write an essay on the growth of entrepreneurship in india

Entrepreneurship in India–Complete History, Evolution and Transformation

Quick Summary

• Tracing the historical journey of entrepreneurship from the medieval age to the vibrant entrepreneurial landscape of today.
• Understand the pivotal role of key factors such as the New Economic Policy of 1991, the impact of Shark Tank India, and the government initiative Startup India in shaping the contemporary entrepreneurial landscape.
• Economic Development and Employment are some of the effects and indirect contributions that entrepreneurship has on the Indian economy.
• When it comes to sustaining economic growth in India, fostering entrepreneurship for innovation, living standards, and social change, is an imperative need.

Table of Contents

The growth and transformation of entrepreneurship in India began in the early times when the ‘barter system’ was a common means of exchange. However, before proceeding, let us understand what entrepreneurship is and who entrepreneurs are. Entrepreneurs are those individuals or groups who create new businesses and job opportunities. Entrepreneurship is the ability of an entrepreneur to run and operate a business with goal-oriented objectives. In this article, we will focus on the following:

• Evolution of entrepreneurship and their classification into different areas.
• The importance of entrepreneurship in India
• The need of entrepreneurship

Evolution of Entrepreneurship in India

Medieval Age

To discuss the growth or development of entrepreneurship in India, you must understand that India has one of the oldest and most civilized business histories. During the Harappan civilizations around 2700 BC, there was an internal and external trade culture. Also, due to this, most foreign countries recognize Indian entrepreneurial skills.

Moreover, the increase in trade occurred during the era of Mughal rule. The popularity of Indian products, arts, crafts, Vedic tools, foods, and much more attracted attention from different parts of the world. The Arab mainland, western colonial counties and African countries were the major parties involved in the trade.

At the same time, different countries like UK, France and Portugal expanded their colonies in different parts of the world. However, a significant entrepreneurial change occurred when the East India Company started its business from the Bay of Bengal and later occupied parts of Bengal. It indirectly linked the entire Indian state into one business ecosystem.

There were some major downsides to the colonial mindset of England. However, it also played some good aspects in developing entrepreneurship in India.

Modern and pre-independence

This was the era of industrialization in India, where some of India’s best entrepreneurs rise. The major events changed the face of entrepreneurship in India.

• The first cotton textile mill was revolutionized in 1854 by an Indian entrepreneur, Kawasji Dover. It was one of India’s boldest steps in the modern development of entrepreneurship development.
• Jamsetji Tata founded the company Tata Group in the year 1868. With the foundation of the Tata Group, he has created a bar for entrepreneurship development in India.
• 1874 Cotton Mill by JRD Tata, TISCO by Dorabji Tata, 1932 Tata Airlines, Tata Steel Plant, and more were high-rate businesses in India. At the same time, it has also played a major role in various independence initiatives.

Post-independence

Entrepreneurship in India, along with the national economy, was ground-breaking after independence. There was not much left in the Indian economy at that time. However, the government took major steps to support India’s development which is as follows.

• Prime Minister Nehru adopted the economic structure line of the Soviet Union. It gave a major push to the New Industrial Policy of 1956. Similarly, this policy liberalized the bar and standards set by the British government, which were the ultimate impediment to industrial development.
• Economic reforms were carried out in the initial phase of governance. Also, prominent economists adopted the Mahalanobis model, which primarily aims to support entrepreneurs.

As all these influential policies were in operation, few major industries were established as opposed to the traditional textile and natural resource industries. Since independence, there was a huge growth in entrepreneurship in India.

However, it may seem that most of the top entrepreneurs were already in business. But the reality was different. Economic policies were not giving much support to the entrepreneurs, due to which there was rough growth. However, the transformation of entrepreneurship began in 1990.

Transformation of Entrepreneurship in India

The major transformation of entrepreneurship in India began with the ‘Economic Policy Reform’ in 1991. The policy was further expanded in 2022. So, you can easily categorize the major transformation of entrepreneurs in India by these two policies and events.

New Economic Policy

The New Economic Policy of 1991 was a huge turning point. This policy has included three major aspects, which are as follows.

These were the most important of all the major aspects involved in the new economic policy. However, all of them played an important role in developing entrepreneurship in India. Some of the benefits that this policy replaced are as follows.

• It gives a green signal to private banks and non-Indian banks to operate without any disruption. It was the only reason for the huge circulation of money in the economy. And finally, it increased loans and supported new entrepreneurs.
• Due to the policy, foreign companies can find the best option to invest their money. This boosted huge FDI and FPI in India and helped in understanding new and advanced technology.
• Rise of India as a tech hub in the startup world where Indian tech people were the best choice for US, UK, France and other country projects. At the same time, it also revolutionized the world of technology.

The major objective was economic reform, which has also served in the transformation of entrepreneurship in India. Before the policy, India’s entrepreneurship was based on the model of traditional industries and agro-industries.

However, after the implementation of the policy, major changes were seen in the technology. The rise of Infosys, TCS, Wipro, HCL, and more. Also, in automobiles, Maruti, Tata, Mahindra, Bajaj, and more were emerging. But there is a limitation to this policy as it favours a lot of big companies and does not give a chance to a small and new startup to take off.

Growth of Startups

In 2016, startups started to grow . There are some key aspects of this startup initiative whose main objective is to provide and lend support for entrepreneurship development in India. By the year 2015, startups were rampant in India. Moreover, India is also known as the ‘ poster child of an emerging market’. Some of the key aspects of the 2016 Startup Initiative are as follows.

• The MSME ministry swung into action by supporting small and micro startups and firms.
• The Make in India initiative allows entrepreneurship to live in India and work on its growth.
• The NITI Aayog scheme was also launched. Its objective is to develop skills and provide training to become a skilled resource.

New innovators and potential entrepreneurs are helping their businesses in the Indian market daily. If you consider the growth of entrepreneurship since 1990, you will see a sharp growth every year.

The current Indian entrepreneurship world is becoming a highly favorable market for any company to invest in. Also, most Indian companies have marked their potential in international trade and shown the growth of entrepreneurship in India. However, among all other top start-ups and companies, the IT sector of India is on the boom. It alone handles a large part of the development of the entrepreneur representing India.

Shark Tank India

Shark Tank India, the entrepreneurial reality show, has not just entertained viewers but has sparked a revolution in the country’s startup culture.

The show provides a platform where dreams are pitched, ideas are analyzed, and the future of aspiring entrepreneurs is determined. The show has become very popular among the Indian audience, striking a chord with those who are passionate about entrepreneurship.

In a country where the startup culture is flourishing, Shark Tank India has emerged as a catalyst for change. The show provides a platform for budding entrepreneurs to showcase their innovative ideas to a panel of industry titans, offering a rare opportunity for mentorship, investment, and growth. The show unveils the hard work, perseverance, and determination that goes into establishing a business from scratch.

The show has become a beacon of hope for those who are undecided about embarking on the entrepreneurial journey. It proves that with passion, creativity, and strategic thinking, dreams can indeed come true.

Also Read:- Shiv Nadar Net Worth

Startup India

The ‘Startup India’ initiative was launched by the Government of India on January 16, 2016, with the aim of promoting entrepreneurship, innovation, and startup culture in the country. The initiative was unveiled by the Prime Minister of India, Narendra Modi. The launch of ‘Startup India’ marked a significant step towards creating a more favourable environment for startups to thrive.

The Startup India initiative came with a comprehensive action plan outlining various measures and policies to support startups. This included initiatives related to simplifying regulatory procedures, providing financial support, offering tax incentives, and promoting innovation and skill development.

Contributing to the GOI’s vision of an ‘Aatmanirbhar Bharat’, the ‘Startup India’ initiative reflects the government’s commitment to fostering a culture of entrepreneurship and innovation, to position India as a global hub for startups.

Here’s how the initiative benefits the startup culture in India and contributes to the well-being of the youth:

1. Ease of Doing Business

‘Startup India’ focuses on simplifying and streamlining regulatory processes, making it easier for startups to register and operate. This reduces hurdles and encourages more aspiring entrepreneurs to take the leap of faith into starting their businesses.

2. Access to Funding

The initiative aims to provide easier access to funding by establishing a dedicated fund for startups. It encourages financial institutions and investors to support innovative ideas and early-stage companies, helping them scale and grow.

3. Tax Benefits

Startups registered under the initiative can avail various tax benefits, including exemptions from capital gains tax, tax holidays, and a reduction in compliance costs.

4. Skill Development and Training

The initiative emphasizes skill development and training programs to equip aspiring entrepreneurs with the necessary knowledge and skills to run successful businesses. The initiative has also launched the ‘Startup India Learning Program’. The program aims to help entrepreneurs get their ideas and ventures to the next level through structured learning. The program covers lessons on key areas of entrepreneurship by 40+ top founders of India in an extensive 4-week Program.

5. Market Access

The initiative facilitates market access for startups by connecting them with potential customers, both within India and globally. This helps startups scale their operations and tap into larger markets, contributing to their overall success.

6. Networking Opportunities

‘Startup India’ fosters a collaborative environment by promoting networking opportunities through events, conferences, and industry interactions. This enables startups to connect with mentors, investors, and other entrepreneurs, facilitating knowledge exchange and collaboration.

Indirect Effects of Entrepreneurship on the Economy

The indirect effects of entrepreneurship are not so visible, yet they are equally important for economic development. The following are indirect effects:

Money Flow in the Market

The flow of money in an economy is as important. The more it flows, the healthier the economy. Enterprises help in the flow of money in the market by creating employment and increasing production and consumption.

Infrastructural Development

Start-ups thrive in the ecosystem. When an ecosystem is formed in a particular city, there is an increase in the infrastructure of the city or particular area. For example, startups growing in Bangalore, Hyderabad and Delhi. These cities were developed strategically to create a better environment to support start-ups to meet the need for entrepreneurship.

Indirect Employment

Direct employment is the employment created by entrepreneurship within the business. But it is not the only employment. Entrepreneurship also creates a lot of indirect jobs. For example, in an area like Powai in Mumbai, infrastructural development creates a need for hotels, restaurants, transportation, etc.

Increase in Related Services

When entrepreneurs grow and expand their operations, it requires many services. These services may be outside their core expertise. For example, an ed-tech start-up would require several services like human resources, marketing, consulting, legal services, etc. Therefore, when the number of entrepreneurs increases, so does the demand for related services.

