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ENTREPRENEURIALSHIP DEVELOPMENT

Prof. J M Ovasdi

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Evolution of the concept


Entrepreneur a French word for an organizer of musical or other entertainments It was also used for military expeditions and civil engineering aspects In the 18th century the term was used in economic aspects also Richard Cantillon, an Irishman, living in France, introduced the term entrepreneur as his unique risk-bearing function in economics.
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Entrepreneur as a Risk-Bearer
Richard Cantillon defined entrepreneur as a agent who buys factorof productions at certain prices in order to combine them into a product with a view to selling it at uncertain prices in future. Uncertainty a risk which cannot be insured against and is incalculable A risk can be reduced through the insurance principle, where the distribution of outcome in a group of instances is known Uncertainty is the risk which cannot be calculated
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Entrepreneur as an Innovator
Organizer coordination of the factors of production, organization & supervision Innovator -- new product, new technology new market, new source of raw material, new process Inventor & innovator inventor is one who discovers new methods and new materials. Innovator utilizes inventions and discoveries in order to make new combination of products, services
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Characteristics of an entrepreneur
Risk-bearer Hard work Desire for high achievement Highly optimistic Independence Foresight Good organizer Good judge of persons Innovative Leadership
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Difference between an entrepreneur and a manager


Points Entrepreneur
To start a venture for personal gratification
Owner of the enterprise Assumes all risks & uncertainty of the business Though uncertain gets all the profit Change-agent, strategist

Manager
Provide her services to an entrepreneur
A servant of entrepreneur No risk except punishment for non-performance Fixed salary and bonus for exceptional services Executes the plans of the entrepreneur Professional qualifications necessary. Experience preferred
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Motive
Status Riskbearing Rewards Innovation

Qualifications Professional qualifications and


experience not necessary.
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Functions of an entrepreneur
Idea scanning and ideation Determination of the business objectives Product analysis and market research Determination of form of ownership/organization Promotional formalities for business set up Raising necessary funds Procuring machines and material Recruitment of workers Undertaking the business operations.
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Types of entrepreneurs
Innovating- new products/services, new markets Imitative -- duplicating Fabian least risk taker, follower of successful people Drone lack of adaptation to environmental changes Solo operators self with a few employees Active partners joint venture with active participation Inventors research & innovation Challengers Karsan Bhai, Gulshan Kumar Buyers who take over companies Life-timers family business extensions Intrapreneurs (from within) managers starting independent business ventures
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Difference between entrepreneur and intrapreneur


Difference Entrepreneur Intrapreneur

Dependency

Independent in his operations

Raising of funds Risk Operation

Dependent on the entrepreneur the owner Raises funds himself Funds are not raised by her Bears the complete risk Bears partial risk Operates from outside She operates from not an employee within the organization

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Entrepreneurship
What an entrepreneur does is entrepreneurship It is an attempt to create value through recognition of business opportunity, the management of risk-taking appropriate to the opportunity, and through the communicative and management skills to mobilize human, financial and material resources necessary to bring a project to fruition It is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or increase profit by production or distribution
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Entrepreneur & Entrepreneurship


Entrepreneur Person Organizer Innovator Risk-bearer Motivator Creator Visualizer Leader imitator Entrepreneur ship Process Organization Innovation Risk-bearing Motivation Creation Vision Leadership imitation
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GROWTH OF ENTREPRENEURSHIP IN INDIA


Prof. J M Ovasdi

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Pre-independence
Till about 1750, that is, prior to the Industrial Revolution India & China had over 40 % share of the world trade. Industrial revolution of Europe and North America killed the entrepreneurship of the rest of the world Indian textile, carpets, gems, spices were traded world-over Indian entrepreneurs catered to all the needs of the common man and the nobility The surplus was exported by traders
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British Rule & IR


Indian entrepreneurship suffered because of the decline of the Royal patronage East-India company rule they purchased raw material from India and after making cloth in England imported to India and other colonies The British rulers did not allow industries to be set up in India for fear of competition with British industries Daily need goods for the common man continued to be manufactured by the local artisans
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Other Factors
Imposition of heavy duties on the import of the Indian goods in England Mass-manufactured low priced goods killed Indian craftsmanship Indian Railways were built to help British trade The Indian nobility who were the patrons of Indian crafts became crazy about foreign goods Indian craftsmen failed to adapt to the changing tastes and needs of the people.
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Attempts at Revival of Entrepreneurship


Parsi community became the pioneers of entrepreneurship in India They set up a number of factories in and around Bombay to meet the needs of the British companies ship building, steel making, gunpowder in the second half of 19th century. Ranchodlal Chotalal set up a modern textile factory in Ahmedabad in 1861. Parsis set up a number of textile mills in Bombay In 1915 there were 96 textile mills 41 of Parsis, 23 by Hindus and 10 by Muslim entrepreneurs First major steel mill by set up by Jamshedji Tata in 1911. The dominant trading communities of Jains and Marwaries entered the scene after first World War.
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After the first World War


Managing Agencies --In 1936 Dwarkanath Tagore set up the first joint-stock company Carr, Tagore & Co. for managing the steam tugs/boats After the First WW and more so during the II WW the British government encouraged the Indian entrepreneurs to set up factories to fill up the gap in production by British companies At this stage the traditional trading communities of India emerged as the big entrepreneurs Birlas, Modi, Bajaj, Mafatlal, Kirloskar, Chettiars
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After Independence
After getting political independence, the Government of India focused on economic growth Government took a number of initiatives to put economy on the fast track Five Year Plans were designed and implemented for all round development in urban & rural sectors, big and small business Infrastructure like electric power, roads, railways, telephones etc needed immediate attention
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Development of SME
From third Five Year Plan (1962-67) special emphasis was accorded to develop small-scale industries Various incentives & concessions were given in the form of capital, technical know-how, markets, and land to potential entrepreneurs Special concessions were granted for setting up small industrial units in backward areas to remove the regional imbalances in development
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Institutional Support to SMEs


To facilitate the new entrepreneurs several institutions were set up like Directorate of Industries Financial Corporations Small-scale Industries Corporations Small Industries Service Institutes As a result of these initiatives the number of small-scale industries increased from 121,619 in 1966 to 190,727 in 1970 an increase of 17,000 units in four years
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Comments on the Trade and Industrial Policies from 1947 - 1991


Since exports were much lower than the demand of imports emphasis was laid on encouraging importsubstitution to save foreign exchange to develop entrepreneurship and technical skills of the workers Heavy industries were set up as Public Sector Undertakings (PSU) Technology was imported for setting up big and small industries Automatically SMEs emerged to feed the heavy industries However the quota-permit industrial policy was a mistake.
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Role of Entrepreneurs in Economic Development


Economic development means a process of upward change whereby the real per capita income of a country increases over a long period of time. What causes economic development The classical economists like Adam Smith, and David Ricardo the rate of capital formation was the most important factor of economic development save more and invest in production of goods & services It depends on the personal interest & initiative of an individual where to invest & earn profit & create wealth Ricardo identified 3 factors of production machinery, capital & labour. They had no though for entrepreneurship.

