Entrepreneurship development is concerned with the study of entrepreneurial behaviour, the dynamics of business set-up, development and expansion of the enterprise. Entrepreneurship development concentrates more on growth potential and innovation. Entrepreneurship Development has gained increasing significance in developing an economy.
Entrepreneurial Development Programme (EDP) designed to help a person in strengthening and fulfilling his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entrepreneurial role effectively.
According to Nandy, supportive community, self-image of his entrepreneur, value and status of entrepreneurial career are the main factors responsible for the development of entrepreneurship.
Meier and Balmin also stated that “development does not occur spontaneously as a natural consequence when economic conditions are in some sense right- a catalyst or agent is needed and this requires entrepreneurial spirit.”
Social conditions also affect the level of development in developing economies. Culture also decides the level of entrepreneurship. People are generally conservative and they are not inclined to bring or accept change. But with a favourable environment we can initiate entrepreneurship.
Read this article to learn about:
- What is Entrepreneurship Development
- Phases of Entrepreneurship Development
- Models of Entrepreneurship
- Strategies of Entrepreneurship Development Programme
Entrepreneurship Development encourages and skills the people to take on new ideas, work around them and to lead from the forefront. It is all about building a business from scratch, opportunity identification, idea generation and turning those ideas into a profitable business. It is important for an individual to have complete knowledge about culture, infrastructure and entrepreneurial support structure in an economy. This facilitates our community to become more entrepreneurial.
An entrepreneur is a creator or a designer who designs new ideas and business processes according to the market requirements and his/her own passion. Entrepreneurship is the art of starting a business, basically a startup company offering creative product, process or service. We can say that it is an activity full of creativity.
Entrepreneurship development is concerned with the study of entrepreneurial behaviour, the dynamics of business set-up, development and expansion of the enterprise.
The whole point of entrepreneurship development is to increase the number of entrepreneurs. This accelerates employment generation and economic development. Entrepreneurship is promoted to help lessen the unemployment problem, to overcome the problem of stagnation and to increase the competitiveness and growth of business and industries.
Entrepreneurship Development concentrates more on growth potential and innovation. Entrepreneurship Development has gained increasing significance in developing an economy. It is an organised and systematic development. It is a tool of industrialization and a solution to the unemployment problem for any country.
What is Entrepreneurship Development
The word “entrepreneur” is derived from the French verb enterprendre, which means ‘to undertake’. The process of creation of an enterprise is called “entrepreneurship”. Entrepreneurship is the capacity and willingness to develop, organise and manage a business venture considering the risks involved in order to maximise profit. Entrepreneurial spirit is characterised by innovation and risk-taking.
Entrepreneurs have a vision for doing things in a better way, thinking beyond the constraints of current rules and resources.
Entrepreneurship development is the process of improving the skills and knowledge of entrepreneurs through various training and classroom programs. Entrepreneurship development is important because the presence of entrepreneurs is universal and is reflected in all major dimensions of civilisation, viz. social, political, economic, etc., across the globe.
Entrepreneurship development is a process meant to inculcate/polish entrepreneurial skills and vision among people. It is the training, enhancement, and mentoring of entrepreneurial skills into a person to ensure success of an entrepreneurial enterprise.
It is the process of identifying, motivating and training people with all relevant skills required to transform ideas into reality. Entrepreneurs have some inborn traits such as vision, risk- bearing capacity, out of the box thinking etc. However, not all entrepreneurs are born and they need to be made aware about the availability of various schemes, support systems and to be trained in managing resources, finances, marketing and people issues.
Phases of Emergence in Entrepreneurship Development
For the convenience of our study of entrepreneurial emergence, the history of entrepreneurship and the emergence of entrepreneurial class in India may be divided into 4 phases:
Phase I – Entrepreneurship in Ancient Period:
The first phase of entrepreneurship emerged when the Aryan conquerors settled down in this country by suppressing the non-Aryans. They appropriated the products of village communities to themselves, leaving a little for the villagers or native. Thus, the main conflict of ancient Indian society began.
The Aryans were faced with the problem of innovating new crafts and occupations and also evolved some kind of division of labour for the new handicrafts, breeding of cattle and cultivating land. All these occupations did not exist at the time of conquest by Aryans. They were the products of entrepreneurial action.
Immediately after the conquest, the settlement of the Aryans began and together with it the formation of states and the establishment of laws. The need of Dharma was expressed in the oldest Upanishads and the oldest Dharma sutras followed. They avoided the speaking of class struggle as mentioned above, but used the terminology of the four ranks (Varna Dharma), which is quite characteristic of despotism.
Ancient literature like Manusmriti has provided a clear idea about the entrepreneurial class of people during the ancient period (pre-Vedic). According to Manusmriti, “people belonging to Vaisya caste were regarded as entrepreneurs who are specialized to maintain livestock, to give charity, perform sacrifices, study scriptures and undertake business and banking.” Hence, Vaisyas are the specialized class of people carrying out entrepreneurial activities these days.
They carried on trade in agriculture, industry and banking sectors. Agriculture, crafts and handicrafts were the basic sources of the occupation for the people in Gupta and post-Gupta period. The occupational development during this period comprised ownership of land pasture grounds, trees, forests, water reservoirs; mine, etc. with introduction of entrepreneurship, the towns and cities developed.
Phase II – Entrepreneurship Growth till 1850:
During the pre-independence era, agriculture was the main-stay of the people of India. It is said that besides agriculture, a class of businessmen specialised in manufacturing of handicrafts, metalwork’s, stone carving and jewellery designing, etc. had dominated the industrial-Entrepreneurship sector in rural areas.
Those communities were known as Banias (Hindu and Jain), Parsis, Chheriars and Gujaratis, etc. These communities actually laid the foundation of Entrepreneurship by carrying on trade commerce at the initial stage and later they started establishing manufacturing centres.
Two following types of industries were found in those periods:
- Cottage industries manufacturing woodcraft items, jewellery designing, stone carvings, ironworks, horn works, etc.
- Village industries comprising handloom and textile production, brass and bell metal works developed in clusters.
Manufacturing entrepreneurship in India did not develop then. The introduction of railways in 1840 led to the beginning of industrial entrepreneurship through the factory system. In India in 1854 the first and foremost textile mill was established. Before this, in 1847, R. Chotulal, a Nagar Brahmin envisaged to manufacture textile on the basis of modern factory system.
From the very beginning, the Britishers devised a discriminatory economic policy for the Indian entrepreneurs, as a consequence of which industrial entrepreneurship suffered a great deal.
The following reasons are attributed to the slow growth of entrepreneurship in India during this period:
(i) The enterprises were not given proper protection by the British Government.
(ii) Only those industries in which the British Government put their own capital were given encouragement.
(iii) The railway freight charges were higher for locations not nearer to the ports. This proved that the transportation of goods manufactured for the Indian markets was more expensive than goods meant for export.
(iv) The British imposed exorbitant tariffs on India-made goods.
(v) Entrepreneurs were constantly harassed for getting licences and finance to establish and run industries.
(vi) There were almost no facilities for technical education which alone could strengthen Indian industrial entrepreneurship.
(vii) The Indian indigenous entrepreneurs faced fierce competition from machine-made goods exported to India.
(viii) Lack of transportation and communication facilities acted as the stumbling block in the way of industrial growth.
(ix) The British Government did not encourage the establishment of heavy industries like heavy machinery, iron and steel which are necessary for rapid industrialization.
(x) Political turmoil and abolition of princely courts discouraged the growth of entrepreneurship.
(xi) Prevalence or multi-currency system affected the business environment and blocked the growth.
In Spite of the above problems, the export trade of textile in the 17th century was on an ascending trend. During this period, grouping of Indian merchants into joint-stock associations for the purpose of managing the supply of textiles to the European companies was very significant. This helped in exporting a huge volume of textiles to the European markets leading to favourable terms of trade.
Phase III – Entrepreneurship during 1850-1947:
The mid-nineteenth century opened up the path for rapid industrialization. With the introduction of railways in 1853 in the country, the scope of industrial entrepreneurship had gone up. Britishers started harnessing the natural resources of India to their own advantage simultaneously developing the roads, railways, ports and other infrastructural facilities. In course to time, Britishers along with mercantile class of India had a conducive atmosphere for investment of trading as well as manufacturing activity.
In the eastern part of India, the entrepreneurship was mainly European who engaged in export-oriented industries like jute, textiles, tea, coal, etc. But the entrepreneurship in western part of India was mostly among the Indians.
(a) Emergence of Parsis as Entrepreneurs:
India, an emergence of manufacturing entrepreneurship is viewed by some social scientists as the consequence of the arrival of East India Company followed by colonial British rule. It gave new stimulus to businessmen by injective various changes in the economy and accelerating the export of raw materials and import of finished goods. However, the Parsis were greatly influenced by the East India Company.
During this period, Parsis established a good rapport with East India Company. They acted as brokers, suppliers of commodities and craftsmen in the ship-building industry. Parsis built vessels for the company. In 1852, a Parsis foreman of a gun factory belonging to the company established a steel industry in Bombay. All the above examples prove that the starting point of manufacturing entrepreneurship lay with emerging entrepreneurial talents among the Parsis in the country.