• Importance of Entrepreneurship to the Economy of India

Entrepreneurship is important because it improves the standard of living and generate capital. Let us look at some of the reasons for the importance of entrepreneurship.

Economic Development by Entrepreneurs

It shows the importance of entrepreneurship in the best possible way. New products and services produced by entrepreneurs can fuel the economic development of the companies concerned. This is also true for areas that need to support new business.

For example, the boom of IT industries during the 1990s. The industry grew rapidly and it helped many other businesses. Businesses have grown in related sectors, such as call centre operations, network repair firms and hardware suppliers.

Contribution of Entrepreneurs to National Profit

Entrepreneurial projects help create fresh wealth. Established companies may remain confined to existing markets and reach a threshold in terms of profits. Better goods, services or technology from businesses enable the development of new markets and the creation of new wealth.

Entrepreneurial projects help create new capital. Better goods, services or technology from businesses enable the development of new markets and the creation of new wealth. Also, higher income in the form of increased jobs and higher tax revenue and expenditure leads to better national income.

So, this importance of entrepreneurship helps in making the national income of a country. The government will use these proceeds to invest in the country.

Social Change by Entrepreneurs

This importance of entrepreneurship breaks with tradition and reduces reliance on outdated systems by providing unique products and services. This will improve the quality of life. Such as the smartphone industry continues to grow, tech entrepreneurship will have a huge, long-term impact on the planet.

Also Read: 6 Types of Entrepreneurs

Need of Entrepreneurship for Economic Growth

Entrepreneurship is an instrument of social change and economic development. Entrepreneurs firmly believe that it is entrepreneurship that will beat and transform the market with new-age technologies.

The following factors define why entrepreneurship is needed in economic development.

1. Innovation

Innovation is the primary element of entrepreneurship. New-age entrepreneurs are passionate about innovations in technology and business models. Some of the primary examples of this are Airbnb, Innova8, Ola, Zinerr etc. These companies not only bring innovation in technology but also created unique business models that never existed before. It helps in making your life much easier.

Policymakers of an economy consider innovation while creating a road map for the country’s economic development. Innovation creates market ease and new opportunities and encourages consumption. Therefore, entrepreneurship in India is important as it inspires innovation.

2. Employment

Employment is an important factor in the development of any economy. A low employment rate indicates the poor health of an economy. An economy needs to generate more jobs and wage opportunities to accelerate growth. It plays an important role in job creation.

The bigger the enterprise, the more job and salary opportunities are created. Therefore, the need for entrepreneurship in India becomes important for economic development.

3. Living standard

The standard of living is, in a way, directly proportional to employment. Because employment pays people, they spend their money on the purchase of goods and services. Therefore, the consumption rate increases in an economy, and so does the production rate. This eventually raises the basic wage, and people become able to consume higher quality goods and services.

If entrepreneurship in an economy is sector agnostic, it will go a long way in raising the standard of living of the people. Therefore, the need for entrepreneurship in India becomes important for overall economic development.

4. Social change

Social entrepreneurship is a modern term that encourages entrepreneurs to bring about change in society. For example, crowdfunding companies are usually involved in social work such as raising funds for NGOs. Their businesses bring positive changes to society. They not only help the needy but also spread social awareness.

A prosperous society facilitates the path of community development. Therefore, the need for entrepreneurship in India is important as it brings together social reform and economic development.

5. Research and Development

Research and development are the progress of innovation. When an entrepreneur comes up with innovative ideas and builds a business from them, they need to continuously develop their innovation to keep up with the market and improve the user experience. As the enterprise grows, they spend more resources on research and development, which leads to technological progress.

Technological advancement not only supports a particular company but the entire nation. It contributes to the growth of science and technology. The economy further utilizes these developments to implement in various sectors to make progress. Therefore, the need for entrepreneurship in India is necessary for the progress of science and technology.

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Changing Face of Entrepreneurship in India

Entrepreneurship in India was on a rough path. Moreover, after independence, it had a terrible impact. However, with policies and hard work our country was able to overcome it at one point in time. Now with an innovative mind, India is gaining dominance in the market. And entrepreneurship opportunities will increase in India.

For policymakers and business owners, it is essential to consider the relationship between entrepreneurship and economic development. Knowing the pros and cons of entrepreneurship makes it possible to adopt a balanced approach. An approach to developing the importance of entrepreneurship, which can have positive economic and social impact.

Conclusively, we can look at various practical, direct and indirect factors that come into effect due to entrepreneurship. And why entrepreneurship is essential to an economy. We should not underestimate the impact of entrepreneurship on the economy. Entrepreneurship in India leaves a positive impact on the economy.

Suggested Read: 10 Successful Entrepreneurs in India and their Net worth

Also Read:- Behind Gautam Adani’s Billions: Net Worth, Companies, and More adani net worth

Frequently Asked Questions

What is the future of entrepreneurship in india.

Entrepreneurship in India is growing today and has reached the global level. With new economic policies and the rise of startups in India, more jobs are created in the market. It is helping India’s economy to grow and attract massive investments. Given the current policies for entrepreneurs and the growing market, the growth of entrepreneurship will be bright in the coming years.

What is the most important in entrepreneurship?

Entrepreneurship has certain important qualities. Those qualities include the ability to communicate accurately and effectively, leadership skills, the ability to sell products and ideas, having a vision for the future, being flexible, persistent, and collaborating. The most important thing in all this is vision. No entrepreneurship can survive and grow without a proper vision.

What are the three importance of entrepreneurship to the economy?

Entrepreneurship helps in boosting the economy of the country. It plays a vital role in building and establishing the economy without which the country has to suffer huge losses. Entrepreneurship has three importance for the economy:

1. Contribution to National Profit 2. Social change 3. Economic Development

It also helps in raising the standard of living, generates employment, and brings innovation.

What are the benefits of entrepreneurship to youth?

There are several benefits of entrepreneurship for youths. You can learn many important skills that can be useful for your work and life. Along with this, you get to know about teamwork, how to manage a team, networking, creativity, problem-solving, communication, critical thinking etc. Along with this you will also earn money for yourself and can help your community by giving back.

What is the need for entrepreneurship?

There is a great need for entrepreneurship in India. Entrepreneurship brings the following changes to society.

1. Innovation 2. Employment 3. Living standard 4. Social change 5. Progress

Apart from this, entrepreneurship helps in boosting the economy and takes the country forward. It creates new products and brings new services which encourage employment and ultimately economic growth.

What is the status of entrepreneurship in India?

Entrepreneurship is on the rise in India. Every year more and more businesses are booming in addition to the already existing business. In the last few years, India saw 50,000 startups out of which 8000 – 9000 are technology-based startups while there are more than 1300 new tech startups. According to the government, which will increase further.

Can I become an entrepreneur?

Yes, you can become an entrepreneur. Before starting any business, I do not have a high expectation that I will be successful. Entrepreneurship requires a lot of motivation and dedication. To be a successful entrepreneur you must have the zeal to learn new things and have a critical mind and creativity that can solve any problem that comes in the business.

Which entrepreneur is the best in India?

There are many entrepreneurs in India who have been in business for a very long time and still growing. Some of them are:

1. Jamsetji Tata – Tata Group 2. Kumar Mangalam Birla – Aditya Birla Group 3. Gautam Adani – Adani Group 4. JRD Tata – Air India 5. Dhirubhai Ambani – Reliance 6. Narayana Murthy – Infosys 7. Azim Premji – Wipro 8. Shiv Nadar – HCL 9. Ardeshir Godrej – Godrej Group 10. Jarnanalal Bajaj – Bajaj Group

Here are some related resources:

• How Is Need For Entrepreneurship Is Important For Economic Growth?
• The Difference Between Entrepreneurship and Intrapreneurship
• Top 10 Free and Paid Entrepreneurship Courses  
• 11 Steps to Entrepreneurship Development: Start and Grow a Business

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5 Entrepreneurship and its evolution in India

Vishal Kumar

1.  Learning Outcome

After completing this module students will be able to:

i.   Understand the evolution of entrepreneurship in India.

ii.  Industrial Policy 1948.

iii. Know the sources of entrepreneurship in India.

iv. Know about ten entrepreneurs who changed the face of corporate India.

2.  Introduction : The Entrepreneurial growth in India is as old as Rigveda when metal handicrafts existed in the society . But manufacturing entrepreneurship did not develop so much in India due to its weak transportation and communication system. At that time the only means of transport was rivers so some kind of entrepreneurship was seen among the Artisans in the cities which were established on the banks of rivers like Banaras, Gaya, Puri, Allahabad etc. At that time Indian industry was basically small scale and cottage industry. But it could not survive due to lack of transport facilities, the establishment of an alien rule with the influx of many foreign influences, competition of more highly developed form of European industry.

Although entrepreneurial talent was in abundance in the Indian businessmen, but India did not offer much scope for its development, that is why many traders migrated to various countries like Burma, Singapore and Kenya for the purpose of growth and trading. In that regime, lack of political party, network of custom barriers, taxation policies, existence of innumerable system of currency, low prestige of businessman, and lack of capital were the main reasons responsible for failure of entrepreneurship.

3.  Evolution of Entrepreneurship in India: In 17th century, Indian export trade of textile was on ascending trend in spite of discouraging environment for the entrepreneurship. Method of trading in India is changed by European investment. Grouping of the Indian traders into joint- stock associations for the purpose of managing the supply of textiles to the European countries was very significant at that time. As a result Indian textile goods were in great demand and the balance of trade was favorable. But the position of Entrepreneurs did not improve as the British government revised its custom rules to discourage the demand of Indian textile goods, and Indian entrepreneurs could not expand their business as they had to depend upon the merchant class for capital and they retain the major share of profits. Up to 1850, the major commercial and economic development in India centered on the growth of the British private enterprise in banking, insurance, steamships, plantations and coal mines. Afterward, with a view to take advantage Britishers think to exploit the natural resources of India. So with this objective they penetrate into the Indian Territory. The railway was introduced in India in 1853.

After 1850 manufacturing entrepreneurship came in to existence. In 1854, C.Davar established a cotton textile manufacturing unit in Bombay. In four years, there were four textile mills in India and with in a period of 25 years, its number had increased to 58. Ranchodlal, a Nagar Brahmin in 1861, established a textile manufacturing plant. Then in Surat, first ship building industry was established by East India Company. After that lot of entrepreneurs entered in to new ventures like Jamshedpur steelworks. Jute mills, pharmaceutical industry were also started. Then in Surat, The East India Company established its first ship building industry. In the end of 19th century, there were 18 jute mills and 51 cotton mills.

