the business settle and then bloom.
6. Self confidence and Self esteem- Most of the entrepreneurs set up the business in order to
be on their own. They believe in framing their own life as per their own wishes. They have
a very high degree of self respect and confidence to be master of their own fortune.
7. Excellent leadership- Entrepreneurs are the best leaders, who can motivate the entire team
towards the set goal. They have excellent skills of decision making and they work hard to
make their decision right. They are inspired and self motivated. They exhibit very high
levels of stamina with which they can work untiringly.
8. Team building ability – A well focused and motivated team can achieve anything
and everything. Team building is a rare skill. The leader needs to address the conflicting
issues among team members and to set a common and bigger aim for all. He must create a
all win situation and distribute the gains to all. Leader needs to have faith and support of the
entire team to perform the difficult tasks. A successful entrepreneur possesses the team
building ability.
4. Ethics and values – All the successful entrepreneurs base their business on the basic
principles of ethics and values. The statistical studies indicate a very high correlation between
 business ethics and long survival with good profits. The most respectable entrepreneurs of today,
Narayan Murthy and Ratan Tata are very well known for their ethics and values.
Prepare an outline of basic qualities of any one entrepreneur of your choice - Narayan Murthy
(Ref. his book Better India Better World.)

Difference between - Entrepreneur – Manager - Intrapreneur

A Professional manager needs to know the basic principles of management.

1. Planning 2. Organising 3.Staffing 4.Monitoring and Controlling

Managers like entrepreneur, are energetic, motivated and goal oriented. We may compare the two
on the following grounds.

Managers work with a short term motive and resigns from the job when gets a better opportunity.
For an entrepreneur, his enterprise is like his own baby. So he has a longer perspective and is ready
to take any efforts for the betterment of the organisation

A good manager in any organisation is good at the assigned task. However he is a sheer follower of
the selected path but is unable to choose the best path. Entrepreneurs set the path.

A manager is paid a contractual payment and hence does not take any risk of profit and loss. For an
entrepreneur profit will be a reward for his risk bearing capacity.

Manager’s entire aim is to fulfill the targets set by the higher up and hence they have set objectives
to attain. Entrepreneurs set the goals themselves and motivate the team to attain these goals.

Managers maintain performance oriented relationship with colleagues and subordinates. They treat
the team members in a professional manner, whereas an entrepreneur considers the man power as
an important resource and hence treat all with more care and compassion.

In many cases, the manager has better paper qualification and the skill set than the entrepreneurs.
Manager is appointed for a specific profile and hence he is required to have the relevant experience
and qualifications. An entrepreneur may think of a business opportunity for which he himself may
not have the required skill set for the execution.
Compare the personality of any good and successful manager known to you with Narayan
Murthy/ Bill Gates/ Sahanaj Hussain

Difference between entrepreneur and intrapreneur -

(Comparison between an intrapreneur and an entrepreneur-
Outline similarities and differences between entrepreneurs and managers)

Intrapreneur is the one who has new ideas or new ways of doing existing process within the
corporate unit.
Intrapreneurship can be termed as corporate entrepreneurship.
Intrapreneurs operate within the framework of the organization.
Encouraging intrapreneurship helps to improve the corporate business. Many modern organizations
such as Googal encourage the staff to think about the processes that are beyond their domain. This
leads to overall motivated atmosphere in the organization. If ideas need incubation and further
research, the company provides full support in terms of resources and time and the concern
employee is appropriately honored.

If intrapreneurship is encouraged, competitiveness among employees leads to better ideas and

better strategies. Corporate image is enhanced and corporations attract better employees. Attrition
becomes very low and the work environment becomes congeal. Thinking out of the box is
promoted among all employees. Interdisciplinary teams are formed and exchange of ideas improve
the overall productivity.

1. Both, entrepreneurs and intrapreneurs are creative and have capacity to innovate. Both are
highly motivated and are very focused on their aims.
2 Entrepreneurs undertake the risk of running a business whereas intrapreneurs do not bear
any business risks.
3 Entrepreneurs have to organize all the resources for the new experiment, pilot study and is
overall responsible for profits and losses whereas the company takes up the responsibility of
providing resources at different levels of experiments and the intrapreneur is not directly
responsible for the financial success and failure of the business
4. Entrepreneurs set the goal and work hard to achieve the same, whereas intrapreneurs find
some new ideas within the corporate’s domain which may enhance the profitability of the
company.

The modern organizations are promoting intrapreneurship by conducting idea generation sessions
for the employees. When employees across the verticals think out of their own domain or think out
of the box, better ideas emerge and if these ideas are properly shaped, it may lead to new areas of
business development.
The process can be outlined as –
1. Create a healthy and interactive work environment
2. Encourage and respect new ideas
3. Give opportunities to all to handle different responsibilities.
4. Conduct idea generation sessions in regular intervals.
5. Select workable ideas.
6. Provide necessary resources for R and D and incubation.
7. Provide mentoring
8. Appreciate and encourage concern employee/employees in public
9. Implement the idea and have the market test
An excellent example of Intrapreneurship is Tata Swach –Water purifier that will have low cost to
suit the requirements of lower middle class and poor class. The product is designed for the rural
market.
Gather more information about Swatch water purifier

Theories of entrepreneurship
Market Process Theory
Hayek and Krizner
Knight - Risk and Uncertainty
Joseph Schumpeter - Theory of Innovation

 Hayek –Relationship between market equilibrium and role of entrepreneurs

 Process of adjustment
 Centralised and decentrlised process

Hayek –Relationship between market equilibrium and role of entrepreneurs

Process of adjustment
Centralised and decentrlised process

Krizner-
Alertness to disequilibrium
Flashes of eoresights

EcoKnight-
Risk and uncertainty
Consolidation of uncertainty
Appointment of the personnel
Rewards to entrepreneurs –
For the ability
Scarcity of supply of self confident people with necessary power.

Joseph Schumpeter
Innovation and invention
Five types of innovations –
New Product
New Market
New source of raw material
New method or tecnology
New form of organisation

Effects of innovation -
 Demand
 Cost
Three motivating factors –
1. Dream
2. Strong willpower
3. Joy of creation

Economic Theories –
1. Richard Cantillon – Noted economist and renowned author developed an early theory of
entrepreneurship in 1700 , describing entrepreneur as risk bearer. All those who buy at a
certain fixed price and sell at an uncertain price operate at risk. Therefore merchants,
farmers, craftsmen are the real entrepreneurs.
Persons bearing risks are different from one who is supplying capital.
2. Mark Casson – According to this theory, the demand for an entrepreneur arises out of the
need to adjust to the changes . The supply of entrepreneurs is scarce as the qualities
required for a successful entrepreneur are very rare.
Definition- J B Say coined the term Entrepreneur
Joseph Schumpeter – Innovation
Peter Drucker- The entrepreneur always searches for change, responds to it and exploits it as
an opportunities.
Entrepreneurship – Composite skill – mix of qualities and traits
Creative and innovative response to the environment- social, education, business, agriculture
and many more.
 Doing new things or finding a new way of doing existing process.
 Scope of the concept –
 Business
 Agriculture
 Public administration
 Service sector
 Social work

 1997 – Survey of 30 founder companies of 17 states of US upto $6.5 B

 Effectual reasoning
 Inverse of Causal
 All teaching so far is to develop causal reasoning

 Managerial thinking – Causal reasoning

 Strategic thinking - Creative causal reasoning
 Entrepreneurial thinking – Effectual reasoning

 Causal process – idea –market research – financial projections – team – business plan –
finance – prototype – to market – to exit.
  The process of effectual reasoning –
Three categories of means –
1.What they are – traits, tastes and abilities
2.What they know – education, training, expertise and experience
3. Whom they know – social and professional network
 Causation model -
 Example of starting an Indian restaurant by causal way-
 Effectuation model – lunch packets – to restaurant

 Principles of effectual reasoning –

1- Affordable loss principle – hands on selling
2. The principle of strategic partnership – focus on building partnership than competitors analysis
3. The leveraging contingencies principle – The ability to turn unexpected into profitable.

 Predictable market and unpredictable market –

Causal reasoning -
 If we predict the future, we can control it
Effectual reasoning -
 To the extent we can control the future , we need not predict it.
 Effectual logic is people dependent.
 Getting right people
 Dark side of the reasoning –
 No specific goal
 Efforts - will and aspirations of the people.
 Example of U- Haul (1945) – Leonard Shoen
 Creating right people

Indian styles of entrepreneurship

India is a country of multiple language, caste and culture. Indian business scenario is influenced by
all these aspects. The family, value system and society play a very important role in shaping of the
individuals.

History of Indian entrepreneurship –

Prior to British rule, India was well-known for the artwork, spices, silk, and handicraft among all
neighboring and even far off countries. All these businesses had brought glory and fame to India in
the international market. Many communities such as Parsees, marwarees, gujrathies and Punjabis
were known for the business traits.

During British rule all the business suffered a set back because our goods could not stand the
competition from British goods in terms of quality and price. The education system produced more
clerks and accountants rather than business leaders. However, some money lenders, steel
companies were set up in this time span.

After Independence, we did not have a sizable rise in startup companies. In fact Indian
entrepreneurship has remained limited to some specific regions, caste and communities. Parsees,
marwares, gujrathies and Punjabis still dominate the business scenario. The leading business houses
are carrying on their family business. The basic features of Indian styles of business –

1.Family based business houses – More than often, business runs in some of the business families.
Tata, Birla are some of the business family groups which are being run for years and are in fourth
and fifth generations.They have diversified in many areas and today they are coporate giants. Vast
experience and through understanding of Indian market have enabled them to take correct and
timely decisions and so are highly successful.
These business houses started with a focus on one area and gradually with backward and
forward linkages they have attained diversification. The new generations have added different
dimensions to business handled by previous generations. For example, Asim Prmji added IT arm,
Vijay Mallya added airlines. The major controls are retained in the family and then they have gone
public to raise the required resources.
2.Caste/Community based businesses- Some communities are known for their expertise in
specific areas such as Money lending and trading in Marwari community and Stock broking in
Guajarati. Many Gujarati motels are famous in US and UK. Patels are known for their shops
providing all Indian products in US and UK.
3.Sindhi and Punjabi styles - A different class of businessmen emerged after independence and
post partion of India and Pakistan. Those Sidhi and Punjab who migrated to India had to struggle
for their survival. They came to India and left all their wealth back in Pakistan. They entered in
business for sheer survival and then are now established business houses.
5. High tech IT based business houses – A new class of educated people entered into
knowledge based industry with IT boom. Numbers of new IT companies were set up by IT
professionals around 1980. For eg Infosys, Patni computers. Indian IT professionals have also set
up new companies in Silicon valley of US.
6. Women enterprises – Few Indian women with extraordinary capacities have proved to be
very successful in their business. They have come from different family , educational background,
but have shown common qualities ,such as commitment and perseverance. Kiran Shaw majumdar
(Biocon), Sahanaz Hussain (Sahanaz), Vandana Luthra (VLCC)are some of the successful women
entrepreneurs.
7. Social entrepreneurs - The individuals aiming at social change and enabling weaker
elements, are setting up social enterprises. This is a very recent development and in this style of
business social change happens along with commercial gains. Anandvan, a colony set up by Baba
Amte for rehabilitation of leprosy patients is a place where the patients have achieved self
sufficiency and are producing surplus for the market. Pratham – Mr. Chavan, Arvind Kejriwal
(Megasaysay Recipient and a social entrepreneur)
Challenges
1. Our education system is tuned to produce more clerks and accountants rather than
entrepreneurs. Education system need more flexibility and space for original thinking for the young
minds.
2. Even today, some of the communities prefer to avoid risk and prefer to take risk free way of
life. They do not have nor nurture the business traits.
3. Indian peoples’ attitude towards money and business needs to be changed. Most often
money is treated as evil and the rich and wealthy are assumed to be cheaters and unreliable. We
need to concentrate on the following-
Entrepreneurship Development Education -
Skill development Program
Mentoring and incubation centers
To bridge up the resource gap - Funding

Women and Entrepreneurship-

Traditionally the role of women in any society was limited to child bearing and upbringing,
household responsibilities such as cooking and housekeeping, maintain the social and family
relationships and to provide a whole-hearted Support to all family members.
The role of women in modern society is changing gradually. It is found that women can perform
better if they are convinced and enabled.
Characteristics of women –
1. Physical strength –Women are physically stronger than men and have longer life
expectancy than men.
2. Adaptability –Women can adapt easily to a change in the situation.
3. Understanding others’ requirements- Since women take care of all the family members,
they are found to be more sensitive to the others’ requirement.
4. Commitment – Women by nature are found to be more committed. They believe in
fulfilling the promises they make. In case of repayment of loans, the number of women
defaulters is much less than that of men.
5. Financial management – Women manage funds in a better way. They know how to manage
with limited resources to meet the end requirements. They are expert in sitting the priorities.
6. Leadership – The natural leadership talents come out of the desire to achieve and excel.