(b) Swadeshi Movement and Birth of Indigenous Entrepreneurship:
In 1905, Indian leaders adopted concepts of Swadeshi and boycott to counteract the discriminatory policy of the British Government. The swadeshi method was based on mashakti (the principle of self-reliance) which meant manufacturing and using indigenous goods by the Indian.
The basic objectives of the Swadeshi Movement were the following:
- To promote indigenous industries by the Indian entrepreneurs;
- To rejuvenate the cottage and handicraft sector;
- To provide employment opportunities to the craftsmen of India.
The movement acted as an antidote to British policy and encouraged their Indians to plunge into entrepreneurship. Jamshedji Tata established his first iron and steel industry with the help of Swadeshi contribution. P.C. Roy founded the Bengal Chemical works. V.O. Chidambaram Pilli set up the indigenous Steam Navigation Company at Tuticorin, Tamil Nadu.
Hence due to this movement indigenous entrepreneurship developed in many types of activities such as textiles, soap, matches, oil, tanneries, potteries, etc. Even banks and insurance companies grew up through swadeshi endeavour. Indian entrepreneurs were given the opportunities to produce more during the First World War because there was a rapid increase in demand for India made goods. And there was a reduction in the import of goods from Britain.
(c) Managing Agency System:
In the post-war period, the policy of protection by the Government provided stimulus to certain industrial activities. A remarkable feature of the post-war period was the introduction of the Managing Agency System. This system was initiated by Sri Dwarkanath Tagore who glorified the formation of joint stock companies and emphasised that the management of enterprise must be retained in the hands of the firm rather than in the hands of any individual.
During this period, though the Indian entrepreneurs grew in numbers and made great headway in cotton textiles and steels they still faces a number of problems such as:
- Shortage of technical manpower due to lack of technical and vocational education
- Lack of managerial skills
- Lack of technical know-how
- Low level of confidence in accomplishing the jobs
In view of the above-mentioned problems the Tatas were forced to employ foreign technicians and managers. However, industries such as cement, sugar, cotton textiles, paper, coal, iron and steel were developed after the Second World War. As such indigenous entrepreneurship grew at a rapid pace with the emergence of entrepreneur classes such as Parsis, Marwaris and Gujaratis in the country on the eve of Independence of India.
Phase IV – Entrepreneurship Growth during the Post-Independence Era:
In the Post-Independence period, the Government of Identified the need for rapid Industrialization. According to V.R. Gaikwad and R.N. Tripathi, socio-economic background of the persons played a decisive role in the process of entrepreneurship. Thomas Timberg has traced the growth of entrepreneurship in the context of the leading business community of Marwaris.
During the post-independence period, Marwaris emerged as big investors and industrialists from the status of petty shopkeepers and moneylenders. In free India, the Government itself emerged as a strong force to take up entrepreneurial ventures by establishing new occupations and industries. The first Industries Policy Resolution (IPR) was announced in 1948 which provided clear-cut guidelines for industrial and entrepreneurial development.
Emergence of Marwaris as a Great Business Class:
Marwaris had developed a lot in building new and small enterprises in the beginning of the post-independence era. It is believed that 60 percent of the assets of the Indian industries were in the hands of the Marwaris. The Monopolies Inquiry Commission listed 147 large industries of Marwaris in almost all areas which proved their entrepreneurial talent. Thus Marwaris made a successful bid to fill the vacuum lifted by the British in the business sector.
After Independence, the Birla group set up the rayon mill at Gwalior which had been the largest of its kind till 1964. In 1964, the Bajaj group laid the foundation of Hind Lamps and in 1949 Dalmia groups established a cement factory in Orissa. Before independence, the Marwaris controlled only 6 companies; but after Independence, they had 618 directorships, which rose to one-fourth of the total in 1951. The report of the Monopolies Inquiry Commission, 1964 has mentioned 37 large industrial houses from which the traditional strength of different communities can be revealed.
Reveals the frequency distribution of industrial companies controlled and ISO the directorship held by communities from 1911-1951.
This Marwaris community emerged as a giant entrepreneurial class in the post-Independence period. The houses of Birla, Singhania, Bajaj and others have created their image in the international market in the field of industrial development in India.
In the post-Independence period entrepreneurship has been dispersed both socially and geographically. This has been possible because of infrastructural development, foreign collaboration, technical know- how expansion of vocational and technical education, export promotion, import substitution and above all, the favourable policy of the Government towards industrial development.
The government by providing incentives, subsidies and other inputs at concessional rates induced the entrepreneurs to set up small scale units. Hence, entrepreneurial growth under planned economic development of the country has reached a new height.
Emergence of new entrepreneurial class and the growth of entrepreneurs can be attributed to the following aspects:
- Establishment of institutional support systems such as promotional agencies and financial support agencies and financial support agencies.
- Panchayati Raj institutions for village development.
- Nationalisation of commercial banks in 1969 for the purpose of nation building.
- Development of money market and capital market.
- Formation of specialised institutions like NSIC, KVIB, KVIC, SISI, TCOs, SFCs etc.
- Establishment of entrepreneurial development institutions at both national and state levels such as NIESBUD, NISIET, EDIT and IEDs and CEDs respectively.
During this period the development schemes, adopted by the government, were aimed at the following objectives to promote new breed of entrepreneurs:
- To encourage a proper distribution of economic power between public and private sectors.
- To spread entrepreneurship from new dominant entrepreneurs to a large number of industrially potential people of varied social strata.
As such, in the post-Independence period, the base and magnitude of entrepreneurship in India developed.
Need for Entrepreneurship Development
Needs of entrepreneurship development are as follows:
- To lead a higher rate of economic growth and development
- To create more employment opportunities
- To fully utilise the factors of production
- To promote technological advancement in the country
- To develop the underdeveloped and backward areas
Objectives of Entrepreneurship Development
The important objectives of entrepreneurship development are as follows:
- To identify and train potential entrepreneurs
- To develop necessary knowledge and skill among the entrepreneurs and strengthen entrepreneurial quality and motivate them for goal achievement
- To impart basic managerial understanding
- To provide post-training assistance
- To analyse the environment related to small industry and small business
- To select a project or product suitable to the environment
- To formulate projects
- To understand the process and procedures of establishing small enterprises
- To know the sources of help and support available for starting a small enterprise
- To acquire the necessary managerial skills
- To know the pros and cons of being an entrepreneur
- To acquaint and appreciate the needed social responsibilities and entrepreneurial discipline
In addition, some of the other important objectives of the entrepreneurship development (ED) are as follows:
- To let the entrepreneur himself set or reset his own objectives of his business and work individually and with his team of assistants for their realisation
- To prepare him for accepting totally unforeseen risks of business for a long time after the training is over
- To enable him to take strategic decisions
- To enable him to build an integrated team suitable to tomorrow’s demands
- To enable him to communicate fast, clearly and effectively
- To develop a broad vision to see the business as a whole and integrate his functions with it
- To enable him in relating his product and industry to the total environment, to ascertain what is significant in it, and to take it into account in his decisions and actions
- To enable him in coping with and co-ordinating the different types of paper work, most of which would be statutorily obligatory
- To make him adopt democratic principles while working with employee
- To strengthen his passion for integrity, honesty and compliance with law, rules and regulations because such low-mindedness is the key to success in the long run
Role of Government in Entrepreneurship Development
There are four important roles played by the government in entrepreneurship development, namely:
- The regulatory role
- The promotional role
- The entrepreneurial role
- The planning role
1. The Regulatory Role:
A large part of the economy of even the most non-centrally planned countries is regulated by the government:
(i) The Government may determine the conditions under which entrepreneurs may enter certain lines of business as in the granting of a charter, a franchise, or a licence or permitting entrepreneurs to use any public facilities or resources.
(ii) Government may regulate or assist in the conduct of entrepreneurs’ ventures of many kinds once they are underway. This includes controls that merely lay down general standards and prohibitions and those that interfere with matters that may be considered managerial.
(iii) Public control may extend to the results of entrepreneur operations as in the limitation of public utility profits, ceding on dividends and the imposition of excess profit tax on the economy generally.
(iv) Government controls the relationship between the various segments of the economy. It prevents the undue concentration of economic power in the hands of enterprises.
Government regulations of the enterprises may be—direct controls and indirect controls. The direct or physical controls are more drastic in their effects. They are discretionary and can be applied selectively from one enterprise to another and industry to industry at the discretion of the State.
The indirect controls are usually exercised through fiscal and monetary incentives and disincentives or penalties. Certain activities may be encouraged or discouraged through monetary or fiscal incentives and disincentives. A high import duty may discourage imports and fiscal and monetary incentives may encourage the development of export oriented enterprises.
2. Promotional Role of the Government:
The promotional role is very important in our country where the infrastructural facilities are inadequate and entrepreneurial activities are scarce. The State has to assume direct responsibility to build up and strengthen the necessary developmental infrastructures such as power, transport, finance, marketing, institutions for training and guidance and other promotional activities. The promotional role of the State also encompasses the provision of various fiscal, monetary and other incentives, including measures to cover certain risks for the development of enterprises.
