i

A RESEARCH STUDY ON THE MANAGEMENT OF

RISK IN THE GROWTH OF MICRO AND SMALL

ENTERPRISE IN INDIA

(With special reference to Mumbai and Pune)

Thesis Submitted to the D. Y. Patil University,

School of Management

In partial fulfilment of the requirements for the award of the Degree of

DOCTOR OF PHILOSOPHY

in

BUSINESS MANAGEMENT

Submitted by

Mrs. Maria Sonia Justin Raj

Enrollment No: DYP-PHD146100002

Research Guide

Prof. Dr. R. GOPAL

DIRECTOR,

FORMER DEAN & HEAD OF DEPARTMENT

D.Y. PATIL UNIVERSITY,

SCHOOL OF MANAGEMENT,

Sector 4, Plot No. 10,

CBD Belapur,

Navi Mumbai – 400 614

April 2017

ii

A RESEARCH STUDY ON THE

MANAGEMENT OF RISK IN THE GROWTH

OF MICRO AND SMALL ENTERPRISE IN

INDIA

(With special reference to Mumbai and Pune)

iii

DECLARATION

I hereby declare that the thesis entitled “A RESEARCH STUDY ON

THE MANAGEMENT OF RISK IN THE GROWTH OF MICRO AND

SMALL ENTERPRISE IN INDIA, (with special reference to Mumbai

and Pune).” submitted for the Award of Doctor of Philosophy in Business

Management at the D.Y. Patil University, Navi Mumbai - School of

Management is my original work and the thesis has not formed the basis

for the award of any degree, associate ship, fellowship or any other

similar titles.

The material borrowed from other sources and incorporated in the

dissertation has been duly acknowledged.

I understand that I could be held responsible and accountable for

Plagiarism if any detected later on.

The research paper published based on the research conducted in the

course of the study are also based on the study and not borrowed from

other sources.

Place: Signature of the Candidate

Date:Navi Mumbai Mrs. MARIA SONIA JUSTIN RAJ

Enrollment No: DYP-PHD146100002

iv

CERTIFICATE

This is to certify that the thesis entitled “A Research Study on the

Management of Risk in the growth of Micro and Small Enterprise in

India, (with special reference to Mumbai and Pune).” submitted by

Mrs. Maria Sonia Justin Raj is a bonafide research work for the award of

the Doctor of Philosophy in Business Management at the D.Y.Patil

University School of Management in partial fulfilment of the

requirements for the award of the Degree of Doctor of Philosophy in

Business Management and that the thesis has not formed the basis for the

award previously of any degree, diploma, associate ship, fellowship or any

other similar title of any University or Institution.

Also certified that the thesis represents an independent work on the part

of the candidate.

Place:

Date:

Signature of the Signature of the Guide

Head of the department

v

ACKNOWLEDGEMENT

I am greatly indebted to the D.Y. Patil University School of Management

which has accepted me for the Doctoral Program and provided me with an

excellent opportunity to carry out this research work.

I am grateful to my Teacher, Guide and Mentor, Professor Dr. R. Gopal for

having guided me continuously at all times. This report would have been

incomplete without the unparalleled support of such a dedicated teacher and

guide.

I am grateful for all the entrepreneurs who, during the time of research gave

their precious time in responding to all the questions and sharing with me their

times of hardships and pleasant experiences of their journey in businesses.

I am grateful to my Husband Mr. Nikhil S Shah, my Parents and In-laws for

being highly encouraging and continually supporting me throughout the time

while I have been pursuing this study.

My heart fills with gratitude towards my Lord and Saviour Jesus Christ, the

author of my life, my only source of strength at all times who has enabled me

to be what I am today and will be through this journey of life.

Place:

Date: Signature of the student

vi

INDEX

CHAPTER No. PARTICULARS PAGE

NO.

Preliminary Cover Page i.

Title ii.

Declaration iii.

Certificate iv.

Acknowledgement v.

Index of the report vi.

List of Tables vii.

List of Figures viii.

List of Abbreviations ix.

Executive Summary x.

Chapter 1 Introduction 1

Chapter 2 Literature Review 14

Chapter 3

Objective, Hypothesis, Research

Methodology and Limitations of the

study

33

Chapter 4 History of Industrial Revolution in

India 41

Chapter 5 MSME’s After Globalization-

Understanding The Current Scenario 56

Chapter 6

Role Of Government Organizations For

Entrepreneurship Development In

Maharashtra

65

vii

Chapter 7 Role Of Non-Government

Organisations 78

Chapter 8 TAX structure in India 84

Chapter 9 India v/s Tax Free Heaven Countries for

Business 98

Chapter 10 MAKE IN INDIA 115

Chapter 11 Schemes Of The Government For The

Development Of MSMEs. 131

Chapter 12 Risk Factors faced Entrepreneurs 175

Chapter 13 Strategies Adopted By Individuals 185

Chapter 14 Data Analysis 196

Chapter 15 Findings, Conclusion and Suggestions 222

Chapter 16 Recommendations 234

Chapter 17 Future Scope of the Study 237

ANNEXURE

Annexe I Bibliography 239

Annexe II Webliography 243

Annexe III Questionnaire 246

Annexe IV Statistical tables of SPSS 254

viii

LIST OF TABLES

Table No. Particulars Page No.

Table 12.1 Reimbursements-Credit Rating Scheme 152

Table 12.2 Assistance against the security -Scheme of Bill

Discounting 158

Table 12.3 Categories of beneficiaries under PMEGP

Scheme 165

Table 15.01 Sample size structure as per Education of the

entrepreneur 197

Table 15.02 Sample size structure as per Age of the

entrepreneur 197

Table 15.03 Sample size structure as per Industry of the

entrepreneur 197

Table 15.04 Reliability test 198

Table 15.05 Percentage of Respondents : Age 199

Table 15.06 Percentage of Respondents : Education

Qualification 199

Table 15.07 Percentage of Respondents : Type of Industry 200

Table 15.08 Relation between Age and the Kind of Risk

Faced 201

Table 15.09 Pearson Chi-Square Tests 203

Table 15.10 Relation between Education Qualifications of

the Entrepreneur by Factors of Risks 203

ix

Table 15.11 Pearson Chi-Square Tests 205

Table 15.12 Relation Between The Type Of Industry And

Factors Of Risks 206

Table 15.13 Pearson Chi-Square Tests 207

Table 15.14 Awareness of the Government Policies by the

Age of the Entrepreneurs 208

Table 15.15 Pearson Chi-Square Tests 209

Table 15.16 Awareness of The Government Policies With

Respect To The Education Qualification 209

Table 15.17 Pearson Chi-Square Tests 210

Table 15.18 Awareness of the Government Policies with

Respect To The Type of Industry 211

Table 15.19 Pearson Chi-Square Tests 212

Table 15.20 Level of Assistance received by Age of the

Entrepreneur 212

Table 15.21 Pearson Chi-Square Tests 213

Table 15.22 Level of Assistance received by the

qualification of the Entrepreneur 214

Table 15.23 Pearson Chi-Square Tests 214

Table 15.24 Level of Assistance received by the type of

Industry of the Entrepreneur 215

Table 15.25 Pearson Chi-Square Tests 216

Table 15.26 Expectation of Entrepreneurs by age 217

x

Table 15.27 Pearson Chi-Square Tests 217

Table 15.28 Expectation of Entrepreneurs by Education

Qualification 218

Table 15.29 Pearson Chi-Square Tests 219

Table 15.30 Expectation of Entrepreneurs by the type of

Industry 220

Table 15.31 Pearson Chi-Square Tests 220

xi

LIST OF FIGURES

Table No. Particulars Page No.

Figure 1.1 Population map of India 2016 2

Figure 1.2 Product range of MSME‟s 4

Figure 1.3 Cost breakup of Manufacturing and

Service MSME 5

Figure 6.1 Registration of an MSME 67

Figure 6.2 Pre-commissioning stage-approval of

setting up a plant 68

Figure 6.3 Post production Approval 69

xii

LIST OF ABBREVIATONS

AMC Assistance for Marketing Centre

ATI Assistance to Training Institutions

AVP Adivasi Vikas Prakalp

CDP Cluster Development Programme

CENVAT Central Value Added Tax

CGT Capital Gains Tax

CIZ Central Intelligence Zone/Agency

CRM Customer Relationship Management

DYPUSM D. Y. Patil University School of Management

DC-MSME Division Schemes Development Commissioner

Ministry of Micro, Small & Medium Enterprises

DDD Dairy Development Department

DPI Development of Production Infrastructure

EDPs Entrepreneurship Development Programmes

FBT Fringe Benefit Tax

GDP Gross Domestic Product

GOI Government of India

GST Goods and service tax

HIDA Overseas Human Resource and Industry

Development Association

xiii

HNWI High Net Worth Individuals

IBC International Business Companies

ICT Information & Communication Technology

IDBI Industrial Development Bank of India.

IFCI Industrial Financial Corporation of India

IGMTP Indo-German Manager Training Programme

IPR Intellectual Property Rights

IRAS Inland Revenue Authority of Singapore

IRDP Integrated Rural Development Programme.

JBY Janshree BimaYojana

KSY Krishi Saptak Yojana

KVIC Khadi and Village Industries Commission

LMC Lean Manufacturing Competitiveness

MAIDC Maharashtra Agro Industries Development

Corporation Ltd

MAVIM Mahila AartikVikasMahamandal

MCED Maharashtra Centre for Entrepreneurship

Development

MDA Market Development Assistance

MFDC Maharashtra Fisheries Development Corporation

MFI Microfinance Institution

xiv

MIDC Maharashtra Industrial Development Corporation

MII Make in India

MRCP Maharashtra Rural Credit Project

MSDE Ministry of Skill Development & Entrepreneurship

MSE Micro and small enterprises

MSFC Maharashtra State Finance Corporation

MSKVIB Maharashtra State Khadi & Village Industries

Board

MSME Micro, Small And Medium Enterprises

MSNY Mahila Swavalambban NidhiYojana:

MSSIDC Maharashtra Small Scale Industries Development

Corporation.

NABARD National Bank for Agricultural and Rural

Development

NGO Non-Government Organization

NIMZ National Investment and Manufacturing Zone

NMCP National Manufacturing Competitiveness

Programme

NSIC National Small Industries Corporation Limited

NSQF The National Skill Qualification Framework

OECD Organisation for Economic Co-operation and

Development

xv

PICS Productivity and Innovation Credit Scheme

PMEGP Prime Minister Employment Generation

Programme

PMRY Prime Minister Rojgar Yojana

PPP Purchasing Power Parity

RBI Reserve Bank of India

REMOT Rejuvenation, Modernization and Technology

Upgradation

RISC Rural Industry Service Centre

RMSY Ramai Mahila SakshamikaranYojana

RRB Regional Rural Banks

RRC Research and Resource Centre.

RSVY RashtriyaSwayamVikasYojana

SEWA Self Employed Women‟s‟ Association

SEZ Special Economic Zones (SEZs).

SGSY Swarnajayanti Gram Swarojgar Yojana

SHG Self Help Group

SICOM State Industrial and Investment Corporation of

Maharashtra

SIDBI Small Industries Development Bank of India

S-IWEP Swayamsiddha- Integrated Women Empowerment

Programme

xvi

SME Small and medium-sized enterprises

SMME Small, Medium & Micro Enterprises

STT Securities Transaction Tax

SUTE Start Up tax Exemption Scheme

VAT Value Added Tax

VC Venture Capital

WMS Welfare Measures Scheme

WTC World Trade Centre

WVI World Vision India,

YPS Yerala Projects Society

xvii

EXECUTIVE SUMMARY

The MSME-Micro, Small and Medium Enterprises, a branch of the Government

of India, is the apex body for the formulation and administration of rules,

regulations and laws relating to micro, small and medium enterprises in India.

Shri Kalraj Mishra is the current Minister of Micro, Small and Medium

Enterprises. The MSMEs are the backbone of the Indian manufacturing sector and

have become very important for economic growth in the nation. It is valued that

the MSMEs accounts for almost 90 % of the industrial units and 40% of value

addition in the manufacturing sector. MSME‟s plays a vital role in the growth of

GDP in the economy as it makes employment opportunities at low capital cost.

As per the ministry of MSME, there are around 26.1 million enterprises and these

sector have a share of 45% in the manufacturing output and also hold 8% of inputs

in the Gross Domestic Product (GDP).These sectors contribute around 40% of all

exports and give employment to near 59.7% million people.

This report revolves around the concept of Risks faced by entrepreneurs, the

factors that enable the growth of MSME‟s and the strategies adopted by

entrepreneurs to mitigate risk. Risk is universal and is accepted universally in all

walks of life. It is more so in the business sectors, particularly in Small and

Medium Enterprises (SMEs). The meaning of the word “Risk” may be drawn to

the Latin word Rescum, which means Risk at Sea. Risk in broad terms can be

defined, “as any issue that can impact the objectives of a business unit, be it

financial, service or commercial.” Risk Management is a never ending process that

can help improve the operations, arrange resources, ensure regulatory agreement,

achieve performance target, increase financial stability and ultimately prevent

loss/damage to the unit. Risk Management plays a crucial role in protecting its

assets and resources and guaranteeing that risks are reduced to a greater level. The

principle of risk management is to reduce the risks to a reasonable and manageable

extent. Every business entity needs healthy risk management systems but the

SMEs need much more than that as they may not have the ability to manage and

control risks due to their size and several other limitations.

xviii

In-order to study in detail about the factors of growth in the Micro, Small and

medium enterprises, an in-depth study about the role of Government and non-

government organisations have been conducted along with a detailed secondary

research on the Make In India and its effects on the economy. A thorough study on

the Tax structure in India v/s the tax structure in Tax Haven countries have been

included in order to understand a comparative analysis of the kind of money/funds

outflow experienced by the entrepreneurs in the country. For long, entrepreneurs

have been the pioneers of models, systems, products and processes in their

respective fields. Taking risks to make decisions is a daily part of the toil an

entrepreneur goes through. Entrepreneurship can have a diverse impact on the

economy of a country, mainly through important innovations entering the

marketplace, leading to newer products or manufacturing processes which

eventually increase efficiency through attracting competition into the market. Such

is the value of entrepreneurs to a nation, they are considered national assets that

need to be refined, motivated and rewarded in order to boost the economic

activity, Hence the kinds of risks and the strategies adapted by the entrepreneurs in

order to mitigate the risks faced by them has been included in the study.

Through the Make In India initiative in India, there are several steps taken by the

government to systematically create the perfect stage for the setup. The

government has primarily targeted to boost the infrastructure facilities available in

India by increasing the economic growth at a tremendous rate and improving the

quality of life for the Indian citizens by enabling both an industrial and urban

infrastructure development.

This research study touches upon four major risks faced by an entrepreneur,

namely, Family support, Finance/Funds, Business/Location, Government (Rules

and policies).

This research identifies crucial factors influencing the risks faced by the

entrepreneurs and tries to link the Age, Demographics, Qualification and the

industry type of the entrepreneurs and its effect on the levels of risks faced by

them. The research also touches upon the strategies and ways adopted by the

xix

entrepreneurs in order to fight the challenges faced by them in the growth of their

enterprise.

The objectives of this research report is to study the nature and dynamics of

MSME‟s in India, to analyze the impact of demographic factors on the level of

risks faced by the MSME‟s in India, to understand the levels of risks involved in

the formation of MSME‟s in India, to understand the steps/strategies adopted by

the firms to mitigate the risks, to analyse the factors of gaps in between the

government and the entrepreneurs, to give suggestions to entrepreneurs for the

improvement of relations between entrepreneurs and the government.

It aims at throwing light in the areas of issues and risks that the entrepreneurs feels

most while or before starting the enterprise. This research bring in-depth issues

that the entrepreneur faces and steps or approaches that can be taken by the

government in-order to make sure that the nation genuinely feels the support of the

government by ways of training modules, funds and subsidies that can be given to

the entrepreneur.

For the purpose of this research, data has been collected from specific cities in

Maharashtra namely, Mumbai and Pune. A detailed literature review was

conducted from all the available material as a basis for secondary data. The

collection of Primary Data was done by means of Questionnaire to each

entrepreneur in the Manufacturing, IT and Service Industry. The Secondary data

was collected from the vast number of past research papers, National and

international journals on entrepreneurship, books and the reports that are published

based on similar topic. Two major cities in India were chosen namely Mumbai and

Pune, being the commercial hubs of the nation. The city of Mumbai is chosen

since it is the trade capital city of the country and Pune as a representative of a fast

developing two tier cities in business in India.The study brought to light that there

are many business entities that are unregistered in the region on Mumbai and Pune

due to various reasons like Taxes, Government policies and tedious

Documentation procedures. In order to carry out the study effectively, a

questionnaire was designed so as to conduct the research and it was the instrument

xx

of the survey. There was one set of questionnaire that was used for collecting data

from the Entrepreneurs.

The statistical analysis was done on a majority of male entrepreneurs with 54% of

entrepreneurs in the age group of 25-35 years, 23% of entrepreneurs in the age

group of 36-45 years and 22% entrepreneurs in the age group of 46 and above,

with 13% of the entrepreneurs interviewed having completed school as their

qualification, 17% of entrepreneurs having completed junior college, 11% of

entrepreneurs having dropped out of degree/graduation and the rest 56% of

entrepreneurs being post graduates. 19% of entrepreneurs from the field of

manufacturing, 35% from service, 24% from information technology (IT) and

another 20% from other which include real estate, pharmaceuticals and health and

hospitals.

It is found from the analysis that most of the entrepreneurs have good support

from their families in terms of moving from a job to a self-owned business, it was

also known that some entrepreneurs have faced issues from families as reluctance

from the family in moving from a job to an enterprise, this is keeping in mind the

risks and issues faced by the entrepreneurs in terms of entrepreneurship. It was

also noticed that most entrepreneurs faced problems of difficult loan procedures

followed by the no availability of a capitalist or a funder. As a solution, most

entrepreneurs depended on family contributions and friends for their source of

funds. As expectations from the government, it was seen that the easy Licensing

was the highest followed by less number of documentations, followed by easy

document renewals, and the least being single window clearance. The analysis

revealed the ways they chose to overcome the problems related to government

policies, almost all the groups said that they were unregistered and some others

mentioned that they hit the wall everywhere and finally done the registration and

other formalities through agents. Almost all the entrepreneurs wanted all the four

factors on an approximate level namely, easy licensing, easy renewals, single

window clearances and less number of documentations. This shows there is a high

need for the government to realize the gaps in the registration and the

entrepreneurial structure of the country.

xxi

The study recommends that there is a requirement of a „pro-active Non-

Government or Government institutions‟ wherein the existing entrepreneurial

divisions need to move out of the old ways of government offices and have

computerized and fast ways of brining solutions to the entrepreneurs personally.

The decisions made by the top level ministry needs to be clearly channelized and

the order of implementing the policies needs to be put across to them so as to

enable a hassle free execution plan for the entrepreneurs. The registration

processed needs to be simplified, with clear information on documentations that

are needed for starting an enterprise in every field, policies and rules have to be

simplified and taxes reduced. Another need of the hour is public friendly

„Financial Institutions‟, which are open to clear doubts and queries relating to

businesses of the public at large, the research clearly shows that the existing

bodies have unfriendly rules and policies and hence the entrepreneurs make their

own ways in finding funds, hence there has to be an increase in the financial

institutions and capital funding agencies and government bodies in the country.

There has to be more accessibility of entrepreneurs towards the same. Easy loan

availability and tax exemptions have to be incorporated in the working structure of

the country; these factors will surely help in building the entrepreneurial

development of the country. Yet another issue that stands as a threat on the nation

is the rate of unemployment and the fastest way to tab it is Skill Development and

Empowerment. There has to be creation of specific funds located for skill

development, the HRD ministry needs to oversee to make sure that the younger

minds in the country are challenged to think beyond their capacities in terms of

idea generation and enterprise development. The government has to see the

education sector as a powerful tool to push the spirit and passion of

entrepreneurship and this can be majorly done with tie-ups with corporate and

educational institutes, thus building a space and developmental workshops with

personalized handholding to those students who show a passion to begin an

enterprise.