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The emergence of USA, Japan, and Russia as great economic powers in the 20th century was due to the spirit of entrepreneurship of small innovator investors who were the drivers of great economic development Most of the big businesses, world over had started as small enterprises In India, Gulshan Kumar revolutionized the audiocassette business with T-series, and Karsanbhai defeated the multinational HUL in detergent business by introducing Nirma Infosys was launched by six co-workers who sold the ornaments of their wives to raise Rs. 1 Lakh.
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Role of Entrepreneurship

There are certain barriers for entrepreneurs in underdeveloped regions Paucity of funds Lack of skilled labor Non-existence of minimum social and economic overheads Lack of infrastructural amenities electricity, roads and other means of communication In India, largest number of entrepreneurs have been imitators rather than innovators great scope for duplicate/unbranded goods produced by jugad methodology.
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Role of Entrepreneurship

Role of Entrepreneurship
Entrepreneurship promotes capital formation by mobilizing the idle saving of the public Provides immediate large-scale employment Promotes balanced regional development Helps reduce the concentration of economic power Stimulates the equitable distribution of wealth, income and even political power in the interest of the country Encourages effective resource mobilization of capital & skill which might otherwise remain unutilized and idle It includes backward & forward linkages which stimulate the process of economic development It promotes countrys export trade (40% in India)
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Reasons for Growth of Entrepreneurship


The Global Entrepreneurship Monitor report in 2007 observed high incidence of entrepreneurship throughout the world, particularly in China, India, Thailand. Industry structure post-capitalist society. Shift from capital intensive to knowledge intensive industry inspired by IT revolution. Ideas and not infrastructure are important Deregulation and Privatization China in 1980s, Russia, Eastern Europe and India in 1990s Growth of Services Sector- largest number of opportunities in this sector for entrepreneurs and jobs
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Reasons for Growth of Entrepreneurship


Government Incentives & Subsidies Entrepreneurial Education (EDP) universities and technical institutes Rajiv Gandhi Udyami Mitra Yojana (RGUMY) Increasing flow of Information Easier Access to Resources Return on Innovation IPR is a major boost to entrepreneurs willing to take risk High regards for Self-employment formerly government jobs were the first priority Acceptance of Ex- Entrepreneurs in jobs even after their failed ventures.
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Doing Business in India -- Some Issues


John Galbraith, a noted economist who served as the Ambassador of the US in India, had called India the chaos that works. Starting a business in India is not an easy task. Funds may be available but there are lot of hurdles to be crossed before the business starts functioning. India is not considered to be business-friendly Major issues involved are the following
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Doing Business in India -- Some Issues


Bureaucracy bureau is a French word meaning office and the Greek suffix kratos, means power or rule. So, bureaucracy refers to the rule of the office. Bureaucracy in India is very rule-minded. There are too many rules to be complied with for starting a business. Too many clearances to be obtained. Businessmen frequently use bribe and other methods to get the government clearances Corruption is a way of life, not only in bureaucracy and politics but in many other fields.
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Doing Business in India -- Some Issues


Tribe of Middle-men acting as consultants they help and also cheat the businessmen for getting licenses and loans. Grey market and Counterfeit Goods grey market is the flow of goods through unauthorized channels (smuggling) to evade taxes. It creates problems for the manufacturers and the customers. Counterfeit goods are a substandard copy of the original. Also known as piracy. Pirated/counterfeit music and film CDs/DVDs are more in demand than the original products. Social Capital personal relationship pehchan connection, with the powerful people is more important than the quality of the product.

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Doing Business in India -- Some Issues


The Doing Business report is published annually by the World Bank. About 178 countries are ranked and Indias rank if 120 (2008 report). For enforcing contracts Indias position is 177. the courts take too much time in deciding business related disputes Even for closing a business it is very difficult That is the reason for insufficient FDI in India. China gets 10 times more FDI than India.
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Why Start a Business


Dream come true Thrill of being your own boss Self esteem from job seeker to job giver No restraints on your innovative ideas Money is the most common reason for starting a business Exponential growth possible as against a timebound career Creating a successful business is an insurance cover and training opportunity for the next generation
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Disadvantages

You are alone You are the risk-bearer You cant blame others for bad decisions All losses are yours Work may not be satisfying Long hours at the establishment unlike employees Lack of success will affect self-esteem Difficult to exit from a failed business An employee may get a new jobs in a couple of months but starting a new business may take years.
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Entrepreneurial Characteristics & Skills


Most common characteristics of entrepreneurs across the world 1. Commitment and determination 2. leadership 3. Opportunity obsession 4. Tolerance of risk, ambiguity, and uncertainty 5. Creativity, self-reliance and ability to adapt 6. Motivation to excel and the skill to motivate subordinates to excel.
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Demographic and Cultural Backgrounds


1. 2. 3. 4. Offspring of self-employed parents Being fired from more than one job Being an immigrant or a child of immigrants Previous employment in a firm with more than 100 people 5. Being the eldest child in the family 6. Being a college graduate 7. Being a widow, single parent without economic support
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Entrepreneurial Skills
1. 2. 3. 4. 5. 6. 7. 8. Curiosity, Craziness, and Creativity Real-time strategy and decision making Comfort with change and chaos Teamwork Good judge of people Tolerance of imperfections Extremely efficient negotiator Good mastery of the basics of finance, accountancy, marketing, and communication skills
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Entrepreneurial Skills
9. Comfortable with life style changes 10.Willing to break/bend/stretch laws 11. Patience to start from the scratch 12. Prepared to make enemies 13. Comfortable with confrontations 14. Dealing with failure 15. Willingness to learn

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Types of Entrepreneurs
Classification based on the Timing of Venture Creation Early Starters with little or no full-time work experience. Normally the entrepreneur is from a business family. An extreme case of an early starter is Suhas Gopinath who listed his company Globals Inc, in the USA because Indian laws do not permit a minor to run a company. Experienced few years experience in family business or as employee for some years Narayan Murthy and five colleagues launched Infosys at the age of 35 years with practically no resources Mature Ex-CEOs, senior mangers taking VRS and starting their ventures Jagdish Khatter of MUL started his own venture, Ashok Soota and Subroto Bagchi quit Wipro to start Mindtreee, and B V R Subbu, the ex- CEO of Hyundai India, started his own venture by buying the Daewoo plant in India.
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Types of Entrepreneurs
Based on Socio-cultural Variables First-generation Entrepreneurs Dhirubhai Ambani and Narayan Murthy Entrepreneurs from Business Families few socio-ethnic family groups have dominated the business scene in India Parsee, Gujarati, Sindhi, Chettiyar. Tatas,Birlas, Wadias, Murugappas, and Singhanias are from these groups. Road-transport business is dominated by Punjabis, particularly Sikhs.
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Jagadish Khattar
Ex IAS and the CMD of Maruti Udyog Limited has launched his new venture Carnation, a network of multi-car sales and after sale service outlets. Carnation plans to pumps a whopping Rs1000 Cr for developing its business model. Carnation planning to focus on sales, service, lease and finance multi-branded cars. Also they are planning to sell value added products and accessories like batteries, tyres etc.
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Suhas Gopinath
Born in Bengaluru (1986), Suhas launched a web site called CoolHindustan.com at the age of 14, and incorporated his company in the USA, since Indian Laws do not permit minors to register a company, making him the world's youngest CEO at that time. Gopinath taught himself how to build websites and sold portals to bricks-and-mortar firms in the US. Achievements He has received awards from his home state, European Parliament and he has advised World Bank for the development of computer skills in Africa for generating employability in poor countries.