3. The Entrepreneurial Role:
The growing importance of the entrepreneurial or participative role of the State is evident from the rapid expansion of the public sector in most countries.
The chief reasons for the growth of public enterprises are the following:
(i) In a democracy, the national emergency of war inevitably causes an expansion in state activity.
(ii) Major economic dislocations, such as the Depression of the 1930s, tend to stimulate state activity.
(iii) In the economic growth of a country, governments are called upon to act as banker, assistant or owners of infant enterprises.
(iv) When private enterprises become unprofitable but the need for their service continues, the Government may be prevailed upon to acquire and manage such unprofitable enterprises at a loss.
(v)Governments are also required to extend the owner-manager relationship when there has been a pronounced wastage of national resources.
(vi) Government ownership may be extended by the failure of private management to consider itself a trustee of the public good and by its abuse of power, especially in cases (as in public utilities) where monopoly or semi-monopoly conditions prevail.
4. The Planning Role:
In developing countries, the State plays a very important role as a planner. The need for economic planning is implied in the famous ‘scarcity definition’ of Economics. As Robbins points out in his scarcity definition, the main business of the science of economics is the optimum allocation of scarce resources between competing ends.
Role of Entrepreneurship in Economic Development
Entrepreneurship has an important role to play in the economic development of a country like India. The entrepreneur is an economic leader and change agent who has the ability to identify opportunities for ensuring innovation in techniques of production, new products, new sources, and new markets.
The role of an entrepreneur has now undergone change over the years. Earlier he was expected to bear the risk and uncertainty but now besides these, he is required to coordinate the productive resources in a viable way. Moreover, he is expected to take an active role in the introduction of innovations.
Thus, to ensure accelerated pace of economic growth, developing economies like India require an effective entrepreneurial role as they are tied by a chain whose links are in poverty, imbalanced development, under employment, low productivity, traditional culture and a stagnatic set of conditions.
The resources either remain unutilised or underutilised because people are backward in the sense that they lack skills, their knowledge is deficient and they are conservative and immobile. Under these situations only few daring and risk taking entrepreneurs emerge.
Prof. Schumpeter observed that the entrepreneur is not a man of ordinary managerial ability but he is a man of qualities who introduces something new. Actually, he is a reservoir of untapped technical knowledge who can make the proper use of it. He supplies the funds and other resources, plans innovations and takes ultimate decisions.
Development of western economies is the result of entrepreneurship. This has made the people of developing economies very much conscious of the role of entrepreneurship in accelerating the pace of economic development. Now there is growing awareness among the people of developing economies that accelerated pace of development is possible only with the help of entrepreneurship.
It requires an increase in the quantity and quality of entrepreneurship in the economy. By quality we mean to say that the innovative and imitative entrepreneurs can contribute stimulus for development. It has been rightly observed that “though a country has resources—labour, technology, technical knowledge and capital, its potentialities cannot be fully explored unless there are active and enthusiastic entrepreneurs, who have the ability to organise the various factors of production.”
Meier and Balmin also stated that “development does not occur spontaneously as a natural consequence when economic conditions are in some sense right- a catalyst or agent is needed and this requires entrepreneurial spirit.”
Social conditions also affect the level of development in developing economies. Culture also decides the level of entrepreneurship. People are generally conservative and they are not inclined to bring or accept change. But with a favourable environment we can initiate entrepreneurship.
A viable business environment is governed by the active, social and cultural behaviour of the people, efficient economic environment and supportive and motivating attitudes of Government.
Since developing economies lack innovative entrepreneurs, efforts should be made to produce innovating and imitating entrepreneurs. Thus, we can say that entrepreneurship is an indispensable ingredient in the economic development of a country like India.
Entrepreneurship Development Process
Stages involved in the entrepreneurship development process are :
1. Pre-training Stage:
This stage includes the activities and the preparation required to launch the training programme. It involves identification and selection of potential entrepreneurs and providing initial motivation to them.
2. Training Stage:
In this stage, the training programme is implemented to develop motivation and skills among the participants.
3. Post-training Stage:
This stage involves assessment to judge whether the objectives of the programme have been achieved or not. Entrepreneurship Development Trainer evaluates all the trainees to ensure their stage of development.
Factors Affecting Entrepreneurship Development
Environment is the surrounding of the economy which influences the growth of entrepreneurship.
Environmental factors which affects the entrepreneurship has been classified into two categories:
- Internal Environment
- External Environment
Internal environment consists of the family background, kith and kin, social status, caste and religion, social mobility and social status of the entrepreneur. External environment consists of the political, economical, social, technological, legal, cultural and psychological. Political environment consists of the political atmosphere and quality of leadership in the economy greatly affecting the entrepreneurial business.
The Economic environment consists of the economic policies, trade tariffs, incentives and subsidies etc., available in the economy. Social environment consists of the consumer or labour attitude, opinions, motives etc. Technological environment consists of competition, risk, technical know-how etc. Legal environment consists of the rules and regulation of the economy through different legislative policies.
Cultural environment consists of the structure, aspiration, values and the psychological environment consists of the motivation, attitude, perception etc.
Strategies for Entrepreneurship Development in India
The following strategies for entrepreneurship development in India are suggested:
1. Public entrepreneurship should remain confined only to those industries and sectors where private enterprise, individual or corporate, is generally not attracted. Existing public entrepreneurship should be improved through better management and by putting relatively greater emphasis on research and development. There is a need to streamline the R&D wing of public sector enterprises.
2. All possible efforts be made very seriously for the development of an industrial culture, it should be realised that the central core of entrepreneurship is the motive force since an appropriate entrepreneurship implies positive action and initiative. Motivated individuals with a combination of abilities and attributes can pursue their goal with enthusiasm.
One can easily give examples of men like J. N. Tata or Ranchodlal Chhotalal who established their enterprises against heavy odds in the country under British rule. Without motivation, an individual cannot become a successful entrepreneur even though he may have access to finance. Individual qualities of vision, vigour, leadership and enterprise need to be inculcated.
3. There is a need to develop management education and industrial training. In modern times, management education is being viewed as an effective supplement to the development of entrepreneurship since entrepreneurial decisions have to be effectively supported by managerial decisions. Quite often, the entrepreneur functions as a manager especially in small-scale industries where the entrepreneur is his own technician and manager.
This fact justifies the route of formal education and necessitates the establishment of business schools and management institutes in the country, where relevant courses may be introduced. Happily, some such institutions have come up but they should further be strengthened and developed into first-class institutions comparable with their counterparts in developed countries. In addition, facilities should be provided on an increasing scale for sending talented young men and women to business schools abroad.
But, strategies should be chalked out to give a conducive environment for them to come back to India and apply this knowledge in a suitable manner. Besides, industrial training programmes should be frequently organised. This will help in widening the mental horizon toward practical business and industrial problems.
New industrial training centres well equipped may as well be established. Education and training will very much help in developing; and augmenting a race of new entrepreneurs needed to harness and utilise the scarce resources for economic development.
4. The development of backward regions/areas constitutes a new challenge. Programmes for their development he drew up and should be effectively implemented. Such programmes await new entrepreneurs whose technical expertise and managerial competence would bring about the desired development and fulfil social needs.
5. Adequate measures are a must for mobilising and fostering entrepreneurial talent in the country. In this context, it should be realised that entrepreneurs are not the gift of a particular class. For instance, in Japan, innovators came from the underprivileged classes as the affluent classes had hardly any incentive to innovate. “Innovating entrepreneurs have frequently come from those classes of people normally barred from advancement to status-bearing positions.”
6. Economic administration by the State should be improved and made more effective so that objectives of economic policies may be fully achieved in the overall interest of the country’s economy. Better economic administration would go a long way in ensuring and increasing entrepreneurship. Monopoly benefits to a few big entrepreneurs is evil and must be checked. The general policy of encouraging the small entrepreneur will go a long way in activating and broadening the leadership potential.
Improvement in business climate by the state through its well-designed economic policies, its fiscal, commercial, industrial or agricultural will benefit the entrepreneurs in a changing technological society and thus facilitate healthy development of entrepreneurship.
7. Institutional framework should work towards meeting major industrial or economic needs or goals. Such a framework, in addition to its several facets, must place entrepreneurial development and its objectives in a proper and meaningful perspective following which entrepreneurs may plan their business activities within the bounds of such a framework for the desired coordinated development.
8. Greater emphasis should be put on research relating to processes and enhancement of the value of indigenous techniques. This would have an encouraging impact on entrepreneurship and technology at the domestic level. As a general rule, Indianisation of entrepreneurship should be effected in place of foreign collaboration. However, general guidelines should be stated for cases in which foreign collaboration with well-known foreign companies may be allowed.