Favorable factors for women to be an entrepreneur -

1. Flexibility and adaptability
2. Desire to support to family income
3. Natural ability to multitasking
4. Sense of responsibility
5. Higher degree of commitment
6. Leadership styles – participative and democratic type
7. Endurance and perseverance

Weaknesses of women entrepreneurs –

8. Sensitivity and low emotional intelligence- This has an adverse impact on the rational
decision making process.
9. Lack of interest in legal matters – Since women are sensitive and are driven by emotions
rather than facts, they are likely to commit errors bypassing the legal framework.
10. Submissive nature – Many women do not pursue their viewpoint and try be more
accommodative rather than being persistent.
11. Limited mobility and exposure – Lack of exposure and protective upbringing limit the
imaginations of women. Ideas become tough and hence the business suffer.
Barriers for Women entrepreneurs-
Age of entry
Education
Family background and support
Psychological factors

 Case study – (UOM 2005)

Shahnaz Husain : World’s Greatest Woman Entrepreneur
There are perhaps few others who can stand testimony to the truth of these words, as Shahnaz
Husain, India’s pioneer in herbal cosmetics. Credited with single-handedly placing Indian Herbals
on the world cosmetic map, her success story – that of young girl from a conservative Muslim
family who rose to become an international trailblazer in the field of herbals – is by now legend.
President of CIDESCO, the first Asian to enter Selfridges in London and break a 40-year old sales
record GQM Commitment to Quality award, FICCI’s outstanding woman entrepreneur, US
magazine Success’s “World’s Greatest Woman Entrepreneur” – the list of accolades and
achievements is endless.

An entrepreneur in the truest spirit of the word, the lady has a whopping 80 percent of the domestic
herbal market, and sales counters in the best stores internationally, be it the Seibu Chain in Japan,
Bloomingdales in the US, Galeries Lafayette in Paris, Harrods and Selfridges in London…it goes
on.

Meeting the high priestess of herbals in her office in Greater Kailash, one is struck by the fact that
Shahnaz wears the accolades with the confidence of a person who deserves them – there is no self-
effacing embarrassment when she discusses the more than humble beginnings of the Shahnaiz
Husain empire.

“Though I was married at a very young age, I always knew that I was made for something more,”
begins Shahnaz. Not prepared to sit back as a housewife and mother at the age of 16, the young
Shahnaz set about writing for magazines to earn money so that she could fund her education.
Staying with husband Nasir in Tehran, Shahnaz found the ideal opportunity in the international
beauty schools there. After studying cosmetic chemistry in international beauty schools in centres
including London, Paris and Denmark for close to eight year, Husain hit upon the idea of exploring
the 4000-year –old Indian Ayurvedic system, so that she could research and develop herbal cures
and treatments.

“I had seen the debilitating effects of synthetic cosmetics abroad; there was no doubt in my mind
that the herbal system would work,” recalls Shahnaz.

She returned to India to set up shop in one room, with a startup investment of Rs.35,000/- borrowed
from her father. The going was tough – Shahnaz had priced her product well above the existing
market.

“I began with just one product – Shalife, a massage cream. My facial was priced at Rs.100, while
you get one in the market for a paltry for Rs.6,” reminisces Husain. However, that did not stop the
crowds from coming in, and soon, Shahnaz had more than clients than she could handle. The lady
invented a marketing style uniquely her own; she decided to make the brand a personality-driven
one, flying in to various cities to lecture on herbal and Ayurveda, inaugurating Shahnaz franchises
and salons, and returning the same day.

“I would go to a place for one day, offer free prescriptions and advice, inaugurate the salon, and go
back,” says Shahnaz. It worked - today, there are more than 600 salons in India and abroad. The
Shahnaz Husain group of companies has acquired a global presence, with exports to 132 countries
including those in the Middle East, South-East Asia, Australia and all over Europe. Recently, the
company has been approached by a Fortune 500 investment company to explore business
opportunities.

The strategy was one she applied with great success internationally as well – at one point, during a
makeup demonstration in Russia, Shahnaz was asked to stop as the floor was caving in under the
pressure of the people who had turned upto watch. Interestingly, Shahnaz has never advertised her
product, a fact that Harvard in the US wanting to use her marketing system as a case study.

In retrospect, Shahnaz attributes her success to her “sheer grit and determination.” “I do not
believe in destiny – the word “fail” does not exist in my dictionary. I never fail, because I never
stopped trying,” says she. That she doesn’t is obvious – 17 herbal lines, with many more in R&D,
Husain is busy expanding her empire by adding health resorts, signature garments accessory lines
and more to her portfolio.

Having completed 25 years in the business, the self-taught marketing miracle reveals her formula
for success. “In life, you get what you negotiate. Any woman has the capacity to do what I did – it
doesn’t matter what you want, what matters is how badly you want it”.

Questions :

1. Examine the true qualities involved in Mrs.Shahnaz Husain as a successful entrepreneur.

2. Describe the pricing and marketing strategy adopted by Shahnaz Husain.

3. How does Shahnaz Husain start her new saloon ?

4. What are the factors that led Shahnaz become successful globally ?

Economic environment and analysis of business opportunities -

Political – Economic – Social –Technological (PEST) analysis -

Political aspects –
1. Internal stability – Internal law and order provide necessary
 safety required by business enterprises.
2. Military invasion or external aggression discourage business ideas 3.
Political
Ideologies-
Government policies regarding
Political support for new ventures
Economic aspects –
Economic system –
capitalism – freedom of enterprises –private ownership ; Socialism – Central planning and
government ownership and Mixed economy – Coexistence of Planning and freedom of investment
and coexistence of private and public ownership

Business cycles – Phases - Inflation – boom – disinflation- recession –Crisis- revival

Moderate degree of inflation is favorable for business as profits rise during this
phase and recession is characterized as falling profits and hence is not a
favorable phase for business.

Exchange rates – Business depending on imports and exports are affected by

exchange rates.

Financial institutions – Existence of financial network help business to raise

short and long term loans.

Fiscal and monetary policies- The fiscal policy determines the tax liabilities
of the business and people and monetary policy determines the cost and
availability of funds. Both are important factors that affect the profitability of
the business.
Social aspects –
Demographics –
Education
Class and caste and gender issues
Culture and attitude
Technological aspects –
Technological status
Cost of technology
Technology and cost of production
 Other complimentary resources
The industry analysis can be done through following two models -
Michael Porter – Five forces model
John Mullins – Seven domain model
 Michael Porter’s Five forces model – Late 1970s
To measure the attractiveness of the industry
Profitability of the industry
Five forces –
• Threat of entry
• Buyer power
• Supplier power
• Threat of substitutes
• Competitive revelry
Threat of entry –Is it easy or difficult to enter the industry?
Those hoping to build enduring business prefer high entry barriers
Buyer power – Do buyers have power to set terms and conditions?
Entrepreneurs prefer weak buyer power
Supplier power -Do supplier have power to set terms and conditions?
Entrepreneurs prefer weak supplier power
Threat from the substitutes-
Will substitutes steal my market?
Entrepreneurs prefer little threat
Competitive rivalry – Is competitive rivalry intense or genteel?
Entrepreneurs prefer little rivalry.
John Mullin’s Seven domain model- The business road test – John Mullins
1.Industry – Micro
2.Industry - Macro
3.Market – Macro
4.Market – Micro
5.Entrepreneurial team- Mission, aspiration
6.Entrepreneurial team- Ability to execute
7.Entrepreneurial team- Connectedness across the value chain
Process of idea generation, screening and selecting an appropriate
business idea.
Feel the market pain and find out what can sell in the market.
Define the product.
Estimate the market size.
Decide upon the team
Prepare the business plan
Validate or screen the viability of the project
Organize resources
Choose business form
Execute the idea.
Recently the process of idea generation is slightly modified – Saras Sarsvathy – HBR submission
Write down what one is good at, in order of individual efficiency.
Check the market requirement for a suitable business opportunity that matches the efficiency.
Select the idea which has a potential market and for which the team has the required skill set.
Prepare business plan for that idea.
Check the feasibility of the idea.
Organise the required resources.

Business Plan
Why to prepare business plan?
Business plan is an important tool for a prospective entrepreneur who is seriously thinking of
starting a business.
To raise the external finance
To consider all facets of business
To Test feasibility
Provides confidence in decision making
Identify the future needs

Entrepreneur/ CEO should himself or herself write the Business Plan in order to have clarity about
the entire proposal.
The main focus of the business plan is on Market plan, Financial plan and on the details of
management team
Appropriate cover page, graphs, diagrams and photographs are needed to make business plan
attractive for interested parties.
There is no specific format of business plan as yet however a general guideline can be drawn as
follows -

General outline of a business plan -

1. Executive summary
2. Background of the business
3. Product description
4. Market analysis
5Management and organisation
6. Financial summary
7. Funding requirement
8. Appendices
1.Contents of Executive Summary-
Mission
Purpose
Sales and Marketing strategy
Business opportunity and product design
Management team and their experience
Financial planning and projections
Future projections
Required funding
Executive summary must highlight the idea and ability of the team for the execution of the same.

2. Background – The entrepreneur needs to explain the consumer pain that his product may be
addressing or new area it may be introducing. The evolution of the idea and the current stage of the
business must be mentioned. The entrepreneur’s belief in his own idea is the prerequisite for
attracting funding and good people to the venture.

3 Product/service description
Description of the product, the unique features of the product must be explained by the
entrepreneur. Distinguishing the product via a comparison with competitors’ product brings clarity
for the readers. Honest acceptance of limitations and the identification of the risk highlights the
unbiased and logical thinking of the entrepreneurs.

4 Market analysis
 Realistic estimation of the market size, taste and trends in the market help in arriving at the proper
estimation of the financials. Mention of the characteristics of target market, future market trends
and distribution channels add weight to business plan.