In 1905, the ‗Swadeshi‘ movement emphasized on indigenenous goods formed an important facet of nationalism and developing nationalism in the minds of Indians. Jameshedjee, Tata also named the first millhe built as ‗Swadeshi Mill‘. Major names of that era were Ghanshyam Das, Birla, Khatans , Goenka, Mafatlal, Jejeebhoy, Gagalbhai, Kirloskar, Hirachand, Wadia, Godrej, L.K. Singhania, Gujarlal and Lala Shriram. The advertisement of Krishna Mills in The Tribune of April13, made the following appeal: ―Our concern is financed by native capital and is under native management throughout‖. Thus the Swadeshi movement inspired the Indians to invest in industrial activities and under Indian management. The main goal of Swadeshi movement was to encourage the Indian industries and to promote and protect their interest. In this movement Indian people  boycott foreign goods and it works. As a result British trade and industry hit badly and Indian manufacturing Entrepreneurship especially cottage industry, handloom clothes, soap and textile gave a new life. Change makers like JRD Tata, MS Oberai, jamnalal Bajaj lead the new way for Indian entrepreneurs and opened a new vista for Indian .Entrepreneurs and entrepreneurship. Now Entrepreneurs focused on their Business expansion and growth.

It is observed that lack of technical skills and insufficient capital resources made a hurdle in the growth of Entrepreneurship. This problem was also discussed by the Planning Commission at that time of the First Five Year Plan. In their words ― as a proportion of the total population the number of educated men and women in the country is very small, and there ids dearth of trained personnel of the requisite quality in business and industry as well as in public administration. Unemployment among the educated classes is to some extent a consequences of the excessive bias in the present educational system towards literary education to the neglect of specialized technical and vocational training. To some extent the difficulties experienced by educated young men in finding employment are traceable to certain reluctance on their part to take on occupations which involve hard manual work or work in somewhat uncongenial surroundings either in cities or in rural areas. The problem has many facets. Unemployment among highly qualified and trained personnel may to some extent be frictional or transitional in character but it may also be due to a lack of adjustment between demand and supply of such specialized personnel‖. So reason for Indian unemployment was lack technical and vocational guidance and faulty education system. British government neglected practical and vocational aspect of literary and academic training.

So in pre- independence period, India did not have a well developed banking system. Managing agency system was first recommended by Indian Dwarkanath Tagore, who encourage others to form joint-stock companies and developed a distinct method of management in which management remained in hands of ‗firms‘ rather than ‗individuals‘. Some of the famous managing agents at that time were Andrew Yule and Co., Martin Burns, Bird and Co., Duncan Brothers, etc.

In the post independence period there has been considerable growth of Entrepreneurship. In this period Entrepreneurship has dispersed socially as well as geographically. This has been due to development of industrial infrastructure, growth of public sector, import substitution, export promotion polices of the government, foreign collaboration, expansion of technical and other education, increasing status of businessmen, etc. technocrats now constitute a major source of entrepreneurship. It may be slow or creeping change in the traditional structure of agriculture. Now Entrepreneur used modern methods of cultivation in order to growth of crops. Now they wanted to produce commercial crops along with traditional crops. People with diverse backgrounds (different caste, communities, and families) have joined the stream of Entrepreneurship. No doubt, Entrepreneurship in India has widened after independence. But there is need to instill the spirit of enterprise in every group and community and to take the mantle of leadership to everyone of the country so as to make India a truly developed country. As Pt. Jawahar Lal Nehru states, “Industrialization produces steel, it produces power. They are the base. Once you have got the base, it is easy to build. The strategy governing planning in India is to industrialize and that means the basic industries being given the first place”.

4. INDUSTRIAL POLICY 1948

After independence population increases but production was not increased as desired. Inflation also showed its giggling teeth. So only measure to deal with inflationary tendencies, and to ensure economic development, it is felt that industrial production should be increased. So in order to strengthen industrialization, Industrial policy 1948 was announced. The government took some important measures in this industrial resolution such as distribution of economic power between public and private sector, spreading entrepreneurship from the existing centers to others centers, etc‖. Government of India adopted several measures to develop basic infrastructure and heavy industries. Industries (Development and Regulation) ACT 1951, Five year planning, industrial policy, Incentives and subsidies, are important measures. To strengthen the industry, in 1948 IFCI was also set up.

Pt. Jawahar Lal Nehru gave due importance to the small scale industries. In the words of Nehru,‖ The test of a country‘s advance in industrialization is heavy industry not the small industries that may be put up. That does not mean that small industries should be ignored. They are highly important in themselves for production and employment”.

Entrepreneurial growth after independence has witnessed great economic, social, and political changes in India. These changes led to remarkable changes in entrepreneurship. In this era several new communities not known for mercantile background started entrepreneurial activities. In five year planning system there has been a mushroom growth of entrepreneurship in the country. Private entrepreneurship established industries in diverse fields, both capital and consumer goods industries. Since the adoption of first plan, indigenous organization for design, construction and engineering of projects has been developed. India has successfully completed major projects abroad in the face of international competition. Industrial houses have started research and development in various fields on a considerable scale.

With the entry of young and highly educated people in industry , the face of entrepreneurship totally changed. Government policies regarding import substitution, export promotion and foreign collaboration have led to rapid entrepreneurial growth in India. A noteworthy feature of entrepreneurial growth under planning has been the emergence of small entrepreneurs in different parts of the country. Technicians, rural artisans, engineers, etc became entrepreneurs. Many institutions set up to provide all type assistance to small entrepreneurs. In fact small industry has become a movement in India. It has created a healthy environment for the growth of entrepreneurship.

In 1991, the government of India announced its policy toward the small scale sector. There has been a remarkable spurt in entrepreneurship in India due to economic reforms. Sh. N.R.Narayans Murthy raised the hopes of the middle class when entrepreneurship in this country was meant to be in heritage. Today, he is an example of how people can build an empire from scratch with no ancestral business behind them.

Sunil Mittal, Anand Mohindra , Shahnaz Hussain, J.L.Oswal, Godrej, Tata, Birla, and many more are the names which entirely change the face of Indian entrepreneurship. Some of the biggest companies today, Airtel, Future group, jet Airways, and Zee television, did not exist two decades ago. Many like Wipro and Infosys went public only after 1991. Today several Indian industries are global benchmark even in emerging sectors such as Information technology, telecom and Outsourcing. Within 20 years India has produced more than 2 lakh Millionaires and large number of billionaires.

5. Sources of Entrepreneurship in India

Before independence the supply of domestic entrepreneurship basically came from selected communities that are Parsees, Gujaratis, and Manipur Parsees. They had merchant houses at Bombay and Surat for overseas trade and for the European traders they acted as brokers by the middle of the 19th century they has emerged as a dominant trading and financing communities of Bombay and Gujrat. They playes a important role in the development of cotton textile and steel industries in India. In Ahmedabad Gujrati trading community played a very major role in establishing textile industry. In the Northern part of country Hindu and Muslim traders played a significant role in the growth of entrepreneurship. In eastern part of country especially Calcuta , Marwari businessmen established industries. The Marwari community and other traditionally entrepreneurial communities dominated the entrepreneurial scence before independence. In South India, Chhetties were the main trading community. They acquired interest in banking by establishing contracts with reputed Indian business houses. Syrian Christian called Nazarani, Mappilas, and Mohammedan merchants known as Moplahs were important trader classes on the West coast in South. Khatris, Bhatias and Lohianas were important enterprises in Punjab and Brahmins in Maharashtra.

In his book ―Enrepreneurship-Concept, Nature and Need‖ M.M.P.Akhouri states that Entrepreneurship is the result of four dominant factors, the socio economic system, the support system, the resource system, and seld sapphire system. these four systems are interrelated, interacting and constantly adjusted with each other. Planned efforts to develop entrepreneurs, therefore, require integrated efforts covering all the four systems. An attempt to effect change in one system neglecting others is bound to fail and the overall objective to develop entrepreneurship will not achieve.

6.  TEN ENTREPRENEURS WHO CHANGED THE FACE OF CORPORATE INDIA

1)  Cowasjee Nanabhal Davar— The Inspiration To Invest

Davar inaugurated India‘s industrial revolution. In 1854, he set up India‘s first steam-powered textile mill in Bombay. Capitalized at Rs. 5 lakh, the Bombay Spinning and Weaving Company paid a 10 percent dividend for six years straight. Davar set the stage for the safety of industrial capital in India. Galvanized by his example, others too made industrial investments. Among them: the woods and the tatas .

2)  Sir Jamset Nusserwanji Tata—The Father of India’s Industrial Revolution

Tata was the first Indian to understand the significance of the industrial revolution. At his Swadeshi textile mill, he instituted pension funds and accident compensation. He believed India‘s progress hanged around steel hydroelectric power and technical education. He inspired creation of the Indian Institute of Science—formerly –Tata Institute—in Bangalore. In 1900, when he was 60, he set up jamshedpur Steelworks after learning steel-making in Europe.

3)  V.O. Chidambaram Pillai—The Steamships That Cried Freedom

Pillai was a nationalist who entered business to prove a point as much as to make profits. His Swadeshi Steam Navigation Company Ltd. broke the monopoly of British shipping in coastal trade with Ceylon. VOC, as he was popularly called, was a radical Congressman who was arrested in March 1908 on charge of section . He was, finally released on 1912. Pillai inspired an entire generation of conservative southerners to plunge into business.

4)  Rai Bhadur_Mohan Singh Oberoi—The Brown Sahib’s Opportunity

In1934 Oberoi mortgaged his wife‘s jewels while scratching together Rs. 20,000 to buy his British partner‘s stake in the Clarke‘s Hotel, Shimla. He put in money while the Britishers pulled their out, and a decade later, he was the first Indian to run a hotel chain. In 1965, he opened the first five-star international hotel in India in Delhi. Thirty-four hotels in seven countries later, Oberois was the first real Indian multinational.

5)  Henning Hock Larsen—The Dane Who Never Went Home

One of a small flock of Europeans who refused to quit India. Larsen and his partner Soren K.Toubro— both came here to setup a cement plant for a British employer—set up a company in 1938 that became India‘s pre-eminent engineering giant. Larsen knew independent India offered much scope for his company and his skills. Worth Rs. 5,400 crores today, Larsen‘s push to manufacture it at in India sparked off an engineering boom that hasn‘t quit. From nuclear plants to new necessaries, Larsen‘s stamp on India is indelible.