9. Financial institutions should provide adequate and timely credit and technical assistance, especially to small and medium-sized enterprises. They should also impart knowledge about the needs of the economy and they should file their massive data in terms of growth of new entrants or entrepreneurs in the field of industry. These may as well be dwelt upon at length in their reports and other publications. All this will go a long way in inculcating and sustaining entrepreneurial spirit in the newly-emerging classes.
10. Now, special categories of entrepreneurs, viz., women, retired army personnel, handicapped persons, educated youths, Non-Resident Indians (NRIs), displaced persons etc., have appeared on the economic scene. Their emergence is more directly conditioned by economic and industrial factors and not only by social factors of caste, community and social approval or disapproval. Factors like access to capital, business experience, opportunity to acquire technical and managerial competence have played a crucial role.
For instance, in the case of light engineering products, electronics, computers and in several other new products, the entrepreneurial source is generally not traceable to any specific caste or community background.
The entrepreneurs in such fields are usually technologists and in their endeavour to establish manufacturing units, they reveal a multiple basis of entrepreneurship, viz., foreign collaboration, diversification, etc. Conducive working environment should be ensured for the healthy development of such entrepreneurs in future. It is only then that their qualities of vision, vigour, leadership and enterprise can be well utilised for the industrial development of the country.
Entrepreneurship is not confined to industry and is needed in all activities. Its existence in agriculture among the cultivators, small and large, is seen by all today. The growing farm of today in many parts of the country is a proof of such entrepreneurship. The need for entrepreneurship is even greater in management of the Government, more so as it is the largest entrepreneur.
India has a proud record of entrepreneurship. Its present growing status in the industrial world is its proof. It has now to prepare itself for entrepreneurships of a different order. Tremendous advances in science and technology will have to be harnessed and incorporated, requiring on the part of the people and the Government a more mature approach to be on par with advanced countries.
Philips, Sony, Honda, Ford are the signposts of entrepreneurship today for all to emulate. Some of these have come up only in recent years and from small beginnings. In India, too, one sees glimpses of such entrepreneurship.
Models of Entrepreneurship Development
Some of the models of entrepreneurship development in India are as follows:
1. SIET Model of Entrepreneurship Development:
SIET Institute, Hyderabad in collaboration with D.C. McClelland of Harvard University conducted certain experiments called the Kakinada Experiment to verify the theory of achievement motivation in developing entrepreneurship. Six Training experiments each of two weeks duration were conducted during 1964-1965 with 52 participants from Kakinada (Andhra Pradesh), 26 participants from Vellore (Tamil Nadu) who had already set up SSI units.
This is like a before and after experiment where after the completion of the training, performance comparison of trainees with a control group of an equal number of untrained entrepreneurs., showed significant improvement in entrepreneurial performance of trainees.
Another experiment in the training programme was conducted of 12 weeks duration for unemployed engineering graduates by SIET in 1970. The objectives of this programme were to enable the trainees to take up entrepreneurship, to impart skills in selecting a product, planning and setting up of a unit and to impart managerial skills.
A follow up study in 1973 by SIET Faculty had revealed that out of 155 potential entrepreneurs trained; about one half had either set up or in the process of setting up their units. SIET launched training programmes for self-employed youth in other states like J&K in 1972, for Assam in 1974 and also for Karnataka. Only 17 out of 95 trainees could set up their enterprises and among these in the same state all the 16 trainees started their enterprises within a year.
Though these experiments were encouraging, another follow up study by SIET faculty in 1974 disclosed that the trained entrepreneurs faced problems like procuring adequate raw material, inadequate or delayed financial assistance, inability to lend after-sales-service and long and large over dues from the debtors.
The above problems faced by entrepreneurs emphasised the fact that it is not enough to motivate the trainees to set up enterprises.
In order to realise the objectives of entrepreneurship development, SIET evaluated an integrated model of EDP in 1974. The essence of this model is to coordinate and synchronise the functions of the supporting agency.
Among the activities that will generate motivation among potential entrepreneurs that can be called as stimulatory activities, the model included activities like education in business opportunities, identification of potential entrepreneur, motivating them by providing business and economic insights and managerial skills through training, helping entrepreneurs to think of new products for which demand exists and project feasibility report, making available techno-economic information, setting up local agencies with trained personnel for entrepreneurial counselling and motivation, creating forums for entrepreneurs to discuss a common problem.
The next type of activity or support activities that are intended to help entrepreneurs in setting up and commissioning the unit include activities like registration of a unit, arranging finance, provision of common facilities including land and building, consulting services, provision of scarce raw materials, tax relief concessions and marketing assistance.
The Third type of activities is sustaining activities that include continued association of all the supporting agencies to sustain and develop the enterprise. These include technology upgradation, expansion and diversification of production.
The SIET model can be represented in the form of circular activity. The cycle shows that stipulatory activity of entrepreneurship development under favourable conditions lends to supporting activities crystalizing into setting up of enterprises. Once the enterprises pick up, some of the supporting activities are needed for their sustenance and development. The same sequence used not to be followed in practice as all the activities can be initiated simultaneously.
2. Gujarat Model of Entrepreneurship Development:
Gujarat Industrial Corporation launched the Technicians Scheme in 1969 offering loan finance up to 100 per cent of the fixed assets, working capital margin and preliminary and pre operative expenses to technically qualified or experienced persons who have viable projects. The scheme was later extended to non-technicians, especially employees with industrial experience, sales management or business graduate and new entrepreneur scheme (NES).
Need based financing and reliance on the entrepreneurs’ capabilities and competencies rather than their financial position were the main criteria of financing under the scheme. Encouraged by the results of technicians’ scheme, four corporations in Gujarat (GIIC, GITC, GSFC, and GSIC) jointly sponsored a programme for developing entrepreneurs in 1970, a three months training-cum development programme for technicians, traders, employees in private firms, sales men and professionals who have motivation and project plans.
The Gujarat model has incorporated its EDP features like identifying potential entrepreneurs, assisting the trainee entrepreneur to prepare viable projects, developing entrepreneurial and managerial skills of training and providing them with financial and infrastructure facilities so that the new units are set up within the shortest possible records.
The contrast between the two models shows that the SIET model aims at electing potential entrepreneurs from the general public whereas the Gujarat model focuses on the experience. The SIET model assigns an important role to a local agency to initiate and support entrepreneurship, besides the survey of the industrial prospects as an important input. On the other hand in Gujarat, the role of support institutions is considered important. Thus both models highlight the significant role of support agencies. The training inputs are similar in both the models.
3. Udai Pareek and Nadkami Model of Entrepreneurship Development:
Pareek and Nadkami presented a role transformation model for the emergence of entrepreneurs. They have identified four sets of factors that influence entrepreneurship.
a. Individuals, society and family make individuals internalise certain values and names which transform them into an entrepreneur.
b. Socio-cultural Traditions:
The entrepreneurs who are influenced by the society and family themselves generate socio-cultural environments and traditions and influence others to a greater or lesser degree.
c. Socio-political economic policy:
The policies of the Govt. and other financial institutions determine the opportunities available.
d. Support Systems:
These include financial and commercial institution research, trainee and consultancy services.
In this model, the role of social cultural factors is that of the initiator and intervening impetus is provided by a support system including the political and economic environment.
4. Ghaziabad Model:
The training and placement cell of the Govt. Polytechnic Ghaziabad analysed the existing design of the entrepreneurship development programmes. The cell prepared a more refined and effective model for the organisation of the programmes.
The faculty of the polytechnic found that their programmes could not motivate the students to start their own enterprise after attending entrepreneurship development programmes. Therefore the training and placement cell prepared a refined model for the unemployed technical persons.
The main points for this model are:
- Knowledge of entrepreneurship must be given through curriculum
- In final year, structured training must be given through awareness camp
- Expert lectures by officials from DICs, banks, financial agencies and other management experts on entrepreneurship
- Get-together with established entrepreneurs, so that the participants have an idea of proven success stories
- After completion of camp, a team comprising officials from DIC, UPSFC, bank, faculty members and established entrepreneurs must evaluate the participants and select the talented ones
- The selected participants must be given stipend until he starts earning through his own enterprise
- The team members must visit and counsel the participants on various problems during the establishment period
- After establishment, the team members must provide follow-up support from time to time, until they satisfy that participant has developed into a successful entrepreneur
- The success story can become real motivation to others to follow
The above model will definitely help in making entrepreneurship development programmes meaningful. They will help in turning the attention of youth towards self- employment, which in turn will be useful in decreasing the unemployment scenario to some extent.
Apart from the above specific models that have been experimented, it is estimated that EDP work is being undertaken by over forty different agencies all over the country. Taking clues from the Gujarat model of the EDP, various branches and offices of State Bank of India throughout the country have conducted programmes especially for educated unemployed in industrially backward districts.
Relevance of Entrepreneurship Development
1. Entrepreneurship development proved that entrepreneurs can be made if they are not born.
2. Entrepreneurship developments are expected to bring about economic and social change in the entrepreneur’s behaviour.
3. Entrepreneurship development can convert ordinary persons into risk takers, innovators, employers, and above all, the leader of a business and industries.
4. Entrepreneurship developments are relevant from the point of view of assisting the trainee entrepreneurs in converting their idle savings.