The government needs to work towards simple policies, tax exemptions, easy

loans availability, easy licensing and skill development initiatives and thus will be

a rise of a new and vibrant India with skill, expertise and employment generation

xxii

everywhere all across the nation, only then will the nation see a new light towards

the equality in regional development of the country.

1

CHAPTER 1

INTRODUCTION

1.1 MSME in India

1.2 Objectives of MSME

1.3 Characteristics of MSME

1.4 Products under MSME sector

1.5 MSME contribution to nation building

1.6 About the ministry MSME

1.7 The organizational setup of the MSME

2

CHAPTER 1

INTRODUCTION

INDIA known as one of the oldest civilizations in the world and has the reputation of

being one of the most populated countries in the world. Rich in tradition, India is

knows as a conglomerate of a long history of being one of the oldest cultures on the

earth. Being one of the world‟s largest and the fasters economies, which in itself

means everything in India has to be large-scaled in order to accommodate the vastness

in the culture, diversity and also population. It is projected for India to be the world‟s

third largest economy by 2030 in terms of the Purchasing power (PPP).

(Not to Scale)

Fig 1.1 Source :www.indiaonlinepages.com/population/population-map-of-india.html

India is the 19th largest exporter and the 10th largest Importer in the world, in the year

2011-12, the foreign trade of the nation grew to be an impressive 30.6% to reach

$792.3 billion. According to the Central Intelligence Agency (CIZ) world fact book,

India is 11th in the world in terms of nominal factory output. Through it all, over the

last 5 decades, the macro and small scale segment has acquired a prominent place in

3

the socio economic development of the country. This segment plays a vital role in

spreading the benefits of economic growth among the masses by drawing surplus

work force from the primary sector to productive non-farm employment, including

manufacturing and service business activities. The small scale and medium enterprises

are an important component of the Indian economic system due to their employment

generating potential, healthy contribution to domestic market and also exports.But that

is not enough, the economy is in need of more entrepreneurs to move into enterprise

formulation which would also increase the employment opportunities for the large

unskilled mass that the nation has. The past decade has seen a sudden boom in the

formation of enterprises, start-ups new budding businesses have seen a new flight in

the nation. The young blood has taken up the task of changing the corporate look and

is moving into a much friendlier and free environment to work with and work for.

Moreover, a new fresh breath of air with the „Make in India‟ initiative by the

government of India has brought in new interests among the citizens as the

government takes keen interest in the building a stronger and much energetic

backbone of the nation with a new spirit of bussing entrepreneurial spirit in the young

and old alike. But there still lies a large gap between the people and the government.

This research project, ‘A RESEARCH STUDY ON THE MANAGEMENT OF RISK IN

THE GROWTH OF MICRO AND SMALL ENTERPRISE IN INDIA (with special

reference to Mumbai and Pune)’aims at throwing light in the areas of issues and risks

that the entrepreneurs feels most while or before starting the enterprise. This research

bring in-depth issues that the entrepreneur faces and steps or approaches that can be

taken by the government in-order to make sure that the nation genuinely feels the

support of the government by ways of training modules, funds and subsidies that can

be given to the entrepreneur.

The MSME‟s at a glance document by the MSME department of the Government of

India (MSME-GOI) stated that the MSME sector has emerged as a highly vibrant and

dynamic sector of the Indian Economy over the last five decades, this is the sector

responsible for the development and the growth of the economy by means of its

service, products and the trade. it not only gives employment opportunities to the vast

youth resource of the nation but also works towards the development for the backward

4

and rural areas of the Nation by means of business and logistical operations in the

interiors of the India, thereby reducing regional imbalances, and assuring more

balanced supply or resources and wealth throughout. The MSME works

complementary to large industries, thus contributing enormously to the development

and the growth of the nation. The sector consists of 36 million units which has a fast

growth rate annually, provides employment to nearly 80 million individuals. The

MSME sector through more than 6,000 products contributes about 8% of GDP,

through which this sector has a potential to create extensive growth in the country and

canbe a major partner in the process of the country‟s inclusive growth in the next 5

years.

MSME Share by Sectors:

Fig 1.2 :Source :Annual Report MSME, Year 2013-14

MSME‟s are small sized entities that are explained based on their investment size.

They mainly contribute to employment export, output in the economy. They perform a

role in the economy by providing employment opportunities to skilled and unskilled

people. As per the report of the ministry of MSME‟s this sector employs over 80

million people.

5

Micro, small and medium enterprises are defined based on their investment in

plant and machinery (for manufacturing enterprises) and on equipment for the

enterprises providing services as stated below:

Year 2015-16

Fig 1.3 :Source :http://aima-msme.in/msme-schemes/msme-ministry-scheme/

1. Micro enterprise is an enterprise wherein investment in assets does not go beyond Rs

25 lakh.

2. Small enterprise is an enterprise wherein the investment in assets is more than Rs 25

lakh but it does not go beyond Rs 5 cr.

3. Medium enterprise is an enterprise wherein the investment in assets is more than Rs 5

Cr but does not go beyond Rs 10 cr.

Enterprises engaged in providing or rendering service are as follows:

1. Micro enterprises are those wherein the investment in recruitment does not go beyond

Rs 10 lakh.

2. Small enterprises are those wherein the investment in recruitment is more than Rs 10

lakh but does not go beyond Rs 10 cr.

3. Medium enterprises are those wherein the investment in recruitment is more than Rs 2

Cr but does not go beyond Rs 5 cr.

6

1.1MSME IN INDIA –

Currently MSME‟s in India consist of SSI(Small Scale Industry),SSE(Small Scale

Enterprise), tiny enterprises, SSSBE(Small Scale Service Business Enterprises) and

medium size enterprises. The main focus is on manufacturing sectors like textile, auto

ancillary and engineering industries. Approximately 300 items are reserved for

production only in MSME sectors. Many countries around the world follow a mix of

many criteria to define MSME. They account for 99.7% of all enterprises.

1.2 OBJECTIVES OF MSME’S:

As per the Ministry of MSME, " Imparting greater vitality and growth impetus to the

small, tiny and village enterprises in terms of output, employment and exports and

instilling a competitive culture based on heightened technology awareness." is the

aim and motto of the MSME.

The Objectives of MSME‟s include:

Huge emphasis on domestic production

Operational flexibility

Less intensive imports

Technology- based industry

Competitiveness in export market

Low investment requirements

Capacity to develop appropriate technology

1.3 CHARACTERISTICS OF MSME

Heterogeneity of sectors: The MSME sectors are considered to be heterogeneous in

terms of their size, location, variety of products, people employed.

Industry-wise distribution of enterprises: Out of the industries classified under

MSME sector the top positions were held by the industries engaged in

manufacturing of food products, wearing apparels and textiles sector.

7

Ownership of enterprises- Social group-wise: Analysis in terms of social group

states that enterprises owned by OBC‟s shows high no of units as compared to

enterprises owned by SC and ST.

Banks concerns in lending to MSME: Banks face certain concerns while lending to

smaller enterprise because credit information availability is not as easy as it is for

larger firms and moreover it is not cost effective on part of the lender to collect

information.

Priority sector lending and MSME: If a bank does not make any lending under

MSME sector, it can still achieve all priority sector stipulations by lending to other

priority sector segments.

1.4 PRODUCTS UNDER MSME SECTOR

Food and Allied Industries : pickles, bread, mustard oil and ground nut oil

Wood and Wood Products : wooden furniture and fixtures

Paper Products: books and registers

Chemical Products: wax candles, safety matches, fireworks and agarbatties

Glass and Ceramics: glass bangles

Other Products: stainless steel utensils, domestic utensils-aluminum, rolling

shutters

1.5 MSME’S CONTRIBUTION TO NATION BUILDING

MSME sector plays a very important role in the Indian economy. This sector is critical

in meeting the objectives of reducing poverty, generate employment facilities. The

sector has got a very consistent growth since last five years but it has been resulted

into inefficient resource utilization due to constrained environment. The term MSME

is used to describe small businesses in the private sector. MSME not only acts as a

catalyst in the growth of the economy but also help feeding large local and

international chains as well as suppliers, manufacturers and retailers. Multinational

companies have also played an important role in the establishment ofMSMEs and it

has an essential role for the growth of the nation‟s GDP as it provides employment

opportunities.

8

Emergence of MSME was based on Gandhian model. Despite of various protection

and policy measures MSME has been always remained small and technologically

backward. MSME‟s in India manufacture more than 6000 products ranging from

traditional to high technology items.

It is a fact that Micro Small and Medium enterprises play a major role in the

development of most economies. This gets reflected in the form of increasing number

of employment opportunities and rising proportion in product manufacturing, exports,

technical innovation and promotion of entrepreneurial skills. After agriculture MSME

sector is the second largest manpower employer in India. In MSME the small scale

sectors nurtures the talent and helps to grow into medium and large size. They

provide maximum opportunities for self -employment and wage employment. They

also contribute in building the image in a society through innumerable ways like

creation of non-farm livelihood, low cost, balanced regional development, gender and

social balance.

The MSMEs have played a major role in ensuring socialistic goals like equality in

income and balanced regional development. However in comparison to large scale

public and private enterprises, MSMEs are considered to be more efficient and

provide employment opportunities at relatively lower cost. The employment

opportunities of MSMEs are four times greater than that of large enterprises. MSMEs

account for 80% of total industrial enterprises in India. One of the major contributions

of MSME is to promote balanced economic development. In large enterprises the

economic growths are more visible as that of small industries. While small enterprises

create variety of opportunities in the marine of poverty, it has also helped in

industrialization of rural and backward area which indirectly reduces the regional

imbalances, and assures more equitable distribution of national income. These small

industries also give a support to large industries by supplying supplementary products.

The ministry of micro, small and medium enterprises envisions a vibrant MSME

sector with the growth and development of the MSME sector in cooperation with the

various ministries, departments, state governments, various organizations and other

9

stake holders in providing support for the growth and development of the enterprises

and encouraging the birth of new enterprises.

1.6 ABOUT THE MINISTRY:

The commencement of the ministry was in the year 2007, subsequent to the

amendment of the Government of India rules 1961, during which the Ministry of Agro

and Rural industries and the ministry of small scale industries were formed as one to

form the Ministry of Micro, small and medium enterprises (MSME). The ministry

now designs policies, promoted programmes, facilitates training programmes, projects

and schemes and monitors their implementation with a view to assist MSME‟s thus

helping them to scale up. The primary responsibility of promotion and development of

MSME‟s is of the state governments through which the government of

Indiasupplements the initiatives of the state government by ways of promoting and

facilitating the working of the of the ministry in the development of the MSME‟s, in

doing this the major role of the ministry of MSME is to develop the initiatives taken

by the state governments in the development of the MSME‟s, encourage

entrepreneurship, livelihood and employment opportunities and thus enhance the

competitiveness of the MSME‟s in the changing economic scenario. The schemes

undertaken by the ministry and its organizations seek to provide:

a. Adequate flow of funds from banks and financial institutions;

b. Support of modernization and technical advancements;

c. Infrastructural facilities and developments;

d. Quality certifications and documentations;

e. Applications of modern management principles;

f. Development of entrepreneurship and skill through appropriate opportunities of

training;

g. Support for deigning, packaging and branding of the products and services;

h. Welfare of workers, artisans and labourers;

i. Assistance in trade with an aim to increase export and decrease imports;

j. Better access to domestic and international markets.

10

1.7 THE ORGANIZATIONAL SETUP:

The implementation of the policies and the schemes for providing support for the

MSME‟s is undertaken through the following organizations which function under the

ministry of MSME.

1. Office of the development commissioner (Micro, Small and Medium

enterprises)

2. Khadi and Village Industries Commission (KVIC)

3. Mahatma Gandhi Institute of Rural Industrialization.

4. Coir Board of India

5. National small industries corporation (NSIC)

6. National Entrepreneurship Development Institute (NEDI)

7. National board of Micro, Small and Medium Enterprises

8. National Small and Medium Enterprise Development (MSMED) Act

2006

1. Office of the development commissioner (Micro, Small and Medium

enterprises)

The Office of the development commissioner (Micro, Small and Medium enterprises)

headed by the development commissioner and the special secretary, being an apex

body for formulating and overseeing implementation of the policies of the MSME‟s in

the nation, plays a key role in strengthening this sector. It functions through a network

of regional testing centers, footwear training centers, field testing stations and

specialized institutes. Its role is to advice the government in constructive policy

formulation in the development and the promotion of MSME‟s in India, giving

technological, economic and managerial consultancy services as well as extension

services to the MSMEs in India, with facilities for technological upgradation,

modernization improvement in quality and infrastructure and providing training and

skill development thereby developing the strength of human resource.

11

2. Khadi and Village Industries Commission (KVIC)

The Khadi and Village Industries Commission (KVIC) is established under the Khadi

and village industries commission Act, 1956, is a statutory organization that is

working towards the growth and development of the Khadi and village industries

specifically in the rural areas of the nation thereby strengthening the Khadi and village

products by reducing the burden of competition by the larger giants and keeping the

sense of freedom struggle by helping in the promotion of goods from rural India thus

generating employment opportunities and bringing in a balanced regional

development in the nation. The KVIC is credited towards generating sustainable rural

non-farm employment opportunities at low per capita investment. This also helps in

keeping check over the rural population migrating towards the urban cities in search

of employment opportunities.

3. Mahatma Gandhi Institute of Rural Industrialization.

The national level institute namely „Mahatma Gandhi Institute of Rural

Industrialization‟ formerly known as Jamnalal Bajaj Central research institute has

been established under society act 1860, at Wardha, Maharashtra with a role to

strengthen the research and extension activities in the Khadi and Village industries

sector. The main function of this board is to improve the research and development

activities under the rural industrial sector by developing and encouraging the research

and extension activities in rural areas of the nation thereby introducing new and

improved production procedures and technological advancements for the continual

improvement and development of the industries in the sector.

4. Coir Board

The coir board is a statutory body established under the Coir Industry registered Act,

1953 for keeping a check and improving the working and living conditions of the

workers engaged in the industry also promoting the development of the coir industry

as a whole. The activities of the board include continuous research and development

activities in bringing in new and improved coir products, technological advancements

in the industry, and marketing the coir and coir products in India and Abroad. The coir

12

board also promotes the co-operative organizations that produce the raw materials of

coir like the producers of coir yarn, coir fiber coir yarn and the manufacturers of coir

products ensuring monetary returns to the producers and manufacturers of coir. The

board has actively promoted two research and development institutions in Kerala and

Bangalore namely; Central Coir research institute (CCRI), Alleppey and central

institute of coir technology (CICT) Bangalore for undertaking the research and

extension activities of the coir and the allied products which has grown to become one

of the largest rural industry in the nation.

5. National small industries corporation (NSIC)

The National small industries corporation (NSIC) was established by the Government

of India in 1955, with an objective to promote and nourish the growth of small scale

industries in India. The NSIC continues to remain at its very best in terms of industrial

development with its various programmes, initiatives and projects in-order to develop

the small scale industries in the country. It provides a variety of support services to

micro and small enterprises by catering to their different needs and requirements of

the MSME‟s in areas of technological developments, procurement of raw materials,

credit rating, marketing of the products, adoption of modern management practices,

etc. the NSIC runs its systems by means of its professional dedicated teams at all

levels of the nation and operates through 142 offices located all over India and one

office located internationally in Johannesburg (South Africa). The main objective of

the corporation is to generate, aid, promote and handhold various initiatives and foster

the growth of micro and small enterprises in the country on a commercial basis.

6. National Entrepreneurship Development Institutes (NEDI)

The entrepreneurship training and development is a very important factor in the

promotion of Micro, small and medium enterprises, especially amongst the first

generation entrepreneurs. In-order to create the entrepreneurial culture in the minds of

the first level entrepreneurs in the nation, the MSME Ministry has setup three

National Level Entrepreneurship Institutes viz; the National Institute of

Entrepreneurship and small business development (NIESBUD) located in Noida,

13

UttarPradesh. The national institute of Micro, small and medium enterprises (NI-

MSME) 1960, located in Hyderabad and the Indian Institute of Entrepreneurship (IIE)

1993, Guwahati as autonomous societies. These institutes are together termed as

National Entrepreneurship Development Institute (NEDI). They are committed to

develop training and development modules, providing consultancy support to the

upcoming entrepreneurs along with research support for the promotion and

development of MSME‟s in the nation by bringing in competitiveness in their

approach.

7. National board of Micro, Small and Medium Enterprises (NB-MSME)

The National board for MSME enterprises (NBMSME) was started on 15th May 2007

which consists of 47 members.

Functions of National Board:

The factors are examined that are affecting the development of MSME enterprises and

also to review the policies & programmes of the central government.

To provide economic information services.

Providing facilities for infrastructure, up gradation of technology.

Coordinating the policies and programmes for the developments of small scale

industries.

8. National Small and Medium Enterprise Development (MSMED) Act 2006

The Micro, Small and Medium Enterprises Development Act (MSMED) has started in

2006 to take care of the policy issues affecting the MSMEs. The act works to develop

these enterprises and also to build the enterprises in their competitiveness. It provides

the first ever legal framework in order to recognize the facts of enterprises which

include manufacturing and service entities. It was the first to define the medium

enterprise and works towards building businesses for the Micro, small and medium.

This act helps entrepreneurs at the national level of the micro small and medium

enterprise with a statutory consultative mechanism in coordination with the three

classes of enterprises and with a wide range of advisors.

14

CHAPTER 2

LITERATURE REVIEW

2.1 Entrepreneurship Introduction

2.2 Researches of entrepreneurship in India

2.3

Research on the development and the risk factors of

entrepreneurship in India

2.4 Gap analysis

15

Chapter – 2

LITERATURE REVIEW

The purpose of this research is to study the management of risk and its affects in the

growth of micro and small enterprise in India. In specific, this research determines the

factors like family background, government support, sources of funds and the

entrepreneur‟s instincts to take risks which contribute to the motivation of the

entrepreneur to take up the challenge of entrepreneurship. Thus, this review of

literature has been done with a focus to cover most of the above factors.In this chapter

few research papers, journals, articles and books pertaining to the current study of the

management of risk in the growth of micro and small enterprise in India (with special

reference to Mumbai and Pune) has been covered. During the course of this research

it has been found that this area has been extensively researched but the factors of

growth have not been identified in any of the researches, this literature review takes

into consideration many Indian as well as international researches. Articles have been

gathered from magazines and other research reports which helped in the collection of

the secondary data in the study. Internet was extensively used in order to gather

international data in researches conducted in the topics covering this research study.

Data mining was done using the software Proquest through the department library.

This chapter of literature review can be grouped in four different factors:

The first focuses on the meaning and definition of the word „entrepreneur and the

evolution of entrepreneurship in developed countries.

The Second category comprises of the study conducted by researches on

entrepreneurship in India.

The Third section comprises of the studies dealing with the factors of risks faced by

the entrepreneurs in the Indian context

Finally the last section comprises of the factors of risks in the growth of the

enterprises with ways and means to suppress the amount of risks faced by the

entrepreneurs.

16

2.1. ENTREPRENEURSHIP: INTRODUCTION

Factors of risks and uncertainty have been a subject of research amongst theorists and

researchers since the start of business on earth. Many researchers and theorists have

worked hard in trying to find the exact definition of entrepreneurship, yet there

remains no single clear distinct definition to entrepreneurship. Some researchers

define entrepreneurship from the economic point of view, some psychological, some

look at it from the management perspective while others give it a social side, which

makes entrepreneurship a multidimensional concept.

In the early time, the phenomenon of entrepreneurship was only of interest to the

economist. Early reference to the term „Entrepreneurship‟ was made by Sir Richard

Cantillon, an economist (Hébert and Link, 1988; Binks and Vale, 1990). His first

work on the term „entrepreneurship‟ namely „Essai Sur la Nature du Commerce en

Général’ was published in 1732. Cantillon introduced a model of economics wherein

individuals were divided into three classes, they were Land-owners, Hirelings and

Entrepreneurs, wherein the Landlords were financially stable and dominators,

Hirelings who earned continual fixed incomes, while Entrepreneurs were the ones

who would set up their enterprise with their self-accumulated capital or as individuals

regarded as living off Uncertainty. According to Cantillon, entrepreneurs are the

people who would buy an item at a specific price then use the item to make or produce

another item and thus sell the final product to the customer at an uncertain price.