6)  Dr. Verghese Kurien—Father Of the Unlikely Entrepreneur

Dr. Kurien created Operation Flood, the largest dairy development programs in the world. He made  India the world‘s largest milk producer. But most importantly, he put economic‗power in the hands of the producers, all 10 million families at last count. The Kaira District Cooperative Milk Producers‘ Union, or Amul as India knows the giant, is modern and fleet enough to lord it over an array of multinational competitors. Humble farmers, and cowherds—they all have a stake in one of the world‘s best dairy operations.

7)  Karsanbhai Khodidas Patel—The Power Of The Grassroots.

Patel knew no marketing, had no management qualifications and no collaborator, Indian or foreign, when he created the first Indian brand to humble the best multinationals. The saga of this Gujarat government chemist began with a 12-yard shed in his backyard in 1969. Worth Rs. 2,440 crore today,  Nirma‘s cut price detergent shook the likes of Lever, Patel, who speaks little English, inspired legions of Davids to do entrepreneurial battle with India‘s corporate Goliaths.

8)  Aditya Vikram -Y-Birla—The First Mogul of Globalization

When MIT graduate AdityaVikram Birla returned to India to be a part of his grandfather G.D.Birla‘s sprawling empire in the 1960s, he could have gone with the flow. But when it took Indian bureaucrats  11 years to clear a refinery project, Birla did not believe it worth his while to work the license raj . Instead, long before globalization became a buzz-word, he spread outward, setting up a textile mill in Thailand, later the world‘s largest palm oil refinery in Malaysia. When he died in 1995 his group had 17 companies in 14 countries.

9) Dhirubhai Ambani— The Saga Of The New India.

Truly, an entrepreneur for the, tumultuous new India. Poor son of Gujarat village school teacher reached Aden at age 17 and worked as petrol station attendant. Mixing grand opportunism with extreme guile, he clambered his way up, manipulating the license raj to his advantage. He created an equity cult by going to millions of small investors when the big bankers refused him money. He adapted as easily to liberalization. At Rs. 60,000 crore, there‘s quite simply nothing larger than Reliance in India today.

10. N.R. Narayana Murthy—Messiah of the New Middle Class.

How many companies have 1,388 employees that are rupee millionaires and 72 that are dollar millionaires, including drivers and peons? Murthy‘s miracle is not just that he and seven professionals built a tech powerhouse from Rs. 10,000 as initial investment in 1981. He did it with middle class values—hard work, humility, honesty and innovation—-and inspired uncountable thousands on the good way to make money. And as the thousands clamoring to get into Infosys indicate, there is no better employer around.

( Source: Adapted from Business Today, Jan 20, 2000 and The economist , Indian Entrepreneurs : 10 Greatest Businessman From History )

A business journal from the Wharton School of the University of Pennsylvania

Three Waves: Tracking the Evolution of India’s Startups

November 5, 2019 • 15 min read.

How did India’s innovation ecosystem evolve and reach its current position? The authors of this opinion piece share their insights.

• Entrepreneurship

Entrepreneurship is embedded in India’s economy and culture. This opinion piece traces the roots of India’s startup ecosystem and where it is headed in the future. The co-authors include Somshubhro Pal Choudhury, a partner at Bharat Innovation Fund , a $100 million venture fund that backs entrepreneurs building deep-tech companies in India; Supriya Sharma, partner – insights at CIIE.CO , a leading entrepreneurship center based at the Indian Institute of Management – Ahmedabad; and Sanjay Jain, a partner at Bharat Innovation Fund.

India’s startup economy has been booming. The last decade has seen significant activity on multiple fronts including the founding of new startups, amount of funding and number of investment rounds, influx of global investors and startups, development of regulatory infrastructure, global mergers and acquisitions, and internationalization. Entrepreneurial success stories abound. At last count, India had 26 unicorns , with eight new entrants joining the club in 2018 alone.

For example, consider Byju’s, one of the newly minted unicorns in the K-12 online education space, which today has a valuation of $5.5 billion. Started in 2011 by a former schoolteacher, Byju’s has gone through more than seven rounds of funding, acquired a customer base of some 35 million subscribers, and is already profitable. The company had revenues of more than $200 million in 2018, with a three-fold jump over the previous year and a target of doubling revenues this year. Byju’s recently acquired Bay Area-based early learning phygital (physical plus digital) platform startup, Osmo, for $120 million. Byju’s also partnered with Walt Disney Inc. for its aggressive global expansion into the early learning space with Disney’s timeless stories and characters.

Amid all this fervor, it is important to take a step back and reflect on how the Indian startup ecosystem has reached its current position. History repeats itself, they say, but our intentions lean more towards understanding the patterns of evolution. That can help us equip ourselves and create interventions to keep the momentum going.

Like most old economies and cultures, entrepreneurship and trade have blossomed in India for centuries. Built on these foundations, India’s current entrepreneurial ecosystem is a result of three waves of entrepreneurial activity with distinct focus areas – Information Technology (IT), consumerism and innovation. In our view, each of these waves is marked by distinct kinds of businesses, predominant activities and ecosystems comprising various social, regulatory, technological, economic and cultural elements. While each wave draws upon the previous one, we find that it is distinct from its predecessor and successor.

We will elaborate upon these waves, but only after touching upon the foundations of entrepreneurship in India. After all, we must begin at the beginning (or as far back as we can go).

Of Oceans, Seas and Risk Takers

Culturally, many communities in India are believed to be entrepreneurial and avid risk takers. Historically, Indian traders are known to have travelled as far as Egypt, Bahrain, Vietnam and Burma (Myanmar), among other countries. Entrepreneurial communities in India own and run many family-owned small- and medium-sized businesses as well as large behemoths such as Reliance and Bajaj. A report published in 2018 notes that 111 of the most popular family-owned businesses had a total market capitalization of some $839 billion. This number does not include the vast number of small and medium-sized family-owned businesses spread across India.

“At last count, India had 26 unicorns, with eight new entrants joining the club in 2018 alone.”

Plenty of data support these entrepreneurial inclinations. The Global Entrepreneurship Monitor estimates some 20% of Indians (aged between 18 and 64 years) intend to start a business in the next three years, while more than 11% are nascent entrepreneurs (against the global average of 12.6%). About 63.7% of people in India consider entrepreneurship to be a desirable career choice, against the global average of 62.4%.

A stroll along the streets of the old cities of Ahmedabad, Kolkata, Mumbai, Delhi, Hyderabad (and many others) or a drive through the industrial clusters spread all over the country reveals the entrepreneurial spirit embedded in the cultural and economic milieu of India. These embedded entrepreneurial inclinations, we believe, have laid the foundations for waves of entrepreneurial activity in India.

Wave 1: IT Matters

The roots of information technology can be seen in the setting up of schools of technology and management and entry of IBM in India in 1950s (only to exit two decades later). In 1968, the corporate giant, Tata Group, set up Tata Consultancy Services and took on several computerization related projects in India. It partnered with a U.S. based mainframe-manufacturing company and thus began the era of offshoring.

However, the wave of IT and IT-enabled services began taking cognizable form with the founding of companies like Patni Systems around the 1980s. Founders of these companies were educated in prestigious schools (mainly in the U.S.) and closely witnessed the market asymmetries to realize the unlocked value in offshoring. They returned home to set up IT businesses to capture this value. These IT companies also became nurturing grounds for entrepreneurs. Early employees of such companies went on to establish giants like Infosys, many of which, in turn, became breeding grounds for the next generation of entrepreneurs.

The growth of these IT companies and increased offshoring of R&D created a pull on technical education. As a result, engineering became the almost de facto choice for higher education, thus leading to the creation of a large pool of engineers. In 2014, India was estimated to be home to some 25% of the world’s engineering graduates .

With almost a non-existent venture funding industry back then, most of these businesses in the first wave were bootstrapped and they focused on services. Stories are often told of N. R. Narayana Murthy, founder of Infosys, borrowing money from his spouse and being continually broke. Such was the entrepreneurial zeal and the size of the offshoring opportunity that many IT businesses established in the 1990s have now grown into some of the largest and most successful companies founded in India. Today, India’s IT/ITES and BPO firms constitute a $180 billion industry primarily focused on the global market.

The success of Indian IT businesses also brought more prosperity to the country’s middle class. Between the 1960s and 1990s, a typical middle-income household had one primary earner who was either employed by the government or a public sector undertaking or ran a small local business. Children’s education was taken seriously and they were often guided towards engineering or medical schools. Once they had graduated, engineers found immediate employment with IT companies (through campus placement) and brought home salaries that were higher than their parents’ incomes. As IT businesses grew, so did the paychecks of their employees, the effects of which also spilled over to other industries.

Since more money was now available to be spent, the Indian economy opened up to global markets, creating more avenues for consumption and setting in motion the next wave of entrepreneurship.

Wave 2: Rise of Consumerism

The Indian consumer story was sparked by an increase in expendable income. This wave started around the middle of the last decade and created opportunities for a variety of business models.

With the liberalization of policy infrastructure, more capital was now becoming available. The investment thesis — a growing emerging middle class with higher incomes would consume more, use smartphones and access the internet often. Internet usage was expected to become cheaper, therefore improving access. Thus, models around e-commerce, specialized retail, marketplaces, hyper-delivery networks and organizing the unorganized sector were being bet upon.

This was a mammoth wave of entrepreneurial activity in India; the ‘startup’ expectations were also seen to have taken birth around this wave. Substantial investments around the consumer investment thesis first came from the U.S., later followed by China and Japan. Unparalleled opportunities were created; these not only led to the India foray of large consumer brands like Amazon and Uber, but also the emergence of more than 25 home-grown unicorns (like Ola, Zomato, Swiggy, PayTM and many more). Not to forget, Walmart acquired Flipkart at a valuation of $22 billion.

This wave is also marked by many me-too platforms and aggregator models, albeit with business model innovations and adapting processes to India’s unique culture and demands like ‘cash-on-delivery.’ Quite unlike their Chinese counterparts that have enjoyed a near monopolistic luxury, these Indian born ventures are competing strongly in an open market against global, well-funded, and well-matured competitors. Some of the ventures have succumbed but several have succeeded and are now setting their eyes on global expansion.

