Female entrepreneurship: Govt must focus on mkt linkages, access to finance

The number of female entrepreneurs has grown in India with proactive government support. But the growth has been patchy and slow and needs to be accelerated. In this regard, DBS Bank India and CRISIL recently released a report, the third one in its “Women and Finance” series, which contains useful insights regarding the experience of self-employed women entrepreneurs across 10 major Indian cities. Women-owned enterprises, which stand at a modest 20 per cent of all businesses, are expected to constitute a significant 33 per cent by 2030. It is anticipated that this growth will translate into a substantial increase in the number of women-owned enterprises from 13.5-15.7 million in 2016 to 31.5 million by 2030. In this respect, the future potential impact of women-led businesses on the Indian economy is noteworthy. While the findings of the report are limited to women working in urban areas, they suggest myriad opportunities and challenges faced by female entrepreneurs in today’s ecosystem. It is assumed that the problems faced by rural woman entrepreneurs are generally more severe than those that urban female entrepreneurs confront. Notably, 82 per cent of women-led enterprises are micro units, essentially sole proprietorships, and concentrated in the informal sector.

The report underscores the percolation of digitisation, with an increasing proportion of self-employed urban women using unified payments interface (UPI), corporate credit cards, and other digitised banking services. Around 73 per cent of the self-employed women surveyed preferred receiving payments digitally from customers, and 87 per cent used digital-payment methods to meet their business expenses. For women entrepreneurs, digital payments can speed up business registration, reduce the transfer time on payment, and improve their interactions with clients, vendors, and financial institutions. Additionally, as reflected in the report, 26 per cent of self-employed women have female members on their boards, reflecting their commitment to gender diversity and inclusion. However, female entrepreneurs face numerous challenges as they struggle to balance family responsibilities with entrepreneurial pursuits. Gender biases and unequal access to resources act as formidable barriers, impeding their access to funding, networks, and market insights. The report’s findings suggest a large proportion of women are risk-averse and rely on traditional sources of financing to fund their business ventures. For pledging collateral, they turn to personal assets, with 28 per cent leveraging personal properties and 25 per cent turning to gold. Only 3 per cent use shares as collateral. About 65 per cent of self-employed women have not taken a business loan. Of them about 39 per cent rely on personal savings to fund their enterprises while the rest depend on financial assistance from family or friends. On personal finance, the report finds women allocate 45 per cent of their investments in safer options like savings accounts and gold.

There is a significant awareness gap regarding government schemes, pushing women to not only seek financial support from banks but also support in navigating government schemes, assistance in digitising financial processes, and a desire for mentorship. The government must, therefore, focus on market linkages and mentoring to support entrepreneurship, apart from access to finance and skilling. Specific schemes tailored to the needs of women entrepreneurs, including flexible loans, collateral-free options, integration with global markets, and mentorship networks can help nurture the entrepreneurial ambitions of women.