According to Cantillon a successful entrepreneur is a person who would buy the basic

item and then sell the final product at a good price, keeping in mind the demand and

supply pull of the market, they are people who cope with risk much better than their

counterparts.

In continuation, other economists in line with Cantillon reconsidered and restructured

the role of an entrepreneur. Jean-Baptiste Say (1769-1832) who was a business person

and was the first professor of Economics in Europe, he wrote 2 books, enhanced and

built on Cantillon‟s ideas of entrepreneurship namely „A Catechism of Political

Economy‟ (1821) and „A Treatise on Political Economy‟ (1802) wherein he provided

a completely different interpretation of the entrepreneurial task. Sir Say‟ regarded the

17

entrepreneur as a manager in a firm. Rather than emphasizing on the risk bearing role

of the entrepreneur, Say stressed that the entrepreneur‟s principle quality is to have

good judgment.

Then came Joseph Schumpeter (1928) brought in a new dimension on the definition of

entrepreneurship, he introduced the concept of „creative destruction‟ wherein he

defined entrepreneur as an individual who introduced new factors of production.

Joseph Schumpeter rejected the views of entrepreneurs‟ being risk takers or a manager

of a firm. Instead he argued that an entrepreneur is termed as an innovator, as

someone who carries out any one of the five tasks stated below;

1. Creation of a new product or service

2. A new method of production

3. Creation of a new market

4. New source of raw material

5. Creation of a new organization or an industry.

Schumpeter elaborated that anyone who achieves one of these as a director of the

organization or as an individual is an entrepreneur. Creative destruction meant that the

innovation replaced the old and destroyed the equilibrium.

Ludwig von Mises(1949) defined the entrepreneur as an individual who acts.

According to Mises, the entrepreneur is termed as an agent who has an explanation to

the changes that occurs in the market, he reasons out the factors of change that affects

the market. Mises considered that the entrepreneurial action as the game of the mind

of the individual who holds talents and skills to turn a raw material in a usable form. It

is the power in the mind of the individual to see more in the world that he lives in and

created living for others easy by bringing in new ways and techniques in using the

same raw material in multiple ways. According to Mises the entrepreneur is driven by

his thoughts and his past experiences.

18

Friedrich Hayek 1937: Hayek was a follower of Mises, and he developed the price

theory by following the footprints of Mises. Hayek‟s study focused on the information

and knowledge rather than factor of entrepreneurial decision making. He tried to

understand the fact of how entrepreneurs successfully functioned entities by involving

complex manpower functioning and yet made business sail in a smooth flow of

power, responsibility and resources with knowledge only locally connected and

peculiar thinking.

Israel Kirzner1997:Krizner based his theory on the theories of Hayek and Mises. He

rejected the theory of equilibrium. He believed that the economy is in a constant state

of disequilibrium because to the constant economic shakes that it receives due to

various factors.

David C. McClelland 1969: McClelland‟s research in the area of entrepreneurship was

based on the psychology of the entrepreneur; he stated that individuals with high need

of achievement and strong personality traits are more likely to behave

entrepreneurially. He regarded the following description as distinctive characteristics

of high need achievement 1. A performance of higher risks and a propensity to work

harder in such situations. 2. A belief system that sheer hard work and determination

will alone reach to attain goals 3. A tendency to believe that the probability of success

in attaining a goal would be high. 4. A continuous mechanism of feedback in terms of

success or failure of one‟s efforts.

A research study by Collins and Moore (1964) containing discussions with 150

business entrepreneurs at Michigan stated that 1. Most entrepreneurs were either

orphans or half orphans 2. Entrepreneurs do not focus on social status or mobility.

They have very less focus towards the social status of authority or rewards associated

with power or authority. 3. Entrepreneurs often keep pushing themselves towards

excellence from one point to another; they like to achieve targets on a continual basis.

4. They differentiate or judge as either good or bold. 5. Entrepreneurs are generally

rebels, they strive within their families for the freedom out of the responsibilities in

the home and desire for free space within the family for more business oriented jobs

19

and goals 6. Entrepreneurs are mostly authoritative and clear single minded decision

makers and they dislike any authority over them.

Richard Gardner in the early days of research (1989) entitled “who is an

entrepreneur?” in which the author tried to determine the character or the personality

trait of the entrepreneur. There were different approaches for this research which can

be summarized as follows:

1. A trait affects the personality of the entrepreneur

2. Behavioral traits depend on the activities of the entrepreneur.

The research conducted by Roberts (1991) identifies a typical profile for technological

entrepreneurs in developed regions. The below given are the most significant findings

of Roberts.

1. Entrepreneurs are most likely to have businessmen fathers

2. The first born sons are least likely to become the entrepreneurs than their siblings.

3. No two entrepreneurs are alike; they display wide range of personalities, motivations

and goals for starting new enterprises.

4. Initial capital is small and from sources of personal savings and family funding.

5. Large-scale deficiencies in the making of a clear and crisp business plan reduce the

ability of the firm to get funding from a professional source.

6. Family background does not have any difference to the success status of the

entrepreneur or his business; entrepreneurs are made and not born!

7. Individuals with high need of achievement generally become successful

entrepreneurs.

8. Entrepreneurial teams generally perform much better than single handed owner

enterprises.

Some studies focusing on the personality traits of the entrepreneurs shows that the

younger entrepreneurs take more risks than the older entrepreneurs, the fear of failure

and retirement expenditures hinders them from taking risks. Honaday and bond (1987)

analyzed a number of characteristics such as need for achievement, aggression to

accomplish the task, independence and leadership skills were felt to be significantly

associated with entrepreneurs. The research found that out of these characteristics the

20

need for achievement and independence on oneself arose as prominent characteristics

and most significant for the individuals to take up entrepreneurship.

Johns and Cromie (1983) compared Psychological and entrepreneurial characteristics.

Their study indicated that the new aspiring entrepreneurs have vibrant and new

passions for entrepreneurship. They possess unique personal qualities but as time

passes they lose those passions and tend to lose entrepreneurial qualities thus begin to

resemble career executives. This study says that the new aspiring entrepreneurs

possess unique personal characteristics, but after some years of managing the

enterprise they possess the traits of an employee wanting to complete targets and

reach the financial deadlines. The study rightly concludes that the skills that are

required to start and launch an enterprise are different from the skills required to run

and function it.

Shawn Wang and PengChau (1990) discuss the details about the success of Baidu, the

internet based Entrepreneurship. China emerged as a global powerhouse with Baidu

being one of Asia‟s largest technology companies. Wang describes in simple words,

„to be an entrepreneur, a person needs sheer courage to fight all odds, be a risk taker

and have the strength to do things for the first time‟.

Entrepreneurship in the late 19th Century and early 20th Century

The entrepreneurs were viewed mostly from an economic viewpoint than as a

manager or a business owner. Richard T. Ely and Ralph H. Hes, briefly stated:

The entrepreneur organizes and operates an enterprise for personal gain. He pays

current prices for the materials consumed in the business, for the use of the land, for

the personal services he employs, and for the capital he requires. He contributes his

own initiative, skill, and ingenuity in planning, organizing, and administering the

enterprise. He also assumes the chance of loss and gain consequent to unforeseen and

uncontrollable circumstances. The net residue of the annual receipts of the enterprise

after all costs have been paid, he retains for himself.

(Richard T. Ely and Ralph H. Hes ,1937 )

21

By the mid of the 20th century, the definition of the entrepreneur as an Innovator had

evolved, Sir Joseph Schumpeter‟s opinion on the definition of the Entrepreneurs gave

new light to the entrepreneur as an innovator.

Joseph Schumpeter‟s vision on entrepreneurs is as follows:

The function of the entrepreneur is to reform or revolutionize the pattern of

production by exploiting an invention or, more generally, an untried technological

method of producing a new commodity or producing an old one in new way, opening

a new source of supply of materials or a new outlet for products, by organizing a new

industry.

(Joseph Schumpeter 1952, p 72)

The entrepreneur is not confined to any industry or country or group or class or race, it

exists in every person but depends on his/her desire to move further and explore the

environment around us.

Vosle, 1994: Vosle defined the entrepreneur as an individual with an ability to analyse

the environment, explore the possibilities, understand and grab the opportunities,

make a new untouched technology or method of production, streamline resources and

covert the ideas into credible steps of action.

Zimmer and Scarborough 2005: stated that the entrepreneurs are risk takers who bring

in new products and services and thus add new colors and meaning to the upliftment

of the society.

2.2 RESEARCH STUDY OF ENTREPRENEURSHIP IN INDIA

Nambiar 1977 – in the article names “financing of Priority Sector, speaks on the

responsibilities of commercial banks in the small and medium enterprise sector. The

MSME‟s are not confined to the provision of finance, the banks have to check the

feasibility of the businessplan and assist the entrepreneurs to move forward with the

feasible and strongest business plan. Nambiar emphasized the balance of Coordination

between the various government agencies and the public and private sector banks, for

the better functioning and the success of the priority sectors.

22

Murthy 1980, in the dissertation entitled “Financing of MSME‟s in Rayalaseema”

speaks that even though the MSME‟s face problems and challenges at a

multidimensional level, it still rules out the availability of the courseof finance with

the appropriate working capital, without the support of the banks the SSI cannot move

forward in solving a problem empathetically as a mentor for the development of the

MSME‟s thus enabling much talked about balanced regional development and rural

industrialization

Agarwal 1987, in the paper titled “Bank Financing of Small scale industries in India”

has stated that the Indian Financial system is unsuccessful in providing adequate

amount of Loans to MSME‟s. Agarwal is of the opinion that the Banks and financial

institutions have to be more open and flexible towards the MSME‟s in their attitude

rather than maintaining strictness in order to solve the challenges faced by the

MSME‟s in their everyday workability.

Jain 1990, in the paper entitles, Assistance of Small Industry, has appointed out that

the institutional assistance to MSME‟s should be to build the right kind of institutions

and to enable the small enterprises to enjoy the infrastructural facilities, there is a need

to simplify and make easy processes in working towards the administration of the

government schemes and policies towards entrepreneurs.

James Manalel 1994 in the paper entitles role of Incentives in the Development of

MSME unites in Kerala. The author reported that the assistance given by then banks

and financial institutions in working towards the support of the SSI units was less or

untouched. The effectiveness of any package or incentive created by the government

is completely depended upon the workability in the quality of delivery to the

MSME‟s. the state government provides lucrative incentives, but the quality of the

delivery is termed to be poor s perceived by the entrepreneurs.

VenkateshwaraRao 1995, in the paper entitled, Development of SSI stated that the

censes conducted by the reserve bank of India and the National state insurance

corporation NSIC also established that the small units used their monetary strength

more effectively and the profitability of the large scale sector is much smaller that the

23

profitability received by the small scale sector. The author emphasized that the role of

banks to help in the growth of the small scale industry is moving beyond just

providing funds but in handholding entrepreneurs in working towards making

entrepreneurs in helping bring maximum productivity.

Nirmal K Gupta 1995, this article entitled “Small Industry” advocated that a large

number of central government organizations has been established in the country to

provide organizational, financial, marketing, technical, raw material, training and

development and other allied forms of assistance required by the small scale, micro

enterprises, cottage industries and the village enterprises. Moreover IDBI-Industrial

Development Bank of India, Small Industrial Development of India SIDBI and

NABARD- National Bank for Agricultural and Rural Development are among them.

These institutions have played a major role in the development of micro, small and

medium enterprises in the country, in addition to the financial and consultancy

services provided by them to the entrepreneurs.

SaroshBana 2000 – in the research paper entitled “India‟s Small Scale Sector”,

according to then statistics state the Small Industries Development bank of India

SIDBI, MSME account to close to 96 percentage of India‟s industries, 40% of the

output in the manufacturing and 35% of the exporters apart from am employment base

of more than 17 million people in the country. The author stated that a new line of

entrepreneurs initiated a new line of production also provided rich ancillary inputs for

the MSME sector. In this paper he also stated that the responsibility that SIDBI has

achieved is much more than just providing funds to the budding MSME of the nation.

Sridhar Krishna 2001 – in the paper “ impact of small industries‟ stated that apart

from providing overall financial assistance to the upcoming entrepreneurs in building

the MSME‟s, the role of DIC district industrial center is also to provide permanent

registration to industrial units, not only as prepare the entrepreneurs with various legal

frameworks which allows the entrepreneurs to get various concessions, incentives,

benefits and schemes of the government related to the progress of the MSME‟s.

24

Nalsamma Anthony 2002 – in the paper titled the prospects and growth of Small Scale

industries in India-An Overview‟ states that the SSI units were brought up in the midst

of challenges because of the shortage of funds, lack of business knowhow, inadequate

marketing skills etc., most of the risks were due to inherited weaknesses. Inspite of

the various risks faced by them initially, the MSME‟s are developed and promoted

keeping in mind the socio economic benefits to the society. In addition, promotion of

MSME requires, institutional support from various sources and these sources of

support are not only depended for funds but also for granting smooth slow of finance

without unnecessary more formulation to allow the MSME‟s to function much better

and faster.

EdvinGyanadas 2003- in the paper titled, “Marketing performance of MSME‟s under

global environment-a difficult Task?” has researched on the marketing performance of

MSME‟s under global environmental conditions by taking a sample of 250

entrepreneurs. The study states that the government declared some incentive packages

aimed at making MSME‟s more competitive both domestically and on a global

platform, by providing easier support from the public sector banks for the strong

support of entrepreneurs. He also stated that an active involvement of public sector

banks in entrepreneurial lending which requires changes in the efficient management

of resources, the attitude of banking personnel, proper deployment of manpower and

improvement in work technology and ethics.

JayalakshmiSrikumar 206 in her research paper titled “SME‟s and Global

Competitiveness,. Strategies for growth and Survival in the WTO Era” stated that the

MSME entrepreneurs had an opinion that the government only frames the schemes

and policies but does not know to implement them in the right way. The author also

stated that the WTO regime and industrial liberalization has opened up a world of

competitiveness for the development of MSME‟s. in many nations, the strategies and

policies created by the government has been reframed keeping in the mind the

MSME‟s of the country. The policy framework in India has been in the midst of fast

growth in order to develop the MSME‟s to cope up with the changing economic

scenario like the other Asian countries around. She concluded that the MSME‟s

25

should be provided with infrastructure developments and an environment which is

conducive for the survival and growth of the MSME sector in the country.

Rakesh KR Singh 2007, in the paper “Comparative study on Strategies of Indian

Small medium large Scale organizations” suggests that the challenges faced by the

Micro and small firms and the reluctance to use support from external sources are

standing as obstacles that deter the MSME‟s in using the technology and

infrastructure that will work in the growth of the MSMEs.

Anil Kumar December 2008, in the paper titled, “Awareness of Supporting Agencies

among Women Entrepreneurs in Small Businesses” analyses that the awareness of

agencies that support women entrepreneurs in micro and small business by taking a

450 sample entrepreneurs in the research form 5 states from the North of India which

comprised of Rajasthan, Himachal Pradesh, Delhi, Punjab and Haryana. This study

highlights the challenges faced by the women entrepreneurs in these cities in starting

new small businesses. The author also emphasized that low awareness plays a major

reason in less utilization of the schemes and subsidies of the government.

Raju 2008, in the paper titled “small and medium enterprises (MSMEs) in India, past

present and future” conducted an analysis and concluded that the MSME‟s are the

backbone of India and the industrial sector of the country, they have become the

engine of the economic growth in India. It is estimated that almost 90% of

manufacturing Industrial units and 40% of value addition in the manufacturing sector

of India is run by the MSME‟s. This paper scrutinizes the development and growth of

the Indian small scale sector since the start of the economy in the year 1991. The

marketing, licensing and lending issues are closed studied in this paper. The micro,

small and medium enterprises Act 2006 is formed with an expectation to boost the

sector. Some future policies of the government and frameworks is being stated in

detail in the concluding of this sector.

DineshRai 2000 in the paper titled “MSME reviewed the performance of various

schemes of the KVIC” stated that the managers of the branches of some branches

were not aware of the guidelines, incentives and schemes. It is essential for the banks

26

to set up core centers and it is their responsibility to extend the core centers

throughout the country.

Poplia and Rao 2009, in the paper titled “Service quality Provided by PSBs(Public

Sector banks) to SME consumers” states that the customer Satisfaction plays an

important role, particularly in the context of the ever increasing competition and

sustained growth in business. The study focuses on the support given by PSB‟s to the

budding entrepreneurs. This study majorly finds that the modernization and

communication is the major factor that affects the services of the MSME‟s in a huge

way. There is also a need to train the staff and employees for the improvement in the

service provided to the consumers. A large number of the respondents revealed that

the institutional and government support to the MSME sector is not sufficient and the

government has to make sure of a stronger implementation plan so that the schemes

and subsidies reach the businesses in a much better efficient and a much impactful

way. Large number of respondents also felt that the procedures and policies of the

other countries is much better than the policies and procedures followed by India.

VijayaChitra and Poovanendran 2009, in the paper titled, “determining the business

success and failure of MSME units” in this paper they have suggested that small scale

entrepreneurs do not get good support from the government on time as required by the

entrepreneurs. The authors have also stated that the RBI should take necessary steps to

encourage the small scale entrepreneurs to receive bank loans with minimal

relaxation.

Popli and Rao 2009 in the study, “ an empirical study of MSME in Electronics

Industry in India: Retrospect and Prospects in post WTO Era”, in their study analyzed

that the Micro, small and medium enterprises have continually been a vital pillar of

support to the economy domestically all across the globe, regardless of the

competitions or the barriers that they face they still remain to run the nations with

their opportunities of employment generation capacities and skill development

trainings given to individuals working with these MSME‟s. In an emerging economy

like India MSME‟s have a strong Socio-economic role to play in the regional

development of the country. The Indian electronic industry is undergoing strong

27

transformations due to the emerging business policy and the new business

environment in the post WTO regime. This research paper analyses the challenges,

factors of technological upgradations, competency development, government policies,

strategies for implementation, quality of improvement and the overall improvement of

the sector in the post WTO regime. This study was conducted with the help of an

extensive research done involving India‟s MSME‟s in the textile sector and from the

experienced policy makers from various organizations at the government of India.

This research finds out lacks in growth conducive business environment, difficulties

in raising fund from the market, lack of quality consciousness and the inadequacy in

government support. Further the paper highlights the need to upgrade the technology

for faster and qualitative production and the creation of a strong and supportive

environment.

CII survey 2010 report titled, Infrastructure development key to MSME‟s growth and

development, it states that the high cost plays a major role in the development and

growth of the economy. He stated that the lack of availability of credit is a major

factor holding the growth and development of MSME‟s.

Azad 2010 in this research paper entitled “ Grooming MSME‟s in Blooming ASEAN”

states that there is a need for support organizations and extensions in the fast pace of

the growth of MSME‟s. Such support and extensions include, quality testing, market

intelligence, modernization, technology upgradation etc. he also mentioned that the

available institutional network in India has to be supported with extension services for

the smooth function of the MSME units.

JagapathyRao (2010) in the research paper titled, a study on socio-economic

background of entrepreneurs in s mall scale industries states that there is a need to

create awareness of financial sources and government policies and incentives to the

scheduled cast and scheduled tribes. The author further stated that the financial policy

should be able to uplift the underprivileged class of the society in the rural India from

a submerged existence to an abundant existence.

28

KrishnaveniMuthaiah and SudhaVenkatesh (2012) in the article titled „A study on

barriers affecting the growth of small scale industries in India, brought out an

interesting fact that the entrepreneurs who do not have the intention to run for long

have not registered their businesses. This bring out a gap that the entrepreneurs need

to be brought into awareness of the advantages of registering a firm to avail facilities

such as external credit, government incentives, government orders, ease of tax and

other such advantages brought in by the SME‟s supporting institutions. Firms can

register themselves as public limited or partnership firms which will enable more

hands to work and more minds to think towards a brighter future of the company.