“India has evolved from being the IT, services and business process outsourcing hub of the world to being a significant R&D center for multinationals and many Silicon Valley startups.”

Wave 3: Up the Innovation Curve

The latest wave in India has two defining characteristics — B2B models and deep-tech, IP-driven innovation.

Over the last two decades, India has evolved from being the IT, services and business process outsourcing hub of the world to being a significant R&D center for multinationals and many Silicon Valley startups. Bangalore, particularly, has emerged to be the capital of GCC or Global Capability Centers, with about half of the global 1200 multinationals having set up their R&D centers in India. Today, we see entire product lines and unique products being designed, developed and delivered entirely from India. A few multinationals including GE, Cisco and Adobe have even shifted the P&L of some of their R&D business units to India.

Some may say that India’s R&D story began with Texas Instruments setting up their R&D center in Bangalore in 1985. However, we find that the R&D activity in the ecosystem accelerated significantly from the late-1990s, perhaps linked to the opening up of the Indian economy and the foundations created by the first wave of IT businesses. While these offshore-R&D development centers started off with basic testing, product maintenance and some rudimentary software development, many of them significantly went up the value curve over the next two decades. This led to many global multinationals setting up their second largest R&D sites beyond their headquarters.

Closely clued into the global ecosystems, Indian startups are moving up the intellectual property ladder, too. We are seeing fewer ‘me-too’ e-commerce models and more startups building unique products and solutions. The target customer is no longer only (or primarily) India and an increasing number of startups in India are now born global. These entrepreneurs are more seasoned, with experience of having worked in large multinationals, and have a global exposure with working in the U.S. or Europe before returning to India. Most importantly, these entrepreneurs have a product mindset unlike their counterparts from the previous generation who were more services focused. These entrepreneurs are building from India, for the world. Playing in the global market also brings home strong IP sensibilities for the ecosystem.

The other characterizing feature of the current wave is the salience of B2B models. The growth of the IT businesses from the first wave and the consumer-driven startups from the second wave along with the drive for traditional businesses to compete on a global playing field has created opportunities for business (as against consumer) products and solutions. The demand for B2B solutions from the global markets is a few times over. Many of us would have heard startups shying away from B2B models often citing the difficult working relationships. This is beginning to change with businesses that were themselves struggling startups in the recent past, now creating a more encouraging market for other young B2B startups.

The mass consumer segment from the second wave appears to be hyper-invested now with winners already picked, but there are several niche opportunities that are getting capitalized. Beyond the current unicorns, the next wave of 100 startups in India are much more diverse, going beyond consumer to B2B marketplaces, healthtech, enterprise-tech, robotics, fintech and many more. Some of these startups include Grey Orange Robotics, Medgenome, Blackbuck, Bankbazaar, Uniphore, etc.

The startup ecosystem is now shifting to more B2B models that have deep-tech and IP-driven innovation at their core. Examples include some of the startups in our Bharat Innovation Fund portfolio including Entropik Technologies (platform for Emotion AI, mapping EEG brainwave signals, facial expression and eye tracking), Detect Technologies (high temperature magneto-resistive sensor and signal processing for leakage and corrosion detection in oil refineries) and even a number of new-age Space-tech startups building affordable connectivity solutions, nano-satellite platforms and 3D printed modular rocket engines, taking a cue on the affordable Space-tech success from Indian Space and Research Organization (ISRO). There are now multiple success stories with Zoho and Freshworks leading the unicorn SaaS space from the southern city of Chennai. We now see over 500 AI startups in India leveraging the affordable talent and easier access to large pools of data and as well as a number of in-house and outsourced data science teams offering services to global customers.

While a plethora of challenges remain, most startups in the current wave seem to be adopting the Israeli way of establishing a global connect and customer base for scaling-up, after development, piloting and achieving product-market fit, done affordably in India in comparison to their global counterparts.

“These entrepreneurs are building from India, for the world.”

The Digital India Push

Digital India has been a big initiative by the Indian Government over the past decade across political party lines. The push towards this started with the development of public goods digital infrastructure known as ‘IndiaStack’ in 2009 and issuance of biometric IDs to Indians. IndiaStack is a presence-less, cashless, paperless, consent-based scalable architecture that promises to revolutionize and accelerate India’s digital push. It promises to enable the country leapfrog from being a digital infrastructure poor country to being a leader. In the last eight years, over 1.2 billion Indians have received their biometric IDs — Aadhaar — and onboarded on the Universal IDentification (UiD) project. This was the fastest ever rate of reaching a billion users, surpassing the growth of giants like Facebook, WhatsApp or even mobile phones!

The IndiaStack infrastructure seems to have enabled a more efficient opening of over 500 million bank accounts for citizens who never had one earlier. These bank accounts were opened with an aim to ease citizens’ access to formal credit and direct transfer of government benefits and subsidies. This IndiaStack infrastructure has also made its presence felt in the private sector with the country moving fast from largely an all-cash economy to cashless digital transactions.

Additional infrastructure layers are being built on IndiaStack. For instance, ‘HealthStack’ aims to enable India’s flagship healthcare scheme of insurance to 300 million citizens and ‘Digital Sky’ focuses on drone and small aeroplane flight plan authorization. A uniform single taxation scheme, launched recently, for the entire country has increased the tax net significantly and simplified the age-old taxation norms that have plagued the growth rate for decades. Infrastructure is ready for every citizen to have a Digital Locker for e-signed documents like driving license and certifications. India’s digital infrastructure is also attracting considerable interest from countries that are on the path of deeper digitization.

Riding on the above three waves and the government’s push for digitization, India’s startup ecosystem now stands firmly with over 300 incubators and accelerators, about 30,000 active startups. In 2018, institutional venture funding of over $4 billion channeled towards tech startups only speaks of the growing size of this ecosystem. With over 50 central and state government policies for supporting startups, the rails of policy and regulation are also getting stronger in India. The recent thrust on building technological infrastructure and enhancing the ease of business is further fuelling the growth of the ecosystem. While economic challenges remain, we are positive about the strong political will and the promise of bold reforms for the long run to get the economy to $5 trillion.

As 2019 flies by, we are closely witnessing the evolution of the third wave. We are seeing startups apply Artificial Intelligence and Machine Learning to create solutions across sectors. Novel use cases of IoT, blockchain and the IndiaStack are also emerging. We are seeing startups that are born global, creating solutions for the world as well as those that are applying next-gen technology to address deep and complex challenges of inclusion and livelihoods in India. The future holds immense promise and we are humbly contributing to its creation.

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Innovation and entrepreneurship in india: an overview.

Published online by Cambridge University Press:  18 October 2019

India began the process of market liberalization that opened it to significant interactions with the world economy in 1991. In this essay, we provide an overarching view of the country's journey toward integration with the global innovation and entrepreneurship network. Major nodes in this global network have two major components that may be metaphorically referred to as ‘pillars and ivy’. Globally connected multinational enterprises (MNEs) form the pillars. Agile startups are the ivy, and their success (metaphorically, the height to which they can climb) depends on their symbiotic connections with the pillar MNEs. Both components are essential and reinforce each other. Without MNEs, the scaling of startups is hampered. Without a vibrant population of startups, MNEs’ interest in a location remains driven by cost, rather than capability and creativity. MNEs (mainly foreign) provided the initial sparks for the formation of the Indian innovation and entrepreneurship ecosystem. We chart the subsequent growth of India's startups. They began in the information technology (IT) sector but now cover a much wider range of industries. Today, India's innovation and entrepreneurship ecosystem is one of the largest in the world, with global integration in terms of technology, financing, human capital, and administration.

印度于1991年开始了市场自由化进程，从此开启了印度与世界经济互动的大门。在本研究中，我们对印度融入全球创新和创业网络历程提出了一个总体观点。在全球网络中主要节点包含两个重要组成成分，可以将其比喻为“支柱和常春藤”。全球跨国企业构成了支柱，初创企业是常春藤，它们的成功(打个比方，如它们能爬多高)取决于它们与跨国公司的共生关系。这两个组成部分是必不可少且相互促进的。没有跨国公司，初创企业的规模会受到限制；而没有一个充满活力的初创企业群，跨国公司对一个地区的兴趣只会受成本驱动，而不是该地区能力和创造力。跨国公司 (主要是外国公司)引发了印度创新和创业生态系统的形成。在本研究中，我们描绘了印度初创企业后续发展蓝图。这些初创企业始于信息技术(IT)领域，但现在涵盖了更多行业。如今，印度的创新和创业生态系统已成为世界上最大的生态系统之一，而且在技术、金融、人力资本和管理方面实现了全球一体化。

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• Volume 15, Special Issue 3
• Suresh Bhagavatula (a1) , Ram Mudambi (a2) and Johann Peter Murmann (a3)
• DOI: https://doi.org/10.1017/mor.2019.52

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India's Startup Revolution: Exploring the Rise of Innovation and Entrepreneurship

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The Evolution of Indian Entrepreneurship

After 75 years of winning independence, the indian entrepreneurship story is making waves globally.

By Harsh Mariwala

As India enters its 75 th year of independence, it is time to acknowledge the contribution the country has made to the global entrepreneurial ecosystem.

From an emerging market, we have consolidated our position as one of the fastest-growing markets for emerging tech companies. The Indian start-up ecosystem is the third largest in the world today with over 100 unicorns (valuations of US$ 1 billion or more) emerging in the last decade. In 2022 alone, 42 technology-led start-ups have joined the coveted unicorn club. What is noteworthy is that these startups span across sectors and industries ranging from fintech to agri tech to health tech and many more, attracting global investors and venture capital. Backed by government initiatives and support, the Indian entrepreneurship story is making waves globally, too.

B:LINE:TWO TECHNOLOGY CHIEFS TOGATHER CEO, INFOSYS, MR. N.R. NARAYANA MURTHY( LEFT)HAVING A WORD WITH CHAIRMAN, WIPRO, AZIM PREMJI DURING A MEETING OF ADVISORY COMMITTEE ON INFORMATION IN THE CAPITAL ON 15-1-2001.PIC--KAMAL NARANG | Photo Credit: KAMAL NARANG

However, it is important to reflect and understand how the Indian start-up ecosystem has evolved.

