Entrepreneurial Environment in India


The literal meaning of the word ‘entrepreneurial’ as in oxford dictionary is “a person who makes money by starting or running businesses, especially when this involves taking financial risks”. To understand the present entrepreneurial environment in India we have to start from the beginning. It all began with Prime Minister Jawaharlal Nehru’s will to shape the Indian economy; he believed that the state should control every aspect of Indian economy resulting in a planned economic growth. Nehru strongly believed that entrepreneurs should focus their efforts on nation building rather than selling products or competing with each other, because he felt that it did not contribute to nation’s growth. To confirm that the concept of nation building was properly enforced by all entrepreneurial, Nehru made sure that every entrepreneur received a “certified nation building” license from the relevant license officer. Also a rule was passed stating that only two to three companies could be granted a license within the same industry, that result in the decrease in competition among the entrepreneur. Another major issue was the money laundering within companies i.e. to move money that has been obtained illegally, into foreign bank accounts. To prevent money laundering within companies it was made mandatory for the excise and licensing officials to visit and audit every company each year in order to ensure quality assurance. These strict regulations led to some problems, not only did every entrepreneur needed to obtain multiple licenses but the government officers who were in charge of the supervision of all licensing aspects were underpaid and eventually resorted to bribery and corruption. This led to entrepreneurs paying bribes in order to acquire the necessary licenses. To get freedom from the burden of obtaining licences, popularly known as the “licence raj” in India, many of the businessmen immigrated to the United States in order to avoid such official procedure and to gain economic freedom. The exodus of businesses and the businessmen led to the loss of many opportunities for the country to grow through industrialisation. Realizing that the existing economy was in terrible crisis, Indian business practices began changing for the better in 1991 after extensive economic reforms. The introduction of LPG (Liberalisation, Privatisation, and Globalisation) changed the picture Indian economy. With the changing picture of the business, there was also a power shift. Before 1991 it was the entrepreneur who was at power as he could gain as much as possible due to less competition, but after the concept of globalisation the consumer or the buyer became the gainer as he had wide verity of goods and due to increase in competition with large MNCs, many small scale industries had to close down.
The 1991 reforms were indeed a much needed change for the economy in tatters, but have raised a lot of questions on several issues of nation’s growth and the path the nation should take towards it.

The changing scenario

The increasing population in India has led to the establishment of Entrepreneurial environment in India. There was a traditional environment of the entrepreneurs in India which was mainly focused on the purpose of self-interest. The Indian entrepreneurial system is mainly based on the concept of “jugaad”, which means, to find a solution for the problem in one way or the other. This concept includes the process to detect the problem and find the solution for it without giving up. It includes the process of calling an initiative, quick thinking and solving the problem at the earliest so that it fulfils the market demands at cheap prices. Day by day, the enterprises are increasing in the country. It is because of the increasing knowledge of the entrepreneurs and their awareness towards the markets. Nowadays, the traditional environment of the entrepreneurs has been declining and the non-traditional environment of the entrepreneurs has been rising.
Earlier family-based business played dominant role in the establishment of Indian markets. But after the liberalization, in 1991, the family-based business started expanding and to establish themselves in the competitive world. After the liberalization, the business opportunities in India grew at a large scale and the entrepreneurial environment began to develop. In the past twenty years this entrepreneurial environment has been rapidly growing providing services to the country, generating wealth and providing employment in the country.

Problems in the path of entrepreneurs

India faces many difficulties in its way of development such as terrorism, corruption, political risks etc. still it overcomes them and results into the day by day development of the enterprises. The development of the entrepreneurial environment has not been affected by the problems it faces in day to day lives. Communalism is the main cause of terrorism in India. Foreigners have taken the advantage of such situations from time to time; the most lasting one has been the British rule over India for many years. (They had also helped in bringing the entrepreneurial environment in India to some extend but rare cases). The Indian culture has the ability to resist such situations and ultimately it has shown its entrepreneurial skills. Corruption is another problem faced by the Indians which results in the increasing difference between the rich and the poor in the century. Corruption results into the heavy losses faced by the enterprises but the peaceful protests and better corporate laws in place this problem is being tackled. There are many political parties in the country which create a lot of problem for the enterprises. With a coalition government in power unanimity in decision- making over critical issues of growth and development becomes a distant dream.
There are factors such as economic factors, social factors, psychological factors, competitive factors and facilitating factors which affect the entrepreneurial environment in India. The economic factors affecting the entrepreneurship are financial assistance from Institutional sources, accommodation in Industrial Estate, attitude of the government, encouragement from large business, machinery on hire-purchase, labour conditions, raw materials and size and composition of the market. The social factors such as family background, social status, religion, social mobility, social marginality; psychological factors such as need of achievement and withdrawal of the status respect; competitive factors such as rivalry among the existing firms; facilitating factors such as experience and training, arrangement of finance and occupational and geographical mobility also affect the entrepreneurial environment in India. The most important factor required for the making up of entrepreneurial environment in India is the education.

Need of the hour

With a wide bottom of the pyramid India needs an environment where such small businesses receive the required encouragement and resources. The unequal distribution of resources has to be addressed. The gap has to be filled for the new businesses to flourish and blossom. Such ventures will contribute not only to individual growth but would also improve the bigger picture at the country’s economy level.
There is a lot that can be done in this regard like improving the microfinance facilities, training and education to develop the untapped human resources in villages and semi-urban areas of the country. The entrepreneurial environment in India has a great potential to improve and attract budding entrepreneurs to come forward and contribute towards country’s progress and prosperity.


  1. lallawm says:

    (y) nice

  2. swapnil says:

    gr8 work bro
    all the best

  3. nir says:

    keep it up

  4. NK says:

    It is gainful reading your article .You should also discuss few things how to start a new company in India.Thank you

  5. Prateek Dwivedi says:

    Nice Work … Keep it up.. 🙂 

  6. Sham dikshit says:

    Good article.Keep it up  Sham DikshitDewas ( M.P.)

  7. Siddharth Vyas says:

    Very interesting and information packed paper. Congratulations to you.

  8. alok sharma says:

    good work. your work on this is much appreciable. keep it up

  9. Nishant Chauhan says:

    awsm article… will be of lot of importance… keep it up

  10. Rachna Jha says:

    good work….carry on…!!!! al d best…

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