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Micro, Small & Medium Industries


Ministry of Agro and Rural Industries (Krishi Evam Gramin Udyog Mantralaya) and Ministry of Small Scale Industries (Laghu Udyog Mantralaya) have been merged into a single Ministry, namely, MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES (SUKSHMA LAGHU AUR MADHYAM UDYAM MANTRALAYA) since May 2007

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Micro, Small & Medium Enterprises - The Engine of inclusive growth & development
Worldwide, the micro small and medium enterprises (MSMEs) have been accepted as the engine of economic growth and for promoting equitable development. The major advantage of the sector is its employment potential at low capital cost. The labour intensity of the MSME sector is much higher than that of the large enterprises.
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Engines of Economic Development


The MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. In India too, the MSMEs play a pivotal role in the overall industrial economy of the country. In recent years the MSME sector has consistently registered higher growth rate compared to the overall industrial sector. With its agility and dynamism, the sector has shown admirable innovativeness and adaptability to survive the recent economic downturn and recession.
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MSME Importance
The MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. In India too, the MSMEs play a pivotal role in the overall industrial economy of the country. In recent years the MSME sector has consistently registered higher growth rate compared to the overall industrial sector. With its agility and dynamism, the sector has shown admirable innovativeness and adaptability to survive the recent economic downturn and recession.
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Importance of MSME
As per available statistics (4th Census of MSME Sector), this sector employs an estimated 59.7 million (about 6 crore) persons spread over 26.1 million (2.6 crore) enterprises. It is estimated that in terms of value, MSME sector accounts for about 45% of the manufacturing output and around 40% of the total export of the country.

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Definitions of MSMEs
Production A micro enterprise, where the investment in
plant and machinery does not exceed Rs 25 lakh A small enterprise, where the investment in plant and machinery is more than twenty five lakh rupees but does not exceed Rs. five crore or A medium enterprise, where the investment in plant and machinery is more than five crore rupees but does not exceed ten crore rupees
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Definitions of MSMEs
Services
In the case of the enterprises engaged in providing or rendering of services, as A micro enterprise, where the investment in equipment does not exceed ten lakh rupees; A small enterprise, where the investment in equipment is more than ten lakh rupees but does not exceed two crore rupees; or A medium enterprise, where the investment in equipment is more than two crore rupees but does not exceed five crore rupees
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Clarification regarding investment limits


For the removal of doubt, it is hereby clarified that in calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded.

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RAJIV GANDHI UDYAMI MITRA YOJANA


(A Scheme of Promotion and Handholding of Micro and Small Enterprises) The objective of Rajiv Gandhi Udyami Mitra Yojana (RGUMY) is to provide handholding support and assistance to the potential first generation entrepreneurs, who have already successfully completed EDP/SDP/ESDP or vocational training from ITIs, through the selected lead agencies i.e. 'Udyami Mitras', in the establishment and management of the new enterprise, in dealing with various procedural and legal hurdles and in completion of various formalities required for setting up and running of the enterprise.

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Background
World over, micro and small enterprises (MSEs) are recognized as an important/constituent of the national economies, contributing significantly to employment expansion and poverty alleviation. Recognizing the importance of micro and small enterprises, which constitute an important segment of Indian economy in terms of their contribution to countrys industrial production, exports, employment and creation of entrepreneurial base, the Central and State Governments have been implementing several schemes and programmes for promotion and development of these enterprises.
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The small scale industries in India, including the tiny or micro industries and service/business entities, collectively referred as micro and small enterprises (MSEs), have a long history of promoting inclusive, spatially widespread and employment-oriented economic growth. In terms of employment generation, this segment is next only to agriculture.
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EDP- Entrepreneur Development Program


Entrepreneurship development and training is one of the key elements for development and promotion of micro and small enterprises, particularly, the first generation entrepreneurs. Entrepreneurship Development Programmes (EDPs) of various durations are being organized on regular basis by a number of organizations e.g. national and state level Entrepreneurship Development Institutes (EDIs), Micro, Small and Medium Enterprises Development Institutes (MSMEDIs) [earlier known as Small Industries Service Institutes (SISIs)], national and state level Industrial Development Corporations, Banks and other training institutions/agencies in private and public sector etc., to create new entrepreneurs by cultivating their latent qualities of entrepreneurship and enlightening them on various aspects necessary for setting up micro and small enterprises.

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EDP- Entrepreneur Development Program


Besides, various Industrial Training Institutes (ITIs), other private training institutions are also organizing vocational training (VT) programmes, skill development programmes (SDPs) and entrepreneurship-cum-skill development programmes (ESDPs). However, there are still wide spread variations in the success rate, in terms of actual setting up and successful running of enterprises, by the EDP/SDP/ESDP trained entrepreneurs.
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EDP- Entrepreneur Development Program


It has been observed that entrepreneurs particularly new entrepreneurs, generally face difficulties in availing full benefits under available schemes of the Governments / financial institutions, completing and complying with various formalities and legal requirements under various laws/regulations. In selection of appropriate technology, tie-up with buyers and sellers etc. In order to bridge the gap between the aspirations of the potential entrepreneurs and the ground realties, there is a need to support and nurture the potential first generation as well as existing entrepreneurs by giving them handholding support, particularly during the initial stages of setting up and managing their enterprises.
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Objectives of Rajiv Gandhi Udyami Mitra Yojana (RGUMY)


1. To provide handholding support and assistance to the potential first generation entrepreneurs, who have already successfully completed or undergoing Entrepreneurship Development Training Programme (EDP) / Skill Development Training Programme (SDP)/ Entrepreneurship cum Skill Development Training Programme (ESDP) /Vocation Training Programmes (VT), through the selected lead agencies i.e. 'Udyami Mitras', in the establishment and management of the new enterprise, in dealing with various procedural and legal hurdles and in completion of various formalities required for setting up and running of the enterprise.

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Objectives
2. To provide information, support, guidance and assistance to first generation entrepreneurs as well as other existing entrepreneurs through an Udyami Helpline (a Call Centre for MSMEs), to guide them regarding various promotional schemes of the Government, procedural formalities required for setting up and running of the enterprise and help them in accessing Bank credit etc.
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Udyami Mitras
Eligibility Under RGUMY, financial assistance would be provided to the selected lead agencies i.e. Udyami Mitras for rendering assistance and handholding support to the potential first generation entrepreneurs. Following agencies/ organizations can be appointed as the lead agency i.e. Udyami Mitra: i. Existing national level Entrepreneurship Development Institutions (EDIs). ii. Micro, Small and Medium Enterprises Development Institutes (MSMEDIs)/ Branch MSMEDIs. iii. Central/ State Government public sector enterprises (PSEs) involved in promotion and development of MSEs e.g. National Small Industries Corporation (NSIC) and State Industrial Development Corporations etc.
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Udyami Mitras
iv. Selected State level EDIs and Entrepreneurship

Development Centers (EDCs) in public or private sectors; v. Khadi and Village Industries Commission (KVIC). vi. Special Purpose Vehicles (SPVs) set up for cluster development involved in entrepreneurship development; vii. Capable associations of MSEs/SSIs; viii. Other organizations/training institutions/NGOs etc. involved in entrepreneurship development/ skill development.

