Mahrukh Farooq

The Mavericks of Business Indian entrepreneurial ventures have the potential to drive the country’s economy to new heights By Mahrukh Farooq As a result of liberalisation conducted on behalf of the government between the late 1990s and early 2000s, India’s economic growth increased rapidly to reach a whopping 7.4% in 2011. Although the GDP growth of the country has slipped to a little below 5% as of 2014, there are still many indications that India is doing much better than its counterparts - its current account deficit has decreased with the last quarter seeing the lowest current account deficit in 5 years, thanks to improved exports and lower gold imports; inflation has declined, the lowest its ever been in 4 years; the Indian rupee has stabilised and corporate earnings seem to be improving. Much of these developments can be credited to India’s growing base of entrepreneurs and innovators whose creative ideas have manifested into thriving business enterprises. According to a report titled, ‘Entrepreneurship in India’, which was developed by the National Knowledge Commission (NKC) in 2008, the total number of entrepreneurial ventures had grown substantially. This had thereby contributed to the wealth of the economy as well as provided greater sources of employment to the Indian workforce. Much has taken place since then with many budding entrepreneurs putting their innovative ideas to the test and coming up with competitive businesses offering cutting-edge solutions. To put things in perspective, less than 1% of startups were founded by students who had just graduated from college; today, nearly 7 years later, that figure has jumped to 3%. The trend, therefore, is evident; with over 3,100 startups currently in operation, the coming few years are to be seen, as quoted by some experts, as the ‘golden era’ of Indian entrepreneurship. According to the Finance Ministry’s Economic Survey for-, tech startups in India are to witness maximum growth with revenues from software products and services for- to be expected to grow at a rate of 12%-14%. Other projections include the steady migration from traditional retail to modern retail (i.e. online business), though the latter still only accounts for 8% of the total market. In addition, it is expected that India’s e-commerce market is expected to grow by more than 50% in the next 5 years. In response to these major developments, the government is making drastic changes to its policies directed towards startup and small & medium enterprises (SMEs) in order to ensure a strong framework within which these businesses can operate. Single window clearances, tax benefits and subsidised resources are some of the incentives that are being offered. One major incentive is the allotment of Rs. 1,000 crore to the entrepreneurial sector as part of the country’s Union Budget 2015 which was presented by the Finance Minister Arun Jaitley in the Lok Sabha. The funds, in question, will be kept aside for the setting up of a mechanism for Self-Employment and Talent Utilisation (SETU). This system will be a Techno-Financial, Incubation and Facilitation Programme that supports all aspects of startup businesses and other self-employment activities, particularly in technology-driven areas. According to Arun Jaitley, issues related to raising venture capital, incubation facilities and the ease of doing business need to be addressed immediately in order to ensure the creation of jobs as well as the steady flow of income. As far as India’s entrepreneurs are concerned, this policy could not have come at a better time. Currently, there is a great absence of adequate funding centers for budding entrepreneurs, resulting in a void for appropriate capital for businesses. According to the NKC report in 2008, nearly 63% of entrepreneurs were self-financed, whereas other sources of funds presented were in the form of banks, venture capital (VC), angel investors and state finance corporations. Amongst the entrepreneurs who turned to banks for funds, 61% did receive the required finances. Yet, the prevailing perception regarding the ease with which individuals can acquire funds at the introductory stage is far from positive. “By the time a great idea gets approval and the funds arrive, the people behind the ideas move on to accept high-package jobs in multinational companies, now this big boost from the government will help the budding entrepreneurs in making big” said Mr. Abhishek Srivastava, SED’s National Head for Brand and Marketing Communication. SED (Student Entrepreneurship Development) is a non-profit organisation formed in February 2014 that gives aspiring entrepreneurs a platform through which they can present their business plans to a panel of leading business and corporate experts, who can then guide them and provide them with funds whenever necessary. “The number of entrepreneurs setting up shop each year has tripled compared to 2008. But there is long way to go to develop an entrepreneurial mindset among students and their parents,” added Mr. Abhishek. Regardless of whether the mindset exists or not, the desire to ‘make it big’ by coming up with the ‘next big thing’ is pretty strong. This is evident by the trend set by Sachin Bansal and Binny Bansal, two graduates of IIT who left high paying jobs at Amazon.com to come with their very own e-commerce platform called Flipkart in 2007. Initially a book selling website, the company eventually grew to acquire multiple platforms including Myntra, WeRead, Chakpak.com, Letsbuy.com and Mime360. Currently, Flipkart owns assets worth $12 billion and employs more than 16,000 people. With so many examples for aspiring entrepreneurs to seek inspiration from, it is then no wonder that an increasing number of young Indian people are taking the leap and starting their own business. After all, what is required is the initiative as Nolan Bushnell eloquently puts it, “The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.”