5. Entrepreneurship developments are expected to create the sense of social responsibility in the minds of the budding entrepreneurs.
Entrepreneurship Development in India
India is one of the fastest developing economies .There has been rapid transformation in the business environment in the Indian economy. India has a mixed economy and entrepreneurs have contributed considerably to the growth and development of the country. India is very nicely poised to enjoy the fruits of demographic dividend.
Presently, India is one of the youngest nations in the world with more than 54% of its total population below 25 years of age. The existing entrepreneurs and aspiring entrepreneurs can play a vital role in the transformation of the economy.
Entrepreneurs take up new innovative ideas and influence the economic growth and development of the country while following their entrepreneurial pursuits. The role of entrepreneurs in a country like India is not specified to any single sector. The entrepreneurs can play a significant role in manufacturing, services and in the agriculture and allied sectors as well.
India is predominantly a rural economy. They are equally important in the rural areas of the country. The growth of women entrepreneurs in the last few decades is a significant change.
Examples of Risk Taking in Entrepreneurship
Some of the examples of risk taking in entrepreneurship by few Indian scholars are as follows:
Quite a few Indian scholars have also expressed their views on entrepreneurship. For example, Christopher stated that entrepreneurial ventures are based on factors such as – the demand for the product, the individual entrepreneur’s experience in business and his risk-taking tendency.
Gaikwad and Tripathi maintain that hard work, drive, and initiative are the major reasons for the development of entrepreneurship in India in spite of the fact that adequate technical knowledge is available in the country. According to Malgaonkar the local institutional involvement, economic opportunities available and training support to the people are the main factors responsible for entrepreneurship activities in India.
Studies undertaken at the National Institute of Small Industries Extension Training (now NI- MSMK), Hyderabad, show that entrepreneurship is conditioned, on the one hand, by encouraging factors such as – guaranteed economic gains, fulfilment of personal ambition, social prestige, and social responsibility, and, on the other hand, by discouraging factors such as – shortage, of capital and government red-tapism.
The studies also highlight the role played by youth, formal education, urban background, and experience in industry, high scores in levels of aspiration, and risk-taking and adapting propensity which facilitate the development of entrepreneurship.
According to Nandy, supportive community, self-image of his entrepreneur, value and status of entrepreneurial career are the main factors responsible for the development of entrepreneurship. Pathak observes that project management skills, institutional adequacy, price support, and social support are the major supporting factors responsible for the development of entrepreneurship.
Akhouri and his associates pointed out that a strong achievement motivation, institutional support, involvement of local agencies, availability of techno-informational support, finance and availability of raw material influence the emergence of entrepreneurship. Sharma finds that an individual’s commitment, prevailing socio-economic background and government policies and their implementation are the major determinants for the rise of entrepreneurship.
Nadkarni and Pareek show that entrepreneurs’ status in society and incentives available in the form of support and concessions are the basic components of entrepreneurship and its development.
Singh maintains that high self actualising need, deviant pursuit’s linkage effects and their involvement, infrastructure support are prime factors leading to development of entrepreneurship. Deshphande observes that caste and family occupation, and its status are important assets of an entrepreneur for his entry into business.
Entrepreneurship Development Programme
Entrepreneurial Development Programme (EDP) designed to help a person in strengthening and fulfilling his entrepreneurial motive and in acquiring skills and capabilities necessary for playing his entrepreneurial role effectively. Towards this end, it is necessary to promote his understanding of motives, motivation patterns, their impact on behaviour and entrepreneurial value. A programme which seeks to do this can qualify to be called a programmer.
This has to be stressed here, because there are a number of programmes which aim at providing informational or managerial inputs or focus on preparation of a project. Although all these inputs are required by a new entrepreneur, a programme not touching entrepreneurial motivation and behaviour cannot be called an EDP.
Though EDP has been recognised as an effective human resource development tool, many a time there are very many expectations from a single programme, like removing unemployment, enhancing industrial development, promoting small-scale industries, developing industrially underdeveloped regions, etc.
EDP is primarily meant for developing those first-generation entrepreneurs, who on their own cannot become successful entrepreneurs. It covers three major variables: location, target group and enterprise (entrepreneurial activities). Any of these can become the focus or starting point for initiating and implementing an EDP. The remaining two then will follow by making proper synthesis with the first.
For example, if the objective is to promote women entrepreneurs, suitable location and proper entrepreneurial activities must match or if the objective is to develop the North-East region, then the potential target group and feasible entrepreneurial ventures must follow.
EDP by itself therefore aims at achieving the specific objectives of the programmes and therefore cannot create any magical result. It is a continuous process of training and motivating them to set up profitable enterprises in large measure.
Salient Features of Entrepreneurship Development Programme (EDP)
To ensure success of EDP, it would be better to incorporate the following features:
- Identification and careful selection of entrepreneurs for training
- Developing the entrepreneurial capabilities of the trainee
- Ensuring a viable industrial project for each potential entrepreneur
- Equipping the trainee with basic managerial understanding
- Helping him to secure necessary financial, infrastructural and related assistance
- Subsidised training cost to ensure commitment of participants
The salient features of the EDPs may be enumerated as follows:
1. Selection of Entrepreneurs:
EDPs should identify and carefully select the most suitable persons for ED training. If the candidates are not properly selected, then the entire programme will be adversely affected and the very purpose of the EDP is defeated. This will also have a direct bearing on the success rate to stand guarantee for the young entrepreneurs.
2. Entrepreneurial Capabilities:
EDPs should develop the needed entrepreneurial capabilities of the trainees so as to make them successful prospective entrepreneurs. EDPs should use an advanced series of psychological tests to find out the motivation and entrepreneurial capabilities of the trainees, generate the ‘need for high achievement’ and develop the same among the participants.
3. Managerial Skills:
EDPs should equip the trainees with basic enterprise building skills and impart basic managerial skills needed for the successful management of the enterprise. The set of skills includes basic trade or career or occupational skills, basic business routine skills. Marketing skills, business starting skills and business development skills, other required skills include conceptual, analytical, human, administrative and technical skills.
4. Viable Project:
EDPs should ensure to offer a viable industrial project for each potential entrepreneur. EDPs should provide guidelines to the potential entrepreneurs on the effective analysis of feasibility or availability of the particular project in view of marketing, technical organisation, financial and social aspects. The participants should also be trained in the knowledge of how to prepare the project report or feasibility report for a certain project.
5. Resource Mobilisation:
EDPs should help each participant to secure necessary financial, infrastructure and related assistance for making the selected project a success. The trainees should also be given full knowledge about the sources of finance, raw materials required, technical assistance, licence and permits and also about the government authorities for various purposes.
6. Low Cost of Training:
EDPs should charge a very low or nominal cost for training the candidates of entrepreneurship. For this purpose, it is quite necessary that the training cost should be highly subsidised and only the token fee should be changed.
Important Issues of EDP
The development of EDP as a strategy contributing to the industrialisation and economic growth of backward and other areas needs a proper direction and organisation for making it more effective and purposeful. The contribution of EDPs is very uneven among regions for which definite programmes need to be chalked out to bring about some degree of uniformity and upgradation.
Before this is tackled, some important issues need immediate attention.They are detailed below for consideration:
1. Structure and Composition of EDPs:
The ED programme should have a practical content with inter-institutional organisational arrangement to make it a success. The successful EDPs have, at their base, the inter-institutional co-operation or an institution such as Gujarat Centre of the State Bank of India, which besides having conducted the programmes has also arranged for finance and other inputs for the entrepreneurs.
The EDPs conducted in isolation would dissipate resources and talents. The issue, therefore, for effective functioning of EDPs is to have a financial agency strongly backing up efforts for entrepreneurial development. The place and role of TCOs need to be reviewed and their activities suitably accelerated. Who should conduct an EDP is an important issue.
2. Areas of Operation:
In North-Eastern Area, entrepreneurial development activities have not been benefiting from the support activities of financial institutions. In these areas, programmes have to be linked with support activities.
3. Fixing Priorities:
Another area of fixing the priorities of EDPs is to consider their working in terms of efficiency and social need criteria. Evaluation of EDPs have revealed that those who have business experience, education and skills are proving successful entrepreneurs. This source should be tapped first and then go to the stratum to cover entrepreneurs from the non-traditional class, i.e., without business and industrial experience, but having the potential of becoming successful entrepreneurs.
Next come the entrepreneurs belonging to backward and other communities who have to overcome many additional handicaps to become successful entrepreneurs. A proper course content of EDPs has to be developed to meet the specific requirements of each of these three strata of entrepreneurs in proper balance, without sacrificing the efficiency criteria.
4. Lack of Specialists’ Support:
Entrepreneurship has been an area of study requiring interdisciplinary efforts by people from different disciplines. A large number of organisations/agencies engaged in entrepreneurship development in India do not have in the home all the specialists required and have to depend upon outside faculty.
The number of specialists available in the country for developing small-scale industries is not very large. As a result, many a time organisations are unable to locate/avail services of experts. On the other hand, there are specialists who have time to spare in which they can render their services to the organisations.