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Role and Responsibilities of Udyami Mitras


The selected lead agencies i.e. Udyami Mitras would be expected to render assistance and handholding support for following services: Networking, coordinating and follow up with various Government departments/ agencies/ organizations and regulatory agencies on the one hand and with support agencies like Banks/financial institutions, District Industries Centers (DICs), technology providers, infrastructure providers on the other hand, to help the first generation entrepreneurs in setting up their enterprise.
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Role and Responsibilities of Udyami Mitras Udyami Mitras are expected to help the first generation entrepreneurs in: a) Identification of suitable project/product/enterprise and preparation of bankable project report for the same b) Creation of the proprietorship firm/ partnership firm/ Company/ Society/ Self Help Group (SHG) etc; c) Filing of Memorandum (as prescribed under MSMED Act 2006);
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Role and Responsibilities of Udyami Mitras


d) Accessing bank loans, admissible capital subsidy/ assistance under various schemes of the Central /State Government and other agencies/organizations/financial institutions/ Banks etc. by networking with respective agencies e) Assistance and support in establishment of work shed/office; f) Sanction of Power load/connection; g) Selection of appropriate technology and installation of plant and machinery/office equipment etc;
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Role and Responsibilities of Udyami Mitras


h) obtaining various registrations/ licenses/

clearances / No Objection Certificates (NOCs) etc. from the concerned regulatory agencies/ Government departments/ local bodies/ Municipal authorities etc.; i) Allotment of Income Tax Permanent Account Number (PAN) and Service Tax/ Sales Tax/ VAT registration etc; j) Sanction of working capital loan from the banks; k) Arranging tie up with raw material suppliers;

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Role and Responsibilities of Udyami Mitras


l) Preparation and implementation of marketing strategy for the product/ service and market development; and m) Establishing linkage with a mentor for providing guidance in future n) Creation of web page and email identity; (ii) Once the enterprise has been successfully set up, the Udyami Mitras would also monitor and follow up on the functioning of the enterprise for a further period of minimum 6 months and provide help in overcoming various managerial, financial and operational problems.
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Setting up a Micro, Small and Medium Enterprise


The main steps involve in setting up a Micro, Small & Medium Enterprise are as below : (a) Project Selection (b) Technology and Machinery (c) Arranging Finance (d) Unit Development (e) Filing of Entrepreneurs Memorandum (f) Approvals (g) Clearances (h) Quality Certification
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The Swarnjayanti Gram Swarozgar Yojana (SGSY)


SGSY was launched as an integrated program
for self-employment of the rural poor with effect from 1 April 1999. The objective of the scheme is to bring the assisted poor families above the poverty line by organising them into Self Help Groups (SHGs) through the process of social mobilisation, their training and capacity building and provision of income generating assets through a mix of bank credit and government subsidy.
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Activity Clusters
The scheme emphasizes establishment of activity clusters through selection of key activities based on aptitude and skill of the people, availability of resources and market potentiality. The scheme adopts a process approach and attempts to build the capacities of the rural poor. It provides for involvement of NGOs/CBOs/Individuals/Banks and Self Help Promoting Institutions in nurturing and development of SHGs, including skill development.
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DRDA Revolving Fund


The scheme provides for the cost of social intermediation and skill development training based on the local requirement. Flexibility has been given to the District Rural Development Agencies (DRDAs)/States in the utilisation of funds for training, sanction of Revolving Fund, subsidy for economic activity based on the stage of development of groups. The focus of the program is on establishing a large number of micro-enterprises in rural areas based on the ability of the poor and potential of each area, both land-based and otherwise, for sustainable income generation.
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Capacity Building
Due emphasis is being laid on different components such as capacity building of the poor, skill development training, credit, training, technology transfer, marketing and infrastructure. The subsidy allowed under the SGSY is 30 per cent of the total project cost, subject to a ceiling of Rs.7,500 (for SC/STs and disabled persons subsidy limit is 50 per cent of the project cost subject to a ceiling of Rs.10,000). For Self-Help Groups (SHGs), subsidy would be 50 per cent of the project cost subject to a ceiling of Rs.1.25 lakh or per capita subsidy of Rs.10,000, whichever is less.

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Minor Irrigation Projects


There is no monetary ceiling on subsidy for minor irrigation projects for SHGs as well as individual swarozgaris. The SGSY has a special focus on the vulnerable groups among the rural poor. SC/STs account for at least 50 per cent, women 40 per cent and the persons with physical disability constitute 3 per cent of the Swarozgaries respectively.
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Relaxations
The SGSY seeks to promote multiple credits rather than a one-time credit injection. The SHGs may consist of 10-20 members and in case of minor irrigation, and in case of disabled persons and difficult areas, i.e., hilly, desert and sparsely populated areas; this number may be a minimum of five. Self Help Groups should also be drawn from the BPL list approved by the Gram Sabha. The SHGs broadly go through three stages of evolution such as group formation, capital formation through the revolving fund and skill development and taking up of economic activity for income generation.
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Limit on Key Activities


Selection could be made up to 10 key activities per block based on local resources, occupational skills of the people and availability of market so that the Swarozgaris can draw suitable incomes from their investment. Under SGSY each block should concentrate on 4-5 selected key activities and attend to all aspects of these activities in a cluster approach, so that swarozgaris can draw sustainable income from their investments.
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Conclusion
The scheme lays special emphasis on development of swarozgaris through well designed training courses tailored to the activities selected and the requirement of each swarozgari. SGSY is being implemented through the District Rural Development Agencies (DRDAs) , with active involvement of panchayati raj institutions, banks and NGOs. It is financed on 75:25 costsharing basis between the Centre and the states.

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Women Entrepreneurs
Traditionally, Indian women had their position restricted to the house-hold and lack of education and opportunities Abla nari Social stigma for working women. Limited career opportunities school teachers, nurses, clerks, receptionists etc. Empowerment of women through higher education, SHG, and institutional financial help have created room for women entrepreneurs.
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Setting up a new unit is a big challenge


The overriding reason for anyone to think of establishing a MSME unit can be summarised in one word - OPPORTUNITY. If one can see an opportunity to provide a product or service in a manner to generate sufficient surplus, then one way is to start up a MSME unit. This is all the more true if one believes in the maxim, "Small is Beautiful" Opportunities emerge out of ideas that one comes across by thinking about lives of friends and neighbours. This can generate ideas about products and services that can make things easier, and improve quality of life of people.
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Women Entrepreneurs
The GoI has defined women entrepreneurs based on women participation in equity and employment of a business enterprise Enterprise owned and controlled by women having a minimum financial interest of 51 % of the capital and giving at least 51 % employment generated in the enterprise to women Women Entrepreneurs are those who think of a business enterprise, initiate it, organize, combine the factors of production, operate the enterprise and undertake risks and handle economic uncertainty involved in running a business enterprise.
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Functions of Women Entrepreneurs


