Entrepreneurship and its Contribution to the Indian Economy
Entrepreneurship plays a very important role in the enhancement of national economic growth. The small and medium enterprises are important parties in an economy that spur the culture of entrepreneurship in India. This sector has helped India to solve problems such as unemployment, poverty, and insecurity. The vibrancy of the model of the economic development that a country adopts is dependent on the strength of the SME sector. The crucial role that SMEs plays relates to the improvement of domestic production, increasing the earnings from exports and generating employment. This essay will focus on the contribution of the SME sector to the Indian economy.
Industrial Production and Export Contribution of SMEs
The industrial production with a rating of about 40% is the input that emanates from the SME businesses and 35% of the manufactured exports come from the small enterprises in India. Notably, the employment levels from the SME enterprises are second after the mainstay engagement of the population which is agriculture. The Indian environment is favorable for the small industries which are not capital intensive in their operations and taking into consideration the scarcity of resources, the youth in this country exploit their skills to better their lives through entrepreneurship.
The Role of Gandhian Philosophy and Government Support
Gandhian philosophy has been the bedrock in which SMEs and furthermore, they have received a lot of support from political parties and policymakers in contemporary times elevating their role in public discourse on matters economics. Essentially, SMEs have major strengths which include flexibility in their operations and the fact that the owner can manage them as a sole proprietor. The starting capital for an enterprise at this level is affordable for most people and the labor is inexpensive due to the high population density in India. The modern entrepreneurs in India have the ability to propel India to new levels of competitiveness around the world if they are supported in growing their businesses.
The Need for Government Support and Strategies
The government should support business eco-systems in which the upcoming entrepreneurs are trying to deliver quality products, standard services, and offering competitive prices at the international and local markets. The socio-economic transformation that is necessary for India will be the engine that is driving growth in the economy and a vibrant sector with innovation being a major ingredient. State agencies in India have to play a key role in removing all the hurdles in the businesses that make entrepreneurship an unattractive venture for the young population in the country. Overall, Indian economy will be more resilient if they develop strategies to empower business start-ups because high growth rates will be maintained. Furthermore, the most necessary input that is needed by the young people in India is an impetus to partake the opportunities available in the SME sector which can be activated through loans and training on entrepreneurship.
Fostering Entrepreneurial Development in India
The facilitation of entrepreneurial development in India is an integrated responsibility that should involve all facets of the society. This is in recognition that the global entrepreneurial culture is necessary so as to tap into new markets and develop modern technologies that will enhance the outreach to target markets. The government should remodel the business environment in such a way that SMEs are supported from their start-up stage up to the level there are mature companies that can invade other business niches around the world (Venkatesh and Muthiah 2012 p 9 ). The domestic imperatives to nurture the SME sector must take into consideration the evolution of the SME policies in the world for the developed and developing countries. The approach that is adopted by the regulating agencies should change from compliance to be performance-based to encourage the young entrepreneurs to be innovative in coming up with solutions to the needs of the Indian people.
Spurring Economic Development and Addressing Challenges
The national objectives on spurring economic development will be realized through the uptake of entrepreneurship as a major preoccupation to create job opportunities and reduce the rates of rural-urban migration in India. However, SMEs face many bottlenecks that are as a result of global economic crises, limited financial resources to fund the start-ups and the poor linkage to the international markets due to the hurdles emanating from global trade policies. Notably, there are opportunities in the Indian economy that are untapped and the ingenuity of young entrepreneurs is an important asset that can be revamped through the establishment of a seed fund the revitalize the SME sector.
Importance of Technology for SMEs
The SME sector in India has a strong foundation with regard to the diverse areas the small entrepreneurs have permeated in the economy. The wave of entrepreneurship in India has aspects that relate to women involved in business, development of modern technologies and improvement of skilled resources (Choochote 2012, p 239). The initiatives that have been started by the Indian government to support the small industry ventures in the economy include an ecosystem on "Make in India" and the promotion of the ICT businesses through the digital India programs. The export contribution engagements policies by the Indian government are meant to make the small industries competitive globally by entering into multilateral and bilateral trade understandings.