Initially financial support can be availed with the help of family or friends and once

the businesses moves further banks loans can be acquired.

2.3 RESEARCHES ON THE DEVEOPMENT AND THE RISK FACTORS OF

ENTREPRENEURSHIP IN INDIA

Upadhye in thedissertation “A study in the development of Entrepreneurship in Small

Scale Sector in Pune city”, researched with a sample strength of 90 small scale units

out f which 10 were successful entities, 65 was on a breakeven or a marginally

successful scale and rest of the 15 were unsuccessful. The study proved an interesting

fact that some of the successful units in the small scale sector were well developed

due to the incentives taken up by the entrepreneurs from the various departments and

institutions of the government of India and the Maharashtra state agencies for

entrepreneurship development. The report also stated that the average age of the

entrepreneurs who were successful in their business was 32 to 35 years of age, with

most of the units being partnership firms having good family support and individuals

belonging to good family backgrounds. The author observed that the educational

qualification also played a major role in the success of the business; entrepreneurs

with good formal education were seen to be more successful in the promotion of the

business. Some units were found to be less in funding or with lesser financial strength.

The author suggested that the financial funding institutions should hold better

knowledge of the MSME units and also get closer to know of the kinds of problems

they face.

29

Bhanushali (1987) in this research study 125 entrepreneurs from small engineering

units were chosen from the district of Kolhapur in Maharashtra. Through the research

it was found that individuals hailing from minority communities with sound

knowledge of engineering have higher probabilities to achieve greater success rate.

These findings suggest improvements in the knowledge will not only bring in a fresh

supply of entrepreneurial talent but also improve on the chances of their success. He

also found that the entrepreneurs who have received higher education also had higher

chances of winning in their business entities. Hence education and knowledge

attaining plays an important role in the success of entrepreneurial ventures. The author

is of a clear opinion that physical and environmental faculties bring in more chances

of success.

Anwar (2002) in the research, the author has the opinion that the socio-economic

factors of the economy are the main reason of unemployment. Unemployment brings

in frustration which outlets anger and even violence. Unemployment as a major

problem in India‟s youth is turning out to be an alarming issue, even though the

government is working towards skill development and other ways of employment

generation, still it remains as a major factor that the government looks at. Therefore

efforts should be made to bring in more employment opportunities by creating

awareness of subsidies that generate income, development of the cottage and small

scale industries and modern technological improvements in agriculture. The author

also emphasized the importance and the role of entrepreneurship in the era of

economic globalization. He states that it‟s the need of the hour to identify and nurture

entrepreneurs who are capable to adapt to innovative technologies and modern

methods of production and thus coping with competition with the foreign markets.

KshetriNir (2011) examines various indicators related to entrepreneurship in India and

analyzes factors affecting India‟s entrepreneurial performance and it does a

comparative study between India and China. The paper points out Indian and Chinese

differences in entrepreneurial culture, regulatory framework, access to finance and

market environment Kshetri makes a conclusion that the structural inertia of Indian

economy has acted as a barrier to foster modern entrepreneurship.

30

In a study conducted on the youth of Orissa, Manjusmita Dash and KulveenKaur

(2012), discuss the challenges that young entrepreneurs face. The entrepreneurs have

stated their opinions on stigmas of the society, cultural problems and regulative

barriers.

A research conducted by IIM-A (AbhisekGoel,et al, 2006) studies entrepreneurs in

different parts of India. The researchers do an in-depth study on various perceptions of

Indian entrepreneurs. The perceptions range from attitude towards entrepreneurs as

life partners to family life. They conclude that the Indian youth have a more negative

approach to entrepreneurship than the Chinese. These stem from deep rooted social

perceptions and norms as entrepreneurship suffered cultural problems and was not

supported to take it up as career.

Sujoy Kumar (2011) discusses on the scopes and challenges of the MSME‟s. The

paper focuses on the alternative economic model of entrepreneurship where focus has

been placed on the small scale entrepreneurs. The paper speaks about a concept of

distributive justice in which the researcher states that the resources have to be

distributed evenly to the small ad micro scale entrepreneurs.

Kalyan Kumar &Gugloth (2012) in their research study namely small and micro

enterprises in the 21st century states that the prime intent of the study is to check on

the sustenance and competitive growth of MSMEs in India. The article focuses on the

ongoing changes in the business environment and the analysis of their suggestion for

MSMEs. It further focuses on the implication of globalization and domestic economic

liberalization for MSMEs and analyses its intensification performance. The MSMEs

has emerged as the most dynamic sector of Indian industrial economy.

In the research paper, „problems faced by entrepreneurs‟ by AhayNayar,

VasanthKiran(2014) have touched on three major factors that affect entrepreneurship

entities and also entrepreneurial intentions among people, the three major factors

namely, cultural bottlenecks, bureaucratic procedures in setting up and lack of

distribution.

Dr.Anuradha (2014) in the research paper titled, problems and prospects of micros,

small and medium enterprises in India in the era of globalization compares the

performances of MSME‟s during the re and post liberalization period in India with the

31

help of four economic diameters namely No. of units, production, employment and

export. The study results show that except marginal increase in growth rate in

employment generation, the growth rate in other parameters is not encouraging during

the liberalization period.

Mohandass, Subramaniyan (2014) in the research study focuses on the implication of

globalization; analyze the performance of small scale industries based on number of

units, employment, production, investment and exports on post liberalization.

In the research study Challenges and Opportunities in Micro, Small andMedium

Enterprises in India Abhinav Sharma1, Dr. D.C. Gupta (2015) analyses the various

challenges and opportunities associated with MSMEs in India. The suggestions

through the study were 1. Arrangements may be made by the government to ensure

the supply of trained and professional managers for the small scale sector. 2. It would

be necessary to consider policy initiatives to incentivize MSMEs to achieve

economies of scale by expanding production 3. To facilitate the MSME sector to

garner resources, it is imperative that a separate trading exchange be set up

exclusively for the MSMEs. 4. Provide special incentives for encouraging larger flow

of Venture Capital & Private Equity funds into the sector.

2.4 GAP ANALYSIS

Through this literature review it was found that there has been innumerable amounts

of studies, theories and literature found on the topic of entrepreneurs, their evolution,

what makes an entrepreneur and also the risks and challenges faced by entrepreneurs

all across the globe and in specific to India.

This detailed study of the literature review indicates that firstly, there is no research

which studies on the management of risk in the growth of enterprises in specific to

Micro and Small enterprise in India, most researches have been on SSI and MSME‟s

in general hence studies in specific to Micro and small enterprises have not been

found.

Secondly; there has been no study in the areas specific to the regions of Mumbai and

Pune.

32

Additionally there has been no study found on the correlation between the

demographics like the age, education qualification, type of industry and demographics

factors of an entrepreneur in relation to the risk factors of entrepreneurship faced by

the entrepreneurs.

Hence, this research stands in the gap and fulfils in specific areas of Micro and Small

Scale industries and also researches in specific areas of Mumbai and Pune.

33

CHAPTER 3

OBJECTIVE OF THE STUDY

3.1 Statement of Research Problem

3.2 Research Objectives

3.3 Hypothesis

3.4 Research Methodology

3.4.1 Primary and Secondary Data

3.4.2 Sampling Design

3.4.3 Population

3.4.4 Sampling Method

3.4.5 Sample Size

3.4.6 Research Instrument

3.4.7 Pilot Testing Phase

34

CHAPTER 3

OBJECTIVE OF THE STUDY, HYPOTHESIS AND

RESEARCH METHODOLOGY

3.1 STATEMENT OF RESEARCH PROBLEM

This research study touches upon four major risks faced by an entrepreneur

1. Family support

2. Finance/Funds

3. Business/Location

4. Government (Rules and policies)

This research identifies crucial factors influencing the risks faced by the

entrepreneurs and tries to link the Age, Demographics, Qualification and the

industry type of the entrepreneurs and its effect on the levels of risks faced by

them. The research also touches upon the strategies and ways adopted by the

entrepreneurs in order to fight the challenges faced by them in the growth of their

enterprise.

3.2RESEARCH OBJECTIVES:

1. To study the nature and dynamics of MSME‟s in India.

2. To analyze the impact of demographic factors on the level of risks faced by the

MSME‟s in India.

3. To understand the levels of risks involved in the formation of MSME‟s in

India.

4. To understand the steps/strategies adopted by the firms to mitigate the risks.

5. To analyze the factors of gaps in between the government and the

entrepreneurs.

6. To give suggestions to entrepreneurs for the improvement of relations between

entrepreneurs and the government

35

3.3 HYPOTHESIS

On the basis of the objectives the following hypothesis has been designed.

H01 – There is no effect of age of the entrepreneur on the factors of risk faced by

him

H11 – The impact of risks differs with varied ages

H02 – The education Qualification of the entrepreneur has no effect on level of risk

faced by the entrepreneur

H12 - The education Qualification of the entrepreneur determines the level of risk

H03 – The type of Industry of the entrepreneur has no effect on the level of risk

H13 - The type of Industry of the entrepreneur has a direct effect on the level of risk

H04 - The entrepreneurs are not aware of the government policies

H14 - The government policies are well published and aware to the entrepreneurs

H05 - The government is not a source of support to the entrepreneurs.

H15 - The government is standing strong in support of the entrepreneurs.

H06 - The entrepreneurs have very limited or no expectation from the government

in terms of enterprise formulation.

H16 - The entrepreneurs have high expectation from the government in terms of

enterprise formulation.

3.4 RESEARCH METHODOLOGY

For the purpose of this research, data has been collected from specific cities in

Maharashtra namely, Mumbai and Pune. A detailed literature review was

conducted from all the available material as a basis for secondary data. This

36

chapter of research methodology gives a clear idea of the research conducted,

which includes the steps followed in the research such as primary and secondary

data sources, sampling, the type of data collecting instrument used and finally data

analysis.

3. 4.1 PRIMARY AND SECONDARY DATA

The collection of Primary Data was done by means of Questionnaire to each

entrepreneur in the Manufacturing, IT and Service Industry. The Secondary data

was collected from the vast number of past research papers, National and

international journals on entrepreneurship, books and the reports that are published

on the said topic.

3.4.2 SAMPLE DESIGN

Two major cities in India were chosen namely Mumbai and Pune, being the

commercial hubs of the nation. The city of Mumbai is chosen since it is the trade

capital city of the country and Pune as a representative of a fast developing two tier

cities in business in India.

3.4.3 POPULATION

Sampling Units - Entrepreneurs from the fields of Manufacturing, IT and

Service.

Extent – Maharashtra State in specific to Mumbai and Pune

3.4.4 SAMPLING METHOD

This research required a probability random sampling method wherein the method

of sampling used for this research has been Convenience Random Sampling

method, thus the samples were randomly chosen for this research project from the

fields of Manufacture, IT and Service.

3.4.5 SAMPLE SIZE

The study brought to light that there are many business entities that are

37

unregistered in the region on Mumbai and Pune due to various reasons like Taxes,

Government policies and tedious documentation procedures because of which the

total universe remains unknown. Hence, there are „N‟ number of entrepreneurs in

Mumbai and Pune in the fields of Manufacture, IT and Service who are registered

and also many being unregistered. The formulae to determine the sample size

whose total universe count is unknown is as below;

n = Z2 × (P) × (1-P)

C2

Where,

Z = Z value (1.96 for 95% Confidence level)

P = Percentage picking a choice, expressed as a decimal=60%

C = Errors acceptable in the estimate P = 10%

Sampling Formulae :

n = (1.96)2 × (60) × (40)

(6)2

= 256 Samples

A total of 293 entrepreneurs were interviewed through the questionnaire and a total

of 263 reliable and valid filled data instruments were used for the analysis.

3.4.6 RESEARCH INSTRUMENT

In order to carry out the study effectively, a questionnaire was designed so as to

conduct the research and it was the instrument of the survey. Below stated is the

outline of the data collected and the type and contents of the questionnaire. There

was one set of questionnaire that was used for collecting data from the

Entrepreneurs.

Section I of the questionnaire was to understand the demographics of the

entrepreneur and also his/her entity, which included the age, gender, education

qualification, industry type, annual turnover, year of establishment, the number of

employees and the location of the enterprise.

38

Section II is divided into 4 factors of risk namely,

1. Family Support

2. Finance/Funds

3. Business/Location

4. Government interventions and policies

Each section is subdivided in-order to check the depth of the risks faced by the

entrepreneurs, the awareness of the risk faced and the ways undertaken to

overcome and mitigate the risks based on a Likert scale.

1. FINANCE/FUNDS

Funds

Knowledge about loans

Government subsidy

Family borrowings

High interest rates

Money lenders

Property mortgage by banks

Gold loans

2. LOCATION

Inaccessible to the city

Away from the market

Unavailability of water

Unavailability of electricity

Accommodation of labour

3. BUSINESS

Competition

Unavailability of raw materials

Unavailability of skilled labour

No proper machinery

39

4. GOVERNMENT INTERVENTIONS AND POLICIES

Multiple window policy

Taxes

Q1 is to check the kinds of risks faced by the entrepreneurs.

Q3 to Q5 described about the family related risks/problems faced by the

entrepreneurs.

Q6 to Q8 eight described about the risks of funds and finances.

Q9 to Q11 described about the risks in business or competition.

Q12 toQ21 elaborated upon the risks with respect to government policies and

documentations. It is an elaborate detail of hiccups faced by the entrepreneurs

while dealing with governmental and legal procedures.

The questionnaire ends with questions about the Make in India and to check if the

people have any hopes from the MII project.

The research was conducted using a coded questionnaire for entrepreneurs. It

comprised of quantitative and qualitative statements. The quantitative section was

tested using SPSS 20.

3.4.7 PRE-TESTING PHASE (PILOT STUDY)

Pilot Study was conducted in Mumbai on Entrepreneurs to test the reliability of the

instrument used. The study was conducted with a sample of 50 entrepreneurs in

and around Mumbai city.

A: FACTOR ANALYSIS TEST

On the basis of the Factor Analysis Test conducted, the variables of the research

have been found. The research is Descriptive in nature.

The Independent variables in this study have been chosen as:

1. Age of the Entrepreneur

2. Education qualification of the entrepreneur

3. Type of Industry

Dependant Variable:

1. Risks with Funds

40

2. Risks with Government

3. Risks with Family

4. Risks in Business

Controlled Variables

1. Risks

B: DATA COLLECTION AND STATISTICAL ANALYSIS.

The research was conducted using a coded questionnaire for entrepreneurs. It

comprised of quantitative and qualitative statements with the use of Likert Scale to

maintain the accuracy of the response. The responses were then received and were

then recorded in a tabular chart. The statistical tools used were Chi Square test and

Anova Test. The analysis of the same was done through the software SPSS 20.

C: LIMITATIONS OF THE STUDY

This research study has been conducted specifically in the area of Mumbai and

Pune and hence it does not give in-depth analysis of the factors risks faced by

entrepreneurs across the nation of India.

This research includes only 4 major risks faced by entrepreneurs namely Risk of

funds, government (policies and regulations), Family and Business risks, whereas

there can be possibilities of several other kinds of risks faced by entrepreneurs

which has not been considered in this research.

41

CHAPTER 4

HISTORY OF INDUSTRIAL REVOLUTION IN INDIA

4.1 The first Industrial Revolution

4.2 The secondary industrial revolution

4.3 Industrial policies

4.4 Instruments used by Industrial Policies

42

CHAPTER 4

HISTORY OF INDUSTRIAL REVOLUTION IN INDIA

Industrial revolution was started in period from about 1760 to 1840. It was that

period of time when the transformation was being made.

4.1 FIRST INDUSTRIAL REVOLUTION:

Industrial revolution in India can be divided into 2 broad categories:

1) Before British came to India.

2) Modern industry development after independence or during independence

freedom rights.

Before British invasion: India once was very famous for its handicrafts and cotton

industry and Indians were the only exporters of these things throughout the world,

thus Indians were on a path of development. New small machines and tools were

made for use, but when British came to India, this industry collapsed because

Indians were only allowed to send the cotton and handicraft to England. Indians

were exploited and their living conditions were badly affected.

Modern industry development after independence:On 23 June 1757, the Britain‟s

East India Company defeated Siraj-ud-Daula, the Nawab of Bengal, in the Battle of

Plassey. The British thus became masters of Eastern India which was rich in

agriculture, industry and trade. Revenue was collected by the East India Company

from these regions and was sent to Britain, this provided them with the capital.

Seizing of raw cotton from the Indian cotton farmers and then exporting it to

Britain. Finally, they brought the manufactured textiles from Britain to India, and

India became a free market for goods made in Britain.

The major reason for Britain's Industrial Revolution was its textiles. Before the

Revolution, India was the world's number one textile manufacturer and exporter.

Thus the Industrial Revolution was made in Britain, but it was funded by

India (against her will).In 1750, India produced nearly 25 % of the world's

manufacturing output and was only outdone by China, which constituted 32.8 %.

43

However by 1880, India only took up 2.8 % of world exports and after its

independence from British colonization in 1947 India was one of the most poverty-

stricken regions in the world. However, from 1750 to1947, India experienced

improvements in its economy in various areas including agriculture, factory

production, finance, and even film production.

When the British came to India they brought new techniques and innovations along

with them. Soon the Great Britain became hub for industrial revolution and was the

first country to come up with this modern industrial revolution technique.

Development of new machines and tools had started. Due to Industrialization after

independence, the lifestyle of people changed in India. The lower class started

working at lower wages; this created a gap between the rich and poor.Soon

industrial revolution though first started in Britain spread throughout the globe and

proved to be the turning point in the history of the world. It affected the daily life

of people throughout the globe.

Industrial revolution involves that period of time when the transformation was

being made throughout the world from hand work to machine work. There was

increase in iron production and more use of chemicals which led to innovation.

More tools were developing so that machines could run more efficiently; however,

the industrial revolution had an effect on other countries of the world both

positively and negatively.

As Britain‟s East India Company collected money and product required for

manufacturing variousgoods from various parts of the country and sent them to

Britain and in turn the goods manufactured in Britain was imported to India and

sold here at much higher price, thus India became a large market for British goods.

4.2 SECONDARY INDUSTRIAL REVOLUTION:

After independence new policies came up which led to modernization and

innovations, therefore the standard of living of Indians improved. Thus industrial

revolution brought new world of advanced technology into light.

What new developments took place during industrial revolution in India?

44

New machines were developed which reduced manual labour.

New sources of energy came into existence for running advanced machines like

kerosene

Advancement in transportation technology

Communication facilities also increased, introduction of telephone, radio etc.

Development of socio economic class, modernization gradually came in.

Western culture started showing dominance in India.

People migrated from rural areas to urban for better living conditions.

Introduction through Research, development and consultancy.

Based on modernization, Industrialization in India is divided into four major

sectors of the economy

The Primary Sector: Extraction and production of raw materials, farming,

mining, etc.

The secondary Sector: The secondary sector considers the materials that are

gained from the primary sector and transforms the raw materials into final

goods such as textiles and automobiles

The Tertiary Sector: The tertiary sector includes the services such as banking,

finance, and cinema to consumers and businesses

The Quaternary Sector: The quaternary sector usually appears the latest in a

country's modernization process

THE PRIMARY SECTOR:

Agriculture/ Farming: Production of Food Crops –

As compared to other countries, India had much more agricultural land reserved for

food crops, such as wheat, barley, maize, millet, rice, etc. In 1892, 10,900 thousand

hectares were available for wheat growth, and this increased by 13,910 in 1947.

India also had 26,556 thousand hectares of rice fields in 1890 which increased to

34,625 by 1947. The increase in the available agricultural land reserve was

primarily due to the development of irrigation and canal networks in Punjab,

Narmada Valley, and Andhra Pradesh.