Frederick Harbison five functions 1. Exploration of the prospects of starting a new business enterprise 2. Undertaking risks of economic outcome uncertainty 3. Introduction of innovations or imitation of innovations 4. Coordination, administration and control 5. Supervision & leadership Internal assessment test profile of at least two women entrepreneurs
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Growth of Women Entrepreneurs


In India Women Entrepreneurs is a new phenomenon Traditionally women entry into business is traced to an extension of their kitchen activities 3 Ps Pickle, Powder and Pappad Push factor that compel women to take up their own business to tide over their economic difficulties and responsibilities Pull factors imply factors which encourage women to start an occupation or venture with an urge to do something, independently. With women professional education 3 Ps have become 3 Es Engineering, electronics, and energy. More Es -education, entertainment, event management

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Women Entrepreneurs
Examples Solar cookers in Gujarat Small foundaries in Maharashtra TV capacitors in Orissa Famous Indian Women Entrepreneurs Sumati Morarji Shipping Corporation Yamutai Kirloskar Mahila Udyog Neena Malhotra Exports Shahnaz Huaasain Beauty Clinics and Personal care products Kiran Mazumdar Shaw Bio-Technology
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Dr. Kiran Mazumdar Shaw


Entrepreneur Dr. Kiran Mazumdar-Shaw, Chairman & Managing Director of Biocon Ltd., who became India's richest woman in 2004 (an estimated Rs.2,100 crore US$480 million), was educated at the Bishop Cotton Girls School and Mount Carmel College in Bangalore. She founded Biocon India with a capital of Rs.10,000 in her garage in 1978 - the initial operation was to extract an enzyme from papaya. Her application for loans were turned down by banks then - on three counts biotechnology was then a new word, the company lacked assets, and (most importantly) women entrepreneurs were still a rarity. Today, her company is the biggest biopharmaceutical firm in the country.
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Ekta Kapoor
Ekta Kapoor, creative head of Balajji Telefilms, is the daughter of actor Jeetendra, and sister of actor Tushar Kapoor. She has been synonymous with the rage of soap operas on Indian TV, after her most famous venture 'Kyunki Saas Bhi Kabhi Bahu Thi', which started airing on STAR Plus in 2000. Ekta dominates Indian television with shows in multichannels. At the 6th Indian Telly Awards 2006, she bagged the Hall of Fame award for her contributions to Indian TV.
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Sunita Narain
Sunita Narain, an environmentalist and political activist as well as a major proponent of the Green concept of sustainable development, was awarded the Padma Shri by the Government of India in 2005. Narain, who has been with the India-based Centre for Science and Environment since 1982, is currently the director of the Centre, and the director of the Society for Environmental Communications, and publisher of the fortnightly magazine, 'Down to Earth'.
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Major constraints faced by Indian Women Entrepreneurs

a) Lack of confidence In general, women lack confidence in their strength and competence. The family members and the society are reluctant to stand beside their entrepreneurial growth. To a certain extent, this situation is changing among Indian women and yet to face a tremendous change to increase the rate of growth in entrepreneurship. b) Socio-cultural barriers Womens family and personal obligations are sometimes a great barrier for succeeding in business career. Only few women are able to manage both home and business efficiently, devoting enough time to perform all their responsibilities in priority.

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Constraints
c) Market-oriented risks Stiff competition in the

market and lack of mobility of women make the dependence of women entrepreneurs on middleman indispensable. Many business women find it difficult to capture the market and make their products popular. They are not fully aware of the changing market conditions and hence can effectively utilize the services of media and internet. d) Motivational factors Self motivation can be realized through a mind set for a successful business, attitude to take up risk and behavior towards the business society by shouldering the social responsibilities. Other factors are family support, Government policies, financial assistance from public and private institutions and also the environment suitable for women to establish business units.
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Constraints
e) Knowledge in Business Administration Women must be educated and trained constantly to acquire the skills and knowledge in all the functional areas of business management. This can facilitate women to excel in decision making process and develop a good business network. f) Awareness about the financial assistance Various institutions in the financial sector extend their maximum support in the form of incentives, loans, schemes etc. Even then every woman entrepreneur may not be aware of all the assistance provided by the institutions. So the sincere efforts taken towards women entrepreneurs may not reach the entrepreneurs in rural and backward areas.
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Overcoming Constraints
g) Exposure to the training programs - Training programs and workshops for every type of entrepreneur is available through the social and welfare associations, based on duration, skill and the purpose of the training program. Such programs are really useful to new, rural and young entrepreneurs who want to set up a small and medium scale unit on their own. h) Identifying the available resources Women are hesitant to find out the access to cater their needs in the financial and marketing areas. In spite of the mushrooming growth of associations, institutions, and the schemes from the government side, women are not enterprising and dynamic to optimize the resources in the form of reserves, assets mankind or business volunteers.
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Over coming Constraints


Highly educated, technically sound and professionally qualified women should be encouraged for managing their own business, rather than dependent on wage employment outlets. The unexplored talents of young women can be identified, trained and used for various types of industries to increase the productivity in the industrial sector. A desirable environment is necessary for every woman to inculcate entrepreneurial values and involve greatly in business dealings
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Emerging Business Opportunities for Women


Eco-friendly technology Bio-technology IT enabled enterprises Event Management Tourism Industry Telecommunication Plastic materials

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Emerging Business Opportunities for Women


Vermiculture Mineral water Sericulture Floriculture Herbal & health care Food, fruits & vegetable processing

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Women Empowerment for Sustainable Development


Empowering women entrepreneurs is essential for achieving the goals of sustainable development and the bottlenecks hindering their growth must be eradicated to entitle full participation in the business. Apart from training programs, Newsletters, mentoring, trade fairs and exhibitions also can be a source for entrepreneurial development.
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Empowerment for Sustainable Development


As a result, the desired outcomes of the business are quickly achieved and more of remunerative business opportunities are found. Henceforth, promoting entrepreneurship among women is certainly a short-cut to rapid economic growth and development. Let us try to eliminate all forms of gender discrimination and thus allow women to be an entrepreneur at par with men.
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Project Identification and Selection


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Ideation & Project


An entrepreneur chooses an idea, an opportunity to start her enterprise Business Environment scanning is done to make the choice like What are the unfulfilled needs of the customers How to fulfill their needs What are your strengths and weaknesses Are you confident of the support of your family, friends and any other support agency. Based on these factors select a project.
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What is a Project
The very foundation of an enterprise is a project It is a distinct mission to achieve and a clear termination point It is a set of activities involved in using resources to gain benefits. Every project has three basic attributes 1. A course of action definite plan 2. Specific objective what do you what to achieve 3. Definite time perspective Procedure project identification and project selection.
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Idea Generation is done through internal & external sources 1. Knowledge of potential customers 2. Watching emerging trends 3. Scope for good copying of existing products 4. Study magazines , journals 5. Success stories of known entrepreneurs, friends etc. 6. Visiting fairs and exhibitions 7. Meeting government agencies, Udhyami Mitras 8. Knowledge about government policy, concessions and incentives etc.
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Identification & Selection

