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| Entrepreneurship has the potential to meet India's 'inclusive growth; target: KPMG & TiE study | |
| BS Reporter / Bangalore December 16, 2008, 12:14 IST | |
The Indian entrepreneurial community indicates an average level of conduciveness at 3.31 on a scale of one to five (1 being poor and 5 being excellent) for entrepreneurial ventures in the country. As the markets evolve and adjust to new realities, several opportunities are likely to emerge for the entrepreneur to start and grow businesses in India. This was stated in the perception survey released jointly by KPMG and TiE titled- Entrepreneurial India during the TiE Entrepreneurial Summit 2008 in Bangalore on Tuesday.
Over 1000 entrepreneurs across 15 Indian states were evaluated to gauge their perception of the ecosystem in their respective states. For the purpose of the study, the ecosystem was evaluated on parameters such as Infrastructure; Finance; Manpower; Local environment & ecosystem; Regulation and Governance. Finance, closely followed by infrastructure, with manpower marginally behind, emerged as the three most important factors considered for fostering entrepreneurial growth.
Although, the respondents wanted improvement in infrastructure, it seems that they have acknowledged the Government’s efforts towards infrastructure development, and are optimistic about its impending transformation. However, despite a surge in the number of venture capitalists and private equity money available in India, there seems to be a gap in the demand for and supply of funds for entrepreneurial ventures. New banking initiatives towards funding start-ups and Small-and-Medium Enterprises (SMEs) were also perceived as deficient, due to several procedural issues and high collateral requirements.
Commenting on the Entrepreneurial growth in India, Pradip Kanakia, Head – Markets, KPMG in India said “Entrepreneurs have a big role to play in driving India’s growth, it is imperative that government; academia and other regulatory bodies create a favourable environment for entrepreneurs to flourish. Through this study we aim to identify challenges of entrepreneurs; assess the approach of various states while creating awareness amongst stakeholders and suggest a plan to spur action which drives the economic growth fueled by entrepreneurial ventures.”
The Entrepreneurial India survey also presents a state-level confidence index. The survey did not attempt to seek the views of entrepreneurs on each of the 15 states, but was restricted to their home state only. Andhra Pradesh, known for its IT services sector has the highest confidence score of 4.14 positioning it much above the national average of 3.31. Following AP, Goa, Rajasthan, Maharashtra, Gujarat, Tamil Nadu (TN) and Punjab lead the pack with scores higher than the national average while Chandigarh, Karnataka, Madhya Pradesh (MP), Uttar Pradesh (UP), Haryana, Kerala, West Bengal (WB) and Delhi have been rated below the national average.
Further, the study also assessed the preference of entrepreneurs across India to name the state in which they would prefer to launch their entrepreneurial venture if given a chance to start all over again. 23 percent entrepreneurs preferred Gujarat as the state for their new venture. Maharashtra and Haryana followed with 13 percent and 7.5 percent of entrepreneurs preferring these states respectively. Tamil Nadu, Andhra Pradesh and Delhi received virtually equal scores – each being preferred by almost 5 percent of the entrepreneurs surveyed.
A sector-wise analysis of the scores revealed that entrepreneurs in both the services and manufacturing sectors appear to be confident of the availability and support from their ecosystem with scores almost same as the national average with manufacturing at 3.30 and services at 3.31.
According to the study, the relationship between the State and the entrepreneur is an important factor in the success of a business. The research suggests that India has achieved a lot to instill confidence in its entrepreneurs but much still needs to be achieved in order to create an entrepreneur friendly environment. “With a slower economy, it is critical to create an even more enabling ecosystem to motivate aspirants to make the leap to a full time entrepreneur and to enable current entrepreneurs to stay in the game. As this happens, we are likely to see entrepreneurs, the Government and academia, be critical catalysts that drive India’s inclusive growth agenda”, added Jehil Thakkar, Executive Director, KPMG in India.
Based on its findings with regards to the challenges faced by entrepreneurs, the report provides a range of recommendations. Speedy land acquisitions and dispute settlement through dedicated courts; development of land clusters with dedicated infrastructure such as dedicated power feeders were some of the key initiatives suggested to boost infrastructure development.
On Finance, where availability was cited as a major concern, changes in lending guidelines for banks and creation of an AIM like exchange for entrepreneurial ventures were few of the measures suggested. To improve regulation and governance, the report suggests implementation of true single window clearance and broadened use of e-governance while creation of a task force comprising of retired judiciary, entrepreneurs and industry associations to review, rationalize and simplify obsolete and inconsistent regulations.
To overcome issues of skilled manpower and social conditioning, incorporate entrepreneurial curriculum at the school and college level as also the creation of a state level model on line of National Skill Development Mission (NSDM) were some of the actionable suggested.
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