Government Support and Policies
Essentially, the procurement policy that is adopted by the government gives priority to the SMEs to benefit from doing business with the government on a major public service project. The large national or international corporations that practice vendor development initiatives in their businesses are incentivized by the Indian government. Additionally, all stakeholders that are involved in unlocking the potential of Indian businesses by reaching out to the global market are supported by the government through research and bettering of the infrastructure network (Swail et al., 2014 p 861) The SME regulation in India is a one window compliance system that guarantees incentives to the upcoming start-ups in the industry. Other interventions by the government to revitalize entrepreneurship in the different segments of the economy have been through performance incentives such as set-offs and rebates on direct taxes.
Policies on Entrepreneurship and SMEs
The implementation of policies on entrepreneurship that will make sure that all SMEs are registered to be part of the ecosystem of small businesses that are supported by the government up to maturity. Entrepreneurs can fill the loophole that is existent in the export business by actualizing their business ideas to come up with feasible plans to venture into the international market. Globalization has led to the emergence of new dynamics in which manufacturing activities are becoming a major preoccupation of the developing countries with small entrepreneurs taking a leading role in this sector.
The Role of Technology in SMEs in India
The crucial area where the technological input is necessary is on value-addition of products exported from India. Skills generation in this sector can be guaranteed through government intervention by financing young entrepreneurs to enroll in programs that will aid them in exploiting technology in their business start-ups. Furthermore, in the era of social media, there a surge to advertise the products that are made in India which makes it easier for enterprises to reach more clients. The e-commerce platform is an enabling factor that is making the export of products from small businesses in India gain a competitive advantage globally. The local enterprises have a role to play is substituting the imports that can be produced locally which includes such as electronic goods. Noteworthy, the government can motivate the young innovators to invest in high technology products and in so doing; there will be the development of capabilities to match the developed world.
Government Support for Inclusive Growth and Innovation
The government has the ultimate responsibility to create employment opportunities for traditional industries, women, youth, and the physically challenged people. Moreover, the financial growth in the economy must be inclusive of the low-income segments of the population which can be ignited through the support of the SME sector that is populated by low-income classes. The government will gain more if it invests in the enhancement of local capabilities to reduce the import burden by making sure that the local demand is met through domestic production. The SMEs will be empowered through government investment in infrastructure, improving ease of conducting business and bettering the export capabilities of the local industries. India has over time become a favored destination for foreign capital, and the government should institute a strategy for innovation so that the local SMEs can be competitive in the face of global competition (Harris et al. 2009 p 411). The achievement of inclusive growth in India will only be realized through the promotion of innovation that will lead to the creation of massive job opportunities. In essence, SME sector is in most cases driven by innovation by entrepreneurs so as to come up with solutions to problems that face the society.
Skills Development and Importance of Incubators
Skills development should be an imperative that the government of the day addresses to improve the business acumen of the entrepreneurs in the face of global competition. The business ecosystem that is supported and encouraged by the government must be involved in the nurturing of start-ups. Essentially, in modern times most businesses naturally are faced out due to changes in technology, an issue that is evident in India, which has made the government support to be biased towards start-ups that are dealing with technological innovations. However, there must be recognition that the academia is important in the development of business ideas and hence, the government should create incubators in learning institutions to usher in students into embracing entrepreneurship.
Understanding SMEs and Overcoming Challenges
Understanding the operation of SMEs under different contexts is important in alleviating the challenges that face them and how the input of the government can help them in position in the highly competitive global market. The pivotal factor that will be propelling an SME in the global stage is the ingenuity in the application of technology as a source of competitive advantage. Notably, the disruptive technology that is a major innovation in modern times and the agility of businesses is dependent on their use of digital technologies to outdo their competitors. The incubation centers started by the government can play a significant role in helping the industry players to implement new technologies in the meticulous that will ease daily operations and deliver quality products.