Production of Cotton-

45

As years passed by, the production of cotton is increasing as there was more and

more usage of machinery. In 1865, India only produced 12 thousand metric tons of

cotton. By 1889, the number had risen to 533, and in 1919 doubled to 1052

thousand metric tons. India exported 102 thousand metric tons of cotton in 1850;

250 in 1863; 326 in 1905; 456 in 1915; and 738 in 1930. However in 1947, after

independence, cotton exports were down to 211 thousand metric tons. These

numbers shows the British exploitation of Indian raw materials, as the exports of

cotton were increased drastically during the 1930s. It was the time when the British

economy was suffering from the Great Depression. Like many other colonized

countries, India's cheap cotton and other raw materials were exported to Britain to

help produce final goods in British factories.

Mining-

India has been rich in minerals since ages. The most profitable business during the

British colonial times was coal mining. The British supported coal, gold, silver,

iron ore and steel mining; but they did not look favorably upon mining of other

metals such as lead. They believed that India's development of metallurgy would

lead to production of weapons for the "natives," a potential threat to British rule.

THE SECONDARY SECTOR

Textile Industry: Problems then and now

The textile industry is one of the biggest industries of the Indian economy today,

and accounts for 21 per cent of employed workers in India. There are many

advantages of India's textile industry that helped it sustain in the market. The

strength is that India has the ability of huge production capacity, and has a large

pool of skilled and low-wage workers available for cheap labour. At the same time,

there are many weaknesses of the Indian textile industry which are the same ones

that were since the British rule. Some problems include the import of cheap textiles

from other neighbours, disorganization and the use of out-dated manufacturing

technology. The one aspect that has changed is the shift in competition. First India

had to struggle against cheap British textiles before independence, but now it only

46

has to deal with cheap Chinese textiles. The textile industry is yet to undergo a

dramatic modernization process.

Automobile Industry-

The automobile industry of India is the tenth largest in the world, producing 2

million units annually. Though India's automobile industry did not flourish until

after independence, the foundations of domestic carmakers such as Tata Motors

and Hindustan Motors were set up prior to 1947.

Iron and Steel Industry-

First step: Bengal Iron Works

James Erskine in 1870 founded the Bengal Iron Works, the first step towards an

iron/steel smelting industry ever taken in India. Raw coal was used to fire open top

furnaces, using the locally available poor-grade iron ore. Bengal Iron Works was

the first plant to produce iron and steel, but later more credit is given to TISCO,

which was able to produce steel and make profit. The two important and historic

iron and steel industries of Indian colonial history that still exist today are Tata Iron

and Steel Company, Ltd (TISCO) and The Indian Iron and Steel Company, Ltd.

(IISCO)

THE TERTIARY SECTOR:

Cinema

India is famous for its cinema industry, collectively known as "Bollywood" by the

world. The first motion picture received by Indians was the Lumiere Brothers'

Cinematographe's six soundless short films, which were shown at the Watson

Hotel, Bombay in 1896. The turning point in the Indian cinema came in 1913,

when DadaPhalke produced India's first silent film „Raja Harishchandra‟. This film

had titles in both Hindi and English and was released in Bombay.

During the 1920s, the Indian cinema came under business laws, many new film

makers gained fame during the 1920s, such as DhirenGanguly for „England

Returned‟ etc. The Indian sound films hadquietly but quickly replaced the silent

films during the 1930s, when the first Indian sound film AlamAra, directed by

47

ArdershirIrani, was released in 1903 in Bombay. This showed how India was

moving towards modernization.

Banking and Finance:Emergence of Modern Banks in India.

It was in the late 18th century that Modern banking systems and institutions

emerged in India. The first banks among them were „The General Bank of India‟

established in 1786, and „the Bank of Hindustan‟, both are no longer in operation.

The State Bank of India is the oldest bank in existence, which was first founded as

the Bank of Calcutta in 1806.The Allahabad Bank, established in 1865, was the

first fully Indian owned bank. This bank in many other banks helped the Indians to

finance the profitable Indian cotton trade.However, some ventures resulted in mass

bankruptcies and banking in India remained under European dominance for many

years until the early 1900s. Even during World War I, II, and even until

independence, the banking sector in India faced many challenges. More than 94

banks in India collapsed between 1913 and 1918 from insufficient

investments. However, during the early 20th century, the banking market had

expanded to include the Punjab National Bank in Lahore and the Bank of India in

Mumbai which led the banking sector to a new level.

The Quaternary Sector:

Education

The education policies of the British were short lived, unjust, prejudiced and only

available for the rick and elite class, hence the quaternary sector failed under the

British administration. Though the British did establish many institutes for higher

education, the Indian public was neglected. Literacy was extremely low among the

Indians under British colonization. In 1911, only 6% of the adult population could

read; in 1931it had only slightly increased to 8%; in 1947 the literacy rate was only

11% of the total adult population.

The British did introduced a lot of regulation, standardization, and new

technologies to India, but at the same time de-industrialized India through

exploitative tactics, could not reach a black-or-white judgment as to whether

British rule benefited or deterred modernization of India's economy.

48

4.3 INDUSTRIAL POLICIES

At the time of independence Indian industries were either non-existent or infant

and had low capacities thus government intervention was needed. Without the

protection and support of government many modern and developed industries

would not have grown.

Secondly, Industries have a certain impact on the economy. This impact varies

from sector to sector. A new industry will attract skill, talent, labor and over time

grow into a fully developed industry.

Industries don't survive in isolation. One industry serves as a raw material provider

to one and the other industry may act as ancillary unit, for example: the iron and

steel industry is a raw material provider to automobile industry and automobile

industry is dependent on proper roads and infrastructural facilities.

4.4 INSTRUMENTS USED BY INDUSTRIAL POLICY:

Use of subsidies and tariff/non-tariff barriers: used to protect domestic industries

from external competition.

Import substitution: that is products are produced domestically and imports are

avoided.

Licensing requirements before commencement of business.

Industries reserved for the government with no private sector intervention.

Journey of Indian Policies from 1948-1991

Indian Policy Resolution, 1948

On 6th April, 1948 Government of India adopted Indian resolution for the welfare

of industrial development of the country. In this, Indian industries were divided

into four categories:

1. The first category included the manufacture of arms and ammunition,

production of atomic energy and management of railways

2. Second category included coal, iron and steel, aircraft, manufacturing of

telephone, telegraphs & mineral oil industries. All factories that were new were to

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be owned by public sector. The existing industries would be continued to be run by

private sector.

3. The third category included 20 large scale & basic industries wherein the

private sector had all the rights reserved to manage them although the state could

interfere as and when required. This included industries like automobiles, prime

movers, salt and sugar, machine tools, industrial alcohol, tractors, paper, heavy

chemical, rubber, cement, fertilizers, electric engineering, electro-chemical,

newsprint, cotton and woollen textiles, air and sea transport, power, non-metals,

minerals and industries related to defence were included.

4. The fourth category included remaining of the industries under private

sector that included both individual and cooperative .Special attention was given to

the development of cottage and small scale industries. Tariff policy, taxation policy

were also designed in this category along with maintaining sound industrial

relations between management and labour.

Indian Policy Resolution, 1956

India underwent lot of economic and political changes which required for a new

policy formulation. On April 30, 1956 second industrial policy was adopted. In

this, the industries were classified into schedules

1. Schedule A: In this schedule, 17 industries were included & the

responsibility of managing them was given to the state, industries included iron and

steel, atomic energy, heavy machinery, mineral oil, lead and zinc, railways,

wireless equipment, generation and distribution of electricity, heavy castings,

mineral oil, iron ore, and arms and ammunition.

2. Schedule B: 12 industries included were owned by the state. These

industries included aluminum, other mining industries and other non-ferrous metals

not included in the schedule A, machine tools, Ferro alloys and tool, steels,

fertilizers, the chemical industry, antibiotics synthetic rubber, carbonization of

coal, sea transport, chemical pulp and other essential drugs.

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3. Schedule C: In this, all the remaining industries were included whose

responsibility of development was left to the private sector. The industries were

controlled by state under Industries Development & Regulation Act of 1951.

Industrial Licensing Policy, 1970:

As per the recommendations of the Dutt Committee, the Government of India

announced a new Industrial Licensing Policy in February 1970.

A „core sector‟ was introduced which consisted of 9 basic industries and

industries related to defence needs. This included industries of agricultural inputs,

iron and steel, non-ferrous metals, petroleum, cooking coal, heavy industry

machinery, ship building and building of dredgers, newsprint and electronics.

It mentioned about „heavy investment sector‟ which included all those

industries having investment more than Rs. 5 crore.

The „middle sector‟ included all industries which had investment between

Rs. 1 crore and Rs. 5 crore.

Industries that had investment of less than Rs. 1 crore were placed in the

„Unlicensed sector‟.

The concept of joint venture came into existence

Industrial Licensing Policy,1973

In February, 1973, industrial Licensing Policy statement was adopted. A

new definition of „large industrial houses‟ was formulated which said that any

industry that has assets of more than Rs. 20 crore would be called large houses.

Thus, the earlier limit of Rs. 35 crore was redesigned.

In this policy, two previous recommendations, of 1970 policy i.e.,

exemption limit from licensing (raised from Rs. 25 lakh to Rs. 1 crore in 1970) and

the joint sector were maintained. This policy also expanded the area of core sector

which included 19 industry groups as compared to 9 industries permitted in 1970

policy.

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Industrial Policy – 1977

It was announced by Janata Government, which was led by Morarji Desai on 23th

December, 1977. This industrial policy statement 1977 was later replaced by

incumbent Congress Government in the year 1980. A non- congress government

was ruling dispensation at centre for the very first time. The Janata Government

had a different approach and philosophies regarding g planning from congress,

which also reflected in its industrial policy also.

Salient features:

The policy gave highest priority to the small scale and tiny industries. It

declared to establish one district industries centre in each district. This was done to

meet the requirement of industries within that district. It had also announced to

have a separate cell in the industrial developmental Bank of India; this was done to

cater the need of the small industries. This policy emphasized more on the

marketing, standardization, quality control etc. in small industries.

More attention was drawn on labour intensive technology, for which they

came up with small and ordinary machines and their optimal use to enhance

productivity and income of the workers engaged in small and cottage industries.

Sectors such as capital goods, iron and steel, petroleum, fertilizers, and other large

scale industries, were given limited role. It was made sure that the large scale

industries were not allowed to expand their production and instead small scale

industries were encouraged to expand. Thus role of large scale industries was

redefined to compliment the role of small industries. In small scale industries the

list of items reserved for exclusive production was expanded from 180 to more

than 500.

The policy also emphasized on public sector units in regards to the viability,

efficiency and profitability. It was declared by the government that minimum loss

would be taken over for selectively sick industries, help those bear losses, followed

by immediate measures to rehabilitate and manage the units taken over.

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The use of indigenous technology was brought in for future development of

industries. As for sophisticated sectors, the government will help buy best available

technology from abroad. Hence called for a restrictive use of foreign technology.

Maximum possible self-sufficiency and minimum export was introduced.

Those imports which was needed for development of priority industries were

allowed, which were restricted before.

The government decided in the interest of balanced regional development,

no more licenses will be issued for the establishment of industries within certain

limits of metropolitan cities.

The policy brought in increased participation of workers in management.

Also in the unnecessary areas, that are those which had no role to play in the

development of the country, the foreign investment was prohibited.

Lastly, this policy is remembered for a very important provision, which

states that foreign companies that diluted their foreign equity up to 40 % under

FERA (FORIEGN EXCHANGE REGULATION ACT) 1973 were to be treated at

par with the India companies, e.g. Coca cola and IBM.

Industrial Policy Resolution – 1980

IPR was adopted by government of India on 23th July 1980. Its main aim was to

facilitate an increase in industrial production.

For small sectors:

1. Increase in the investment ceiling was made.

2. The concept of nucleus plants was introduced to replace the earlier concept

of district industry centers.

3. In the villages, which are well compatible with the environment, the

promotion of village and rural industries was done to generate economic viability.

IPR 1980 reemphasized the spirit of the IPR 1956. Still the small scale sectors

remained the best sectors for generating wage and self-employment based

opportunities in the country.

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Industrial Policy- 1991

The government of India announced a new policy on 24th July, 1991. It had

an aim to correct the distortion and weakness of the industrial structure of the

country that had developed in 4 decades, with raising efficiency of the industries to

the internal tonal level and also accelerate the industrial growth.

The number of industries reserved for public sectors was reduced from 17

to 8. Except for a short list of 18 industries this policy abolished the industrial

licensing, this list further reduced to 6 in the year 1999, which included drugs and

pharmaceuticals, hazardous chemicals, explosives like gun powder and detonating

fuses, tobacco products, alcoholic drinks and defenseequipments. In metro cities

the compulsion for obtaining prior approval for setting units was removed.

The industries reserved for small scale sectors were continued to be so

reserved. This was the first industrial policy in which foreign companies were

allowed to have majority stake in India. In 47 high priority industries up to 51%

FDI was allowed. For export trading houses, 74% was allowed. It was promised

that foreign equity covers the foreign exchange requirement for the capital goods

that are exported. Some amendments in Foreign exchange regulation act (1973)

were also promised.

Major changes were as follows:

Industrial licensing policy: New Licensing Policy put an end to the

licensing, irrespective of the investment made, except for a list of 18 industries.

However out of these 18 industries, licenses on 13 industries have been removed

and now only 5 industries requires license.

Policy of public sector: In 1956, 17 industries were reserved for the public

sector in 1991 it was reduced to 8 industries and currently only 3 industries are

reserved for the public sector.

Privatization and disinvestment: Government decided to give a part of

government shareholdings in public sector to mutual funds and financial Institution

etc.

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Abolition of phased manufacturing programs‟ for new projects: the aim was

to indigenize technology. This was seen in electronic and engineering industries.

This was later abolished.

Removal of mandatory convertible clause: Pre-liberalization banks could

convert them from lenders to owners in long run this was done to nationalize

private firms and thus was abolished post liberalization.

FIVE YEAR PLANS:

First Five Year Plan: In the first five year plan, the industrial schemes were

implemented in areas of small scale industries like co-operative schemes, coir,

survey of small scale industries. Very little importance was given to large

industries in this plan. Here, the outlay for industries was around 112 lakhs, 3.7%

of the total plan outlay. Even though the first five year plan was a disorganized

effort of development, it gave considerable experience of planning to the state.

Second Five Year Plan: Kerala was recognized as a state when the second five year

plan was already formulated. In the second year plan more importance was given

to industry as compared to the first five year plan. During this plan more attention

was given to the promotion of cottage Industries, small and traditional Industries.

Third Five Year Plan: In this plan, slightly more importance was given to the

Industries. The outlay for the Industries was around 17.9 crores. Just like the

second five year plan, in this plan also a major part of the outlay was given to small

and cottage industries i.e. 8 crores.

Fourth Five Year Plan: In this plan, the allotment for Industries and mining was

Rs.2208 lakhs. After the third five year plan and before the fourth five year plan,

there were some gaps which were filled by Annual plans. During this time,

Industrial policy of 1967 was issued. According to this policy, the state was

supposed to function within the limits of the policy laid by the government of

India.

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Fifth Five Year Plan: In this Plan, outlay for Industrial development was around

6145 lakhs. The aim of this plan was to achieve more Industrialization by

modernizing the traditional sector and establishing new units. During this plan the

total expenditure was around 5478 lakhs which was 87.8% as per the total outlay.

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CHAPTER 5

MSME’S AFTER GLOBALIZATION

5.1 Impact of globalization

5.2 Globalization and entrepreneurship challenges for MSME

5.3 Current scenario of MSME

5.4 Effects of demonetization on MSME

5.5 Make in India

5.1 Budget 2017

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CHAPTER 5

MSME’S AFTER GLOBALIZATION

Globalization has had a major impact on enterprises, hence it is important to

examine the effect on globalization on businesses. Two effects of globalization are

global market opportunities and global market threats. Global market opportunities

include the inherent increase in the market, potentials for related businesses due to

the openness of the market and consumers, opportunity in trade and investments.

The opportunities also include the easy of availability of required resources. Thus,

it also gains access to cheaper resources and greater sources of materials as

required. However, the threats can affect the businesses seriously. Global market

threats are many but the biggest and most dangerous threat is increase in the

number of competitors in the market at national as well as international level.

Other threats include the uncertainty, economic changes, change in firms, etc.

These global market threats, such as increase in the market shares in either

domestic or international trade which affects the enterprise and forces businesses to

struggle to gain and sustain competitiveness. Competitive advantage means that a

firm has an additional edge over other rivals who can be in any terms such as cost,

knowledge, experience, products, research and development (R&D), services and

other factors that can contribute to success in the market. It might be relatively easy

for large firms to go global that is to enter in foreign market but it is difficult for

the micro, small and medium-sized enterprises.

5.1 IMPACT OF GLOBALIZATION

There are three types of globalization

1) Trade in Goods And Services

2) Movement of Capitals

3) Flow Of Finance

Due to globalization, the world leaves its boundaries for trade and businesses and

transforms the world into one huge market. In 1991 at the command of IMF and

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World Bank .Globalization led to an unequal competition between dwarf Indian

MNC and giant MNC. Going global in business terms can be stated as a

worldwide movement towards economic, financial, trade and communications

integration. Globalization indicates the opening of the local and national view to

an extensive outlook of an interconnected and interdependent world with transfer

of capital, goods and services at free of cost across national border. MSME‟s are

the most booming and easily offended sectors in Indian Economy. The

significance of this is it ensures the capacity of employment generation,

technological requirement, low capital and use of traditional skills, mobilization of

resources, use of local resources and exportability of products.

MSME‟s contribute about 8% of the country‟s GDP, and even 45% of the

manufacturing output and 40% of the exports. It provides the largest employment

share after agriculture. The impact of globalization was such that it came up with

vast variety of opportunities but along with came large challenges. The worst part

of this was that most of the small units were unaware of these changes happening

around them and had no idea of how it would affect them.

Due to globalization, India changed its meaning in trade and business; such a

change affected its social, cultural and also economic aspects of life. Globalization

had its impact on nearly every business. The internationalization of markets for

activities such as import, export, sales and purchasing has direct or indirect

influence on all of the factors and business related to it.

Advantages-

1. Long-term thinking, perspectives

2. No pressure for short-term success

3. High identification with the business

4. Ability to cooperate successfully for mutual advantage

5. Ability and willingness to enter partnerships

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Disadvantages-

1. Difficulties to adapt corporate culture to new situations and challenges

2. Potential conflicts between corporate objectives and personal objectives of

the owner

3. Risk to focus too many factors

4. In many cases not suitable for the complex planning and implementing of

international activities

5. Low willingness to introduce more sophisticated structures

6. Spending for market research and market entry take a much higher

proportion of total spending

7. Lack of internationally experienced employees

5.2 GLOBALISATION AND ENTREPRENEURSHIP CHALLENGES FOR

MSMES

New start-ups, with the existing enterprises that are innovative are beneficial in

many ways such as to create job and to have economic growth.

However, many and major challenges are faced in adapting new forms of

innovation as it nearly changes scenario. The survival and growth of existing

enterprises gets affected adversely by conditions such as the global financial melt-

down, demonetization, major economic announcements, etc and the economic

crisis that followed. The roles of innovative and entrepreneurial enterprises include

many tasks to be achieved.

a) Poor macroeconomic framework conditions

Due to the macroeconomic framework adoption by majority of the countries and

due to globalization, the entry, growth and exit are influenced, to a very large

extent. Inappropriate regulatory, tax policies, instability in macroeconomic

behavior prevents enterprises from growing at their maximum potential.

Macroeconomic instability, it is in the form of fluctuating values such as interest

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rates and exchange rates, investments and change in policies. Different factors such

as Application of rules and regulations, bankruptcy laws and procedures, unfair or

non-transparent policies and ineffective anti-corruption measures these factors

prevent from being innovative, restricting growth of the enterprises.

b) Obstacles in accessing international markets and knowledge

Operating in international markets gives an exposure to foreign competition as

much as it provides them with new opportunities. Globalization increases incoming

and outgoing of technologies, suppliers, markets, knowledge and many enterprises

make use of this exchanges to grow and diversify, on the other hand there are

others who do not make use of it. One of the reason for enterprises non-

participation in the global markets is, difficulty to find a suitable business partner.

