Entrepreneurial environment in India


Napoleon Bonaparte famously said, “Ability is nothing without opportunity.” True as it may be on the war fields of 19th century Europe, it’s legitimacy is also unquestionable when it comes to the global market of 21st century. As opportunities start drying up in the developed countries of the world, focus is now shifting to the developing countries. As a result, the landscape of entrepreneurship in India is rapidly changing. The year 1991 did not just open doors to India for the world but also opened the doors to the world for Indians as well. Since then, the young minds of our country have been on a rampage. New, innovative and promising enterprises have sprung up in every sector in India. But, one needs to recognize that in a country as large as India and still in it’s developing phase, there are tons of opportunities which can be utilized to build an economically strong and equitable society. But even after 22 years of liberalization, that pace of transformation hasn’t quite picked up yet. Though not as severe as they used to be two decades ago, the reasons for the relatively mild pervasion of the spirit of entrepreneurship in India still remain the same.
The first problem is cultural. In 1947, when we made a ‘tryst with destiny’, the destiny was believed to be a free, welfare state. 200 years under imperial rule had produced leaders who vehemently opposed capitalism and viewed private enterprise with a certain cynicism. Hence, the government was made responsible for most of the industries and private players were not allowed entry. The initial years were very turbulent times for India and any other economic model would have probably failed in India and led to dire consequences. But the gradual shift to an open market that was required for steady economic development, never came. On the contrary, the socialistic ideal was strengthened and private entry was barred in more and more sectors. This had a deep effect on the mindsets of people which is why even after 1991, people were reluctant to enter the newly opened markets. The ones who entered were not very welcome in eyes of the public. They were still viewed as exploiters whose sole motivation was believed to be unconscionable profit expansion. People still preferred to go for a steady, government job instead of taking the apparently risky private job. Even till today fresh talented graduates hesitate to work for start-ups and prefer to take the safe road.
The second problem is systemic. Even though private players are now allowed entry into almost all sectors, the license permit raj system of the early years has still lingered. Government still controls private entry in many businesses through the array of clearances and permits that are required for many sectors. This has led to the most obvious inevitable consequences. Newspapers are flooding with scams carried out by politicians in collusion with big corporates. The present system has built a hierarchy in the market in which the ones at the top of the pyramid are most often the ones who have the right contacts up in New Delhi. This is true not only at the top level but also the same even at the microscopic level. It is difficult even for the small businesses to enter the market without paying bribes to government officials. It is actually ironic how the government’s efforts to ensure a fair system has led to the exact opposite results. Even now the government is trying to counter the problems created by checks and balances with more checks and balances.
The third problem is technical. In the global village that we are living in today, our choices are now influenced by developments all around the world. With the markets now open for the world in India, the local enterprises have taken a hit. India’s technological backwardness poses a major problem for the local producer. Since global players have access to the best technology, it becomes difficult for locals to compete with them. This is evident from India’s poor performance in the manufacturing sector. The importance of research and development has still not been fully realized in India and the scenario continues to appear grim. Not only this, financial resources are also scarce even though government has taken many steps to ensure easy availability of credit.
In spite of all these problems, the spirit of entrepreneurship is slowly catching up with the younger generation. The situation appears positive in terms of the increasing enthusiasm being seen among students in India. But the challenges that we face are also very real. We need to draw examples from developed countries as well as some developing countries where small private enterprises are contributing significantly to economic development. For example, in Nigeria, in spite of many problems such as lack of infrastructure, government support and human capital, the small players are responsible for more than 50 percent of the country’s economic growth.
The challenges that India faces are not unsolvable. In fact, if taken the right approach, every problem can be eradicated within 10 years. The biggest challenge comes from the government’s side. Hence, the government has a big role to play which will decide for the future of entrepreneurial development in India. Also, the younger generation needs to understand the potential of the Indian market and needs to be encouraged to take up initiatives. The road ahead is not smooth but Indians, in the past have treaded on more troublesome roads and still conquered destiny. We have done it before and undoubtedly, we will do it again.

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