5 Management team and organisation

Details of team members along with their skill sets and commitment
Details of Advisers, network and contacts

6. Financial summery
Projected Profit and Loss account, balance sheet and cash flow forecasts – Quarterly analysis for at
least three years
7. Funding requirement –
Assessment of the requirement
Sources of funds
Usage of funds with details of expenditure

Timeframe required
To go live – Time needed to bring product in the market
To Break even – Pay back period – Time needed to get the initial investment back.
Exit route

8. Appendices or Exhibits –
Product description
Marketing and sales plan
Financial projections
Project plan
Management biographies

Details of Marketing plan

4 Ps- Product –
1. Product variety, Quality, Design, Features, Brand name, Packaging, Size, Services,
Warranty and Returns.
2. Price – List price, Discounts, Allowances, Payment period and Credit terms.
3. Promotion Sales promotion, Advertising, Sales force, Public relations and Direct marketing
4. Place - Channels, coverage, Location, Invetory and Transport.
Marketing mix strategy –
Offering mix Communication mix
Distribution channels Target customers

Details of Financial planning-

Profit and Loss account – Expected revenue, cost taxes and profits.
Projected Balance sheet – assets and liabilities.
Cash flow statement – estimated cash receipts and disbursement for the period and resulting
inflow or outflow
Estimation of the operating cash requirements –
Break-even analysis – FC / (P – V)
Why businesses fail?
Marketing aspect – Competitors, customer service, lack of team support and changing
customer requirement
Financial aspects – Errors in cash flow estimation, lack of foresight
Unrealistic goals, lack of deadlines, lack of flexibility and personal issues.
For a successful new ventures following focus is required –
1. Constant feel of the market
2. Financial foresight
3. Building a top management team
4. Entrepreneur’s decision and
5. Outsiders’ advice
Univac- Company to manufacture first computer- lost business to IBM as it never
visualized the size of the market. DDT , Xerox and Novocain suffered because of the same
reasons.
Lack of market focus.
Innovators have limited vision or tunnel vision.
Wrong financial foresight-
Old bankers rule of thumb –Cash income will be delayed by 6months and outlay
will be proponed by 6 months.
Increasing Capital requirement
Lack of Financial management system- controls
Failure to build a top management team –
Team building should start before the need is felt.
Assignment of key areas
To trust people
Entrepreneur’s decision –
 Soichiro Honda , Henry Ford and Henry Ford II
Narayan Murthy and Bill Gates

Prepare a business plan of your own suitable business idea.

While assessing any business plan –check the marketability of the idea, details of
marketing plan, details of financial plan and the information about the team and
it’s vision, mission and skill set

Options to start a business or Quick Startups –

1. Franchising
2. Acquisition
3. Ancillary unit
4. Starting afresh

1.Franchising – Definition – A management whereby the manufacturer or sole distributor of

trademarked product or services gives the exclusive rights of local distribution to independent
retailers for their payment and conformance to standardized operating procedures.

Franchiser – The one who lends his trademark

Franchisee – The one who pays royalties for the right business under franchiser’s name

Three types of franchising –

• Product- Dealers, Outlets selling the branded products – Car dealers , sellers of consumer
durables.
• Process – Outlets producing and sellingthe branded product or services- MacDonald’s, KFC,
Subway etc.
• Business format – name, process and knowledge transfer- Chain of hotels, Chain of cinema
houses etc.

• Advantages to franchisee –
Lesser risk
Already established name and brand
Managerial assistance – training and guidance
Initial financial support
Identified location, suppliers and market
 Challenges for the franchisee – Dependency on franchiser leading to lot of controls and
regulations.

If the franchiser faces problems and decides to discontinue the product or service, then
franchisee is not left with any other option.

Advantages to Franchiser – 1.Expansion with lesser cost and responsibilities

• Economies of scale – Reduction in cost

• Diversification of the market risks-Operation at different locations reduce the risk.

Challenges for franchiser – Quality control- In process and business format types of
franchisee, The franchiser has lessof direct control over the quality of the product and
services.

• Acquisition – This can be considered as a start up or expansion strategy

Acquisition is preferred for the advantages such as

1.well established customer base, suppliers and sales channel

2.Existing staff and goodwill

Challenges-

Study of the company for sale

Need to have expertise to handle the weak areas

Retention of key employees

Determining the price of acquisition - Methods of valuation -

(Asset valuation and Cash flow)

Identification of the candidate –

Ancillary unit- Manufacturing the spare parts or components of a product or developing a part of
the service. Here the scale of production, technology and investment requirement is comparatively
smaller. This can be an option of startup for a SME entrepreneur or can be considered as backward
integration strategy for expansion.
Advantages- The ancillary units can be set up with less of investment, and the output has an
assured market. This becomes a B to B model and hence enjoys certain coverage from the market
risk. The company gets support and help from the parent company for expansion as well as for
Rand D.

Challenges – 1.These units face derived demand and hence the profits depend on demand for the
parent product. The piling up of the inventory stock is again a major risk for the unit.

2.Delayed payments from the other business unit aggravate risk elements.

3. Changed specifications – If the parent product requires any modifications , the this unit need to
adapt to the change instantly.

 Starting a fresh –
Market
Existing New
Product Existing Market Penetration Market development
New Product Development Diversification

The new business can be penetrating the market if the entrepreneur feels that there is further scope
to sell more in the same market. A revised or a new product is sold the market under Product
development. When an entrepreneur tries to explore a new market with the existing product, he is
adopting market development strategy. If an entrepreneur is aiming to sell a new product in
altogether new market, he is diversifying.

 Growth strategies –

Diversification

Joint ventures

Acquisitions

Mergers

Franchising
  Diversification –

Current product New product

Current market Market penetration Product develop.

New market Market develop. Total diversification

 Joint venture – Both the parties contribute to create new

equities.
 Local partner
 Spreading of risk
 New technology
 Leveraging strength and finance
 ECommon in automobiles and food
 conomies of scale
 Global Expansion –
 Relocation
 Financing growth

Indian multinational enterprises

A multinational corporation (MNC) is an enterprise which owns or controls production facilities or

provides services to more than one country. United Nations defined MNC as enterprises which
control assets - factories, mines, sales offices and the like in two or more countries. The
International Labour Organization (ILO) has defined MNC as a corporation which has its
management headquarters in one country known as the home country and operates in several other
countries known as host countries.

The companies of merchant traders in medieval Venice and the English, French and Dutch trading
companies of 17th and 18th centuries were very close to present form of MNC. However they were
essentially trading companies rather than manufacturing ones. The first modern MNC is generally
thought to be the Dutch East India Company which was set up in March 1602. The MNCs have
grown in terms of physical, economic and political power over the years. Most of the large business
houses have overseas operations.

However, recently even small or start up companies are also getting involved in foreign operations
at an early stage. They are popularly known as Micro-multinationals. Enabled by Internet based
communication tools, this new breed of multinational companies is growing in numbers. These
multinationals start operating in different countries from the very early stages. What differentiates
micro-multinationals from the large MNCs is the fact that they are small businesses. Some of these
micro-multinationals, particularly software development companies, have been hiring employees in
multiple countries from the beginning of the Internet era. But more and more micro-multinationals
are actively starting to market their products and services in various countries. Internet tools like
Google and Yahoo make it easier for the micro-multinationals to reach potential customers in other
countries. Service sector micro-multinationals, like Facebook started as dispersed virtual businesses
with employees, clients and resources located in various countries. Their rapid growth is a direct
result of being able to use the internet, cheaper telephony and lower traveling costs to create unique
business opportunities

The macro objectives of MNCs are to make worldwide profit and maximize their market share of
the global market. The decision to set up production or the service providing units in a different
country is mainly guided by economic and political considerations.

• Cost considerations – Easy and cheaper availability of resources such as raw material and
labour, motivates the company to shift the production base or to undertake typical production
processes at different locations This enhances their profit margin. Cheaper and abundant labour
available at India and China has attracted many MNCs operations to their countries.

2. Technological and infrastructural advantage – The companies operating in less developed

economies plan to set up production units in advanced nations to reap the befit of
technology. The IT majors of Indian origin have their international offices in US and other
advanced countries.
3. Economies of scale – As the scale of production enhances, the company can take advantage
of managerial, technological, financial economies of scale and hence can attain higher
profits.

4. Market considerations – A country with good demographics and purchasing power attracts
the best of the business houses. India and China are presently considered as the best market
to sell anything and everything. Leading companies of different sectors are reaching out to
these huge markets.

• Market imperfections and price discrimination – In current global scenario, the market leader
company aspirers to gain global leadership through acquisition of market players in the host
country. Pepsi and Coca – Cola have followed this strategy across the globe to maintain the
leadership and to practice the price discrimination.
• Hedging the market risk – The economies of different nations face different phases of the
business cycle. Even today, when many nations are still struggling to come out of recession,
some are experiencing 8 to 10% of the growth rate. Market conditions differ from country to
country. Hence having business in many countries can give a good cover for the risk.
• Tax and other fiscal gains –Governments of some nations provide incentives to MNCs such as
tax breaks, pledges of governmental assistance or improved infrastructure, or lax environmental
and labor standards enforcement. This process of becoming more attractive to foreign
investment can be one of the driving forces for MNCs.

Because of their size and technological strength, multinationals can have a significant impact on
government policy matters. Along with economic gains, MNCs aim at attaining political control on
the host country. The MNCs give threat of withdrawal to set the policies at their advantage. MNCs
lobbying is directed at a range of business concerns, from tariff structures to environmental
regulations. Companies that have invested heavily in pollution control mechanisms may lobby for
very tough environmental standards in an effort to force non-compliant competitors into a weaker
position. Corporations lobby tariffs to restrict competition of foreign industries. Overall all MNCs
aim at influencing the government policy decisions to maximize the economic and political gains of
themselves and the home country.

When a domestic company aims at MNC status, it needs to undertake a comprehensive study of the
proposed host country in terms of prevailing economic, political, social and cultural conditions.
Every country has different rules and guidelines regarding foreign trade and investment and the
company needs to follow the same. Setting up of foreign offices is a part of strategic planning for
the company and hence the decision needs to be taken after due diligence.
The domestic corporation has different routs open to become a MNC. A company may adopt any
suitable strategy –

1. To open a liaison office in the host country

2. To initiate a representative office

3. To start a project office

4. To set up a branch office

5. To establish wholly or partially owned subsidiary office

6. To enter into joint venture with enterprise of the other nation.

Presently, numbers of Indian companies have attained the status of MNCs and their operations are
widely spread across the globe. In global world of the day, multinational corporations are the
powerful agents of economic, political and social change

Social Entrepreneurship –

William Drayton- Asoka (1980) introduced the concept of social Entrepreneur.

Definitions – 1. Social entrepreneurs are individuals with innovative solutions to
society’s most pressing social problems
2-Schwab Foundation for Social Entrepreneurship - Social entrepreneurs
Innovate by finding a new product, a new service, or a new approach to a
social problem.
3-Wikipedia defines social entrepreneurs as “someone who recognizes a social
problem and uses entrepreneurial principles to organize, create and manage
ventures to make social change.
Social entrepreneurs assess their success in terms of the impact that they
have made on society.
4-Arvind Kejriwal (Megasaysay Recipient and a social entrepreneur)
Social entrepreneur is blend of entrepreneur and NGO.

