I would like to discuss the role of entrepreneurship in the Indian economy, and what needs to be done to so entrepreneurs can play an optimal role. I think that the entrepreneurs in India play a different role from thier counterparts in an advanced economy. For instance, entrepreneurs in an advanced economy enable early stage innovation, and we have seen this in limited measure in India.
FAILURE TO PLAY OPTIMAL ROLE
1. In India entrepreneurs are not pushing the technological envelope
2. They do not focus on different customer segments
3. They prefer to diversify into new business rather than expand
4. Small units in India lack the scale to acquire and use advanced technologies
5. Startup capital required by the entrepreneurs might be high, and not as easy to accessWhy is this so?In India entrepreneurs operate small units in domains that in the developed world would be dominated by large companies. For e.g. retail.
Several factors that encourage entrepreneurs to start sub-scale units and to avoid growth are
1. Govt. reservations for small units
2. Tax system
3. Inefficient use of capital
4. Acquiring premises instead of renting them
5. Purchase of equipment instead of leasing them
6. Production of goods & services instead of sourcing lower-cost options
7. Defects in the regulatory and legal systemsCountries like India have to get the big picture right and fix the pain points in the system. At this juncture India needs to reform the tax system, create a more favorable environment for entrepreneurs to think of large scale operations, and provide infrastructure that will support such growth.
The only way to discover what is and isn't critical is through a close, systematic study of the current situation, followed by recommendations to the government on what can be done to ensure we create a favourable environment.
FAILURE TO PLAY OPTIMAL ROLE
1. In India entrepreneurs are not pushing the technological envelope
2. They do not focus on different customer segments
3. They prefer to diversify into new business rather than expand
4. Small units in India lack the scale to acquire and use advanced technologies
5. Startup capital required by the entrepreneurs might be high, and not as easy to accessWhy is this so?In India entrepreneurs operate small units in domains that in the developed world would be dominated by large companies. For e.g. retail.
Several factors that encourage entrepreneurs to start sub-scale units and to avoid growth are
1. Govt. reservations for small units
2. Tax system
3. Inefficient use of capital
4. Acquiring premises instead of renting them
5. Purchase of equipment instead of leasing them
6. Production of goods & services instead of sourcing lower-cost options
7. Defects in the regulatory and legal systemsCountries like India have to get the big picture right and fix the pain points in the system. At this juncture India needs to reform the tax system, create a more favorable environment for entrepreneurs to think of large scale operations, and provide infrastructure that will support such growth.
The only way to discover what is and isn't critical is through a close, systematic study of the current situation, followed by recommendations to the government on what can be done to ensure we create a favourable environment.
No comments:
Post a Comment