After collecting data and information about various opportunities we have to make a short list of choices according to our strengths & weaknesses We have to list the requirement of financial investment and other resources Some projects may be very beneficial but require resources that are not easy to get. There may be technical problems Considering all the opportunities, and constraints the final selection is made. Then a project report is made. It is the most important step if we have to apply for a loan.
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Selection

Contents of a Project Report


A good project report should have the following contents 1. General Information bio-data of the single or multiple promoters; their specific capabilities and professional, technical qualifications, experience etc i) Industry profile in which the project will fall ii) Organizational structure of the enterprise iii) Product details product utility, product range, product design, advantages to be offered by the product over its substitutes
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Contents of a Project Report


Project Description i) Site Physical infrastructure Availability of raw material, skilled labor, utilities like power, water ii) pollution control requirements sewage system, sewage treatment plant requirements Iii) Communication system facilities available and required Transport facilities existing, expected
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Contents of a Project Report


Production process period of conversion of raw material into finished goods Machines & equipment complete list, cost & sources of supply Capacity of the plant and the number of shifts proposed Technology selected R & D proposed research & development activities proposed to be undertaken in future
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Market potential 1. Demand & supply position how the gap between the two will be filled up 2. Expected price of the production per unit Marketing Strategy arrangements for selling the products After-sales Service state the execution procedure Transportation what facilities are available or will be required
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Contents of Project Report

Contents of Project Report


Capital Costs and Sources of Finance estimates of capital items like land & buildings, plant, machinery, installation costs, preliminary expenses, margin for working capital The present probable sources of finance should be included in the project report Sources should indicate the owners funds together with funds raised to be raised from financial institutions and banks.
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Project Appraisal
Every industrial project involves risk Project appraisal is a process to reduce the risk Ex-ante analysis for proposed project Post-ante analysis is for the executed project Project appraisal is a cost & benefit analysis of different aspects of the project to adjudge its viability Economic, financial, technical, market, managerial and social aspects are analyzed Project appraisal is done by financial institutions to assess its credit worthiness before extending finance to a project. They also get it evaluated by other agencies Sometimes the scope and contents of the project are modified after the appraisal & evaluation
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Methods of Project Appraisal


1. Economic analysis requirement of raw material, level of utilization, anticipated sales, expenses and probable profits 2. Financial analysis most important exercise fixed & working capital 3. Market analysis no profit if goods are not sold. Methods used are management economics, demand forecasting though survey, sales experience, opinion poll, vicarious method selling the goods through dealers on test basis. Life Cycle Segmentation analysis introduction, growth, maturity, saturation, decline 4. Technical feasibility 5. Managerial competence

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Financing of Enterprise
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Need for Financial Planning


Production is the outcome of five factors 1. Land 2. Labour 3. Capital 4. Entrepreneurship 5. Organization These are mutually dependent on each other. Availability of these factors in right proportion is needed for success.
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Need for Financial Planning


Finance is the lubricant to the process of production. It is the life blood of enterprise. Whoever has the gold makes the rule. Make an assessment 1. How much money is needed 2. Where will it come from 3. When does the money need to be available in two forms fixed and working capital, short-term, long term (over five years)
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Entrepreneurial Finance
Entrepreneurs raise funds to start their business though various sources like internal & external Internal sources Self-generated funds that can be spared from the business, plus savings, property, investments, rents. Priority to internal resources External sources Help from family and friends Loans from banks /non-banking financial institutions (NBFC) Loans from State Financial Corporations
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Entrepreneurial Finance
RBI has identified lending to MSMEs as one of the priority sector advances MSMEs may get loans up to Rs 25 lakhs without collateral RBI has fixed time limits for dealing with a loan application from MSMEs The lender organization studies the business plan of the applicant and get it reviewed by experts. Series of meetings are held between the lender and the borrower before loans are granted.
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Government Initiatives for Promoting MSMEs


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MSMI MINISTRY
Ministry of Micro, Small and Medium Scale Industries is primarily responsible for promotion and development of SMEs in India, and has evolved several policies, institutional and support measures, spread all over the country, in order to enable them to meet their changing needs. Small Industries Development Bank of India (SIDBI) has developed various financing schemes.
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MSMI MINISTRY
Ministry of Science and Technology (DST, DBT, DSIR) has evolved several measures and programs for technological assistance and development and transfer of technologies for SMEs. Some of the economic ministries such as Ministry of Textiles, Department of Food Processing and Department of Handicrafts etc. have also recently announced initiatives for technical assistance in various firms
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New initiatives to promote MSMEs


Some of the measures and new initiatives to promote SMEs include: SME development fund A specialized stock exchange for SMEs Encouragement for patenting and ISO Certification SME venture capital fund National Commission for Small Industries (informal sectors) SME development bill Credit Rating Agency Promoting special venture capital companies and risk financing companies for SMEs Improve the working of credit guarantee and export promotion institutions
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New initiatives
Progressively reduce protection measures and simplify implementation policies and control mechanisms SME Development Centres at SIDBI and IIFT Considering liberalizing FDI in SMEs and encouraging their linkages with TNCs and large companies Promoting industrial growth centres/clusters, EOUs(export oriented units), district industry centres, business incubators and business parks Market assistance and export promotion National Small Industries Corporation Small Industries Development Organization Limited Liability Partnership Bill 2006
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Technology Support Initiatives


Proto-typing and product development centres Design, engineering and development centres Small industries and services institutes Tool rooms Specialized development centres with international assistance in areas such as electronics, toys, handicrafts, etc. Technology business incubators Software technology parks S&T Entrepreneurship Development Board Techno-preneur Promotion Program
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Technology Support Initiatives


Consultancy Development Program Tax incentives, fiscal incentives, custom duty exemptions, grants & other financing mechanisms In-house R&D recognition scheme for industry National Innovation Foundation Technology Development Board Technology, Information and Forecasting Assessment Council (TIFAC) Innovation centres, entrepreneurship development institutes
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Technology Support Initiatives


National Institutions for specific industries such as fashion design, packaging, glass and ceramics etc. Small Industries Information and Resource Centre Networks (SENET) S&T Parks Technical Consultancy Organizations (TCOs) Technology Up gradation Fund The Asia and Pacific Centre for Transfer of Technology
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National Manufacturing Competitiveness Council (NMCC)


NMCC has also recognized in its national strategy for manufacturing announced in March 2006, the need for ensuring the competitiveness of small scale sector as it would help in overall growth of manufacturing sector as also the national economy. The strategy report has identified the following important impediments, among others: Access to timely and adequate credit Technological obsolescence (old technology) Infrastructural bottlenecks (power, communication) Lack of R&D linkages no tie up Marketing constraints, disabling rules and regulations
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National Strategy for Manufacturing


The National Strategy for Manufacturing has recognized the need for a focused project on advance technology products and has recommended the constitution of a special group to study the potential for manufacture and export of such products. It has also recommended the establishment of technology parks around institutions of higher technological learning on the lines of those existing in USA. Another important recommendation relates to setting up a Global Technology Acquisition Fund to enable Indian industry to acquire very high technology intensive companies abroad. (National Manufacturing Competitiveness Council, 2006)
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National Strategy for Manufacturing


The strategy suggests a cluster approach for improving the manufacturing competence. New and innovative approach to cluster development should be adopted. Further, small scale sector should be encouraged as breeding ground of innovation and technology development where it becomes the technology sources for large companies. Towards this, government must incentivise technology development in SMEs to enhance their competitiveness.
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National Strategy for Manufacturing


A National Manufacturing Competitiveness Program (NMCP) is being developed which includes objectives to support SMEs. A Design Clinic approach is suggested to bring Indian manufacturing sector and design expertise on to a common platform and to provide expert advice and cost effective solution, resulting in continuous improvement and value addition for existing products. Emphasis is also laid down to enable SMEs to be competitive through quality management standards and quality technology tools. These are only some of the strategies among those suggested in the Report.