The concept - Social returns on investment (SROI)

Guidelines to measure social benefits.
1. Include positive and negative impacts.
2. Consider all stakeholders.
 3. Avoid double counting the value created by the company.
4. Quantify and monetize the social impact.
5. Add the necessary risk factor.
6. Use appropriate discounting methods for social cash flows.
7. Social challenges – caste, class and sex discrimination, Illiteracy
8. Economic challenges – Poverty, inequality and
9. Political challenges – Corruption, lack of transparency
Health and hygiene - Ignorance, misconceptions and resources to fight
diseases
Socio-Psychological challenges – Stress , depression

Need for social entrepreneurship in India - Existance of Dualism-

Urban – Rural divide, Economic divide i.e. gap between rich and poor, Social
divide, gender Discrimination and Regional divide call for the intervention by
the social entrepreneurs.
 Reasons for slow progress –
1. Focus of social entrepreneurs on social change and hence revenue side
is neglected.
2. No institutional setup for encouragement
3. Lack of social support
4. Absence of regulatory body
Roadmap towards social entrepreneurship –
Social Servant leadership – Robert Greenleaf (1977)
Dr. V as an example of socil servant leadership
2- Agapao Love – Respectful consideration and treatment for others.
3 -Altruism,
4-T rust, Empowerment Altruism – Set of moral acts intended to promote
happiness for others and Perseverance to face the challenges
5. Newness syndrome
Challenges from the society
Challenges from the target group
All regular entrepreneurial challenges
6-The change makers
7-Drive the change, steering the change
 8. Collaboration
With Corporate sector – CSR activity
 With Government – Projects
With Community -
How it works?
 Deep retrospection and Far Vision
 Strong ambition and belief
 Transparency
 Commitment
Social Mission with a sustainable model-
Double bottom-line strategy –
Social mission and Sustainability of the model –
Grameen Bank is an example of social entrepreneurship initiated by Dr.
Muhammad Yunus in Bangala Desh with an objective to enable rural women
with funds to start their own small business.
Examples of Indian Social Entrepreneurs -
Goonj- Mr. Anshu Gupta
Left his job in 1998- Family support. Corporate collaboration
Recycling of cloths, books and school material to poor and disaster victims
Aasha Foundation – Dr. Glory Alexander
Action Service Hope for Aids
Established 1998
 Special focus on prevention, treatment and support to HIV infected
people and their families.
 Parivartan – Mr. Arvind Kejriwal –
IIT- 1989
Parivartan in 2000
Transperant governance and RTI
 Pratham -Madhav Chavan
 Established in 1994
 to make education mandatory to all children
Corporate, Government and citizens –
Project and funding –
ICICI bank , Government
GEM report- Global Entrepreneurship Monitoring stressed on the need for the
support to entrepreneurs.

There are three types of supports provided to entrepreneurs world wide -

1. Incubation
2. Business cluster
3. Policies
Global Entrepreneurship Monitor – (GEM)
 As per HBR Sept. 2010
The findings are based on study of entrepreneurs from 54 countries –
emerging and developed markets of 2009
 Incidence of entrepreneurship is twice in emerging markets
 Only 14% of startups create 20 or more jobs.
 In developing countries -Out of 100 , 10 were launching business
Out of 10, four were necessity driven and six are opportunity driven.
 In developed nations Out of 100 only 5 were ready to launch business
and out of five one was necessity driven and four opportunity driven.
 Need to develop opportunity driven business.

The study of entrepreneurship at Saudi Arabia indicates that top 500

companies have grown at 40% and have created almost 30,000 jobs.
The reasons for the higher Entrepreneurial intensity in emerging
economies –
 Migration talent- Talents returning back for better opportunities at home.
 Pent up supply- Due changes in government policies of the emerging
economies.
 Low seed requirement- Small ideas with less capital requirement
 Abilities to scale up- Large market and support from growing economy
 Incubators – Govt. and educational institutions are creating incubators to
nurture and support new business ideas.
 Global radar – When such small business appear on global scene, they
receive appreciation and support as incentive to do still better.
 Support at different levels – family, friends, community, alumni
networks,
 Support system for entrepreneurship -
Incubation – to nurture start ups at early stage and to promote their
growth.
 Benefits –
1. Space with flexibility
2. Shared office services
3. Consultation network
4. Business relations
5. Help in accessing finance

 Requisites for efficient Managing of incubators-

 Strong and committed team of professionals
 To Screen the applicants and define Eligibility
 Strict selection process
 Proper Contract and clear guidelines regarding incubator and incubates
rellationship
 Financial viability – Fixed rent
Usage based fees
Success fee
 IIT and IIM – Leading educational institutions have set up incubators to
promote Entrepreneurship
 Special institutions -
 Incubating companies –

Business cluster – Geographical concentration of industry is being tried

after the success of automobile hub at Detroit in USA and Silicone valley.
China started such cluster developments. India pis promoting SEZ and
Industrial estates at state levels. Advantages of developing business
clusters are -
1. Common Suppliers and hence supplies at cheaper rates
2. Shared infrastructure
3. Skill training
4. Marketing
5. Competitiveness
Indian clusters- IT at Bangalore, Automobile at Pune.

Policy framework – ( Ref. MSME act 2006)

 Entrepreneurship education
 Skill development
 Innovations
 Simplification of procedures
 Access to market
 Access to finance
 Special support to weaker sections

Need For Finance- (Risk – Return ratio)

1. Long term – For Start ups, expansion, diversification, take over, buyouts…..
2. Short term – For day to day operations and transactions

Long term - Equity

Term loans
Higher purchase
Short term – Bank borrowing
Sundry creditors
Personal
Deposits from customers

• Stages of business financing

1. Early stage financing – Seed capital, start up- For developing and
selling the product such Funds are costly as it carry very high risk.
2. Expansion or development finance – Funds for working capital,
sales expansion.
3. Bridge finance in the interim period – preparation towards going
public.
Funds are easy and less costly
4. Acquisition and buyout- Funds in large amounts are needed for
such purposes.
 Three risk capital markets
1. Informal risk capital market – Angel investing.
2. Venture capital market
3. Private equity market –
• Informal risk capital market – Angle investing.
A group of wealthy investors who support early stage business ventures
are called as Angle investors or Business angles.
Role of angle investor is to invest their funds in startups at seed
and early stage. Along with this financial assistance, they also provide
much needed entrepreneurial expertise, knowledge and contact
networks. Most of the angles undertake investment for helping the
entrepreneurs fulfill their dreams. For many angles, investing is giving
back to community. Angle investing is very popular in US, UK and other
developed countries.
Angle investors are highly motivated and high net worth
individuals falling in the age group 45 to 65. Most of them are successful
entrepreneurs and many times do not disclose their identity while
assessing the business proposal.
Angels love to take risk and usually invest around 5% of their net
worth in any one company. Angles are quick at decision making as they
are dealing with their own money. They follow IPO or management
buyout as their exit policy. The time horizon is 3 to 7 year and they
expect returns in the range of 30 to 100%. The expected Risk- Reward
Ratio is higher for startup and less for established ones.
Types of angles – Guardian angels, who bring in entrepreneurial
expertise and Operational angles are the one who have industry
experience but may not have the experience of starting a company.
Financial angles may neither have entrepreneurial nor industry
experience, and may have monetary returns as the objective.
The common criteria used by angles for selection of a business
proposal are
• Potential returns on the investment.
• A good business plan in terms of vision, mission, planning and projections.
• Capable management
• Existence of exit route

The history indicates a massive growth in number of angel investors and

the amount of angle funding. In 1878, J P Morgan and Spencer Trask backed
the idea of electricity of Thomas Edison. The growth thereafter is mainly due to
focus of venture capital funds on larger and later stage investment rather than
early stage and start ups.
Google is World’s greatest angel investment – in 1996 Larry Page and
Sergey Brin of Stanford university started a search engine and in 1998, one of
the founder of Sun Microsystems provided the angle funding of $100,000 to
start Google Inc.
Ram Shriram, one of the founder employee has now become an angle
investor in the Silicon valley and is interested in becoming an angle investor in
India.
For many years, Gururaj Deshpande (Sycamore Networks, Inc) mentored and
invested money in helping first-time entrepreneur, Sanjay Nayak, build India's
first homegrown telecom-equipment company, Tejas Networks. Now six years
old, Tejas Networks has grown dramatically and currently holds the No. 2
market share in India. Similarly, former McKinsey & Co. managing director
Rajat Gupta, who left India more than 20 years ago, used a combination of his
Indian savvy skills and brilliant network abroad to help build the Indian School
of Business and the Public Health Foundation of India (PHFI). Six years after it
opened its doors for the first time, ISB is now the eighth largest business
school in the world.
Venture capital or VC or Venture is a type of private equity capital typically
provided for early-stage, high growth potential companies in the interest of
generating a higher returns. Venture capital investments are generally made
as cash in exchange for shares in the invested company. It is typical for
venture capital investors to identify and back companies in high technology
industries such as biotechnology and information and communication
technology.

Venture capital firms typically comprise small teams with technology

backgrounds or those with business training or deep industry experience.
A core skill within VC is the ability to identify novel technologies that have the
potential to generate high commercial returns at an early stage. By definition,
VCs also take a role in managing entrepreneurial companies at an early stage,
thus adding skills as well as capital (thereby differentiating VC from buy out
private equity which typically invest in companies with proven revenue), and
thereby potentially realizing much higher rates of returns. Inherent in realizing
abnormally high rates of returns is the risk of losing all of one's investment in a
given startup company. As a consequence, most venture capital investments
are done in a pool format where several investors combine their investments
into one large fund that invests in many different startup companies. By
investing in the pool format the investors are spreading out their risk to many
different investments versus taking the chance of putting all of their money in
one start up firm.

A venture capitalist is a person or investment firm that makes venture

investments, and these venture capitalists are expected to bring managerial
and technical expertise as well as capital to their investments. A venture
capital fund refers to a pooled investment vehicle that primarily invests the
financial capital of third-party investors in enterprises that are too risky for the
standard capital markets or bank loans.

Venture capital is also associated with job creation, the knowledge economy
and used as a proxy measure of innovation within an economic sector or
geography.

Venture capital is most attractive for new companies with limited operating
history that are too small to raise capital in the public markets and have not
reached the point where they are able to secure a bank loan or complete a
debt offering. In exchange for the high risk that venture capitalists assume by
investing in smaller and less mature companies, venture capitalists usually get
significant control over company decisions, in addition to a significant portion
of the company's ownership (and consequently value).

Young companies wishing to raise venture capital require a combination

of extremely rare yet sought after qualities, such as innovative technology,
potential for rapid growth, a well-developed business model, and an impressive
management team. VCs typically reject 98% of opportunities presented to
them, reflecting the rarity of this combination.

For a very long time, Silicon Valley venture capitalists only invested
locally. However, throughout the years, they expanded their investments
worldwide. Most recently, Matrix Partners, a leading American venture
capitalist firm, had announced a $150 million India fund, where they will
provide internet, mobile, media, entertainment, leisure, and travel services to
customers in Mumbai. Sequoia Capital, a Silicon Valley-based VC firm, wanted
to take advantage of investing in startup companies and had acquired
Westbridge Capital, an Indian firm, for $350 million. Several other major VCs
who are also taking advantage of the growing Indian market are Kleiner
Perkins, NEA, Norwest, Battery, Sierra, and Canaan Partners. It is no wonder
that venture capitalist investments in India have risen dramatically within the
past few years. From 2005 to 2007, VC investments in India grew from $320
million to about $777 million, respectively.

Indian Venture capital

All India level-
State level-
Bank sponsored
Private funds
Support Infrastructure for Entrepreneurs

Portfolio objectives of V. C.