Enterprise at global level requires trusted foreign partners. Policy makers may find

a model or framework which is helpful in developing strategies for survival and

growth. Findings indicate that an exploratory investigation of this nature is one of

first and it has practical implications for enterprises.

The impact of Foreign Direct Investment (FDI) on the survival of SBEs

Foreign direct investment (FDI) is one of the crucial factors of

globalization. It can be said that FDI is one of the most important aspect of

globalization. It creates stable and long-lasting links for enterprises for survival and

growth. According to World Investment Report 2012, despite of the disturbance in

the global economy of 2008 crisis, global FDI reached $1.5 trillion in 2011 and this

exceeded the pre-crisis average.

Impact of business networking on SBEs and SMEs

The business networking has a direct effect on daily performance and

survival of enterprises. Managing the new challenges and also to explore new

opportunities in domestic and global markets enterprises make use of networking.

The business networking shows direct impact in improving the efficiency and

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effectiveness of the enterprises, at local and in the foreign markets as

well.Networking is a context which can be used by enterprises to build and manage

relationships.

Why Supply Chain Management Is Important For MSMEs?

A good supply chain management provides great value to ultimate customer. SCM

is important for MSMEs in several ways. In the pre-internet era, sharing

information between supply chain partners was highly expensive. The alternative

available was private communication network whichwas beyond the limit of

MSMEs; therefore they chose not to communicate due to huge cost of

communication. Today with internet connectivity MSMEs can set up cost effective

communication networks with supply chain partners. Supply Chain Management is

of great interest in current years for manufacturing service sectors of the economy.

SCM helps various organizations in securing high quality materials and goods at

competitive price. It allows faster response to customer orders. This has benefitted

the organization from reducing the cost throughout the supply chain. MSMEs used

to suffer from incapability of reaching huge set of customers. This can be increased

by improving manpower and better skill requirements. MSMEs having better SCM

practices are in a good position to potentially tap the large market. New enterprises

providing good SCM capabilities will be discovered constantly. This is the

appropriate time for MSMEs who grab the opportunities and make huge business

gains.

Role of Human Resources in MSMEs:

Human Resource Management plays an important role in MSMEs to implement a

successful business strategy to face the challenges, organizations are facing an also

to ensure that they have the right people capable of delivering this strategy. While

the organization plans for a successful trajectory, there is a need for HR and

promoters to agree the change management agenda for the change in organization

culture. This sector has an engine of growth, especially in a developing country like

India due to their contribution for income generation, employment and the increase

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in GDP. In the last two decades, there have certain spaces where many MSMEs

have not grown either by choice or by challenges to transform their business. When

the organization grows, it becomes difficult to involve all employees in operational

decisions. HR can afford to give attention to individuals needs in terms of rewards

or/and career goals. HR functions can come as a weakness when all the efforts

involved in forming a team becomes fruitless. There can several reasons such as

dissatisfaction with pay, HR policies and practices, lack of hygiene factors etc.

5.3 THE CURRENT SCENARIO OF MICRO, SMALL AND MEDIUM

ENTERPRISES

The progress of the MSMEs (micro, small and medium enterprises) is being

booming day by day. Anyone can open their own business at some point of time in

life. The growth of the MSME sector is contributing towards the growth of India‟s

GDP and also providing increasing employment opportunities to the people. The

growth of MSMEs does not only provide increase in industrialization in the rural

areas but also helps in the reducing the imbalances and trying to distribute the

nation‟s wealth for India‟s growth.

5.4 EFFECT OF DEMONITIZATION ON MSMSEs

The MSMEs faced a crisis during the demonetization period as these enterprises

depend on daily and weekly wages to their workers and also for the future

investment. As there was a shortage of currency it reduced the profitability to the

MSMEs involved in the agricultural products, textiles, construction of automobiles,

steel, consumer durables. Also some companies had a shut down due to low cash

liquidity for a few weeks.

There has been an increase in digital transactions and use of cheques of around

41% in the registered MSMEs making the flow of cash more transparent. Digital

India will lead to more job opportunities in the marketing sector of such

enterprises; it will open a gate for new opportunities for the MSMEs. Conversion

of economy from informal to formal will not leak cash out of the system and more

profits can be earned. Also the banks will acquire more cash after the

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demonetization period which could decline the rate at which the investment is lent

to an enterprise; this could act as a gain for the growth of the MSMEs.

EXAMPLE: GOOGLE CEO SUNDAR PICHAI LAUNCHES DIGITAL

UNLOCKED INITIATIVE FOR STARTUPS, SMES IN INDIA:

SundarPichai, The CEO of Google.co has announced a new initiative which is

called DIGITAL UNLOCKED with the support of the IT MINISTRY OF INDIA.

This initiative is all about bringing the small size enterprises and startups to grow

their business on a digital platform which will help to connect to more number of

customers who can buy the product in India as well as in the foreign countries. The

main objective of this initiative is to provide courses which are certified by Google

and the Indian school of business, Hyderabad certification offered by FICCI

(Federation of Indian Chambers of Commerce & Industry). This programs will be

customized as well as offered online and offline.

5.5 MAKE IN INDIA CREATING A NEW PLATFORM FOR MSMEs:

The MAKE IN INDIA campaign which was initiated by our Prime Minister

Mr.NarnedraModi has been initiated for the growth of the manufacturing sector in

India and also investment in the innovation sector of the MSMEs that will

eventually lead to increase in GDP and prosperity of the country. The registration

and the funding process have become easier now than it has been in the past. The

government has realized that the increase in this sector will directly have a positive

impact on the economy. The Micro and Small Enterprises-Cluster Development

Programme is an initiative undertaken by the government so as to enhance the

productivity of MSMEs. Some of initiatives taken by the government to increase

productivity and reach globally are Indo-German Manager Training Programme

(IGMTP), Overseas Human Resources Development Association (HIDA), and

Japan etc. The detailed steps in the „Make In India initiative‟ will be explained in

the next chapter.

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5.6 BUDGET 2017 AND ITS IMPACT ON MSMEs:

Union budget of 2017 in favor of MSMEs presented by Finance

ministerShriArunJaitely focused on Reduction in Corporate Income Tax, Time

Limit Extension, Family Sector, Rural Population and the Youth. Asserting that the

budget provides a big relief to the MSMEs sector, ShriKalraj Mishra, the Union

Minister for Micro Small and Medium Enterprises, said that “lowering of income

tax of smaller firms and doubling the target under MUDRA Yojana will benefit

small enterprises”. Mishra stated that doubling the lending target to Rs.2.44 lakh

crore under the PradhanMantri Mudra Yojana for 2017-18 will also benefit the

small entrepreneurs. Bringing reduction in taxes for smaller companies to 25% will

make MSMEs more viable. As per the data of assessment year 2015-16 there were

6.67 lakh companies falling into this category. Therefore percentage wise the 96%

companies will get the benefit of this lower taxation.

Highlights of union budget:

Reduction in corporate tax

Time limit for availing benefits of income tax has been extended

Relief for MSME‟s that have non-cash receipts and have opted for presumptive

taxation

Carry forwarding of losses

Exemption of conversion of shares

Hundred percent penalty on cash receipts of 3000 INR or more

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CHAPTER 6:

ROLE OF GOVERNMENT ORGANIZATIONS FOR

ENTREPRENEURSHIP DEVELOPMENT

6.1 Doing business in Maharashtra

6.2 Institutions under the Government of India

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CHAPTER 6:

ROLE OF GOVERNMENT ORGANIZATIONS FOR

ENTREPRENEURSHIP DEVELOPMENT

Maharashtra has been the first choice of domestic and foreign investors. It

welcomes investors across the globe. A land of immense opportunities, also the

third largest state in the country in terms of land and wealth. Maharashtra has the

largest network of roadways in India which helps cities like Mumbai and Pune for

faster development in terms of infrastructure and industrial growth. A vibrant

industrial sector and a rapidly growing service sector is what the state boasts itself

as. Both contribute to about 86% of the domestic products, whereas agriculture

sector only contributes 14% of the income thought 55% of population is dependent

on it. Mumbai being the financial capital of the country consist large number of

headquarters of major financial institutions, insurance companies etc. Maharashtra

has been viewed as an industrial powerhouse of India.

The state strives to get investments from other countries as well as domestic

institutions. Maharashtra has many developed industries, not to forget IT

(Information technology) for which the government has set up many IT parks

around the cities.

6.1 DOING BUSINESS IN MAHARASHTRA

A recent study showed that Maharashtra received the highest investment share in

December 2014. The government has taken steps towards motivating the industry

in different ways, providing better infrastructure etc., due to which number of

investors started building up in the state consistently. This lead the government

launch a guide known as “DOING BUISNESS IN MAHARASHTRA” with an

intension to provide the required facilities to the investors and helping them out

with approvals required and guidelines towards starting up a business in

Maharashtra.

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The guide “Doing Business in Maharashtra” contains steps and procedures in

practical action taken towards starting up a business/enterprise in Maharashtra.

The major feature of the guide is the flowchart whichgives „easy to recognize‟

approvals to start up a business in Maharashtra.

The guide has categorized it into three stages,

1. Registration of an MSME or a large project

2. Pre commissioning stage- Approval for setting up a plant

3. Post-Production Approval

Figure 6.1 :Adapted from-Source : www.doingbusinessinmaharashtra.com-2016/17

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69

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6.2 INSTITUTIONS UNDER THE GOVERNMENT OF INDIA

In order to encourage the business activities the government gives various benefits

in the form of schemes and subsidies to the companies. There are various

organizations which work to promote and assist the entrepreneurs in setting up of

business, providing them with capital, task force as well as training required to

efficiently run the business. These organizations are either autonomous (non-

government) or Government Controlled. There are certain organizations which are

directly under the control of the state government which help to promote and

develop business in Maharashtra.

The institutes of organizations that run with the help of the Government are stated

below:

1. Maharashtra Industrial Development Corporation (MIDC).

2. Maharashtra State Khadi & Village Industries Board (MSKVIB).

3. Directorate of Skill Development, Employment and Entrepreneurship

Government of Maharashtra (MAHAROJGAR).

4. Dairy Development Department. Maharashtra State (DDD)

5. Maharashtra Fisheries Development Corporation (MFDC).

6. Maharashtra Agro Industries Development Corporation Ltd (MAIDC).

7. Maharashtra Centre for Entrepreneurship Development (MCED).

1. Maharashtra Industrial Development Corporation (MIDC)

After the establishment of Maharashtra State on May 1, 1960, the Administration

of Maharashtra founded a "Board of Industrial Development" (BID) on October 1,

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1960, under the Chairmanship of Shri. S. G. Barve, I.C.S. The several board

suggestions were obtained of the manufacturing sector were used up for

accomplishment and as per the Borkar Committees recommendation, expansion of

UVWS was trusted to the (BID).

The BID outlined the approvals and it was presented before the state legislation

and approved in the form of "Maharashtra Industrial Act" which contributed to

MIDC, as a detached organization on August 1, 1962. The BID were the first

personnel strength of MIDC

Roles and Objectives of MIDC

Acquisition and disposal of land : The Government of Maharashtra has handed

over the industrial land to the cooperates. Compensation for the private land in

paid up from the government funds. In turn cooperates plan the area and disposes

the land in suitable plots and recovers premium lease money at different rates for

different areas.

Provision of infrastructure facilities: Accordance with the MIC Act 1961

cooperates is required to provide infrastructural facilities like roads water supply

schemes, proper drainage, etc. It is stated that after full development of the

industrial area, it should be returned back to the government after striking out the

account of the industrial area concerned. In this the power to fix the rates for

premium of the lands lies with the cooperates. Both their aim is to achieve a

balance development of the entire state.

Providing services : Cooperates provides following services to the units,

Assured water supply: Pure water supply can be considered as an special service

of the MIDC. An investment of Rs 5 crores was initiated for the water supply

scheme as on 31st March 2002.

Maintenance of Industrial area : The cooperates requires to maintain the roads,

street lights, etc during the transitory period before handing over to the

government. In other areas the cooperates functions as committed obligation, for

which it recovers services charges to meet up to the expenditure of the services

provided.

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2. Maharashtra State Khadi & Village Industries Board (MSKVIB).

The MSKVIB is trusted with the job of providing monetary help to organizations

and persons for growth and operation of Khadi and village businesses and

managing them through supply of plans, prototypes and other practical

information. In executing activities, it may take such steps as to confirm

authenticity of the products and to set standards of quality and ensure that the

goods of Khadi and village industries follow the set standards.

The MSKVIB, directly or indirectly studies regarding the complications of Khadi

and village businesses besides studying or starting pilot projects for the

improvement of Khadi and village industries. The KVIC is certified to start and

sustain separate bodies for the purpose of dealing with matters incidental to its

activities.

Roles and Objectives of MSKVIB

To setup, inspire, help and carry on Khadi & Village Industries.

To help individuals by providing them with labour in their households and to give

finances and other form of financial help.

To conduct Training for growing technical abilities of the Craftsperson.

To produce tools and implements necessary for carrying Khadi & Village

Industries.

To organize for sale of finished goods by opening stores, shops or organize fairs.

To Conduct Training & Workshops to boost technical Abilities

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3. Directorate of Skill Development, Employment and Entrepreneurship

Government of Maharashtra (MAHAROJGAR)

Its vision is to enable employment and offer self-employment assistance for the

youth to increase their earnings, thus promoting wide-ranging progress. Deliver

responsive, clear and decentralized employment facilities and encourage Self-

Employment, e-governance, employability of work seekers, inspiring employers to

seek applicants from DSDE&E and attain reasonable socio-economic growth.

Roles and Objectives of MAHAROJGAR

Superior Skill Growth, Occupation and Entrepreneurship assistance centers for

differently-able people.

Registration and Placement of Job Seekers

SMS Alerts for eligible job seekers

Listing of Job Providers

Career Assistance &Counseling

Work Promotion Programme

Proficiency Expansion

Job Fair

Teaching for Tribal Youth

CNV Act, 1959 execution

To provide maintenance & help to service provider & service hunter from

unorganized sector.

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4. Dairy Development Department. Maharashtra State (DDD).

Distinct Dairy Development Department started in year 1958 to offer essential

organization for improvement of Dairy productions in entire state of Maharashtra.

The head of this dept. is denoted as “Milk Commissioner” Dairy Development

Dept. then started 38 milk treating dairies and 81 chilling center as per necessity.

To resolve problem of surplus milk Govt. started market in other towns. As a

consequence brand like Gokul, Warna started retailing their goods. This also

decreased part of Govt. Milk in marketplace. The DDD inspires farmers to start

dairy business as a secondary business.

Roles and Objectives of DDD

To improve the abilities of dairying in countryside persons and make them to agree

to take this activity as a joint occupation along with agriculture.

To develop Co-operative societies at village, taluka and district level.

To inspire dairying in Co-operative segment and to reinforce the Co-operative

dairies and unions to be financially strong.

To plan various programmes for effective working of dairies in Govt. sector.

To safeguard even production of milk in flush and lean season

To supply unadulterated and wholesome milk regularly to the persons of

metropolitan area at low rates.

5. Maharashtra Fisheries Development Corporation (MFDC).

Maharashtra Fisheries Development Corporation (MFDC) has been registered

under the Companies Act, 1956, (A Govt. of Maharashtra Undertaking) for

organized growth of Fisheries on marketable basis, with a sanctioned share capital

of Rs. 4 crore. The share capital of the Corporation as on 31st March 2010 is

Rs.2.75 crore. The Corporation obtains from the State Government, monetary help

in the form of share principal and grants. The State Government has hand over all

marketable and advertising Fisheries activities to this Corporation.

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MFDC has, since its start, been involved in the improvement and upkeep of the

various Fisheries places of Maharashtra. MFDC owns and preserves Ice Factories

at Sassoon Dock and Aurangabad respectively and having more Ice Factories,

Fisheries Industrial Estate Development is on the plan.

Roles and Objectives of MFDC

To Endorse any company or companies, for the purpose of obtaining all or any of

the possessions, privileges and accountabilities of the Company or for any other

purpose intended to advantage the Company

To launch or fund or aid information or support of associations, organizations,

funds, trusts and accessibilities accounted to help the employees or the

responsibilities of such persons.

To grant allowances and to subscribe or guarantee money for charitable or for

public, general or useful objects.

To train or to pay for the training in India or abroad of any member of the staff of

the Company or any other employee of the Company whichever in the current or

probable to be in the service of the Corporation in future.

6. Maharashtra Agro Industries Development Corporation Ltd

(MAIDC).

Maharashtra Agro Industries Development Corporation Ltd (MAIDC) was

established in 1965 to encourage transformation of the Agro segment through

automation and is a obvious sample of the progressive guidelines of the state. The

objective of the corporation is to make obtainable to the agrarians of Maharashtra

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standard feature Composts, Insecticides, Agro Industrial Implements & Animal

feed at reasonable rates.

Maharashtra Agro Industries Development Corporation Limited (MAIDC)has also

been designated as State Nodal Agency by Ministry of Food Processing Industries,

Govt. of India. In its role as State Nodal Agency it inspects & forwards several

applications of entrepreneurs under different schemes of aid from Govt. of India. It

also assists entrepreneurs in making plans, choosing the area, etc. MAIDC has also

established a Food Park at Butibori near Nagpur with an idea to offer shared

infrastructure amenities for small to medium food handling units. MAIDC is also

in the course of setting up a Flower Auction Centre in Mumbai.

Roles and Objectives of MAIDC

To manufacture and distribute Agricultural Farm Machinery.

To produce and dispense other farming inputs such as Manures, Insecticides, Seeds

etc.

To make and allocate yields relating to Dairy, Poultry and Allied Trade.

To improve agro based businesses for booming out handling of agricultural foods

and to assist such activities.

To render aid to persons, who are in the area of cultivation and associated

productions in revolutionizing their farms and businesses.

7. Maharashtra Centre For Entrepreneurship Development

MCED has been a innovator in adopting shared and financial entrepreneurship

since 1988. It is a teaching establishment in the primary area of entrepreneurship

improvement. It works as a organizer and director for the building and refinement

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of the entrepreneurial essence and the idea of „self-employment‟ in a country that is

mainly motivated by third party occupation.

At MCED, there is continuously the hummable ring of individuals conversing,

thinking, creating plans and refurbishing abandoned ideas. The thrum of effort and

the thrilling buzz of action is a permanent part of the work principles. MCED is

also an extremely expertise savvy organization which, not surprisingly, is one of

the few workplaces to impose the paperless office concept. This peaceful and

productive office atmosphere has been cherished by the absence of a official

supervisor as is the case in other admins. The Governing Council is the rule

making authority of this premier organization and Executive Committee is

observing after day-to-day running of the Centre.

Roles and Objectives of MCED

To spread entrepreneurial values.

To grow entrepreneurs through organized training.

To distribute information and data concerning entrepreneurship.

To aid businesses and organizations in assembling human resources with an

entrepreneurial method.

To generate awareness about developing & upcoming entrepreneurial chances and

encounters.

To improve competencies in business internationalization.

To conduct Organizational Development Programs.

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CHAPTER 7:

ROLE OF NON-GOVERNMENT ORGANIZATIONS FOR

ENTREPRENEURSHIP DEVELOPMENT

7.1

Impact of Non-Government Organisations in Entrepreneurship

Development

7.2

Non-Government Organisations of Maharashtra in

Entrepreneurship Development

7.3 Some active Non-Government Organisations in Maharashtra

7.4

Role of Non-Government Organisations in development in

Women Entrepreneurship

7.5

Entrepreneurship Development among Women in

Maharashtra

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CHAPTER 7:

ROLE OF NON-GOVERNMENT ORGANIZATIONS FOR

ENTREPRENEURSHIP DEVELOPMENT

NGOs, being a social developmental objective, have been playing important roles

as facilitator or intermediary in microfinance movement in India. Such kind of

NGOs, perform excellence in the efforts of development in different capacities.