Evolution of an ecosystem

Like most economies and cultures, entrepreneurship has been an integral part of the country for centuries. India’s current entrepreneurial ecosystem is a result of three waves of entrepreneurial activity with distinct focus areas – information technology (IT), consumerism and innovation. The success of Indian IT businesses over the years has empowered the country’s middle class. As the economy liberalised, incomes grew and more capital was available. This resulted in increased consumption and the advent of smartphones ensured that the Internet was easily accessible, causing models around e-commerce, specialised retail and hyper-delivery networks to become popular.

Over the last two decades, India evolved from being an IT services and business process outsourcing hub to becoming a significant R&D centre for multinationals, with new business models being created almost daily. I believe the next wave of unicorns is going to be much more diverse and will focus on cutting-edge technologies like robotics.  

The talent landscape has also changed dramatically. As recently as eight or 10 years ago, most of our entrepreneurs emerged from business families. Today, that is not the case and many of our young entrepreneurs are not from business backgrounds.

So, what is it that has changed?

In my mind, education has played a very important role in driving the growth of most businesses. It has enabled the leveraging of digital and various other technologies, playing a very important role in creating a vibrant business environment. The emergence of new avenues of funding has also changed the landscape. Earlier we only had banks that provided working capital, but now we have non-banking financial companies (NBFCs), angel funders, private equity and venture capitalists. I strongly believe that if you have a good business, potential prospect, or project, it will not be difficult to raise money.

The willingness to fail has also increased substantially, which is a very good sign because not all businesses are going to succeed. Education provides one with a safety net so one can always go back to the drawing board or the job market if one’s business plans do not materialise.

A lot of Indian business models are also emerging from studying global trends and observing what happens in other countries. For example, I went to New York about five or six years back and I made it a point to see what new products or services were being developed. One of them was AllBirds–a company developing footwear from natural materials. A few months later, I saw a similar company in India doing the same thing.

Therefore, when a business model is based on a similar concept established abroad, the key factor is to be a first mover here.

Looking back at India’s history of developing entrepreneurs, only two industries have truly gone global–IT and pharma. For up and coming Indian businesses to scale new heights globally, we must leverage something we are good at. For example, Bangladesh has done better in garment production for factors such as cheaper cost of labour. India’s strength is a pool of highly educated individuals. We need to move away from positioning ourselves as a place that only provides cheap labour–countries like Bangladesh and Vietnam are already doing that.

I believe that we need to move up the value chain to succeed globally and develop products that require high-end manufacturing. Because India’s talent pool is much more skilled and educated, it provides a huge opportunity. Secondly, focusing on products that are inherently Indian such as yoga, tea and Ayurveda. A lot of global trends are emerging in these areas–especially after the pandemic where there has been an increased focus on wellness. However, I do not envisage these businesses getting as big as IT and pharma.

Looking ahead

When I started my business, I quickly found out that the learning curve is much steeper. However, as your business grows so does your role. From doing things yourself, you must be willing to get things done or delegate work. I find that today many entrepreneurs are not able to do that. My mantra has always been that you recruit talent that is better than you.

As our country celebrates its 75 th Independence Day, my wish is for entrepreneurs to be liberated from the fear of failure. I think we need to celebrate and learn from failures and empower our youth. I am keen on experimentation, removing the fear of failure and prototyping, rather than doing things on a very big scale. Value addition with profitability, and not valuation, must be the guiding light for entrepreneurs.

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The Rise of Indian Entrepreneurs: A Reality Check

Why in News?

• Atmanirbhar Bharat , or a self-reliant India, is  among the most prominent stated goals  of the present government.
• Recently a  report was released by Capital Group which highlighted nine factors  that made “India appealing compared with other emerging markets.”
• Amidst all these reports and government’s policies it is  imperative to understand the correct employment picture.  

The Vision of Atmanirbhar Bharat (Self-Reliant India)

• The idea is that the country will achieve self-reliance in a whole host of economic activities.
• An associated idea, pushed forward by the government, has been  to convince people that they should not look towards the government for an official job.
• The Indian government has long sought to boost domestic entrepreneurship.
• The current dispensation has consistently pushed for the private sector to take the lead in creating jobs.
• A necessary corollary of such growth would be  the rise of entrepreneurship in India .

Select Government Schemes to Support Entrepreneurship in India

• This scheme was launched to promote and support startups in India by providing them with funding, tax benefits, and other incentives.
• It also provides legal and regulatory support and helps startups to network and collaborate with investors, mentors, and other entrepreneurs.
• This scheme provides financial assistance to small and micro enterprises, including startups, through loans of up to INR 10 lakhs.
• The scheme has been designed to cater to the financial requirements of startups and small businesses in the country.
• This scheme was launched to promote entrepreneurship among women and SC/ST entrepreneurs.
• Under this scheme, loans of up to INR 1 crore are provided to eligible entrepreneurs to start or expand their businesses.
• AIM is a government initiative that aims to promote innovation and entrepreneurship in the country.
• The mission provides funding, mentorship, and other support to startups and entrepreneurs working on innovative ideas.
• The EDF is a fund set up by the government to provide financial assistance to startups and small businesses working in the electronics and IT sectors.
• The fund provides equity, debt, and other forms of funding to eligible companies.

Current Employment Picture

• The government has argued that due to key reforms,  India is witnessing a surge in domestic entrepreneurs.
• However, reports suggests that  India’s labour market experiences considerable joblessness and a general lack of employment  opportunities despite a significant GDP growth rate.
• The Centre for Monitoring Indian Economy (CMIE) released data that suggests  most of the new jobs created in the form of self-employment.

Where and How Indians Work?

• According to CMIE,  the total employment in India in January-April 2023 stood at 412.9 million.
• This is  8.6 million more than what it was before the pandemic  (that is, during January-April 2019).
• The total employed people can be further categorised into several other categories.
• However, there are four main categories;  business; salaried; small traders & wage labourers; and farmers.
• The  bulk of Indians work either as farmers or as wage labourers  or small traders. The third biggest category is the salaried class. The fourth-biggest category is the so-called “business” class or “entrepreneurs”.
• Moreover, there is only one category that has actually recovered to the pre-pandemic level. That is those employed in “business” of some kind.
• All other types of employment are  still below the pre-pandemic number.
• The number of people categorised under “business” grew by 8.4 million between the last four years.

Is the Entrepreneurship on the Rise?

• At one level, the fact that employment is soaring within the “business” category can be seen as heartening news.
• It can give a sense that  India’s economy is creating the right kind of incentives for the private sector  to come out and reach for their dreams — that India is the new land of opportunities for entrepreneurs.
• However, a  detailed examination of the data within the “business” category is necessary to present the correct picture.  

Detailed Examination of the Data Within the Business Category

• This includes those people who set up large businesses that leverage capital and humans to run them.
• They manage some fixed premises such as an office, shop, workshop, factory, etc.
• Qualified self-employed professionals : This category includes people who run their own professional enterprises and leverage their own expertise, such as doctors, lawyers, consultants, professional chartered accountants, etc.
• Self-employed
• This category refers to those “entrepreneurs” who run their own business enterprises but these enterprises do not leverage much financial capital, human capital, or even professional skills.
• For example,  taxi drivers, barbers, beauticians, estate agents, brokers, insurance agents, models, astrologers, etc.

Reality of the Rise in Entrepreneurship

• Self-employed entrepreneurs accounted for the largest share,  at around 70-80 per cent of all the entrepreneurs in India.
• The second largest share was that of businessmen, comprising around 15-20 per cent of the total business persons in the country.
• Qualified self-employed professionals accounted for a mere 1-2 per cent.
• According to CMIE, this composition has changed considerably since 2016, from when CMIE started releasing its employment data.
• The  share of businessmen fell substantially and was offset by an equal rise in the share of self-employed entrepreneurs.
• Data shows that at the macro level, what is often considered to be the business class — the  well-to-do entrepreneur — has seen a decline .
• More importantly,  the actual rise of Indian entrepreneurs is happening in the self-employment category , which reflects poorly on the economic conditions.
• It is likely that this shift in the composition of employment in India does not indicate an increase in real entrepreneurship but is merely a reflection of poor employment opportunities in the economy.
• Reforms and policies brought in by the government has set the stage for the growth. But as of now,  the reality appears to be different from expectations and various reports.

Q1) What is the Start-Up India scheme?

Launched on 16th January, 2016, the Startup India Initiative has rolled out several programs to support building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers. These programs are managed by a dedicated Startup India Team, which reports to the Department for Industrial Policy and Promotion (DPIIT).

Q2) How does the Startup India Seed Fund Scheme aim to help entrepreneurs?

 Startup India Seed Fund Scheme (SISFS) aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialisation. This would enable these startups to graduate to a level where they will be able to raise investments from angel investors or venture capitalists or seek loans from commercial banks or financial institutions.

Source:  The Indian Express

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Indian entrepreneurship and the challenges to india’s growth.

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The Joint Family Structure, a peculiarly Indian phenomenon, has powered the success of many Indian businesses. But that success has, in turn, been enabled by the broad sweep of economic liberalization in India. That success will continue only if the reforms continue and if the risks that could derail the growth — terrorism, political corruption/stalemate, stalled reforms and growth that focuses only on the urban rich – are contained. Readers will learn what needs to be done to maintain business as usual. 

The Indian state makes Indians entrepreneurial, as to overcome basic constraints and succeed with what we have we have to innovate and improvise. This article will describe how the Indian Family Business and its entrepreneurial spirit play an important role in India’s growth. In the first part of the article, I discuss its characteristics and survivability in the global environment. In the second section, I discuss the challenges – corruption, terrorism, and unfinished economic reforms — that India faces and their impact on foreign businesses that want to invest in the country.

Indian entrepreneurship

Before 1991, Indian business success was a function of ambition, licenses, government contacts, and an understanding of the bureaucratic system. Decisions were based on connections, rather than the market or competition. Business goals reflected a continuation of the ‘Swadeshi’ movement, which promoted import substitution to attain economic freedom from the West. Pre-1991 policies were inward looking and geared towards the attainment of self-reliance. During this era, entrepreneurship was subdued, capital was limited and India had very few success stories. As well, society was risk averse and the individual looked primarily for employment stability.

In 1991, the Indian government liberalized the economy, thus changing the competitive landscape. Family businesses, which dominated Indian markets, now faced competition from multinationals that had superior technology, financial strength and deeper managerial resources. Thus, Indian businesses had to change their focus and re-orient their outlook outward. A few existing Indian business families adapted to the new economic policy while others struggled. Importantly, a new breed of business was born, one that focused on ICT (Information and Communication Technology) and created wealth for owners and employees.