ROI - Early start ups – 50%

Development finance – 40%

Characteristics of venture capital -

Long term investment of 5 to 10 years .
Lack of liquidity.
High risk.
Equity participation
Participation in management.
 Three criteria of assessment
1. Strong management team backed by the strong family support.
2. Unique product that has market opportunities.
3. Significant capital appreciation

Process of assessment
1. Preliminary screening
2. Understanding and Agreement
3. Review and due diligence
4. Final approval
5. Valuation of a company –
6. Business history
7. Industry analysis
8. Cost –liabilities
9. Future earnings and Dividend payment plan
10. Goodwill and intangibles
11. Previous stocks performance.

• General valuation approaches

Assessment of comparable companies
Present value of future cash flows
Replacement value
Adjusted book value
• General valuation method
Present value = Future value/ (1+i)n
Investors share = Initial funding/ Present value.

Basic tips to entrepreneurs

Perfect Business plan
Proper way of approach
Avoid shopping
Proper presentation

Private equity capital.

 Equity pool is formed by wealthy partners, investment bankers,
institutions and foreign investors to invest in companies which are not
listed or to enable leveraged buyout .
First established in 1946 , by France- born Professor General Georges F
Doriot at Harvard Business School and two wealthy men, John Whitney
and Laurance Rockfeller. The seeds of the US private equity industry were planted in
1946 with the founding of two venture capital firms: American Research and Development
Corporation (ARDC) and J.H. Whitney & Company. Before World War II, venture capital
investments (originally known as "development capital") were primarily the domain of
wealthy individuals and families. ARDC was founded by Georges Doriot, the "father of
venture capitalism"and founder of INSEAD, with capital raised from institutional investors,
to encourage private sector investments in businesses run by soldiers who were returning
from World War II. ARDC is credited with the first major venture capital success story
when its 1957 investment of $70,000 in Digital Equipment Corporation (DEC) would be
valued at over $355 million after the company's initial public offering in 1968 (representing
a return of over 500 times on its investment and an annualized rate of return of 101%) It is
commonly noted that the first venture-backed startup is Fairchild Semiconductor (which
produced the first commercially practicable integrated circuit), funded in 1959 by what
would later become Venrock Associates.

Private equity is money invested in companies that are not publicly

traded on a stock exchange or invested as part of buyouts of publicly traded
companies in order to make them private companies.

Among the most common investment strategies in private equity include

leveraged buyouts (LBO), venture capital, growth capital, distressed
investments and mezzanine capital. Many times investments are short in
nature.

Leveraged buyouts involve a financial sponsor agreeing to an acquisition

without itself committing all the capital required for the acquisition. To do this,
the financial sponsor will raise acquisition debt which ultimately looks to the
cash flows of the acquisition target to make interest and principal payments.
Acquisition debt in an LBO is often non-recourse to the financial sponsor and
has no claim on other investment managed by the financial sponsor.
Therefore, an LBO transaction's financial structure is particularly attractive to a
fund's limited partners, allowing them the benefits of leverage but greatly
limiting the degree of recourse of that leverage. This kind of financing
structure leverage benefits an LBO's financial sponsor in two ways: (1) the
investor itself only needs to provide a fraction of the capital for the acquisition,
and (2) the returns to the investor will be enhanced (as long as the return on
assets exceeds the cost of the debt).

As a percentage of the purchase price for a leverage buyout target, the

amount of debt used to finance a transaction varies according to the financial
condition and history of the acquisition target, market conditions, the
willingness of lenders to extend credit (both to the LBO's financial sponsors
and the company to be acquired) as well as the interest costs and the ability of
the company to cover those costs. Historically the debt portion of an LBO will
range from 60%-90% of the purchase price, although during certain periods
the debt ratio can be higher or lower than the historical averages. Between
2000-2005 debt averaged between 59.4% and 67.9% of total purchase price
for LBOs in the United States.

Business Ethics – Origin from Ethos which means character or manners. Character or
conduct is determined by the series of actions.It is study of moral behavior or conduct It is
Normative science stating what is right and what is wrong.Moral principles and standards that
guide behavior of the business world. Systematic handling of values in business and industry.

Mc Namara defines Business ethics is generally coming to know what is right and what is
wrong in the work place and doing what is right.

Ethical values is a mechanism that controls behavior of business Ethical restrains are more
powerful than crude controls such as police, laws and economic disincentives.

Sources of ethics-

1. Religion
2. Culture
3. Genetic inheritance
4. Legal system
5. Code of conduct
 Views towards business ethics-

Business as a part of society – Business for the social gain. Classical economists believed
that the only goal of business is profit maximization. Integrated view –Business as
economic entity must aim at profit but also needs to fulfill social responsibilities.

Business ethics and business success –

1.Profits 2.Long run survival 3.Diversification 4.Support from society 5.Support from
employees

 Business ethics and Social Accountability

CEP and ILO

SA8000 (1998)

covers all labour rights

 GRI 2002

97 performance indicators –

Economic performance – 13

Environment performance – 35

Social performance - 49

labour practice and decent work- 17

Human rights 14

Society - 7

Product responsibility - 11

 Business ethics- Marketing –

 Pricing
 Promotion
 Business ethics and Finance –
  Insider trading
 Hostile takeovers
 Frauds in financial statements
 Business ethics and Human Resources
 Hiring
 Retrenchment
 Remuneration
 Discrimination
 Towards ethical behavior

Commitment from the top

Code of ethics

Transparency

Reward and punishment system

Internal and External audit

 Examples of ethical companies Tata group of companies

Unethical behavior and business failure- Satyam

Government’s role in developing entrepreneurship in India -

Coir Board - Coir Board is a statutory body established by the Government of

India under a legislation enacted by the Parliament namely Coir Industry Act
1953 (45 of 1953) for the promotion and development of Coir Industry in India
as a whole.

Small Industries Development Organisation (SIDO)

SIDO was established in 1954 on the basis of the recommendations of

the Ford Foundation. Over the years, it has seen its role evolve into an agency
for advocacy, hand holding and facilitation for the small industries sector. It
has over 60 offices and 21 autonomous bodies under its management. These
autonomous bodies include Tool Rooms, Training Institutions and Project-cum-
Process Development Centers. SIDO provides a wide spectrum of services to
the small industries sector. These include facilities for testing, tool mending,
training for entrepreneurship development, preparation of project and product
profiles, technical and managerial consultancy, assistance for exports,
pollution and energy audits etc. SIDO provides economic information services
and advises Government in policy formulation for the promotion and
development of SSIs.
Consequent to the increased globalization of the Indian economy, small
industries are required to face new challenges. SIDO has recognised the
changed environment and is currently focusing on providing support in the
fields of credit, marketing, technology and infrastructure to SSIs. Global trends
and national developments have accentuated SIDO’s role as a catalyst of
growth of small enterprises in the country.
http://www.laghu-udyog.com
http://www.smallindustryindia.com

Ministry of Small Scale Industries is the nodal Ministry for formulation of

policy, promotion, development and protection of small scale industries in
India. The Ministry of Small Scale Industries (SSI) designs and implements the
policies through its field organizations 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.

Small Industries Corporation Limited ( NSIC )

The National Small Industries Corporation Ltd., an ISO 9001:2000 Company,

was established in 1955 by the Government of India with a view to promote,
aid and foster the growth of Small Industries in the country. NSIC continues to
remain at the forefront of industrial development throughout the country, with
it's various programs and projects, to assist the small scale sector in the
country.The Corporation provides integrated Technology, Marketing and
Financial support to Small Scale Sector.

National Institute for Small Industry Extension Training (NISIET )

The NISIET since its inception in 1960 by the Government of India, has taken
gigantic strides to become the premier institution for the promotion,
development and modernization of the SME sector. An autonomous arm of the
Ministry of Small Scale Industries ( SSI ), the Institute strives to achieve its
avowed objectives through a gamut of operations ranging from training,
consultancy, research and education, to extension and information services.

The Khadi and Village Industries Commission (KVIC)

The Khadi and Village Industries Commission (KVIC) is a statutory body created
by an Act of Parliament (No.61 of 1956 and as amended by Act No. 12 of
1987). Established in April 1957, it took over the work of the former All India
Khadi and Village Industries Board. The broad objectives that the KVIC has set
before it are :
The social objective of providing employment, The economic objective of
producing saleable articles, and
The wider objective of creating self-reliance amongst the poor and building up
of a strong rural community spirit. The KVIC is charged with the planning,
promotion, organisation and implementation of programs for the development
of khadi and other village industries in the rural areas in coordination with
other agencies engaged in rural development wherever necessary.

Small Industries Development Bank of India (SIDBI) was established in

April 1990 under an Act of Indian Parliament as the principal financial
institution for :

Origin & Objectives

• Promotion
• Financing
• Development of industry in the small scale sector
• Coordinating the functions of other institutions engaged in similar
activities

Since its inception, SIDBI has been assisting the entire spectrum of SSI Sector
including the tiny, village and cottage industries through suitable schemes
tailored to meet the requirement of setting up of new projects, expansion,
diversification, modernisation and rehabilitation of existing units.
Domain of Service

The Small Scale Industries (SSIs) sector is a vibrant and dynamic sector of the
Indian economy. The sector presently occupies an important place and its
contribution in terms of generation of employment, output and exports is quite
significant. The Small Scale Industries sector including tiny units, comprises
the domain of SIDBI's business. Besides, the projects in the services sector
with total cost upto Rs.250 million are also taken within the area of SIDBI's
operations. The Bank also finances industrial infrastructure projects for the
development of SSI sector.

SIDBI's financial assistance to small scale sector have three major dimensions:

1. Indirect assistance to primary lending institutions (PLIs);

2. Direct assistance to small units; and
3. Development and Support Services

Indirect Assistance

SIDBI's Schemes of indirect assistance envisages credit to SSIs through a large

network of 913 PLIs spread across the country with a branch network of over
65000. The assistance is provided by way of refinance, bills rediscounting, and
resource support in the form of short term loans/Line of Credit (LoC) in lieu of
refinance, etc.

Direct Assistance

The objective behind SIDBI's direct assistance schemes has been to

supplement the efforts of PLIs by identifying the gaps in the existing credit
delivery mechanism for Small Scale Industries. Direct assistance is provided
under several tailor made schemes through SIDBI's 41 Regional/Branch offices
spread across the country.

Development And Support Services

The Bank extends development and support services in the form of loans and
grants to different agencies working for the promotion and development of
SSIs and tiny industries. Over the years, the initiatives of SIDBI under
promotional and developmental activities have crystallised into the following
important areas:

• Enterprise Promotion with emphasis on Rural Industrialisation

• Human Resource Development to suit the SSI sector needs
• Technology Upgradation
• Quality and Environment Management
• Marketing and Promotion and
• Information Dissemination.

The Indian Institute of Entrepreneurship (IIE)

The Indian Institute of Entrepreneurship (IIE) was established in 1993 by

the Ministry of Industry, Government of India with its Headquarter at Guwahati
to undertake training, research and consultancy activities in the field of small
industry and entrepreneurship. The Institute was registered under the
Societies Registration Act XXI of 1860. It started its activities from April 1994.
Besides the Government of India, North Eastern Council, Small Industries
Development Bank of India and the Government of Arunachal Pradesh are its
sponsors.