This apart, the ED Programmes in India are afflicted with a number of operational problems. As such, though there are many institutions to train entrepreneurs, the growth of entrepreneurs is inhibited by these problems.
Some other issues include:
1. There appears to be an inherent inability to identify the needs of the institution and differences of opinion prevailing amongst the practitioners and trainers.
2. There seems to be low institutional commitment for local support to entrepreneurs besides low involvement of marketing, voluntary and financial institutions in the programme, except for a few.
3. Non-availability of various inputs, i.e., raw materials, power, etc. and infrastructural support entwined with poor follow-up by the primary monitoring institution, results in failure of EDP.
4. There seems to be ill-planned training methodology, inconsistency in programme design, its content, sequence and theme and focus of the programme.
5. Training institutions do not show much concern for objective identification and selection of entrepreneurs and the follow-up after training.
6. Some of the institutions seem to be still debating whether to look for proper identification and selection of entrepreneurs for making successful entrepreneurs.
7. Those involved and concerned with the ‘selection and follow-up’ activities have either limited manpower support or a narrow linkage with other support agencies.
8. There does not appear to be standard course curricula even in terms of broad modules being adopted by such institutions.
9. Majority of the institutions engaged in EDP are themselves not convinced of what they are doing as a task delegated by the Government of helping the policy in attaining its social objectives.
10. Perceptual ambiguity of the EDP objective seems to have percolated to grassroots level with a significant distortion both in terms of content and intent.
To conclude, it can be stated that many of the issues related to an EDP are conceptual in nature, many are practical and operational and many are in the borderline between concept and practice. Research and studies, building sophisticated skills and expertise, coordinating, collaborating, corroboration of ideas and actions are necessary strategies that should be continuously pursued to confront these issues.
In the post-independence period, the nation laid stress and put its faith in science and technology. The country has made tremendous investments in scientific institutions and scientific and technical manpower. These investments need to be harvested. We have learnt that the managerial skills necessary to harvest businesses are different from the skills required to create businesses.
Similarly, to create technology enterprises we may also require a different breed of managers in our institutions. Development of technical entrepreneurship and the management of science and technology cannot be dealt with in mutual exclusion.
Entrepreneurship Development Programme in India
Job creation is one of the biggest challenges faced by India. The unique demographic and geographic factors provide immense potential to innovate and promote entrepreneurship among aspiring entrepreneurs. However, due to the lack of an entrepreneurial ecosystem in the country, desired results are not achieved.
In this direction, the Indian Government has started various development programmes to encourage society in pursuing entrepreneurship.
Some of such programmes are:
1. Startup India(2016):
In January 2016, under the guidance of PM Shri Narendra Modi, the Government took an initiative to promote entrepreneurship by nurturing, mentoring and facilitating startups throughout their life cycle. The overall aim of this initiative is to strengthen the entrepreneurial ecosystem and provide resources to face challenges especially during the initial stage of the business where survival and profitability are crucial for the business.
This is a tremendous step in bolstering the growth of startups in the country.
It has the following prominent features:
i. It is a unique platform that caters to all the requirements of a startup
ii. It identifies as well as helps entrepreneurs approach right mentors, incubators, accelerators and investors.
iii. Under this initiative, the Government not only provides support through guidance and mentoring but also provides necessary resources at the right time to set a conducive and holistic environment for startups
iv. For the same, Startup India has brought together academia and industry and has set up research parks, incubators and startup centres that aim to fulfill the needs of budding entrepreneurs and help them focus on the working of their startups and realize their dreams
v. Under Startups India, Entrepreneurship development Programmes (EDPs) are introduced imparting practical and relevant skills. Other facilities under this initiative include facilities like tax exemptions. Tax exemptions are provided to entrepreneurs to reinvest their capital. This initiative is very helpful for entrepreneurs as it gives them access to capital (saved in form of taxes) and brightens their chances of success
2. Make in India:
With the intention to transform India into a global design and manufacturing hub, the “Make in India” initiative was started in 2014. It is an open invitation to Indian citizens, business leaders, potential partners and investors all around the world to abandon all the outdated processes and adopt modern and latest technologies to be synthesized into the manufacturing sector.
i. This campaign by the Government covers 25 sectors of the Economy having high potential for growth. Through this scheme foreign investment is sought to be increased in such specific sectors.
ii. This campaign has improved India’s credibility stronger than ever. All the activities undertaken so far aim to replace obsolete technology with the latest technology and employ modern gadgets to improve efficiency in the business.
iii. It aims to provide a user -friendly and transparent system to its member countries to ensure governance.
iv. This movement has not only led to renewed confidence among the business community but has also gained attention of potential partners abroad. This scheme motivates investors abroad to visit India and collaborate with Indian partners.
v. FDI has shown an extremely positive trend since the launch of Make in India initiative with FDI inflows rising by 55%.
3. Atal Innovation Mission (AIM):
Atal Innovation Mission (AIM) is Government of India’s endeavor to promote a culture of innovation and entrepreneurship among budding entrepreneurs in India.
i. Under this program, policies and plans are developed with the aim to promote innovation across various sectors.
ii. It not only provides a platform for collaboration among stakeholders for different sectors but also aims to promote awareness among current and potential entrepreneurs, investors and business leaders.
iii. AIM works to provide a world class innovation hub to startups in technology driven areas to foster the entrepreneurial environment among startups.
iv. AIM recently launched Atal Tinkering labs across India where students can get hands-on experience with tools and equipment in the field of science, technology, engineering and mathematics.
v. With a view to encourage innovation among startups, some of the services provided under AIM are expert guidance in various sectors, support at the planning stage of the business, providing access to seed capital and imparting training.
vi. Some of the flagship schemes under AIM include establishment of –
- Atal Tinkering labs,
- Atal incubation Centers,
- Atal Grand Challenges and
- Atal Vikas Challenges
The above schemes are established with the view to provide low cost solutions to various intractable problems.
4. Support to Training and Employment Programme for Women (STEP):
Since 1986-87 Government of India has administered STEP as a ‘central sector scheme’, which aims to provide skills that will benefit women of the country to become self-employed. Under this scheme, training is imparted to women with no access to formal training.
i. This scheme aims to cater to the needs of all those girls who are above the age of 16 years.
ii. This initiative covers a wide range of sectors from agriculture, horticulture, food processing, and handlooms to traditional crafts like embroidery, tailoring, stitching, hospitality, travel and tourism and gems and jewellery.
iii. Soft skills development like spoken English are also covered under this initiative.
Recently, the Ministry of Skill Development and Entrepreneurship and NITI Aayog have redrafted the guidelines to make this scheme more relevant and result yielding.
5. Jan Dhan Aadhaar Mobile Initiative (JAM):
JAM is a Government of India initiative undertaken with the intention to enable direct transfer of subsidies to intended beneficiaries accounts. It aims to eliminate all intermediaries and leakages from the system.
This initiative will yield a positive impact on millions of Indians while being instrumental in checking on corruption.
Various schemes under JAM include:
- Pratyaksh Hanstantarit LabhYojna
- PradhanMantri Suraksha Bima Yojana
- Pradhan Mantri Jivan Jyoti Bima Yojna
- Atal Pension Yojana
One of the biggest milestone achieved by JAM is that it has made its mark in “Guinness book of World Record” for most bank accounts opened in one week.
6. Digital India:
Digital India is a technological intervention which aims to modernise the Indian economy. It is launched to enable access to various government services electronically. This initiative aims to empower the Indian society digitally as well as to provide knowledge and universal access to goods and services.
This scheme will ensure access to safe and secure digital space to its citizens. It will pave the way for doing business and also encourage equity and improve efficiency at a broader level. Under this initiative, people can file their ITR online, keep their documents in digital lockers and communicate with various Government departments online.
7. Stand Up India (2015):
On 15 August 2015, Hon’ble P.M. Shri Narender Modi launched ‘Stand up India’ campaign which aims to promote entrepreneurship for economic development as well as job creation in the country.
i. Under this scheme institutional credit is provided to people like SC, ST and women entrepreneurs with the sole aim to enable these people to participate in the process of economic growth of the nation.
ii. Loans granted under this scheme range from 1 million to 10 million to set up Greenfield enterprises in manufacturing, service or trading sectors.
iii. This scheme also provides access to information regarding various financing modes and credit guarantee schemes.
8. Biotechnology Industry Research Assistance Council (BIRAC):
BIRAC is a not-for-profit Public-Sector Enterprise, set up by the Department of Biotechnology to strengthen and empower emerging biotechnology enterprises. It aims to embed strategic research and innovation in all biotech enterprises, and bridge the existing gaps between industry and academia.
The ultimate goal is to develop high-quality, yet affordable, products with the use of cutting edge technologies. BIRAC has initiated partnerships with several national and global partners for building capacities of the Indian biotech industry, particularly start-ups and SME’s, and has facilitated several rapid developments in medical technology.
