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India a tough place to be an entrepreneur: Paper released by KPMG in India and TiE

Team YS
23rd Dec 2009
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{?} Governments increasingly becoming receptive to entrepreneurial demands {?} Gujarat entrepreneurs happy with policies but ask for quick implementation

Governments in six India states namely Punjab, Gujarat, Delhi, Tamil Nadu, Karnataka and Maharashtra are said to be moving in the right direction to promote entrepreneurship. However, implementation of some of the programs is either limited or focused at larger enterprises, said a white paper released by KPMG in India and Tie.

In some cases, the governments across these states are increasingly adopting newer approaches, said the white paper released by KPMG in India and Tie titled "Entrepreneurial India: Sculpting the landscape". On the other hand, the emergence of opportunities in many sectors and the lack of opportunity in others have driven many young people to strike out on their own. Many are leaving their well paying jobs to establish their own small ventures. However, despite the great initiatives undertaken by many Indian entrepreneurs, India remains a tough place to be an entrepreneur.

Speaking on the occasion, Jehil Thakkar, Executive Director, KPMG in India said, "Governments-central, state and local, their policies, incentives and programs play a substantial role in influencing entrepreneurs. In many cases, governments are moving towards friendlier policies but more rapid change is necessary.

"The white paper endeavors to assess the initiatives of select Indian states to encourage entrepreneurial growth and put forth best practices, raise the profile of discussions on entrepreneurship development and contribute to shaping policy."

The paper, while highlighting the views of entrepreneurs, reported that while different state governments are taking proactive policy decisions or framing innovative industrial strategies, awareness of the same is low among entrepreneurs in several states.

Similarly, in many areas, policies need to be made more current with today's environment. For example, in Delhi, the basic policy framework has not been revised for the last 27 years. Hence, many entrepreneurs are not aware of the policies and perhaps were not able to harness the benefits while starting their entrepreneurial journey.


While entrepreneurs in Gujarat and Karnataka are extremely satisfied with their government's quick policy decisions, they however, are hopeful of their quicker implementations.

Entrepreneurs in Punjab desire more focused attention and will, from the political establishments, which they hope will steer investments in small scale industries. However they appreciate their government's policy initiatives in agro and IT/ ITES sector. According to entrepreneurs in Tamil Nadu, the government through Tamil Nadu Small IndustriesDevelopment Corporation Limited (TANSIDCO) has also played a catalytic role in the promotion and development of Small Scale Industries and hastening the industrial dispersal throughout the state. The state has also been one of the first in the country to specifically focus on promoting industry and business growth in Tier II and Tier III cities thus aiming for the holistic development of the state.

A government initiated funding mechanism or seed fund, as available for entrepreneurs in Punjab and Gujarat is desired by their counterparts in states like Delhi, Tamil Nadu and Maharashtra.

The wish list also includes need to fill the gap between academia and industry and industry ready professionals. There seems to be a requirement for increased focus on vocational training and skills-based education especially in states like Punjab and Gujarat. While Gujarat tops the list in providing single window clearance, easy land transfer and land bank for small players as key motivation factors, entrepreneurs pointed out that to a large extent this is true only for select marquee projects and not all projects receive the same treatment.

While the states are moving in the right direction, albeit at a cautious pace, they too have their set of challenges. With more than 30pc of country's population below poverty line, the state's priorities are often clear and may not fit with the priorities of some entrepreneurs and that sometimes limits opportunities. Although the governments acknowledge that opportunity creation will have a domino effect and could lead to long term economic upliftment, many short term priorities and needs often take precedence over long term goals.

"There are ample opportunities in small businesses in India and such opportunities have the potential to transform India in the future. For the government, it is important to realize that the goal of small business owners is to remain self-employed. Such people may not need financial assistance but they are definitely likely in need of regulatory, marketing and legal assistance in order to sustain themselves and grow," said Thakkar.

Log on to www.in.kpmg.com for a copy of the report.

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