MSME act of 2006

The role of micro, small and medium enterprises (MSMEs) in the economic and
social
development of the country is well known. It is the nursery for
entrepreneurship, often driven by the individual creativity and innovation, with
a significant contribution in the country’s GDP, manufacturing output, exports
and employment generation. MSMEs contribute 8 percent of the country’s
GDP, 45 per cent of the manufactured output and 40 per cent of our exports.
The labour and capital ratio in MSMEs and the overall growth in the MSMEs is
much higher than in the larger industries. MSMEs are better dispersed. In view
of these factors, MSMEs are important for achieving national objectives of
growth with equity and inclusion.
As per the quick estimates of 4th All-India Census of MSMEs, the number
of
enterprises is estimated to be about 26 million and these provide employment
to an estimated 60 million persons and of the 26 million MSMEs, only 1.5
million are in the registered segment while the remaining 24.5 million (94%)
are in the unregistered segment.
The State-wise distribution of MSMEs show that more than 55% of these
enterprise are in 6 States, namely, Uttar Pradesh, Maharashtra, Tamil Nadu,
West Bengal, Andhra
Pradesh and Karnataka. Further, about 7% of MSMEs are owned by women
and more than 94% of the MSMEs are proprietorships or partnerships.
MSMEs in the country manufacture over 6,000 products. Some of the
major subsectors in terms of manufacturing output are food products
(18.97%), textiles and readymade garments (14.05%), basic metal (8.81%),
chemical and chemical products (7.55%), metal products (7.52%), machinery
and equipments (6.35%), transport equipments (4.5%), rubber and plastic
products (3.9%), furniture (2.62%), paper and paper products (2.03%) and
leather and leather products (1.98%).
In view of the MSME sector’s role in the economic and social
development of the
country, the Government has emphasized on its growth and development. It
has taken various measures/initiatives from time to time which have facilitated
the sector’s ubiquitous growth. Some of the recent measures include
enactment of the Micro, Small and Medium Enterprises Development Act,
2006, amendments to the Khadi and Village Industries Commission Act,
announcement of a Package for Promotion of Micro and Small Enterprises
(MSEs), launching of new/innovative schemes under National Manufacturing
Competitiveness Program

The Product Group Matrix

There are about twenty-one major industry groups in the small scale
sector. These are listed below :

- Food Products
- Chemical & Chemical Products
- Basic Metal Industries
- Metal Products
- Electrical Machinery & Parts
 - Rubber & Plastic Products
- Machinery & Parts Except Elecetrical goods
- Hosiery & Garments - Wood Products
- Non-metallic Mineral Products
- Paper Products & Printing
- Transport Equipments & Parts
- Leather & Leather Products
- Miscellaneous Manufacturing Industries
- Other Services & Products
- Beverages, Tobacco & Tobacco Products
- Repair Services
- Cotton Textiles
- Wool, Silk, Synthetic Fibre Textiles
- Jute, Hemp and Mesta Textiles
- Other Services

SSI units produce an amazing variety and type of products. Over 7500
products are known to be manufactured in this sector. Even in a
particular product, there would exist a wide range of qualities or
specifications catering to different market segments, particularly in
consumer/household products. Small Scale sector has emerged as a
major supplier of mass consumption items like
- leather and leather goods
- plastic and rubber goods
- ready-made garments
- hosiery goods, sheet metal goods
- stationery items - soap and detergents
- domestic utensils
- toothpaste and toothpowder
- safety matches
- preserved foods and vegetables
- wooden and steel furniture
- paints and varnishes etc.,

Among the sophisticated items mention may also be made of

- Television sets
 - calculators
- microwave components
- plastic film capacitors
- carbon film registers
- electromedical equipments
- electronic teaching aids
- digital measuring equipments
- air-conditioning equipments
- optical lenses
- drugs and pharmaceuticals
- electric motors
- pesticide formulators
- photographic sensitised paper
- razor blades
- collapsible tubes,etc.

The main steps involve in setting up a Micro, Small & Medium Enterprise are as
below :-
(a) Project Selection
(b) Technology and Machinery
(c) Arranging Finance
(d) Unit Development
(e) Filing of Entrepreneurs’ Memorandum
(f) Approvals
(g) Clearances
(h) Quality Certification
Guidelines for Prospective Entrepreneur

What can be done for self-employment?

A micro or small or medium enterprise can easily be set up for self-
employment. You can choose an activity depending upon your interest and
suitability not only to become self-employed but also to generate
employment for others.
What is a Micro, Small or Medium Enterprise?

The earlier concept of ‘Industries’ has been changed to ‘Enterprises’

• Enterprises have been classified broadly into:
(i) Enterprises engaged in the
Manufacture / production of
Goods pertaining to any industry; &
(ii) Enterprises engaged in providing
/ Rendering of services.

 Manufacturing enterprises have been defined in terms of investment

in plant and machinery (excluding land & buildings) and further
classified into :

- Micro Enterprises - investment up to Rs.25 lakh.

- Small Enterprises - investment above Rs.25
lakh & up to Rs. 5 crore
- Medium Enterprises - investment above Rs. 5
crore & up to Rs.10 crore.

• Service enterprises have been defined in terms of their

investment in equipment (excluding land & buildings) and further
classified into:
- Micro Enterprises – investment up to Rs.10 lakh.
- Small Enterprises – investment above Rs.10 lakh & up to Rs.2
crore.
- Medium Enterprises–investment above Rs. 2 crore & up to Rs. 5
crore

It is not necessary to engage in manufacturing activity for self-employment.

One can set up service enterprises as well .
Micro, Small and Medium Enterprises Development Act, 2006
The Micro, Small and Medium Enterprises Development (MSMED) Act,
2006 seeks to facilitate the development of these enterprises as also enhance
their competitiveness. It provides the first-ever legal framework for
recognition of the concept of “enterprise”
which comprises both manufacturing and service entities. It defines medium
enterprises for the first time and seeks to integrate the three tiers of these
enterprises, namely, micro, small and medium. The Act also provides for a
statutory consultative mechanism at the
national level with balanced of stakeholders of all sections, particularly the
three classes of enterprises; and with a wide range of advisory functions.
Establishment of specific Funds for the promotion, development and
enhancing competitiveness of these enterprises, notification of
schemes/programmes for this purpose, progressive credit policies and
practices, preference in Government procurement to products and services of
the micro and small enterprises, more effective mechanisms for mitigating
the problems of delayed payments to micro and small enterprises and
assurance of a scheme for easing the closure of business by these enterprises
are some of the other features of the Act.
Foreign Direct Investment (FDI) Policy
With the promulgation of the MSMED Act, 2006, the restrictive 24% ceiling
prescribed for equity holding by industrial undertakings, whether domestic or
foreign, in the MSEs has been done away with and MSEs are defined solely on
the basis of investment in plant and machinery (manufacturing enterprises)
and equipment (service
enterprises). Thus, the present policy on FDI in MSE permit FDI subject only to
the sect oral equity caps, entry routes and other relevant sect oral
regulations.

Limited Liability Partnership (LLP) Act, 2008

The salient features of the proposed LLP Act, 2008 are as under:
(i) LLP shall be a body corporate and a legal entity separate from its partners.
It will have perpetual succession. Indian Partnership Act, 1932 shall not be
applicable to LLPs, since LLP shall be in the form of a body corporate.
(ii) An LLP has to be incorporated with a minimum of two persons. The Act
does not restrict the benefit of LLP structure to certain classes of
professionals only and would be available for use by any enterprise which
fulfills the requirements of the Act.
(iii) The LLP will be an alternative corporate business vehicle that would give
the benefits of limited liability but would allow its members the flexibility of
organizing their internal structure as a partnership based on an agreement.
(iv) On registration LLP shall be capable of : (a) suing and being sued; and (b)
acquiring, owning, holding and developing or disposing off property.
(v) A person may cease to be a partner of a LLP in accordance with an
agreement with the other partners or in absence of agreement with the other
partners, by giving a notice in writing of not less than 30 days of his intention
to resign as partner.
(vi) In the event of an act carried out by a LLP, or any of its partners, with
intend to defraud creditors of the LLP or any other person or for any
fraudulent purpose, the liability of the LLP and partners, who acted with
intend to defraud creditors or for any fraudulent purpose shall be unlimited
for all or any of the debts or other liabilities of the LLP.
(vii) A contribution of a partner may consist of tangible, movable or
immovable or intangible property or other benefits to the LLP including
money, promissory notes, other agreements to contribute cash or property,
and contracts for services performed or to be performed.
(viii) While the LLP will be a separate legal entity, liable to the full extent of its
assets, the liability of the partners would be limited to their agreed
contribution in the LLP. Further, no partner would be liable on account of the
independent or unauthorized actions of other partners, thus allowing
individual partners to be shielded from joint liability created by another
partner's wrongful business decisions or misconduct.
(ix) An LLP shall be under obligation to maintain annual accounts reflecting
true
and fair view of its state of affairs.
(x) Provisions have been made in the Act for corporate actions like mergers,
amalgamations etc.
(xi) There is a provision of voluntary winding up as well as winding up by the
Tribunal.
(xii) There are provisions for inter conversion of LLP into private company etc.
The LLP Act should pave the way for greater corporatisation of the Small and
Medium Enterprises – thereby enhancing their access to equity and funds
from the
market. De-reservation The issue of de-reservation has been a subject of
animated debate within government for the last twenty years. The Approach
to the Eleventh Five Year Plan notes the adverse implications of reservation of
products for exclusive
manufacture by the MSEs and recommends the policy of progressive
dereservation.
To facilitate further investments for technological upgradation and
higher productivity in the micro and small enterprises, 654 items have been
taken
off the list of items reserved for exclusive manufacture by the manufacturing
micro
and small enterprises in the last few years – reducing it to 21 at present. This
has
helped the sector in enlarging the scale of operations and also paved the way
for
entry of larger enterprises in the manufacture of these products in keeping
with the
global standards. Credit/Finance Credit is one of the critical inputs for the
promotion and development of the micro and small enterprises. Some of the
features of existing credit policy for the MSEs are:

Priority Sector Lending—Credit to the MSEs is part of the Priority Sector

Lending
Policy of the banks. For the public and private sector banks, 40% of the net
bank
credit (NBC) is earmarked for the Priority Sector. For the foreign banks,
however,
32% of the NBC is earmarked for the Priority Sector, of which 10% is
earmarked for the MSE sector. Any shortfall in such lending by the foreign
banks has to be deposited in the Small Enterprise Development Fund (SEDF)
to be set up by the Small Industries Development Bank of India (SIDBI).
Institutional Arrangement- The SIDBI is the principal financial institution
for promotion, financing and development of the MSE sector. Apart from
extending financial assistance to the sector, it coordinates the functions of
institutions engaged in similar activities. SIDBI's major operations are in the
areas of : (i) refinance assistance (ii) direct lending, and (iii) development and
support services. Commercial banks are important
channels of credit dispensation to the sector and play a pivotal role in
financing the working capital requirements, besides providing term loans (in
the form of composite loans). At the State level, State Financial Corporations
(SFCs) and twin-functional State Industrial Development Corporations (SIDCs)
are the main sources of long-term finance for the MSE sector. Recognising the
importance of easy and adequate availability of credit in sustainable growth
of the MSE sector, the Government has announced a 'Policy Package for
Stepping Up Credit to Small and Medium Enterprises (SMEs)', with the
objective of doubling the flow of credit to this sector within a period of five
years. To ensure better flow of credit to MSEs, the Ministry of MSME is also
implementing the following major schemes:

Credit Guarantee Scheme

To ensure better flow of credit to micro and small enterprises by minimizing
the risk perception of banks/financial institutions in lending without collateral
security, the Government launched Credit Guarantee Fund Scheme for Micro
and Small Enterprises in August 2000. The scheme covers collateral-free
credit facility extended by eligible
lending institutions to new and existing micro and small enterprises for loans
up to Rs.100 lakh ($250,000) per borrowing unit. The guarantee cover is up to
75 per cent of the credit sanctioned [85% in respect of loans up to Rs.5 lakh
($12,500) and 80% for loans provided to MSEs owned/operated by women
and all loans in the North-
East Region].