9. Department of Science and Technology (DST):
The DST comprises several arms that work across the spectrum on all major projects that require scientific and technological intervention. The Technology Interventions for Disabled and Elderly, for instance, provides technological solutions to address challenges and improve quality of life of the elderly in India through the application of science and technology.
On the other hand, the ASEAN-India Science, Technology and Innovation Cooperation works to narrow the development gap and enhance connectivity between the ASEAN countries. It encourages cooperation in science, technology and innovation through joint research across sectors and provides fellowships to scientists and researchers from ASEAN member states with Indian R&D academic institutions to upgrade their research skills and expertise.
10. Trade Related Entrepreneurship Assistance and Development (TREAD):
To address the critical issues of access to credit among India’s underprivileged women, the TREAD programme enables credit availability to interested women through nongovernmental organizations (NGOs). As such, women can receive support of registered NGOs in both accessing loan facilities, and receiving counseling and training opportunities to kick-start proposed enterprises, in order to provide pathways for women to take up non-farm activities.
11. Pradhan Mantri Kaushal Vikas Yojana (PMKVY):
A flagship initiative of the Ministry of Skill Development & Entrepreneurship (MSDE), this is a Skill Certification initiative that aims to train youth in industry-relevant skills to enhance opportunities for livelihood creation and employability. Individuals with prior learning experience or skills are also assessed and certified as a Recognition of Prior Learning. Training and Assessment fees are entirely borne by the Government under this program.
12. National Skill Development Mission:
Launched in July 2015, the mission aims to build synergies across sectors and States in skilled industries and initiatives. With a vision to build a ‘Skilled India’ it is designed to expedite decision-making across sectors to provide skills at scale, without compromising on quality or speed.
The seven sub-missions proposed in the initial phase to guide the mission’s skilling efforts across India are:
- Institutional Training
- Overseas Employment
- Sustainable Livelihoods
- Leveraging Public Infrastructure
13. Science for Equity Empowerment and Development (SEED):
SEED aims to provide opportunities to motivated scientists and field level workers to undertake action-oriented, location specific projects for socio-economic gain, particularly in rural areas.
Efforts have been made to associate national labs and other specialist Science and Technology (S&T) institutions with innovations at the grassroots to enable access to inputs from experts and quality infrastructure. SEED emphasizes equity in development, so that the benefits of technology accrue to a vast section of the population, particularly the disadvantaged section of the economy.
Common Misconceptions of EDP
EDP is a catchword. But misconceptions about EDP prevail. Lack of understanding and clarity has limited its growth. EDP has yet to contribute much to the industrial economy of the country. Chandramauli Pathak has listed some of the prevailing common misconceptions about EDP.
1. Join an EDP, All your Problems are Solved:
Joining an EDP is a privilege. It is indeed a valuable opportunity not available to all. But many a time an impression is created that joining EDP means assurance of finance, obtaining the required licences for business ventures and availing or the special incentives.
This misconception arises either because of lack of “honest” promotional efforts to get participants for EDP, or by attracting entrepreneurs by raising false hopes. It may also be a result of entrepreneur’s expectations in gaining such advantages like finance, licences, raw material, quotations, etc. since most EDPs are state-sponsored. Unless this misconception at both ends (trainers and trainees) is not removed, EDP will only create more problems rather than solving them.
In reality, an EDP equips and makes them competent to anticipate and deal with a variety of problems that any entrepreneur may face. It prepares them to deserve and make good use of various forms of assistance.
2. EDP means Only Training:
Any attempt to develop potential entrepreneurs through classroom training has been treated as EDPs.
In fact, training is only one of the segments in “the process” of developing entrepreneurs. The ED process starts from identifying the potential and right candidates, linking suitable projects with each one, training and developing managerial and entrepreneurial capabilities, counselling and motivating the entrepreneur and providing the required follow-up support to help him/her in establishing the venture. The whole process extends much beyond “training.” Much of it is personal counselling and support.
3. Higher the Number, Better the EDP:
EDPs unfortunately have often been linked with statistical output rather than qualitative results. The quantitative dimension has forced manipulations in EDPs. It is taken that an EDP is a success with the maximum number of participants of responses.
The quality and impact of the EDP matters more than the quantitative dimension. Strategies to promote a particular target group, the nature of the non-traditional entrepreneurial activities and higher chances of success in new ventures go a long way in deciding the quality and impact of an EDP.
4. EDP Success is the Sole Responsibility of Trainer-Motivators:
It is the responsibility of the Trainer-Motivator in most cases, to conduct the programme. However, many environmental factors challenge his role as a motivator.
The trainer alone cannot control or influence external factors which usually come in the way of ‘start-ups’ out of an EDP. EDP conducting agencies and the trainers alone cannot develop entrepreneurs and help them set up their enterprises since many other support agencies like Banks, SECs, DICs, etc. are also involved to create better coordination and effective linkages with these agencies.
Such misconceptions prevail amongst EDP trainers or funding agencies, as also among entrepreneurs. We do hope that better awareness and clarity about the EDP process and strategy will help get EDPs their due importance and recognition.
5. Entrepreneurship Development Programme:
Past experience has shown that industrial promotion by provision of facilities, technical assistance, management training, consultancy, industrial information and other services alone are not sufficient to develop entrepreneurs. It was concluded that the focal point should be aimed at the overlooked entrepreneurial spirit and entrepreneurial characteristics of the people to be developed.
The EDP package was, therefore, launched. Over the years, the EDPs have become a vital strategy for harnessing the vast untapped human skills, to channelise them into accelerating industrialisation, in general and growth of the small-scale sector, in particular.
Of late, entrepreneurship development has become extremely important in achieving the goals of all-around development in the country. Consequently, many entrepreneurial opportunities are emerging in various fields. Be it electronic, medicine, engineering, agriculture, communication, atomic energy, telecommunication, food technology and packaging, entrepreneurial opportunities have surfaced at rapid pace in all these and many other areas.
Such opportunities, however, become more perceptible and profitable to entrepreneurs when exposed to latest developments in the respective fields either in terms of technology, use or style of living. Accessibility and understanding of such information widens the base of opportunity sensing by potential entrepreneurs.
Issues and Obstacles of Entrepreneurship Development
Entrepreneurship development incorporates four basic issues, they are:
- Availability of required material resources
- Selection of real and true entrepreneurs
- Formation of industrial units
- Formulation of policy for the development of the region
These four issues are closely interrelated and interdependent. They should be solved properly.
Entrepreneurial development is an organised and systematic development. The main objective of entrepreneurial development is to motivate a person for an entrepreneurial career, and to make him a successful entrepreneur. The trained entrepreneurs would be able to achieve industrial and economic development.
Entrepreneurship development is regarded as a tool of industrial development and a solution to unemployment in the country. It has therefore become a matter of great concern in all developed and developing countries all over the world.
In less developed countries there are several obstacles that come in the way of entrepreneurship development.
- Lack of adequate infrastructure facilities
- Cost of production is too high
- Non-availability of quality raw-materials
- Heavy risk involved in starting up a new enterprise
- Certain customs and traditions of a particular locality create a restriction or prohibition in the functioning of the enterprise
- Non-availability of quick financial assistance
- Prevalence of unstable conditions in the market discourages prospective entrepreneurs from setting up new business ventures
- Frequent change in the Governmental policies create a lot of disturbance to the enterprises
Shortcomings of EDP
No doubt, during the last few years, there has been an emphasis on EDP’s by the Central Govt. State Govt., and private sector. A number of fictitious and furnace Institutions have come into existence. The level of entrepreneurial development determines the level of economic development. Therefore, industrial development as well as entrepreneurial development are keys to economic development.
Thus, there are several shortcomings of EDPs which are as follows:
1. There are inadequate government facilities and incentives including subsidies
2. There is a lack of infrastructural facilities such as power, market, finance, raw materials, techniques etc
3. There is an excess burden of foreign debts
4. There is administrative instability
5. The training provided to entrepreneurs is of poor quality, totally based on theoretical ground and thus the practical part of the training is missing
6. Successful & effective EDP is closely linked to the proper selection of an entrepreneur to be trained. Trained persons must be properly selected after proper scanning of their aptitude, entrepreneurial and managerial skills, motivation etc
7. There is a lack of entrepreneurial spirit. They have a wrong thinking i.e. mere joining of EDP will make them successful entrepreneurs. They have a wrong impression that only joining an EDP means grant of Industrial license, assured financial assistance, raw material etc
8. There are defective organizational policies and structures
9. There is a lack of proper coordination in EDPs organized by Central Govt., State Govt. & private enterprises
10. There is an overemphasis on developing the entrepreneurial industry alone
Suggestions for Improving the Viability of EDPs
Following suggestions are necessary to be implemented in improving the viability of EDPs:
1. The structure and composition of EDPs taking into account the regional variations need to be streamlined
2. The programme should have a practical content and needs a lot of inter-institutional organisational arrangement to make it a success
3. Effective support services should be linked with EDPs for better results. Financial institutions specially SIDBI’s representatives and lead bank’s nominees should be associated with the programme
4. Potential entrepreneurs who have business experience, education and skills should be tapped first for EDPs. Then efforts will be made to cover entrepreneurs from the non-traditional class i.e. without business and industrial experience but having the potential of becoming successful entrepreneurs
5. Inter-disciplinary approach/thrust should be given to the EDP. Intensive follow-up work will have to be done and systematised in the process to make it accessible to entrepreneurs in formal and informal forms
6. A token fee may be charged from the participants to ensure their commitment towards EDPs. Payments of stipend to participants may be avoided as far as possible
7. EDPs should have conceptual clarity and right conception and analysis. It should be designed to meet the objectives already set and imagination to tackle unusual problems
Thus, EDP is necessary for promoting entrepreneurship but its course contents and conceptual framework must be able to motivate first generation entrepreneurs in setting up their viable enterprises at the first instance
Role of Environmental Factors in the Development of Entrepreneurship
Entrepreneurs are not born but are influenced by various environmental factors which stimulate them to start their own enterprises.