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NMCC Funds
NMCC seems to have prepared Rs. 1,000 crore National Manufacturing Competitiveness Program for small and medium enterprises jointly with Ministry of Small Scale Industries. This aims to benefit over 10,000 firms in more than 500 SME Clusters. The thrust of the plan is towards technology infusion. The areas for support include lean manufacturing, ICT, technology and quality up gradation, increasing number of tool rooms, encouraging patents and so on.
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NMCC Funds
National Knowledge Commission has also identified SMEs as a thrust sector for education, skills up-gradation, training and ICT encouragement. Various studies have shown that ICT and technology levels are higher in internationalized SMEs in sectors such as food processing, auto components, ICT, leather, to engineering, garments etc. compared to non-exporting or domestic SMEs.( Agarwal 2005, 1b)
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Private Sector Initiatives


There are a few national level associations and several state level associations for promotion of SMEs. Federation of Small and Medium Enterprises (FISME), Confederation of Indian Industry(CII), PHD Chamber of Commerce, Federation of Indian Chamber of Commerce and Industry (FICCI), and World Assembly of Small and Medium Enterprises (WASME), etc. have evolved various program towards technological capability building and enhancing competitiveness of SMEs. Public-Private Partnership (PPP) Projects are also being recently evolved for sustainable support to SMEs in some areas such as food processing and handicrafts. However, the expertise and capabilities to provide effective technology related services are generally limited.
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Academic and R&D Organizations


Some of the engineering and technical institutions such as IITs, National Institutes of Technology and CSIR Research Laboratories, are also providing R&D and technology related support facilities and services to the SMEs including training and skill development programs. However, access to these facilities are generally not easy, and often lack the business needs of entrepreneurs. There are very limited start-up enterprises based on technologies or intellectual property from academic and R&D institutions. Ministry of Small Industries and Development Commissioner, have a wide network of technical, design, training, pro-type development, testing etc., facilities all over the country spread up to district levels. But, these facilities need to be modernized and tuned to emerging needs.
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Foreign Tie Ups and FDI


Internationalization of SMEs usually refers to the SMEs engaged in international businesses, have developed cooperation, partnerships, linkages and networks with foreign companies and institutions. Imports and exports tend to enhance the efficiencies, capabilities, competitiveness and vision of SMEs. FDI is considered to be an important channel for internationalization, besides catalyzing technology flows and investments. Most countries are aiming at attracting larger FDI which poses challenges and provide opportunities to SMEs. The domestic policies therefore need to be finely tuned to take full advantage of FDI and international aid/support measures or loans. However, the SMEs need to be growth oriented and forward looking, with innovative capacities, for internationalization.
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A survey of over 8000 SMEs in Europe in 2003 revealed that internationalization spurs growth and competitiveness (http://ec.europa.eu). The foreign supply relationships are the most common forms of internationalization while exporting is the next and some establish foreign subsidies and branches. Access to know-how is a frequent motive for going abroad. The study has revealed that smaller countries with small domestic markets are more internationalized. Further the study point to three elements as crucial for developing holistic measures with regard to internationalization.
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SME Global Survey

Problems Current Issues


SMEs managers often have limited time and management skills. A policy measure should consider providing some practical tasks to support the manager, especially in the case of SMEs with low international experience. Studies indicate that SMEs often need specific, targeted support. Such customized support comprises, for instance, assistance in identifying an appropriate foreign business partner for a joint venture or collaboration. Moreover, recent studies indicate that SMEs awareness of support measures is low due to the measures traditional focus on export activities. The studies suggest that policy measures, in order to be effective, need to focus on the experience of the entrepreneur and on developing his/her qualifications in a broad sense.

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Internationalization is more than just exporting. Policy measures, whether general or companyspecific, need to encompass all the different approaches to internationalization and the support to include a wide range of international activities. Foreign partnerships, foreign investments and cross boarder clustering represent new viable ways to strengthen the international business strategies of SMEs. Such diverse international activities may integrate different business functions (i.e. R&D, production and marketing) and thus involve elements across the entire value chain.

Problems Current Issues

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Problems Current Issues


Most developing countries have adopted or are adopting a liberalized FDI regime in various sectors of development, though the degree of liberalization may vary. In case of SMEs, several countries have opened up to 100% FDI while in some it is restricted, say up to 24% in India, in general. Limited studies are available (UNCTAD 1998) related to FDI flows to SMEs, specially in developing countries. A study of technology financing through FDI, for SMEs in India and other select countries, (Agarwal, 2005) was carried out in 2004-05 at IIFT, based on the FDI approvals of the government.
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Problems Current Issues


This study indicated that FDI approvals for SMEs accounted for about 6.0% of total approvals while the amounts were about 2% of the total amount approval. One can infer that FDI approvals were mainly perhaps intended to internationalize markets and technologies rather than investments. The extent of amounts and the number of approvals vary from sector to sector.

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Discussions
A quick analysis of various studies and data indicates that SMEs are going through a transition phase and are generally restructuring their strategies and capabilities to remain competitive and grow in the emerging world trade environment. The government are also evolving policies, strategies and modes of implementation to encourage and support SMEs for their growth, capacity building and international competitiveness. The issues and strategies vary with the level of development and priorities in national economies.
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Discussions
Some of the countries such as Republic of Korea, Singapore and Taiwan have been able to adopt and implement new policies and measures to promote and support SMEs more successfully than many other countries. Innovation, technology, productivity and quality, though inter-related, are assuming greater significance for competitiveness in manufacturing and businesses. Foreign Direct Investments (FDI), networking and technical tie ups are being encouraged to facilitate access to newer technologies, strengthening technological and management capabilities, and access to market information. Creation of training and skill up gradation facilities, ICT applications, and sharing of risks in financing and development, are the thrust areas.