For the old business houses, success had come from the close-knit joint family structure that fosters family values, teamwork, tenacity and continuity. Under this structure, generations lived and worked together under one roof, reaffirming the Weberian values and trust that have built successful businesses. Wealth from the businesses supported the joint family by providing a social safety net for members. In the structure, businesses and families were intertwined though they were also distinct entities with separate rules. Hence, survival of the family became synonymous with the survival of the business.

Liberalization, however, changed the very nature of the joint family. If large Indian businesses were to succeed, the family would have to re-orient itself to compete in a global, competitive environment.

Post liberalization, IT businesses succeeded because they were customer focused and professionally managed. The old, family-managed businesses, which formed the backbone of the economy, needed to evolve and become more institutional, if they were to extend their life cycle. Below, using the Indian mythology trinity of creation, preservation and destruction, I explain the changes that family businesses would have to make below.

Brahma: Creation Cycle

After liberalization, business opportunities in India were manifold. A good number of entrepreneurs seized them and grew from small-scale contractors to large real estate developers, and from distributors to manufacturers. Success became the result of efficient capital allocation, strong execution and a customer orientation.

Today, businesses have access to venture and growth capital, provided that their stories and business models are reasonable. In the pre-1991 License Raj era, abilities such as manufacture and deliver products to the market were the Key Success Factors, without regard for the customer and other efficiencies. Liberalization also brought in the age of Saraswati [Goddess of Learning in Indian mythology]; businesses would now grow because they had knowledge, , not because of whom they knew.

One example is N.R. Narayana Murthy, who co-founded Infosys Ltd. in 1981, with an initial capital of INR 10,000 (CDN$ 250.00). At Infosys, he and his team designed the Global Delivery Model, which also laid the foundation for the knowledge industry. Narayan Murthy’s vision gave a fillip to the IT services industry, creating and encouraging the entry of several new IT businesses.

Vishnu: Preservation Cycle

To maintain business growth, Indian entrepreneurs need to segregate operating control of the business from beneficial ownership, mitigating business and family succession risks. But, in a male-centric culture, people are reluctant to relinquish operating control and institutionalize processes. Consequently, there are few large, structured and professionally managed institutions in India.

Indian businesses need to move from an entrepreneurial-driven, unstructured culture to one dominated by professional managers. Management control should rest with professionals, as they are able to perform more efficiently; beneficial ownership can continue to rest with the owners, who can still provide the vision and connections, and enjoy the fruits [increase in firm valuation] of efficient management.

If a younger generation wishes to take over the business, then clear criteria can be defined to determine their eligibility to succeed their elders. These criteria could include requirements to work in middle management, work across divisions, work in audit, and have a first-class education. Succession must also take into account the changing role of women and their desire to be involved in the business. If a proper succession plan is not developed and implemented, nepotism and stagnation will result.

Essentially, corporate governance with a lucid ownership structure that blends effectively with the professional decision makers [e.g. CEO] can reap benefits for all stakeholders. This will allow entrepreneurs to build larger institutions.

Sunil Mittal, a first generation entrepreneur, indentified an opportunity in mobile telecom. In 1994, Mr. Mittal successfully bid for a telecom license , and services were launched under the brand name AirTel. The business model was innovative –IT management services and hardware (telecom towers) were outsourced to vendors. Fixed costs were converted to variable costs. Mr. Mittal was able to professionalize the organization early, something that helped him build a larger institution. As a result, India now has one of the lowest-priced telecom services in the world.

The Burman Family, which owns Dabur Ltd. (consumer goods company), has is a good example of a family company that segregated management from ownership. It has a separate Family Committee that provides the vision and direction, but the day-to-day management rests with the professionals. The family has a formal structure for communicating with management.

As Indian businesses became professional, opportunities to acquire global businesses increased. In 2006, Corus, an Anglo-Dutch steelmaker accepted an US$7.6B bid by Tata Steel, the Indian steel company. This allowed Tata Steel to become a global leader in the steel business instead of continuing to remain a large domestic steel manufacturer. Once an acquisition target, Tata Steel has itself grown into an acquirer. .

Shiva: Destruction (Exit) Cycle

Owners should exit their business if it is not efficiently managed or if it receives exceptional valuations. A control-and-hold behavior will simply not enable success. We have seen that a few owners, Malvinder & Shivinder Singh, and Ajay Piramal, for example, both in the pharmaceutical industry, have successfully sold their businesses.

As businesses grow, entropy will only increase. The discontinuity will be difficult to manage if a formal family structure is not in place to meet the needs of the next generation. However, if roles and responsibilities of the next generation are defined, and professional management (wherever necessary) takes over, closure of the business can be avoided. As it is said, a lack of liquidity can bankrupt a firm; similarly, the lack of an appropriate family structure can force a business to close after the first generation exits. Thus, Indian owners have to make the transition from being owners to shareholders.

As shareholder value increases, the free cash flow can be invested in new initiatives that enable the new generations to apply their skills. We need not throw away the characteristics of the joint-family business – work ethic, ability to deal with diversity, customer focus — but to blend what has been learned about customer focus and diversity, for example, into a performance-driven structure. Only then can the investment cycle of creation, preservation and destruction continue.

Risks to India’s growth: Real but overstated

The Indian entrepreneurial spirit can only develop and grow if the Indian economy continues to grow on a sustainable basis. The risks to India’s continued growth are terrorism, political corruption/stalemate, non-inclusive growth that focuses only on the urban rich, and stalled reforms. What then is India’s risk premium?

As the investment cycle strengthens, foreign businesses can invest in India independently or through partnerships. The businesses factor the political, economic and family risks in their analysis. From an academic’s perspective, the businesses can either decrease the expected cash flows or increase the discount rate to reflect risk premium, though the adjustments are complex. However, I view investments in India as a strategic decision. Below I discuss the risks and my understanding of them.

Terrorism: India is a stronger state because of its culture

As per Wikipedia, “Terrorism in India is primarily attributable to religious communities and Naxalite [militant Communist Group] radical movements.” I am not going to elaborate on the causes of terrorism but I do want to ask if India as a country will survive and remain united despite the nefarious activities of the insurgents. It can be stated unequivocally that terrorism creates uncertainty and delays investments in any country. However, we need to comprehend a country’s culture, constitution and its past response to terrorism to consider and assess its fate.

Culture is a broad-based word but a powerful concept. Culture is rooted in myths, institutions, television, globalization, upbringing, religion and history. Foreigners have invaded India, but we have learnt to absorb and assimilate them into our society. India has the second-largest Muslim population in the world. Buddhism and Jainism had their roots in India but only traces exist today, as Hinduism absorbed their teachings. The Indian culture is tolerant and can deal with differences. The difference between Europe and India is that Europe is a continent with independent countries while India is one country that has united many divergent countries.

The Indian culture is also resilient and able to respond sensibly to any terrorist activities. As evidence, Indian’s response to the November 26th 2008 terrorist attack in Mumbai was balanced and restrained. I am confident that, given India’s history and behavior, we will remain united as a country.

At the same time, Indian businesses have shown the entrepreneurial skills and flexibility to grow despite the challenges. For instance, an Indian entrepreneur in Afghanistan is assisting the government to develop that country’s infrastructure. C&C Construction Ltd, incorporated by a group of professionals in 1996, ventured into Afghanistan in 2002. It has built 700 km of roads, and works closely with USAID, the World Bank and the Asian Development Bank. C&C Construction will also work closely with the Indian Government to build the Afghan parliament building.

Political risk: Uncertainty will remain

India is a complex country with myriad castes, religions and languages. The political parties have evolved to address their needs and give the minority groups a platform and a voice that are heard at the national level. The foreseeable future will be characterized by coalition politics. It is unlikely that either of the two major political parties – BJP or Congress – will win a majority. This is a reality, but India has the experience to manage the political processes and differences

It is evident that a coalition government slows the reform process. However, it is a positive development, that, irrespective of the coalition government (lead by either BJP or Congress), we have stayed the path of liberalization. There are no major differences between Congress and BJP as far as economic policies are concerned, and both favor economic reforms. And, as India’s middle class grows, the importance of religion and caste will diminish; the focus will be only on growth. Economic progress will change India’s political landscape for the better and further improve political stability.

Economic reforms need to continue

Growth needs to continue and India needs “… another dose of reform, aimed at markets for inputs, from electricity to labor and land … They [1991 reforms] freed markets for products.” [The Economist, July 2011]. If we are to continue to maintain the growth trajectory, the market for inputs needs to be liberalized. These are difficult political decisions and coalition politics will make the process slower and difficult.

It will be easier for the government to address and repair old infrastructure through public private partnerships. India is going through a structural — not a cyclical — change; hence, the process is slow and driven by the political process. We need investments in power, roads, ports and bridges. An important area of reform is the power sector, as no industry can achieve a successful transformation without sufficient power. This is why the Indian government needs to push through the reforms on power generation, transmission and distribution.

Corruption could be viewed as one of the reasons for the slow pace of economic reforms. Overspending on the Commonwealth Games and the Department of Telecom’s under-pricing of 2G spectrums resulted in heavy losses for the exchequer. Indians’ frustrations were channeled through the Gandhian leadership of Anna Hazare. The peaceful protests were successful and the country will get an independent ombudsman, the Lokpal (protector of the people), who will investigate alleged corrupt practices of politicians and bureaucrats. This demonstrates the fact that we have the institutions, leadership and most importantly, the grass root activism to effectively mould decision-making at a national level. This will create a positive environment for further economic reforms.

We also have the positive experience of the past decade, for which both political parties, the BJP and Congress, were responsible. However, future reforms have to be inclusive and supportive of the economically disadvantaged. The Left parties do not support economic reforms. Their thoughts are focused inward on how India can continue to grow economically on its own. As the Left parties are a minority on the Indian political scene and the Congress and BJP political parties are supportive of the economic reforms, it is unlikely that the reform process will be derailed.

What then is India’s risk premium? I believe that it varies according to one’s viewpoint. Politics is an important factor that impacts the investment cycle. Hence, it is essential that the Indian government address issues of corruption and continue with the next phase of reforms to accelerate the decision-making process. Reform will continue but at its own pace. I have observed that companies that have taken risk and stuck to a sound business plan succeed in India. They have both sold their wares domestically and exported talent and products.