Performance & Credit Rating Scheme

The Performance & Credit Rating Scheme for manufacturing MSEs was
launched in April, 2005 with the objective of assisting the MSEs in obtaining
performance-cum-credit rating which would help them in improving
performance and also accessing bank credit on better terms if the rating is
high. Under the scheme (implemented by the National Small Industries
Corporation in conjunction with reputed rating agencies), 75% of the fee
charged by the rating agency is reimbursed by the Government subject to a
maximum of Rs.40,000 ($1,000). Emerging Sources Faced with increased
competition on account of globalisation, MSMEs are beginning to move from
an obsession with bank credit to a variety of other specialized financial
services and options. In recent years, the country has witnessed increased
flow of capital in the form of primary/secondary securities market, venture
capital and private equity, external commercial borrowings, factoring
services, etc. More advanced MSMEs have started realising the importance of
these alternative sources of funding to raise resources and the need for
adopting
better governance norms to take advantage of these funding sources. The
enactment of the Limited Liability

Partnership Act, 2008 is expected to provide a thrust to the MSMEs in their

move towards corporatisation. In today's fast paced global business scenario,
technology has become more vital than ever before. With a view to foster the
growth of MSME sector in the country, Government has set up ten state-of-
the-art Tool Rooms and Training Centres. These Tool Rooms provide
invaluable service to the Indian industry by way of precision tooling and
providing well trained craftsmen in the area of tool and die making. These
Tool Room are highly proficient in mould and die making technology and
promote precision and quality in the development and manufacture of
sophisticated moulds, dies and tools. The Tool Rooms are not only equipped
with the best technology but are also abreast with the latest advancements
like CAD/CAM, CNC machining for tooling,Vacuum Heat Treatment, Rapid
Prototyping, etc. The Tool Room & Training Centres also offer various training
programmes to meet the wide spectrum of technical manpower required in
the manufacturing sector. The training programmes are designed
with optimum blend of theory and practice giving the trainees exposure on
actual jobs and hands on working experience. The Tool Rooms have also
developed special training programmes to meet the requirements at
international level, which are attended by participants from all over the globe.
The Ministry of MSME implements the following schemes and
programs for the up gradation of technology of the MSMEs:

ISO 9000/14001 Certification Fee Reimbursement Scheme

To enhance the competitive strength of the MSEs, the Government introduced
a scheme to incentivese technological upgradation, quality improvement and
better environment management by the MSEs. The scheme reimburses 75%
of the fees, subject to a maximum of Rs.75,000 ($2000), for acquiring Quality
Management System (QMS)/ISO 9000 certification and/or Environment
Management System (EMS)/ISO 14001 certification bythe MSEs.

Micro and Small Enterprises Cluster Development Programme

The Micro and Small Enterprises Cluster Development Programme (MSECDP)
is implemented for holistic development of clusters of MSEs. The programme
envisages measures for capacity building, skill development, technology
upgradation of the enterprises, improved credit delivery, marketing support,
setting up of common
facility centres, etc., based on diagnostic studies carried out in consultation
with cluster units and their collectives and management of cluster-wide
facilities by the cluster collectives.

Credit Linked Capital Subsidy Scheme

The Credit Linked Capital Subsidy Scheme (CLCSS) aims at facilitating
technology upgradation by providing 15% upfront capital subsidy w.e.f. 29th
September, 2005 to manufacturing MSEs, on institutional finance up to Rs.1
crore ($0.25 million) availed of by them for induction of well-established and
improved technologies in the
specified sub-sectors/products approved under the scheme.

National Manufacturing Competitiveness Program

The National Manufacturing Competitiveness Program is the nodal program of
the Government of India to develop global competitiveness among Indian
MSMEs. Conceptualised by the National Manufacturing Competitiveness
Council, the Programme was initiated in 2007-08. There are ten components
under the NMCP
targeted at enhancing the entire value chain of the MSME sector. These are:

(a) Building Awareness on Intellectual Property Rights for the Micro, Small &
Medium Enterprises (MSMEs): The scheme for “Building Awareness on
Intellectual Property Rights (IPR), for the Micro, Small & Medium Enterprises
(MSMEs) has been launched to enable Indian MSMEs to attain global
leadership position and to empower them in using effectively the tools of
Intellectual Property Rights (IPR) of innovative projects. The main features of
the scheme are:
(i)Awareness/Sensitization Programmes on IPR;
( ii)Pilot Studies for Selected Clusters/Groups ofIndustries;
(iii) Interactive seminars/Workshops;
(iv) Specialised Training;
(v) Assistance for Granton Patent/GI Registration;
(vi) Setting up of IP Facilitation Centre (IPFC); and
(vii) Interaction with International Agencies. These initiatives are being
developed through Public-Private Partnership (PPP) mode.

(b) Scheme for Providing Support for Entrepreneurial and Managerial

Development of SMEs through Incubators: The scheme aims at nurturing
innovative business ideas (new/indgenious technology, processes, products,
procedures, etc.), which could be commercialized in a year. Under the
scheme, various institutions like Engineering Colleges, Research Labs etc. will
be provided funds upto Rs.6.25 lakh for handholding each new idea/
entrepreneur. The incubator will provide technology guidance, Workshop and
Lab support and linkage to other agencies for successful launching of the
Business and guide the entrepreneur in establishing the enterprise.

(c) Enabling Manufacturing Sector be Competitive through Quality

Management Standards (QMS) and Quality Technology Tools (QTT): During
the year 2008-09, GoI launched a scheme, 'Enabling Manufacturing Sector be
Competitive through Quality Management Standards (QMS) and Quality
Technology Tools (QTT)' in order to
improve quality and productivity in the MSE sector. The scheme is aimed at
improving the quality of the products in the MSE sector and inculcate the
Quality consciousness in this sector. The major activities under this\scheme
are : (i) Introduction of Appropriate Modules for Technical Institutions; (ii)
Organising Awareness Campaigns for MSEs; (iii) Organising Competition-
Watch (C-Watch); (iv) Implementation of Quality
Management Standards and Quality Technology Tools in selected MSEs; (v)
Monitoring International Study Missions; and (vi) Impact Studies of the
initiatives.

(d) Mini Tool Rooms under PPP mode: Under the scheme, 'Mini Tool Rooms
under PPP mode', 15 Mini Tool Rooms will be set up during the 11th Plan
period. Competitive bidding from entrepreneurs and Associations will be
invited to set up Tool Rooms with Government support upto Rs.9 crore. They
will be more competitive and user
friendly as they will not be bound by the Government procedure and
competitiveness will be the only criteria for selection of promoters of these
Tool Rooms. The approved Plan expenditure under the Scheme is Rs. 135
crore.

(e) Marketing Assistance/support to MSEs (Bar Code): The objective of the

'Marketing Assistance/ Support to MSEs' scheme of NMCP is to popularise the
Bar Code registration and motivate the Small and Micro-Manufacturing
Enterprises to adopt the Bar Code Certification on large scale and to sell their
value added products worldwide and enable higher export price realization. It
also helps in domestic marketing
(wholesale & retail). 75% of annual fee (recurring) of Bar Code certification for
the first three years are reimbursed to Micro & Small Entrepreneurs, under
the Scheme.

(f) Lean Manufacturing Competitiveness Programme for MSMEs: Under the

Lean Manufacturing Programme (LMP), MSMEs will be assisted in reducing
their manufacturing costs, through proper personnel management, better
space utilization, scientific inventory management, improved process flows,
reduced engineering time
and so on. LMP also brings improvement in the quality of products and lowers
costs which are essential for competing in national and international markets.
The total GoI contribution is stipulated as Rs. 28.60 crore (approx.) for this
scheme. The broad activities planned under the scheme include Total
Productive Maintenance (TPM), 5S, Visual Control, Standard Operation
Procedures, Just in Time, Kanban System, Cellular Layout, Poka Yoke, TPM,
etc. The Scheme has been approved as a pilot project for Lean Techniques
interventions in 100 Mini Clusters.

(g) Promotion of Information & Communication Tools (ICT) in Indian MSME

Sector: The objective of this program envisages that some of those clusters of
SMEs, which have quality production and export potential, shall be identified
& encouraged and assisted in adopting ICT applications to achieve
competitiveness in the national and international markets. The total GoI
contribution is stipulated as Rs. 160 crore (approx.) for this scheme. The
broad activities planned under the scheme include, identifying target clusters
for ICT intervention, setting up of e-readiness infrastructure,
developing web portals for clusters, skill development of MSME staff in ICT
applications, preparation of local software solutions for MSMEs to enhance
their competitiveness, construction of e-catalogue, e-commerce, etc. and
networking MSME cluster portals on the National Level Portals in order to
outreach MSMEs into global markets.

(h) Design Clinics Scheme for MSMEs: The main objective of the scheme is to
bring the MSME sector and design expertise into a common platform and to
provide expert advice and solutions on real time design problems, resulting in
continuous improvement and value-addition for existing products. It also aims
at value-added cost effective solutions. The GoI contribution is stipulated as
Rs.50 crore for this scheme. The broad activities
planned under the scheme include creation of Design Clinics Secretariat along
with regional centers for intervention on the design needs of the MSME
sector.

(i) Marketing Assistance and Technology Upgradation Scheme for MSMEs: The
objective of this scheme is to identify and encourage those clusters of MSMEs,
which have quality production and export potential and assist them to
achieve competitiveness in the national and international markets. The
scheme aims at improving the marketing competitiveness of MSME sector by
improving their techniques and technology for promotion of exports. The GoI
contribution is stipulated as Rs.19 crore for this scheme. The broad activities
planned under the scheme include technology upgradation in packaging,
development of modern marketing techniques, competition studies, etc.