7.1IMPACT OF NGOs IN ENTREPRENEURSHIP DEVELOPMENT

While the role of NGOs in entrepreneurship development assessed what they do,

the impact needs to assess what they have done. National Knowledge commission

states that a successful entrepreneur ecosystem is the function of a number of

factors working in tandem. „Entrepreneurial triggers‟ are Individual Motivations,

Socio-cultural Factors, Access to Early-Stage Finance Education and Business

Entrepreneurship involves the community, family academia, financial player‟s

government, industry, and potential entrepreneurs themselves. Promoting

Entrepreneurship involves development that is reflected in following dimensions.

Developing Entrepreneurial Culture: NGOs through their awareness have been

successful in developing an entrepreneurial culture among the beneficiaries.

Improved Standard Of Living: Improvement in standard of living of

beneficiaries could be a meaningful indicator of the economic impact of

development initiatives.

Savings Creation: Beneficiaries of the NGOs shall appreciate a positive growth in

their savings and household assets as a result of the developmental initiatives.

Recognition in the Society: It is important impact that adds to the motivation of

beneficiaries to be part of the development initiatives. Improved morale would in

turn lead to high achievement orientation

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Capacity to Deal with Official Formalities: When routed through the NGO-SHG

window, they are better molded with confidence to approach the authorities for

their requirements. Building awareness of the official requirement acts as strong

morale builder in this aspect.

Skill Development: Training is the main part of the entrepreneurship development

to develop the technical skills.

Capacity to undertake responsibilities: As linked with entrepreneurship

development, efforts of NGOs in this line contribute to build ability to undertake

responsibilities.

Effective Utilization of Man Hours: Development initiatives of NGOs attempt to

facilitate an effective utilization of man hours in income generating activities.

Improved earnings: Income is a key variable to determine effect of any project

under evaluation. The financial requirement is one of the most basic needs hence

the beneficiaries are expected to have an impact on their earnings by the

development initiatives and NGO intervention.

7.2NGO`S OF MAHARASHTRA IN ENTREPRENEURSHIP

DEVELOPMENT

In Maharashtra Non Profit Organizations/ Non-Governmental Organizations are

part of social development and welfare of the state people. Maharashtra NGOs are

participating in Social development and charitable issues organized by Government

and welfare groups. NGOs have been implementing the programmes related to

Women Employment, Rural and Urban Development forming and supporting Self

Help Groups. Research and Development are major part of many active NGOs in

Maharashtra. Many NGOs in Maharashtra have taken up the programme of

entrepreneurship development in rural areas of Maharashtra as 29.6% of state lives

in abject poverty out of total Indian Population.

Objectives of NGOs in Maharashtra are:

• To serve as an instrument of rural development

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• To develop, standardize, popularize and commercialize innovative rural

technologies

• Making traditional rural business more profitable

• Generating new business and employment opportunities

7.3 SOME ACTIVE NGOS IN MAHARASHTRA

World Vision India, (Pune): It is a Christian humanitarian organization working

to create lasting change in the lives of small children, families and societies living

in poverty and injustice. It serves people of all religion, caste, race, ethnicity or

gender. Spread across 174 districts in India, works through long-term sustainable

community development programmes and immediate disaster relief assistance.

Yerala Projects Society, (Sangli): Yerala Projects Society is a registered NGO,

working for the poor and needy people in underdeveloped areas of Sangli district.

Mission-To Support deprived families to satisfy their basic needs, build self-

sustaining community, and bring all underdeveloped elements of the community in

the stream of development.

Vision- YPS envisioned the development of under privileged sections of society by

keeping their culture, wisdom, self-esteem and self-respect intact.

7.4 ROLE OF NGOS IN DEVELOPMENT IN WOMEN

ENTREPRENEURSHIP

Entrepreneurship is emerging as an important avenue in gaining economic

independence for women. According to current status many of emerging women

entrepreneurship is in small enterprises. there are many challenges faced by them,

these challenges can be classified as; lack of managerial skills, difficulty in

accessibility of finance ,lack of Self Confidence, lack of easy access of

entrepreneurial training and post training support, lack of awareness , lack of

education etc. in recent times, the importance of entrepreneurship have been

realized by government as a prominent alternative to traditional wage employ in

new its role in increasing the pace of economic growth. Therefore Indian

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government has given various especial policies to help the women entrepreneurial.

However there are many limitations among the women entrepreneurs in accessing

these facilities. These Limitations to come due to various factor, such as, location

of government training Centre are in far from that, lack of transportation in remote

area.

There number of NGOs in India are trying to help women entrepreneurs at various

level, these are (ICECD) international Centre for entrepreneurship and careers

development, (FIWE) Federation of Indian women entrepreneurship these are

prominent NGOs providing Services to women entrepreneurs in this field for more

then15 year. It is very important to highlight that limited number of literature are

available on the NGOs and NGOs dose contribution to the promotion of women

entrepreneurship in India.

Present study NGOs are working very gently and contributes significantly to the

knowledge about the appropriate and effective approach of the NGOs to support

women entrepreneurship in Maharashtra.

7.5 ENTREPRENEURSHIP DEVELOPMENT AMONG WOMEN IN

MAHARASHTRA

MahilaArthikVikasMahaMandal: It is registered under companies act, 1956 having

district officers in 34 districts of Maharashtra and head office in Mumbai. Main

objective is build organization, capacities, confidence among women.MAVIM

through the SHGs self help groups implement several group projects:

Maharashtra Rural Credit Project: The MRCP gave direction to functioning

and working of MAVIM and influences its policies for empowerment of

women.

Swarnajayanti Gram SwarojgarYojana: sponsors scheme for poverty

alleviation and being implemented by rural development department and district

rural development agencies.

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Swayamsiddha- Integrated Women Empowerment Programme: central

government sponsored India Mahilayojana and Mahilasamrudhiyojana merged

in to new scheme to form Swayamsiddha.

RamaiMahilaSakshamikaranYojana: Formed for scheduled caste women.

AdivasiVikasPrakalp: for empowerment of tribal women for 8 districts of

Maharashtra.

RashtriyaSwayamVikasYojana: sponsored scheme being implemented in each

district for women.

KrishiSaptakYojana: training for rural women to make their participation more

effective in agriculture.

NABARD add-on: formation of 1000 SHGs in 10 districts.

MahilaSwavalambbanNidhiYojana: the scheme in order to bring in women

already organized in SHGs in development mode by imparting them

entrepreneurship training and making available to them hustle free development.

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CHAPTER 8

TAX STRUCTURE IN INDIA

8.1 Types of taxes in India

8.2 Details of types of taxes in India

8.3 5 tax benefits for every entrepreneur in India

8.4 5 signs for entrepreneurial mind-set

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CHAPTER 8

TAX STRUCTURE IN INDIA

India has a well-structured system according to the population in India. In India,

taxes are the largest source of income for the government. This income is invested

in various projects for the development of the country. Taxes are determined by

state and central government also local authorities like Municipal Corporation.

Taxes cannot be imposed unless it is passed by law.

Some minor taxes are also imposed by the local decision makers such as the

Municipality. The authority to impose a tax is derived from the Constitution of

India which assigns the power to impose various taxes between the Central and the

State. An important, limitation, on this power is Article 265 of the Constitution

which states that "No tax shall be levied or collected except by the authority of

law". Therefore, each tax impose or collected has to be backed by

the StateLegislature or the Parliament.

8.1 TYPES OF TAXES IN INDIA

Taxes are of two distinct types, direct and indirect taxes. The difference comes in

the way these taxes are implemented. Some are paid directly by the people, for

example income tax, wealth tax, corporate tax etc. while others are indirect taxes,

such as value added tax, service tax, sales tax, etc.

1. Direct Taxes

2. Indirect Taxes

Direct Tax:

They are tax which is paid directly. These taxes are charged directly on entity or

individual and cannot be transferred to anyone else.

Income tax Act

Wealth Tax Act

Gift Tax Act

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Expenditure Tax Act

Interest Tax Act

Indirect Tax:

These are those taxes that are charged on goods or services. In this the tax are not

directly paid by person to government but they are charged on products and are

collected by the person selling the product. Best example can be VAT (Value

Added Tax), Taxes on Imported Goods, Sales Tax, etc. These taxes are charged so

as to push the price of the product.

Value Added Tax

Service Tax

Sales Tax

Custom duty &Octroi

Excise Duty

Merits of direct tax

Economical: Direct taxes are very cheap in the sense that the cost of collecting

these taxes are comparatively less because they are collected by source and are

paid to the government directly.

Certainty: they satisfy the canon of certainty. It is known by the Tax payers that

how much they have to pay and on what basis they have to pay. It is also known by

government that amount to be collected.

Equity: Direct taxes can be made to follow to the principle of ability to pay by

choosing the correct rate schedules. By making the rate structure workable and

continuous their burden can be put more on rich than poor.

Reducing imbalance: Direct taxes are continuous in nature. Rich people pay higher

taxes because of their higher income and hence this reduces imbalance of income

and wealth.

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Civic awareness: person should know his will be well utilized for the benefit of the

public such as the developmental and defense projects, infrastructural

development, establishment of schools, hospitals, homes etc.

Demerits of direct tax

Unpopular: Direct taxes are directly imposed on the person. They cannot be

shifted. Tax payers feel their pain directly.

Probability of tax avoidance: Direct taxes encourage tax evasion. People hide their

income from the tax official to avoid taxes. In (India, there is a large scale of tax

avoidance especially by businessman.

Inconvenience: The main demerit of direct taxes is that they cause a lot of

inconvenience to the tax payers. Sometimes, the taxes payers have to pay the entire

tax in one go. Besides, the tax payers have to complicated documents of their

income and outlay.

Unfavourable effects on will to work and save: Direct taxes may have an

unfavourable impact on will to work and save. Higher rates of income tax may

disappoint people to work hard or work overtime. Similarly, the direct taxes may

lessen their wish to save.

Merits of indirect tax

Benefits: they have the great benefits if being convenient. They are paid in portion

and in parts instead of lump sum payment. Moreover, amount of taxis included in

the price of commodity and hence load of these is not felt much by tax payers.

Flexible: Indirect taxes can be made flexible and fertile, especially when they are

forced on important goods and services like edible oils, flour etc. whose demand is

not flexible. The government can get enough income by increasing the tax rate of

these commodities.

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Less chances of tax avoidance: Another merit of indirect taxes is that with proper

administration, the chance of tax avoidance in these is very less. They are difficult

to be evaded as they are included in the price of the commodity.

Wide coverage: Indirect taxes can charge on large diversity of goods so that most

of the persons give something to the income of the government.

Equity: Indirect taxes can be made equitable to the people by charging high taxes

on costly items and low taxes in the necessary goods.

Encourage production and investment: Indirect taxes can be used to assign

resources in according with the requirements of the economy. The government can

move the production and investment from less important industries to high

important industries. There have been many provisions for this in the budgets

passed by the government of India.

Demerits of indirect tax

Regressive and unjust: The main demerits of indirect taxes are that they feed

inflationary forces. Indirect taxes are usually charged on the consumption of the

product. They are unfair in sense that middle class people have to pay same amount

as rich people. They reject the principle of skill to pay and therefore their load is

more on poor people.

Inflationary effect: Another fault of indirect taxes is that they feed inflationary

forces. Force of indirect taxes on a commodity increases its price. This may lead to

rise in cost of production as a result of which workers union demands more of

wages that again increases price of product and this coil go on.

Uneconomical: Management cost of collecting indirect taxes is usually high as they

have to be collected from large number of individuals. Moreover, traders more than

the exact amount of product tax charged by increasing the prices of taxed goods

and services.

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Uncertain: The revenue from indirect taxes cannot be estimated accurately. An

indirect tax leads to the rise in the price of the commodity. Consequently, its

demand drop and it is difficult to know the extent to which demand of product has

dropped.

8.2 DETALS OF THE TYPES OF TAXES IN INDIA:

Direct Taxes:-

These types of taxes are directly forced& paid to the Government of India. There

has been a steady increasing in the net Direct Tax collections in India over the

years, which is very good signal. Direct taxes, which are imposed by the

Government of India, are

(1) Income Tax:

Income tax, this tax is the most common type of tax known to everyone. Every

individual whose total income exceeds the taxable limit has to pay an income tax

based on the rates relevant from time to time.

(2) Capital Gains Tax:

Capital Gain tax is a tax on gain in capital. If the individual sells property, shares,

bonds &expensive material etc and earns profit on it within alimited time frame

then the individual is expected to pay capital gain tax. The capital gain is the

difference between the money received from selling the asset and the price paid for

it.

Capital gain tax is divided into short-term gains and long-term gains.

(3) Securities Transaction Tax:-

A huge amount of the people do not expose their profits and avoid paying capital

gain tax, since the government can only tax those profit amounts that have been

declared by the people. To fight with this situation the government has introduced

STT (Securities Transaction Tax) which is applying on every transaction done at

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stock exchange. That means if you buy or sell equity shares, derivative

instruments, this tax becomes applicable.

This tax is added to the price of security during the transaction itself; hence this tax

cannot be avoided.

(4) Perquisite Tax:-

Previously Perquisite Tax was known as FBT (Fringe Benefit Tax) which was

ended in 2009; this tax is on the benefit given by the employer to the employee.

E.g. If the company gives an individual non-monetary benefits like car with driver,

club membership, ESOP etc then all such benefits is taxable under the perquisite

Tax.

(5) Corporate Tax:-

Corporate Taxes are yearly taxes payable on the income of a corporate company

operating in India. In India, for the purpose of taxation the companies are broadly

classified into India domestic companies and foreign companies.

(6) Sales Tax:-

Sales tax can be charged on the sales of movable goods. Sale tax on the Inter State

sale is charged by the Union Government, while sales tax on intra-State sale (sale

within State) (now termed as VAT) is charged by the State Government. Sales can

be broadly studied in three categories. (a) Inter-State Sale (b) Sale during

import/export (c) Intra-State. State Government can impose sales tax only on sale

within the State.

(7) Service Tax:

Most of the paid services are inclusive of a tax; this tax is called service tax. Over

the past few years, service tax has been expanded to cover new services.

Few of the major services which comes under a particular place of service tax are

telephone, tour operator, architect, interior decorator, advertising, beauty parlor,

health center, banking and financial service, event management, maintenance

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service, consultancy service. Current rate of interest on service tax is 14.5%

(February 2017). This tax is proceeding on to the public by the service provider.

(8) Value Added Tax:-

The Sales Tax is the most significant source of revenue of the state governments;

every state has their respective Sales Tax Act. Tax imposed by the Central

government on sale of goods is called as Sales tax; same is called as Value added

tax by the State government. VAT is additional to the price of goods and is passed

on to us as buyer (end user). The government has approved to merge service tax

and sales tax in the form of Goods and service tax (GST).

(9) Custom duty &Octroi (On Goods):-

Custom Duty is a type of indirect tax charged on goods brought into India. This

duty is normally payable at the port of entry like the airport. This duty rate is based

on the nature of items.

(10) Excise Duty:-

An excise duty is a type of tax charged on goods produced within the country. This

is the opposite of custom duty which is charged on importing goods from outside

of country. Another name of this tax is CENVAT (Central Value Added Tax).

(11) Anti Dumping Duty:-

Anti Dumping Duty is when the goods are exported by a country to another

country at a lesser price than its normal value. This is an unfair trade practice

which can give a falseeffect on international trade

Other Taxes:-

(12) Professional Tax :-

If an individual is an earning professional he/she will have to pay professional tax,

it is forced by respective Municipal Corporations on the public. Many of the states

in India charge this tax; the rate on which this tax is levied is not applicable in all

the states.

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(13) Dividend distribution Tax:-

Dividend distribution tax is the tax forced by the Indian Government on companies

according to the dividend paid to a company‟s investors. Dividend amount to

investor is free of tax; at present dividend distribution tax is 15% (as of February

2017).

(14) Municipal Tax:-

The Municipal Corporation in each city levies a tax in terms of property. Every

property owner has to pay this tax. The tax rate for the municipal tax is not the

same in every city.

(15) Entertainment Tax:-

This tax is enforced by the state government on every financial transaction that is

related to entertainment such as movie tickets, major commercial shows exhibition,

broadcasting service, and cable service.

(16) Stamp Duty, Registration Fees, Transfer Tax:-

If an individual decides to purchase any property than in addition to cost paid to

seller, the individual must consider additional cost to transfer that property on

his/her name. This includes the cost for registration fees, stamp duty and transfer

tax. This is officially compulsory for preparing legal document of the property. In a

simple context, this tax is enforced on the handing over of the title of property

ownership from one person to another person. It is a legal transaction fee & stamp

duty. This amount of the tax differs in terms of property to property, based on the

cost of the property.

(17) Education Cess, Surcharge:-

Education Cess is removed and used for Education of poor people in INDIA. All

taxes are subject to an education cess in India. The tax amount is 3% of the total

tax payable. The education cess is mainly applied on Income tax, excise duty and

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service tax. Surcharge is an extra tax that is added to an individual‟s existing tax

calculation. This tax is applied on the amount of tax.

(18) Gift Tax:-

If an individual receives gift from someone, it is included with his/her income then

the individual needs to pay tax on it. This tax is called as gift tax.

This tax is applicable if the amount of gift or value is more than 50K in a year.

(19) Wealth Tax:-

Wealth tax is a direct tax. This tax is charged on the net wealth of the assessed.

Wealth tax is chargeable in respect of Net wealth corresponding to Valuation date.

Net wealth means all assets less loans taken to acquire those assets. Wealth tax is

1% on net wealth more than 30 Lakh. So if an individual has more money in terms

of assets, then he/she has to pay this tax.

Note: - Wealth tax is terminated by government in budget 2015. Henceforth the

surcharge of 12% is applicable on per person earning more than 1 crore (as on

February 2017).

(20) Toll Tax:-

At some of places it is mandatory to pay tax in order to use infrastructure (road,

bridge etc.) build from the public tax fund money given to government as Tax.

This tax is known as toll tax. This tax amount is very small amount but, to be paid

for the continuous maintenance work.

(21) Swatch Bharat Cess:-

Swatch Bharat Cess is recently being enforced by the government of India. This

tax is applied on all taxable services from 15th November, 2015. The tax rate of

Swatch Bharat Cess is 0.5%.

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(22) Kristi Kalian Cess:-

In budget 2016 the Finance Minister has introduced new tax namely Kristi Kalian

Cess. This cess is introduced in order to extend welfare to the farmers. 0.5% is the

tax rate of Kristi Kalian Cess. This tax will be enforcing on all taxable services.

This tax is inclusive in the service tax. Once this cess is applied, individuals are

expected to pay service tax @ 15%.

(23) Dividend Tax:-

This new tax is introduced in 2016 by the finance minister. It is proposed that 10%

additional tax will be enforce on dividend income of more than 10 Lacs from 1st

April 2016 onwards.

(24) Infrastructure Cess:-

New Infrastructure cess is imposed recently in budget 2016 on car and utility

vehicle. 1% infrastructure cess is applicable on petrol/LPG/CNG-driven motor

vehicles of length not exceeding 4 meters and engine capacity not exceeding

1200cc. On diesel motor vehicles is 2.5% of length not exceeding 4 meters and

engine capacity not exceeding 1500cc and 4% cess is applicable on big sedans and

SUVs.

(25) Entry Tax:-

This entry tax is imposed by Gujarat, Madhya Pradesh, Assam, Delhi and

Uttarakhand state government recently. The tax rate is variable 5.5-10% depending

upon the state. All items entering in the state boundaries ordered via E-commerce

are under this tax boundary.

So in total an individual has to pay twenty five different taxes in direct or indirect

way.

8.3 :TAX BENEFITS FOR EVERY ENTREPRENEUR IN INDIA

In order to move to boost startups in the country, the government has introduced

various exemptions and benefits for entrepreneurs.

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These changes came into existence at the commencement of „Startup India‟ Policy,

this has resulted in large number of exemptions and concessions.

1. 100% Tax Exemption for First Three Years

“This exemption is proposed to provide a deduction of 100% of the profits and

gains derived by a qualified startup involving innovation, development,

deployment or commercialization of new products, processes or services driven by

technology or intellectual property,” Finance Minister Mr.ArunJeitley while

announcing the 2016-17 Union Budget in the Parliament. This has come to power

inorder to give a boost to the budding entrepreneurial ventures; the government has

decided to not impose tax for three years.