It is difficult to dampen the Indian entrepreneurial spirit. It has grown and competed in the global market despite the controls of the Indian government. Entrepreneurs have shown their ability to adapt to the changing economic environment and deal positively with the uncertainties in the market place. Yes, the joint family structure – the spawning ground for entrepreneurs – continues to evolve and compete effectively in the world market. But if that success is to be sustained, the economic reforms will also have to continue.

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• Apr 13, 2021

The Rise of Entrepreneurship in India — Emergence, Transformation, and Growth

Updated: Apr 15, 2021

India’s startup ecosystem is robust and promising, full of opportunities and prosperity for those able to conquer it. India’s startup economy has been booming. The last decade has seen significant activity on multiple fronts including the founding of new startups, amount of funding and number of investment rounds, the influx of global investors and startups, development of regulatory infrastructure, global mergers and acquisitions, and internationalization.

Just with the beginning of Quarter 2, the number of unicorns in India in 2021 has risen to 10, just one shy from the number as compared to the previous year. With 6 new unicorns in just 4 days, the total number of Indian unicorns have grown by around 15% in a span of 4 days, with CRED, PharmEasy, Meesho, Infra Market, Groww being the latest entrants

Indian Startup scenario before Independence

Indian Entrepreneurship has a rich history. While the current entrepreneur mindset may differ from what it was in the pre-independence era, the period did see a surge of startups, of course, at a much slower rate than the present.

The colonial-era saw entrepreneurship to be confined by the boundaries of social, cultural, and religious rigidities. Further, the colonial rule brought in an array of political and economic factors that were non-conducive for entrepreneurship. The volatile political environment, lack of favorable laws, harsh tax policies restricted the surge of entrepreneurship. The education system did nothing to encourage the emergence of startups during this period. Slowly, the social reforms, rising nationalism, and betterment of education brought a steady change in the scenario.

In spite of these drawbacks, the East India Company, deliberately or accidentally, seems to have played a vital role in the emergence of Indian entrepreneurs. The popularity of the swadeshi campaign, a campaign focussed on the use of indigenous goods by locals, is also believed to have played a significant role in the growth of startups in the country.

The period between the world wars was marked by the visible growth of entrepreneurship in India. The emergence of the Managing Agency System played a significant role in the growth of entrepreneurship during this period. The following decades brought many opportunities for business that was effectively capitalized by entrepreneurs. This coupled with the society's attitude broadened the vision for the Indian business class. This remained to be the backdrop for the growth of Indian entrepreneurship after Independence.

Growth of Entrepreneurship after Independence

Independence was marked by a significant shift in the entrepreneurial sector. With the newfound freedom, entrepreneurs gained the confidence and belief to pursue their entrepreneurial dreams. The need for employment and regional development paved way for startups. However, during this period policies were not formulated with any special emphasis on entrepreneurship. The development of industries on large scale was still the focus. The next few decades witnessed significant growth in the entrepreneurial ventures across economic and social sectors. With the changing environment, entrepreneurship gained importance. The last decade has seen noteworthy improvement in the quality of startups in India. Institutions have started to take business and academic interest in startups. In the last few years, they have exhibited potential and proficiency, which has made global investors venture into the Indian startup ecosystem.

The dotcom era in India saw the day of light in 1995. This was when VSNL started its first commercial Internet service. It was this time when Indians (though in small numbers) were exposed to phenomena called the ‘World Wide Web’. Then Zoho entered in 1996, started under the name of AdventNet as a Network Management company and it boosted the IT economy that was operating at a grass-root level. It stayed true to being a lean startup and consistent even after 20 years since its inception.

Post liberalisation in 1991, India enjoyed growth rates in the high single digits for several years. The high point came when India earned the tag of the world’s fastest-growing large economy in 2016. Demonetisation in November 2016 temporarily displaced India from its pole position, but the fact remained that it was the new land of opportunities. It was this sudden realization, along with the lost opportunities in China, that had global VC firms making a beeline for India and kicking off a frenzy of entrepreneurial and VC activity

Come 2007–2008 and India witnessed two of its biggest ventures rising up. Flipkart marked its entry in 2007 as a first eCommerce startup and later in 2008, Zomato and Quikr came into the picture. These startups are now over a decade old but still sailing on their first-mover advantage. The economy was not ready to back then, but the novelty of the idea fetched them high revenues as they progressed.

The accelerated funding coupled with the innovative and incrementally competent growth of startups like Zomato, Flipkart, Snapdeal, etc., and their potential to grow as world-class companies have set benchmarks and hope for many aspiring entrepreneurs. The foundation for a sustainable startup ecosystem has already been laid. What remains to be seen is how they capitalize and develop on it while fighting the logistics, market, and funding challenges that come along.

The startup ecosystem in India witnessed a surge in 2015 with over 600 companies acquired funding; fetching over US$ 2bn from PE and VC funds. Few of the big deals include Warburg Pincus’ which invested in Ecom Express, while Rocket Internet AG and Goldman Sacs drove big investments in Foodpanda. The Tiger Global and SAIF Partners’ investment in Little Internet can’t be neglected as well.

Barring the US$ 2bn start-up space deals, the tech space also experienced big funding in 2015 that saw US$ 700mn in Flipkart by Sequoia Capital & Steadview Capital, US$ 500mn in Snapdeal by Alibaba, Softbank & others, and over US$ 1100mn in Olacabs by a group of investors including Tiger Global, Softbank, DST Global, etc.

Another fairly huge investment took place with Quikr, Grofers, Jabong, Shopclue, Pepperfry, and Oyorooms. The cumulative funding for all cross the US$ 100mn mark. Investment momentum took off after 2012 in startups, witnessing an increase in investment values at a CAGR of more than 75% between 2011 and 2015 while investment volumes have increased at a CAGR of over 80% in the same period.

In 2020 itself, India added 11 unicorns, higher than China, 2nd only to the US globally, with Cars24, Zenoti, DailyHunt, and Glance being the latest to enter the league.

Rollback to 2013 where the National Association of Software and Services Companies (NASSCOM) kicked off its ‘10,000 Startups’ initiative. The aim was to aid the growth of 10,000 startups in the country over the next 10 years. The objective was to foster the startup ecosystem, build entrepreneurial capabilities, and bring in considerable value and change in the tech startup ecosystem. All this was made under the F.A.M.E. model: Funding, Acceleration, Mentoring, and Enterprise connect.

Key Differentiating Factors

The most drastic difference between earlier and now would be the fact that there now exists a robust ecosystem for startups. Back in the 1990s, every startup owner was out there on their own. They essentially had to compete with the mindset of traditional businesses in order to succeed.

But now, quite differently, there’s a clear demarcation between startups and traditional businesses — say you run a conventional garment business, the kind of product, business model, the experience you provide would be drastically different from that of a startup. This is one dramatic difference that should definitely get highlighted.

A key difference would be that right now, not every startup is trying to blindly ape the West. Starting from 1998 till almost 2013, there was a prolonged phase, where every startup was heavily influenced by the Western business model. They would all try to become a copy of what’s working in the west, without realizing that the Indian market is different.

This changed post the VC boom in the early 2010s when a lot of startups failed. People now realize that what works in the West doesn’t always work in India. Having said that, it’s not that the trend of aping the west has disappeared. Rather, right now there exists a twin school of thought — one group which is trying to keep a Western modeled startup ecosystem and then those who are trying to build a uniquely local domestic model.

The next one that stands out would be the fact that there’s quite a lot of room being made in the startup space for non-pedigreed individuals. The early startups between the late 1990s till early 2010s were all about pedigree, where it was very difficult for someone not belonging to the elite academic institutions to have access to investors. While that still remains a big factor when it comes to forming networks, we can see things slowly changing in this area, both in a global and Indian context.

The Road Ahead

From a trading dominated nation to a co-working space full of ideas and executions by millennials, there is a long for Indian startups to go. Though the arena has evolved and transformed drastically since its inception and startups expanding the horizon with an innovative approach, the suitability is still an issue. A quick look at the study of “ Entrepreneurial India ” by the IBM Institute for Business Value and Oxford Economics will get you to the ground reality. It is observed that 90% of Indian startups fail within the first five years. Tracing the reason revealed that the lack of innovation and new technologies contribute to the failure. But with time, this too shall evolve to an extent wherein the new startups entering the battlefield shall change the face of the Indian startup ecosystem to leverage numerous benefits and eventually attain impeccable benchmarks.

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Advancing the entrepreneurship ecosystem of India: A qualitative study with Chevening Fellows

• Published: 26 December 2023

Cite this article

• Kamal Gulati 1 ,
• Amrik Sohal 2 ,
• Tharaka de Vass 2 &
• Nrupal Das 3  

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Using social cognitive theory as a guide, this research seeks to explain the perceptions of current and aspiring Indian entrepreneurs. A multiple case study approach using 19 interviews with intellectuals provided qualitative data to conduct a cross-case analysis of the two groups with the qualitative analysis software NVivo. Rare insights from current and aspiring opportunity-motivated entrepreneurial Chevening Fellowships from a predominantly necessity-motivated context offer valuable insights into entrepreneurship in India. The findings reveal what entrepreneurship means to established entrepreneurs, their motivation for embarking on the entrepreneurial journey, the skills they require to be successful, the challenges they face and their strategies to sustain are mostly different to what aspiring entrepreneurs believe how it would be. Compiled recommendations may help strengthen the entrepreneurial ecosystem, particularly in developing economy contexts, to help improve the 10% startup success rate.

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Acknowledgements

Authors gratefully acknowledge the support of Chevening fellows who consented to participate in this study, Chevening Secretariat, Foreign Commonwealth & Development Office, Prof. Richard Briant, University of Oxford, Prof. John Hoffmaire, Chairman, Oxford Pharmaceuticals, Ms. Sarah Fallon, Regional Director, Science and Innovation, British High Commission New Delhi, Ms. Supriya Chawla, Head Chevening Scholarships India for their support.

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Kamal Gulati

Department of Management, Monash Business School, Monash University, Melbourne, Australia

Amrik Sohal & Tharaka de Vass

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Gulati, K., Sohal, A., de Vass, T. et al. Advancing the entrepreneurship ecosystem of India: A qualitative study with Chevening Fellows. Asia Pac J Manag (2023). https://doi.org/10.1007/s10490-023-09940-2

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Accepted : 19 November 2023

Published : 26 December 2023

DOI : https://doi.org/10.1007/s10490-023-09940-2

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