(j) Technology and Quality Up gradation Support to MSMEs: The objective of

the Scheme is to sensitize the manufacturing (MSME) sector in India to
upgrade their technologies, usage of energy efficient technologies to reduce
emissions of Green House Gases, adoption of other technologies mandated as
per the global standards, improve their quality and reduce cost of production,
etc., towards becoming globally competitive.
The major activities planned under the scheme include Capacity Building of
MSMEs Clusters for Energy Efficiency/Clean Development Interventions,
Implementation of Energy Efficient Technologies in MSME sector, Setting up
of Carbon credit aggregation centres and encouraging MSMEs to acquire
product certification licences from National/International bodies. Skill
Development: The Ministry of Micro, Small & Medium Enterprises promotes
the development of micro and small enterprises in the country with the
objective of creating selfemployment opportunities and upgrading the
relevant skills of existing and potential entrepreneurs. The entrepreneurship
and skill
development scheme is implemented by Office of the DC (MSME) through its
network of 58 MSME-DIs and their branches. The programs are conducted
include Entrepreneurship Development, Entrepreneurship and Skill
Development, Management Development and Business Skill Development.
These programs are of short duration and the curriculums based on needs of
the industry and are customized, if required by the clients. 20% of the
targeted training programs are conducted exclusively for the weaker sections
of the society (SC/ST/Women/Physically Handicapped), for which no fee is
charged. Besides, a stipend of Rs.500/- p.m. is provided. The office of the DC
(MSME) also conducts vocational and educational training through its
Regional Testing Centers, Field Testing Stations and autonomous bodies like
Tool Rooms and Technology Development Centers (TDCs). These long term,
short term, trade/field-specific and industry-specific tailor-made courses also
include specialized programmes for Engineers, Diploma holders so that their
absorption by the industry is immediate. A good number of trainees have set
up their own enterprises in creating employment opportunities. The Ministry
is at present training about 3 lakh persons per annum both for business and
technical skill development, which is among the largest programme by any
single Ministry in India. The Ministry is also focusing on socially backward
groups and on least developed areas under its 'Outreach Programme'.
Marketing and Procurement Under Government Stores Purchase Programme,
various facilities are provided to enterprises registered with National Small
Industries Corporation (NSIC) in order to assist them for marketing their
products in competitive environment. These facilities are : (i) issue of Tender
Sets free of cost; (ii) exemption from payment of Earnest
Money Deposit; (iii) waiver of Security Deposit upto the Monetary Limit for
which the unit is registered; and (iv) price preference up to 15% over the
quotation of large-scale units. In addition to these facilities/benefits, 358
items have also been reserved for exclusive purchase from the MSE Sector.
However, as these guidelines were/are not of
a mandatory nature, the same has failed to achieve the desired results. To
assist the MSEs in marketing of their products, Section 12 of the new MSMED
Act enjoins the formulation of a scheme of preferential procurement of
goods/services produced/rendered by MSEs both at the Central and State/UT
levels. Once formulated, the procurement scheme may be more effective in
providing the much-needed marketing support that MSEs seek so
desperately. Each Ministry/Department, CPSU, etc., would have to make
specific mention of the compliance of the preference policy in its Annual
Report to be tabled in Parliament.

Export Promotion
Export promotion from the MSE sector has been accorded a high priority. To
help MSEs in exporting their products, the following facilities/incentives are
provided: (i) Products of MSE exporters are displayed in international
exhibitions and the expenditure incurred is reimbursed by the Government;
(ii) To acquaint MSE exporters with latest packaging standards, techniques,
etc., training programme on packaging for exporters are organised in various
parts of the country in association with the Indian Institute of Packaging; (iii)
Under the MSE Marketing Development Assistance (MDA) Scheme, assistance
is provided to individuals for participation in overseas fairs/exhibitions,
overseas study tours, or tours of individuals as member of a trade delegation
going abroad. The Scheme also offers assistance for (a) sector specific market
study by MSE Associations/Export Promotion Councils/Federation of Indian
Export Organisation; (b) Initiating/contesting anti-dumping cases by MSE
Associations; and (c) reimbursement of 75 per cent of the one time
registration fee and annual fee (recurring for first three years) charged by GSI
India (formerly EAN India) for adoption of Bar Coding. Infrastructure
Development For setting up of industrial estates and to develop infrastructure
facilities like power distribution network, water, telecommunication, drainage
and pollution control facilities, roads, banks, raw materials, storage and
marketing outlets, common service facilities and technological back up
services, etc., for MSMEs, the Integrated Infrastructural Development (IID)
Scheme was launched in 1994. The scheme covers rural as well as urban
areas with a provision of 50 per cent reservation for rural areas and 50 per
cent industrial plots are to be reserved for the micro enterprises . The
Scheme al so provides for up gradation/strengthening of the infrastructural
facilities in the existing industrial estates. The estimated cost (excluding cost
of land) to set up an IID Centre is Rs.5 crore ($1.25 million). Central
Government provides 40 per cent in case of general States and upto 80% for
North East Region (including Sikkim), J&K, H.P. and Uttarakhand, as grant and
remaining amount could be loan from SIDBI/Banks/Financial Institutions or the
State Funds. The IID Scheme has been subsumed under the Micro and Small
Enterprise Cluster Development Program (MSECDP). All the features of the IID
Scheme have been retained and will be covered as “New Clusters” under
MSECDP.

Fiscal Concessions
Under the General Excise Exemption Scheme, full excise exemption up to
turnover of $375 thousand per annum is provided to enterprises having
annual turnover of up to $1 million. However, the limits of excise exemptions
has encouraged tendency among MSEs is to go in for horizontal expansion
(i.e., fragmentation) rather than vertical expansion and upward graduation
into medium and large enterprises. For incentivising such graduation of small
to medium/large enterprises so as to enable them to achieve economies of
scale, extension of excise exemptions to the graduating medium enterprises
on a tapering scale is under consideration of the Government.
Strengthening of Database
A reliable database is the key input in any policy decision-making process.
This is more so for the MSME sector in view of its large size and wide disparity
among the enterprises within the sector. The Ministry has so far conducted
three Census in the year 1971-72, 1992-93 and 2002-03 for
strengthening/updating the database on MSE
sector. However, the long gap between the Census has limited the reliability
of the MSE database. To strengthen the database for the MSME Sector,
statistics and information will now be collected in respect of number of units,
employment, rate of growth, share of GDP, value of production, extent of
sickness/closure, exports and all other
relevant parameters of micro, small and medium enterprises, including khadi
and village industry, through annual sample surveys and quinquennial
census. The quinquennial census and annual sample surveys of MSMEs will
also collect data on women-owned and / or managed enterprises.

Inclusiveness
The Ministry of MSME launched a special programme, namely, 'Outreach
Programme for Skill Development in Less Developed Areas' in September,
2006. Under this program, the field offices of the Ministry organizes short-
term skill development programs in the less developed areas. Such short-
term courses are tailor-made
for these areas so as to enable trainees to get employment or start self-
employment ventures. These programs are of short duration of 1-3 weeks and
the activity selected for trainees are relevant to the local requirement. The
target group consist wholly or partly of disadvantaged sections. Further,
under the recently announced
Promotional Package for MSEs, 20% of Skill Development Programmes have
been reserved for weaker sections along with the provision of a stipend of
Rs.500 per capita per month exclusively for SCs/STs, women and physically
handicapped. In case of the regular EDP/MDP/Skill Development programs, a
nominal fee of Rs.100 is charged. However, there is no fee for SCs/STs,
women and physically handicapped candidates.
 India's pioneering policies for the development of MSEs offers case
studies for the
developing world. Government has moved away, though not yet fully, from its
role of
direct interventions to that of a friend and facilitator. There is growing
realization that
protection in the form of reservation needs to be replaced with easy access to
capital,
technology and skill development to integrate the MSMEs more firmly with
the domestic
and global economy. And these are now the specific target areas of the
Ministry of MSME. India benefited immensely from experience of several
countries, especially in the field of technology. However, the rich Indian
experience gained in the last sixty years in the MSME sector could also be of
equal use for both developing as well as developed countries. Some of the
areas that offer ample opportunities for cooperation in the MSME sector are:

Fee-based consultancy services and training in the following areas:

i) Capacity Building of Entrepreneurs and Technical Manpower of SMEs;
ii) Policy & Institutional Framework for SME Promotion, Development and
Enhancing Competitiveness;
iii) Entrepreneurship Development; and
iv) Business Development Services.
v) Establishment of Turnkey Projects for setting up manufacturing MSMEs on
commercial terms.
vi) Skill upgradation programmes in selected areas such as CNC Machining,
Sheet-Metal Technologies, CAD & CAM Designing, Wool Processing &
Weaving, Leather Technology, Plastic Technology, Wood Working, etc.
vii) Conducting surveys and studies to identify the tooling and related skill
requirements in specific areas or regions like hilly/backward/indigenous.
Providing turnkey assistance to set up Tool Rooms & Training Centres.
Providing consultancy to existing manufacturing SME in upgrading their
production facilities, selection of machine tools, design consultancy for tools,
moulds, dies, jigs & fixtures, etc.
Providing specialized/tailor-made training courses for specific target groups.
 Providing consultancy to existing training institutes in course design and
curriculum development including trainers training programs.
Assistance in product design, tool design and manufacturing of intricate
toolings.
High precision tools, moulds, dies, jigs & fixtures etc. as per
design/specifications of local industry.
Product development & rapid prototyping services

World bank report on doing business 2011

Among the world's economies, Kazakhstan improved business regulation the
most in the past year, according to Doing Business 2011: Making a
Difference for Entrepreneurs, the eighth in a series of annual reports
published by IFC and the World Bank.

1. Kazakhstan improved conditions for starting a business, obtaining

construction permits, protecting investors, and trading across borders. As a
result, it moved up 15 places in the rankings on the ease of doing business
—to 59 among 183 economies. Two other regional economies, Tajikistan
and Hungary, were also among the 10 most-improved economies, climbing
10 places and six places respectively.
2. This year's list of the 10 most-improved economies also includes three in
Sub-Saharan Africa—Rwanda (a consistent reformer of business regulation),
Cape Verde, and Zambia—as well as Peru, Vietnam, Grenada, and Brunei
Darussalam.
3. Globally, doing business remains easiest in the high-income economies of
the Organisation for Economic Co-Operation and Development and most
difficult in Sub-Saharan Africa and South Asia. But developing economies
are increasingly active. In the past year, 66 percent reformed business
regulation, up from 34 percent six years earlier.
4. In the past five years, about 85 percent of the world's economies have
made it easier for local entrepreneurs to operate, through 1,511
improvements to business regulation. Doing Business 2011 pioneers a new
measure showing how much business regulation has changed in 174
economies since 2005. China and India are among the top 40 most-
improved economies. Among the top 30 most-improved economies, a third
are from Sub-Saharan Africa.
5. Worldwide, more than half the regulatory changes recorded in the past year
eased business start-up, trade, and the payment of taxes. Many of the
improvements involve new technologies. "New technology underpins
regulatory best practice around the world," said Janamitra Devan, Vice
President for Financial and Private Sector Development for the World Bank
Group. "Technology makes compliance easier, less costly, and more
transparent."
6. For the fifth year running, Singapore leads in the ease of doing business,
followed by Hong Kong SAR China, New Zealand, the United Kingdom, and
the United States. Among the top 25 economies, 18 made things even
easier over the past year.
7. "Governments worldwide have been consistently taking steps to empower
local entrepreneurs," said Neil Gregory, Acting Director, Global Indicators
and Analysis, World Bank Group. "The economies most affected by the
financial crisis—especially in Eastern Europe—have been targeting
regulatory reforms over the past year to make it easier for small and
medium-size enterprises to recover and to create jobs."

Ease of Doing Business in India

India China

 Ease of doing business 134 79

 Starting business 165 151
 Construction permits 177 181
 Registration of the property 94 38
 Getting credit 32 65
 Protecting investors 44 93
 Paying taxes 164 114
 Trade across the border 100 50
 Enforcing contracts 182 15
 Closing business 134 68

This page shows summary Doing Business 2011 data for India. The first table
lists the overall "Ease of Doing Business" rank (out of 183 economies) and the
rankings by each topic. The rest of the tables summarize the key indicators for
each topic and benchmark against regional and high-income economy (OECD)
averages.
 Region South Asia
Lower middle
Income Category
income
Population 1,155,347,678
GNI Per Capita
1,170.00
(US$)
Doing Business 2011 Rank Doing Business 2010 Rank Change in Rank
134 135 1
DB
Change
Topic Rankings DB 2011 Rank 2010
in Rank
Rank
Starting a Business 165 168 3
Dealing with Construction
177 176 -1
Permits
Registering Property 94 90 -4
Getting Credit 32 30 -2
Protecting Investors 44 41 -3
Paying Taxes 164 168 4
Trading Across Borders 100 93 -7
No
Enforcing Contracts 182 182
change
Closing a Business 134 137 3
.