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Discussions
In India, effective implementation of policies and delivery of results to the satisfaction of the SMEs, remain much below than desired, though there are a large number of institutional mechanisms and support measures available and concerns shown by the government. There is a need to critically review the existing policies and mechanisms, to assess the constraints and gaps in delivering the desired outputs.
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Discussions
For example, there are overlapping agencies and programmes for development of technologies and technological assistance to the SMEs, but the SMEs continue to be weak in R&D, technology development, acquisition and induction of new technologies, productivity and quality among other factors. The technology support programmes are largely implemented from Delhi or the capitals of the states and the awareness about programmes and fiscal incentives available is limited among SMEs.
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Discussions.
Proposals of NMCC are praiseworthy, but the implementation mechanisms are not clear, and also the focused targets likely to be achieved. Hopefully these proposals will not be just an addition to the existing set of support measures, without effective monitoring and assessment mechanisms for the intended results. What is needed perhaps is a strong innovation & technology development policy with legal instruments for implementation, clearly meeting the needs of SMEs at different stages of their development.
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Discussions.
National Knowledge Commission has been generally active in evolving strategies for education and skill up gradation, and employment or entrepreneurship opportunities in ICT and other areas. Digital divide has been an area of concern but at the same time offers opportunities for SMEs. National Small Industries Commission is engaged in evolving policy instruments and mechanisms to utilize and support SMEs.
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Needs of MSMEs
Access to Latest Technologies --Most SMEs, need easier access to new or modern technologies abroad, technology support facilities and easier access to finance, including technology finance, besides marketing information and incentives for training and skills development. Differentiated policies and mechanisms are needed for SMEs in different sectors, stages of their development, nature of operations. For example, the technological needs of SMEs in traditional sectors such as food processing, leather textiles, toys etc. would be different than those in new and advanced technological areas such as microelectricals, pharma, precision instruments and so on.
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Needs of MSMEs
Strategies --There is a need to have short term and long term strategies for enhancing competitiveness of SMEs in one broad based strategy. The R&D expenditure and technological capacities of most of the SMEs would continue to be limited because of their inherent constraints in the resources and vision. The support structures should recognize this fact. However, the SMEs have enormous potential for innovations and incremental development, which need to be nurtured for production of new goods and services at competitive costs.
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Innovations --IT & Auto Parts


The IT and auto-component SMEs are examples of the successes through innovations. Such policies should lead to wider dispersal of economic benefits, capacity building, and utilization of resources, creating employment, etc. across the society. Economic, education, trade, technology and society need to be interdependent.

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The SMEs development project should recognize the needs of internationalizing companies or those who have the potential to internationalize, differently than those of domestic oriented companies or stagnating companies. The analysis of FDI data for SMEs in India tend to show that some SMEs are internationalizing or willing to internationalize through various types of collaborations through FDI route since the amounts involved are small.
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Innovations --IT & Auto Parts

Globalization and SMEs


In the context of WTO and other emerging trade mechanisms including Regional Trade Agreements(RTAs), Free Trade Agreements(FTAs) and bilateral or special economic cooperation agreements, the technological preparedness of SMEs need to be studied and support mechanisms evolved to overcome the gaps or constraints being faced or likely to be faced by them in the international businesses.
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Globalization and SMEs


In view of the wide variations in definitions of SMEs in various economies, the harmonization of definition of SMEs in India, with those in developed or advanced developing countries would facilitate international assistance for technology transfer, development and evolving measures for enhancing competitiveness in export markets. Preparedness of SMEs for WTO is still another issue. Innovations and trade agreements are likely to be the thrust areas in near future.
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IT, ITEs & BPO SMEs becoming Global January 2008 Survey report of Dun & Bradstreet

The small and medium enterprises (SMEs) in the Indian IT space are confident of achieving 65 percent growth in the next two years, surpassing 43 percent growth rate posted for the last two years (2006-7) The study titled 'Emerging IT SMEs of India 2007', provides insights into 244 IT companies involved in providing software and hardware products and services. All the companies profiled were in the below-Rs 100 million-turnover bracket during the previous fiscal year.
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IT, ITEs & BPO SMEs becoming Global The study notes that close to 53 percent of companies faced moderate problems in acquiring funding and 43 percent felt the proposed withdrawal of tax sops for the IT, ITEs (IT enabled call centres), BPO industry by 2009, will be significant in terms of deciding future industry growth.

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IT, Ites & BPO SMEs


Of the 437 locations, from which these 244 companies operate, Bangalore and Mumbai emerged as the top locations for operations. 18 percent and 17.6 percent of the profiled companies were operating from these two cities, respectively. The overseas presence of 28 percent of the sample audience encapsulated the changing trend in the SMEs' perspective, which are now willing to cross borders to pursue growth. Companies with Rs 10-50 million turnover accounted for almost 50 percent of the profiled companies.
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IT, Ites & BPO SMEs


IT SMEs in India are growing at a rate of about 30 percent YoY. This indicates that there is huge growth opportunity in the market and IT adoption is rapid within the SME space. The government seems to be the biggest adopter of technology and has been one of the key drivers for the growth of IT SMEs in India.

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Success of SMEs in India


It can be observed that by and large, SMEs in India met the expectations of the Government in this respect. SMEs developed in a manner, which made it possible for them to achieve the following objectives: High contribution to domestic production Significant export earnings Low investment requirements
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Success of SMEs in India


Operational flexibility Location wise mobility Low intensive imports Capacities to develop appropriate indigenous technology Import substitution Contribution towards defense production Technology oriented industries Competitiveness in domestic and export markets
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Limitations of SMEs
At the same time one has to understand the limitations of SMEs, which are: Low Capital base Concentration of functions in one / two persons Inadequate exposure to international environment Inability to face impact of WTO regime Inadequate contribution towards R & D Lack of professionalism In spite of these limitations, the SMEs have made significant contribution towards technological development and exports. SMEs have been established in almost all-major sectors in the Indian industry such as:
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Reach of SMEs
Food Processing Agricultural Inputs Chemicals & Pharmaceuticals Engineering; Electricals; Electronics Electro-medical equipment Textiles and Garments Leather and leather goods Meat products Bio-engineering Sports goods Plastics products Computer Software, etc.
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VENTURE FUNDS
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What Does Venture Capital Funds Mean? An investment fund that manages money from investors seeking private equity stakes in startup and small- and medium-size enterprises with strong growth potential. These investments are generally characterized as high-risk/high-return opportunities. Venture capital typically comes from institutional investors and high worth individuals, and is pooled together by dedicated investment firms. There are 157 trusts and institutional VCs registered with SEBI
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Venture Capital

Skills of VC Firms
Venture capital firms typically comprise small teams with technology backgrounds (scientists, researchers) or those with business training or deep industry experience. A core skill within VC is the ability to identify novel technologies that have the potential to generate high commercial returns at an early stage. VCs also take a role in managing entrepreneurial companies at an early stage, thus adding skills as well as capital (thereby differentiating VC from buy-out private equity, which typically invest in companies with proven revenue), and thereby potentially realizing much higher rates of returns.
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Why VC charges are high?


High Risk high Rates --Abnormally high rates of returns is the risk of losing all of one's investment in a given startup company. Pool Format --As a consequence, most venture capital investments are done in a pool format, where several investors combine their investments into one large fund that invests in many different startup companies. Spreading Risk --By investing in the pool format, the investors are spreading out their risk to many different investments versus taking the chance of putting all of their money in one start up firm.
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Success Rate of getting VC Funds


Young companies wishing to raise venture capital require a combination of extremely rare, yet sought after, qualities, such as innovative technology, potential for rapid growth, a well-developed business model, and an impressive management team. VCs typically reject 98% of opportunities presented to them, reflecting the rarity of this combination.
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