Few of the environmental factors playing an important role in the development of entrepreneurship are:
- Family background
- Standard of education
- Financial stability or availability
- Social recognition for entrepreneurs
- Technical knowledge
- Strong self-motivation
- Good personal and inter-personal skills
- Good personality
- Availability of various supporting facilities
- Socio-economic environment
- Political stability
- Affiliation to a certain caste or religion
Industrial Policies of Entrepreneurship Development
Pandit Jawaharlal Nehru laid the foundations of modern India. His vision and determination have left a lasting impression on every facet of national endeavour since Independence. It is due to his initiative that India now has a strong and diversified industrial base and is a major industrial nation of the world.
The goals and objectives set out for the nation by Pandit Nehru on the eve of Independence, namely, the rapid agricultural and industrial development of our country, rapid expansion of opportunities for gainful employment, progressive reduction of social and economic disparities, removal of poverty and attainment of self-reliance remain as valid today as at the time Pandit Nehru first set them out before the nation.
Any industrial policy must contribute to the realisation of these goals and objectives at an accelerated pace. The present statement of industrial policy is inspired by these very concerns, and represents a renewed initiative towards consolidating the gains of national reconstruction at this crucial stage.
1. The New Small-Scale Sector Policy 1991:
Industries are the backbone of any country. The progress and prosperity of any country largely depends upon industrial development and no all-round and balanced industrial growth is possible without an industrial policy. All industrially advanced countries have a national industrial policy of their own.
It is determining a reasonable relationship between the state and the private enterprises, between industry and industry, regions and regions. The statement of industrial policy issued by the planning and development department of the then Government of India in April 1945. In 1948, immediately after independence, the Government introduced the Industrial Policy Resolutions.
This outlined the approach to industrial growth and development. It emphasized the importance to the economy of securing a continuous increase in production and ensuring its equitable distribution. After the adoption of the Constitution and the socio-economic goals, the Industrial Policy was comprehensively revised and adopted in 1956.
The Industrial Policy Resolution of 1948 was followed by the Industrial Policy Resolution of 1956, which had as its objective the acceleration of the rate of economic growth and the speeding up of industrialisation as a means of achieving a socialist pattern of society. In 1956, capital was scarce and the base of entrepreneurship was not strong enough.
Hence, the 1956, Industrial Policy Resolution gave primacy to the role of the State to assume a predominant and direct responsibility for industrial development. The Industrial Policy statement of 1973, inter alia, identified high-priority industries where investment from large industrial houses and foreign companies would be permitted. The Industrial Policy Statement of 1977, laid emphasis on decentralisation and on the role of smallscale, tiny and cottage industries.
The Industrial Policy Statement of 1980, focused attention on the need for promoting competition in the domestic market, technological upgradation and modernisation. The policy laid the foundation for an increasingly competitive export base and for encouraging foreign investment in high-technology areas. This found expression in the Sixth Five Year Plan which bore the distinct stamp of Smt. Indira Gandhi. It was Smt. Indira Gandhi who emphasised the need for productivity to be the central concern in all economic and production activities.
A number of policy and procedural changes were introduced in 1985 and, in 1986, under the leadership of Rajiv Gandhi aimed at increasing productivity, reducing costs and improving quality. The accent was on opening the domestic market to increased competition and readying our industry to stand on its own in the face of international competition. In July 1991, The Central Government announced a New Industrial Policy for the country.
A series of measures to liberalise the economy and to increase its competitiveness followed. The main ingredients of the new policy are de-regulation, scaling down of the public sector’s role and encouragement of foreign investments through dilution of restrictions in foreign equity participation, repartition of dividend dilution etc.
2. Industrial Licensing Policy:
Industrial Licensing is governed by the Industries (Development and Regulation) Act, 1951. The Industrial Policy Resolution of 1956 identified the following three categories of industries- those that would be reserved for development in the public sector, those that would be permitted for development through private enterprise with or without State participation, and those in which investment initiatives would ordinarily emanate from private entrepreneurs.
Over the years, keeping in view the changing industrial scene in the country, the policy has undergone modifications. Industrial licensing policy and procedures have also been liberalised from time to time. A full realisation of the industrial potential of the country calls for a continuation of this process of change.
The industrial licensing in India can be read in the following stages:
- The Industries (Development and Regulation) Act, 1951
- Industrial Licensing Policy 1951-60
- Industrial Licensing Policy 1960-70
- Industrial Licensing Policy 1970
- Industrial Licensing Policy 1973
- Industrial Licensing Policy 1977
- Industrial Licensing Policy 1980-90
- Liberalisation of Industrial Licensing 1991
3. Foreign Investment:
While freeing Indian industry from official controls, opportunities for promoting foreign investments in India should also be fully exploited. In view of the significant development of India’s industrial economy in the last 40 years, the general resilience, size and level of sophistication achieved, and the significant changes that have also taken place in the world industrial economy, the relationship between domestic and foreign industry needs to be much more dynamic than it has been in the past in terms of both technology and investment.
Foreign investment would bring attendant advantages of technology transfer, marketing expertise, introduction of modern managerial techniques and new possibilities for promotion of exports. This is particularly necessary in the changing global scenario of industrial and firms so that we can engage in purposive negotiation with such large firms, and provide the avenues for large investments in the development of industries and technology in the national interest.
Foreign Technology Agreement:
There is a great need for promoting an industrial environment where the acquisition of technological capability receives priority. In the fast changing world of technology the relationship between the suppliers and users of technology must be a continuous one. Such a relationship becomes difficult to achieve when the approval process includes unnecessary governmental interference on a case to case basis involving endemic delays and fostering uncertainty.
The Indian entrepreneur has now come of age so that he no longer needs such bureaucratic clearances of his commercial technology relationships with foreign technology suppliers. Indian industry can scarcely be competitive with the rest of the world if it is to operate within such a regulatory environment.
Entrepreneurship Development MCQ
1. “Entrepreneur is basically an innovator” is given in book
- Entrepreneurship in Economic Theory
- Entrepreneurship and Economic Development
- The Theory of Economic Development
- The Achieving Society
2. The Achieving Society is concerned with
- High Standards
3. Need for Achievement Theory is concerned with
- E. Hagen
- Peter Kilby
4. Status Withdrawal Theory is given by
- E. Hagen
- Peter Kilby
- William Baumol
5. Which one is more useful in entrepreneurship?
- Retreatist individual
- Reformist individual
- Creative individual
- Ritualist individual
6. Theory of social Change provides analysis of
- Economic value system
- Ethical value system
- Religious value system
- Political value system
7. Theory of Social Change was propounded by
- Hoselitz B.P.
- John Kunkel
- Max Weber
- K. L. Sharma
8. According to Hoselitz, entrepreneurship is a function of
- Innovation and creativity
- Dream and action
- Managerial skill and leadership
- Capital and Labour
9. Theory of Model Personality is not related with
- Attitudes towards occupation
- Perception towards professionalism
- Role expectation by sanctioning groups
- Operational requirement of the job
10. Systematic innovation considers number of sources for innovative opportunity
11. According to economic approach, entrepreneur is
- Risk bearer
- Profit seeker
- Change agent
12. According to sociological approach entrepreneurship is
- Process of economic change
- Process of role performance
- Process of assembling imagination
- Process of sensitivity
13. Psychological Approach deals with
- Achievement motive
- Performance motive
- Profit motive
- Status motive
14. The Achieving Society’ 1961 is written by
- Higgins. B.
- Carl Menger
15. Entrepreneurial traits deal with
- Job providing behaviour
- Profit seeking behaviour
- Risk taking behaviour
- Change seeking behaviour
16. Entrepreneurship is ensured by
- Small firm
- Middle level firm
- Larger firm
17. Entrepreneurship fails to lead
- New Corporate divisions
- New subsidiary venture
- Partnership firm
- None of these
18. Barriers to entrepreneurship stifle
- Risk taking Capacity
19. Merger and Acquisition
- encourage entrepreneurial behaviour
- discourage entrepreneurial behaviour
- fail to affect entrepreneurial behaviour
- None of these
20. The book “Intrapreneurship” was written by
- Holt David H.
- Pinchot Gifford III
- Meier and Balmin
- B.C. Tondon