Role of SMEs in the Indian Business Landscape
Indian SMEs have occupied a new space in the business world as regards the impetus that will lead to rewarding growth, productivity, and innovation. The economic environment in the world is changing and the Indian business systems have evolved over time and SMEs are going to be pivotal in reducing social inequalities and in solving some of the problems that face this country. However, there is a need to focus on the agricultural sector, which has potential to be more impactful in low-income areas where a lot of people reside.
Initiatives to Revamp the Indian Economy through SMEs
The government must focus synergies in building a strategic framework that will suppress the hurdles that are preventing the unemployed population in India from joining entrepreneurship as an alternative to perpetual job-seeking. The best option that is available to the main stakeholders in this exercise is to make strategic changes in the business landscape that will encourage people to implement their business ideas. Reputable infrastructure systems must be developed that consist of knowledge enhancement tools, digital platforms for e-commerce, and systems for supporting innovation (Kuratko,2005 p 581). IT developments such as cloud computing can be introduced to the SME community to help them share ideas and brainstorm on their innovations.
Uniform Regulatory Regime and Funding Support
The regulatory regime adopted by India must be uniform in the country with the provision of attractive schemes such as export promotion and procurement policies that support the growth of the small businesses. The aspect of funding in this sector can be improved through a partnership with banks so that they can offer loans to the small businesses without fear of losing their investments. Notably, the small enterprises that are created for the purposes of import substitution must be supported to upscale their operations and compete with the multinationals.
Establishment of Facilitation Centers and Grants
The main step towards revitalizing the small businesses in the Indian economy is the establishment of facilitation centers and the issuance of grants to entrepreneurs who have prototypes that attract large businesses. Indian government should institute training centers to increase the pool of skilled people that can transform ideas into successful businesses as exemplified by the implementation of concepts sourced from innovation hubs. SMEs in India have been impactful to the crucial grassroots level growth that brings in an element of equitable economic development in the country (Delmar and Shane 2003, p 1173). The cluster approach that has been embraced by the government is helping in pooling resources for the start-ups with the help of government funds to jump-start operations.
Conclusion
Conclusively, the Indian government policies and other strategic interventions are helping to caution the SMEs from the unfair competition from the multinational corporations. The initiation of a competitiveness program has helped to revamp small industries to embed modern innovations so as to outdo the foreign competitors. Furthermore, the banking sector has responded positively by offering credit to small entrepreneurs as part of their corporate policy in India to promote economic growth. The wide internet coverage around the world has revolutionized the way SMEs interact with the market as globalization has led to the interconnectivity of different parts of the world which is an enabler of business relationships. The main undoing of SMEs in India is the fact that with time they tend to stagnate due to comfort realized at the concept implementation stage and avoidance of complexity associated with big enterprises. Investment in small enterprises will be crucial in reducing the rates of poverty and unemployment in India.
References
Choochote, K., 2012. An analysis of knowledge management process for SMEs in developing countries: a case study of SMEs in India and Thailand, International Journal of Information and Education Technology, vol. 2, no. 3, p.239.
Delmar, F. and Shane, S., 2003. Does business planning facilitate the development of new ventures?. Strategic management journal, vol. 24, no. 12, pp.1165-1185.
Harris, J.D., Sapienza, H.J. and Bowie, N.E., 2009. Ethics and entrepreneurship, Journal of business venturing, vol. 24, no. 5, pp.407-418.
Kuratko, D.F., 2005. The emergence of entrepreneurship education: Development, trends, and challenges, Entrepreneurship theory and practice, vol. 29, no. 5, pp.577-598.
Swail, J., Down, S. and Kautonen, T., 2014. Examining the effect of ‘entertainment’ as a cultural influence on entrepreneurial intentions, International Small Business Journal, 32(8), pp.859-875.
Venkatesh, S. and Muthiah, K., 2012. SMEs in India: importance and contribution, Asian Journal of Management Research, vol. 2, no. 2, pp. 792-795.