2. Abolition of ‘Angel Investment Tax’.

As a form of further relief, the government has stopped the „Angel Investment Tax.

Under this exemption the angel investors, i.e., family and friends and domestic

funds not registered as Venture Capitalists, will be barred from taxation on these

investments.

3. Setting up of a ‘Fund of Funds’ for Startups.

In order to help startups in their first stage by providing them with the necessary

financial increase, the government has decided to set up a fund with an initial

startup of Rs. 2,500 crore and a total corpus of Rs. 10,000 crore over a four year

period.

Life Insurance Corporation of India will be an investor in this fund which will

support a whole range of sectors like manufacturing, agriculture, health, etc.

4. Exemptions in Capital Gains Tax

There is 20% of capital gains tax being exempted by the government recently. In

sale of capital assets, such as stocks, bonds, etc Capital gains tax is charged. This

was a long-pending demand and is deemed to prove highly lucrative for startups.

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5. Other Tax Adjustments and Fund Allocations to Boost Startups

Setting up of provisions to support entrepreneurs belonging to SC and ST, an

allocation of Rs. 500 crore for SC/ST and women entrepreneurs under Startup

India has been initiated.

Also for lowering the long-term capital gains for unlisted firms from 2yrs to 3yrs

an amendment in the Motor Vehicles Act to enable entrepreneurship in the road

transport sector has been enabled.

Rising the eligibility of the scheme of presumptive tax for small businesses, is done

by permit businesses with a turnover of up to Rs. 2 crore from the earlier Rs. 1

crore to enjoy coverage under it.

Provision for „Employee Provident Fund‟ for the first three years, this is brought to

save 12 % of the costs for the startups and provide security benefits for the

employees.

Relief to entrepreneurs living in rented houses away from their homes by raising

the 80 GG deductions from Rs. 24,000 to Rs. 60,000.

8.4 :AN ENTREPRENEURIAL MINDSET

1. The Individual take action.

Barbara Corcoran, founder of The Corcoran Group and co-star of TV‟s Shark

Tank, says people who have a concept but not necessarily a detailed game plan is

more likely to have that entrepreneurial je ne sais quoi. “I hate entrepreneurs with

beautiful business plans,” she says.

2. Being Fearful.

“Many entrepreneurs are judged as ambitious are really insecure underneath,”

Corcoran says. When assess potential investments, she adds, “I want someone who

is scared to death.” Those who are nervous about failing can become highly

focused and willing to do whatever it takes to succeed. If you feel unconfident, use

that emotion to drive you to attain your business goals.

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3. Being resourceful.

Tony Hsieh, lifelong entrepreneur and CEO of Las Vegas-based Zappos, “because

he never had precisely the resources he needed but would somehow figure out how

to make everything work out. Ultimately, I think that‟s what being an entrepreneur

is all about.” It‟s not about having sufficient resources, he explains, but being

resourceful with what you do have.

4. Obsession over cash flow.

Prior to founding Brain shark, a Waltham, Mass.-based provider of sales

productivity software, Joe Gustafson bootstrapped a venture called Relational

Courseware. “All I ever thought about was cash flow and liquidity,” he admits.

“There were 7 times in [the company‟s] 8 year history when I was days or hours

away from payroll and didn‟t have enough cash to make it.”

5. Risk Taking

Stephane Bourque, founder and CEO of Vancouver, British Columbia-based

Incognito Software, says true entrepreneurial types are more likely to ask for

forgiveness than authorization, forging ahead to address the opportunities or issues

they recognize.

“Entrepreneurs are never satisfied with the status quo,” says Bourque, who

discovered he was not destined for the corporate world when his new and superior

ways of doing things were interpreted as unwanted criticism by his bosses. Now,

he says, “I wish my employees would get into more trouble,” because it shows they

are on the lookout for chance to improve themselves or company operations.

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CHAPTER 9:

INDIA V/S TAX FREE HAVEN COUNTRIES

9.1 Tax haven economy

9.2 Description of tax havens

9.3 Tax exemptions in India

9.4 Tax evasion in India

9.5 Common methods of Tax evasion

9.6 Penalties for Tax evasion

9.7 Consequences of Tax haven verses developing countries

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CHAPTER 9:

INDIA V/S TAX FREE HAVEN COUNTRIES

This chapter discusses about the benefits given by India and Tax Haven Countries

for the upliftment and smooth functioning of the micro, small and medium

enterprises. So to understand the topic of Tax Havens, it is first essential to

understand which the tax haven counties in the globe are and how the business

develops in these countries.

9.1 TAX HAVEN ECONOMY

Tax havens are those jurisdictions in which the tax payers of that area have to pay a

very minimal or no tax at all. As such there is no such term as tax haven countries

but those countries which are very generous towards tax incentives are known as

tax haven countries. Some definitions refer to a state, country or territory which

maintains a system of financial secrecy which enables foreign individuals to hide

assets or income to avoid or reduce taxes in the home jurisdiction.

Many companies tend to invest or shift their office to such countries to get the tax

benefits which are offered. Tax haven benefits the countries as well as the

companies and also the individualsfunctioning in the company. It benefits by

drawing capital to their banks and financial institutions, which can form a huge

difference in the financial stability of the company, individuals get benefits through

tax and get a citizenship or domicile.

Tax havens have grabbed attention from policymakers in the past years. This

provides an overview of an emerging body of research and development that

analyzes the consequences of the existence of tax haven countries. For example,

recent theory suggests that tax havens tend to have stronger governance

background than comparable to the other non-haven countries. Especially tax

havens countries provide opportunities for tax planning by huge corporations. It is

always been a dispute that the tax of high-tax countries attract the countries much

more than what we imagine.

Although tax havens have get an attention of spreading worldwide interest in each

minds in recent years, there is no as such definition of what it is mean. But, the

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term is meant to countries and territories that offer favourable tax benefits for

foreign investors. The parts of these tax benefits include, first and foremost, low

corporate tax rates. There are a bunch of other constituents common to tax havens,

such as low withholding tax rates on foreign investors. Tax haven countries always

have a better communications and infrastructure, as quantify by the numerical

value of telephonic lines per capita. They are also badly endowed with natural

resources.

A tax havens country declares that there is smooth the flow of capital around the

world, by removing barriers which includes Taxes, regulation and democratic laws.

Havens are territories where you can deposit/invest your wealth to develop your

home land. Those legislations are all over the tax, or criminal laws, or rules about

transparency and disclosure, or financial regulations.

In the Indian context, a tax haven is often associated with Switzerland and its

numbered bank accounts. But the tax havens are in large numbers and their

importance has grown tremendously over the years. It is astonishing that around

half of the international trade takes place through these tax havens.

These tax havens has some similar features such as ease of setting up companies,

trust, foundations, minimal disclosure requirement and NO or LOW taxation

policies on income and wealth.

The Tax Haven countries in the world as of 2016 are as given in the chart below:

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Source : https://www.gobankingrates.com

On February 2008, the Organization for Economic Co-operation and Development

(OECD) has identified three key factors which identifies whether the jurisdiction is

a tax havens or not,

I. No or Nominal Taxes: The tax havens which imposes no or nominal taxes

or are perceived to offer themselves as a place to be used by non-resident to escape

high taxes from their resident country.

II. Protection of Personal Financial Information: Tax heavens have strict

secrecy laws for their client under which it does not discloses any information of

their clients to foreign tax authorities. This prevents transfer of information and

helps their clients to avoid any scrutiny by foreign tax authorities.

III. Lack of Transparency: A lack of transparency is another factor used to

identify tax havens. The OECD is concerned that all the laws should be applied

LuxembourgCayman Islands

Isle of Man Jersey

Ireland Mauritius Bermuda Monaco

Switzerland Bahamas Guernsey Bahrain

Malaysia Panama Japan Germany

USA Singapore Hong Kong

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openly and consistently, and all the information needed by foreign tax authorities

should be provided as of when the situation occurs. Lack of transparency in one

country makes it difficult and often impossible for other tax authorities to apply

their laws effectively. Secret ruling, negotiated tax rate, or other factors that fail to

apply the law openly or consistently are examples of lack of transparency. Limited

regulatory factor supervision or a government‟s lack of legal access to financial

records are other contributing factors.

9.2 Description The Tax Haven Structure Of Some Countries.

SINGAPORE

Tax savings for companies

In order to enhance new business setup, the Inland Profit/ Revenue Authority of

Singapore (IRAS) introduced the start-up tax exemption scheme (SUTE) in 2004

which is providing newly incorporated qualifying industries exemption from

taxable revenues in the first three years of operations.

Under SUTE tax exemption is taken and a normal chargeable income of upto

S$300,000 for each of the first three years of operations as follows

For 1st S$100,000 after 100% exemption , the exempt amount is S$ 100,000

For next S$ 200,000, after 50% exemption the amount is S$ 100,000.

Hence, the total exempt amount for income up to S$300,000 is S$ 200,000.

Productivity and Innovation Credit Scheme (PISC)

Singapore Govt. has always looked for innovation and automation. IRAS

introduced the productivity, innovations and skills credit (PIC) scheme in budget

2010.

Under the PISC scheme from 2011-18, companies will get 400% tax deduction and

60% cash payouts for investment and productivity improvements. Even though the

PISC bonus factor has already been closed, there are still sustainable amount

savings that can benefit.

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Micro loan program

Under this program banks and financial institutions will lend eligible Singapore

industries loans upto S$ 100,000 for their daily work or for upgrading in

technology and factory equipment. The SMEs will have to pay 5.75% interest for

less than 4 years on their loan. The scheme for women is available at 4.75%.

Superior Geographical Location for SMEs

Singapore is situated in the golden part of South-East Asia; it is easily accessible

from any other country within Asia. Singapore is known to be the centre in the

start-up ecosystem in Asia. In short, Singapore based SMEs businesses have a

geographical advantage when it comes to growing and developing the businesses.

TAX LAWS IN CAYMAN ISLANDS

The Cayman Islands are one of the tax havens amongst America‟s elite. There is

no corporate or income tax on money earned outside its nation, this includes

dividends earned on investment making Cayman Islands popular among fund

managers.

Instead of taxes, offshore corporations pay the annual licensing fee directly to the

government of Cayman Islands. The Cayman Islands makes it easy for individual

and entrepreneurs to shield their business and identities from prying eyes.

Tax Haven Cayman Islands for MSEs

Cayman Islands is one of the five largest offshore financial business and small

start-upcentres worldwide, the government of Cayman Islands providing efficient

tax benefits to MSMEs for their businesses. There is no income tax and revenue

tax for small businesses in Cayman Islands. Here are some of the key benefits are

listed below:

All documents and regulation are in the authorized dialectal of English.

There is no yearly reporting, accounting or auditing necessities for an Offshore

Cayman Islands Corporation.

Only one shareholder and one director are essential. These can be the same

person or a corporate body and do not necessity to include a resident.

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There is a whole absence of direct tax system; no corporation, assets, capital

gains or cover-up taxes. This lawmaking is supported by a 20 year government

assurance (rising to 30 years on request) permitting long term business

forecasting.

There is no least capital obligation for a Cayman Island Business creation.

The business does not need to be run from the Cayman Islands. It can be run

from anyplace in the world

Through Corporate bank accounts.

SWITZERLAND

Tax Haven Switzerland for SMEs

SMEs consider Switzerland as a location to enhance businesses because of low

production cost. The Switzerland Government primarily focuses on new

technologies and digitalization. There are over half a million SMEs operating in

Switzerland and they are providing huge employment for more than two-thirds

country‟s total working population. An important reason for this overall success

comprises workers and their skills. It strongly effects on corporate success of

SMEs.

Micro Firms and SMEs in Switzerland are more sceptical on Transport and

Transportation.

Small firms (lesser than 10 employees) assess to Switzerland as a location more

cautiously than other SMEs. SMEs from transport and transportation also access

him Switzerland more sceptically particularly in terms of infrastructure,

digitalization and tax benefits given from government and this result into growth

of domestic economies.

HONG KONG

Tax Haven Hong Kong for SMEs:

As a small business in Hong Kong there is various benefits made available by the

government to the entrepreneurs, with these benefits the business is able to make

huge amounts ofsaving during tax season.

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In order to promote new SMEs, the IRD (In Land Revenue Department) has

adopted a low profits tax rate for small scale industries. For the fiscal year 2014-15

the profit tax rate is 16.5% for industries and 15% for entrepreneurs.

Profit tax related savings:

For the year 2014-15, businessmen can get a 75% onetime reduction on revenue

tax, tax on salaries and tax on personal assessment, subject to maximum HK $

20,000 per case.

For profit tax, the maximum of the tax reduction is applied to each SMEs, while

for salaries tax, the maximum is applied to each business men. A tax payer who is

individually chargeable and whose salaries and revenue tax can relax tax reduction

under each of the tax types, resulting in more tax savings.

PANAMA

The Republic of Panama is one of the most protected whole-some tax haven. One

of the best characteristic of Panama offshore authority law is that offshore

corporations are permitted to conduct business operations within and external of

the offshore authority.

Here are some of the aids as listed below:

Panama has a regional tax scheme which means that revenue is only taxed if it

originates from Panama so no tax is payable when revenue is gained from a

source outside Panama.

The formation of a new firm procedure is rapid and the continuing maintenance

costs are negligible.

Least reporting to authority requirements, no audit is essential.

Corporate assets of a Panama business can be kept outside Panama.

There are no citizenship necessities or limits with regards to Proprietors,

Managements or Stockholders.

Stockholders and Managements meetings is not required and the Managements

may attend personally or through by proxy.

No limits on shares, shares may be held in recorded or deliverer form.

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No paid up capital required.

No currency exchange controls.

There is complete secrecy maintained with aspects to legal safeguarding, there

is high privacy of business and banking transactions.

They also provide excellent infrastructure and public service facilities.

THE BAHAMAS

The Bahamas became extensively popular as a tax haven in the 1990s after passing

legislation that enabled the formation of offshore companies. It remains one of the

most favorite tax havens for inhabitants of the United States and European nations.

It is possible only to register a company in Bahamas with merely.

I) Single stockholder

II) Single director, who can be both immigrants and reside outside of the

Bahamas.

There is no least paid-up capital to complete Bahamas business formation and the

Clients are not compulsory to travel to Bahamas for the business incorporation

procedures;

Forming a company in the Bahamas is also fast, easy and can be incorporated

within single week, after acknowledgement of all essential documents. An

individual can open the business bank account in the Bahamas or anywhere in the

world;

It is very easy to open common corporate bank accounts to enable Bahamas

progress business. Experts‟ work with globally recognized banks such as HSBC,

Standard Chartered and Citibank to deal corporate bank account facilities in

Bahamas or elsewhere in the world.

DOMINICA

It is often chaotic with the Dominican Republic; the Commonwealth of Dominica

has started lawmaking that will help the formation of offshore corporations, faiths

and foundations, providing tax-friendly and privacy-protected offshore banking

services and the formation of start-ups and operation of Dominica.

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Lifetime tax-exempt prestige of an IBC (International Business Companies).

The Government of Dominica assurances 20 years of tax release for an

International Business Company (IBC).

No annual recording:There are noobligations to file annual reports, financial

reports. Firms are to keep books and records of the company in order for a case

of requirement.

There is a fixed annual renewal due: To keep in good legal status the company

is to pay uniform rate each year.

Various types of events: The Corporation may accept any officially permitted

business action in any part of the world, except for in Dominica or with its

residents. There is no currency control.

There is no registering of Directors and stockholders names thus they are able

to maintain a seal to public. Least 2 persons can setup a business. Same persons

can be the directors. Minimum number of directors is one. Directors and

stockholders can be persons and/or corporate bodies of any nationality and

residence, including Dominica. Secretary is not necessary by law.

Meeting of stockholders and directors can be directed anywhere from the

world, plus in Dominica, both by physical presence or by any accessible

electronic means of communication.

No limits to its share capital value and no requirements to the paid up capital to

start commercialization. Share capital can be secure in any identifiable

currency. Incorporation and yearly fees do not depend on the value of the

authorized share capital.

Time of incorporation is merely 24 hours. Shelf corporations are accessible.

Costs of establishment will seem to be good-looking, with associating the class

of service and prices for same facilities offered by former authorities.

OSLO

Oslo is rated as one of the supreme business welcoming cities in the world. It is the

speedy rising city in Europe with a diversified and robust economy. Norwegians

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are known as technology geeks and initial adopters, keen and able to pay anything

for upcoming technology. This makes Oslo city a distinctive test market. Here we

will discovery trustworthy, extremely capable expertise within IT, design finance,

energy, music tech and life science. For the start-up, incorporation is full of

occasions, linking entrepreneurs with industrial expertise, talent and stockholders.

And, Oslo is rated number 1 city in the world in terms of Standard of living.

Economic, prosperity, and governmental stability, with the well-developed

communication and transport foundations and its long standing trade links with the

European Union create Norway an eye-catching, safe and easy nation in which to

conduct business. Oslo is also rated 19thamong 189 countries, in the convenience

of doing business. Form the 2014 report printed by the International Financial

Corporation and World Bank, demonstrating just how easy it is to conduct

business in the country. Norway is also a nation of tech geeks of new upcoming

technology. Oslo is also financially stable which leads this trend in early adoption

of new technology. Majority of the population has high purchasing capability

which works out as a great opportunity for start-ups working within traditional Tec

and ICT fields.

It‟s easy to startup a business in Norway, the costs are less and functioning a

business is direct. The overall skills and productivity is high, employees trend to be

devoted, there is also difference in wages as people are low liable on the education.

This makes IT businesses low cost to run, and the cost for setting up of R&D

activities is internationally inexpensive.

Education is open, and every worker gets free health insurance. The government

also covers parental vacation for the mother as well as the father.

Five years ago the charges were made compulsory by the Norwegian government

to create a limited company which is equal of £10,000. This perhaps demonstrates

the readiness by the Norwegian government to reduce the high entry to barrier &

limit for start-ups in order to progress and enable a philosophy of entrepreneurship,

creativity and modernization outside apart from the old-style segments like oil,

gas, clean energy and fisheries.

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9.3 TAX EXEMPTIONS IN INDIA

Budget by the Finance Ministry - MSME’s (1st February 2017)

Reeling under the pressure of demonetization, which eradicated 86% of country‟s

bank notes ArunJaitley (Finance Minister, Government of India) while presenting

the budget on 1st Feb. 2017 focused on start-up and the small medium enterprises.

Here are the following announcements made for start-ups and the Micro, Small

and Medium Enterprises (MSME‟s) by the Finance Minister ArunJaitleyIn Budget

2017:

I. TAX BREAK : Through the demand of start-ups finance minister

ArunJaitley has increased the period of profit –linked deduction available to the

start-up to seven years from the current five years .these tax break is only

available on the profit made by start-up for three years and these tax special

operating procedures (SOP) is only available to the start-up which is recognised

by the DIPP( department of industrial policy and promotion )

II. MINIMUM ALTERNATIVE TAX: The demand from start-up to remove

minimum alternative tax(MAT) was rejected by FM arunjaitley. Instead of

removing MAT, the government has allowed companies to carry forward their

MAT to 15 years from the present period of five years. This provides the

companies an additional five years before they become liable to pay their MAT.

III. INCOME TAX BENEFITS TO MSME‟s: In order to give some

relaxationto MSME‟s the finance minister proposed to reduce the income tax for

those companies with an annual turnover of up to Rs 50 crore to 25% . This

gives the MSME‟s a relaxation of 5% from the current applicable rate of 30%.

This will benefit around 96% i.e. 6.67 lakh of companies in India and the

government will forgo around 7200 crore of revenue. This will help MSME‟s to

be more competitive.

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IV. PRESUMPTIVE TAX: The MSME‟s who have a turnover up to Rs 2

crore. The presumptive tax will be lowered from 8% to 6% lowering the financial

burden and boosting small merchant.

9.4 TAX EVASION IN INDIA

To collect taxes from people is never an easy task for our government because

most of the people question the part of giving hard earned money to the

government but the fact is far more different from just giving taxes itself. The

government requires revenue to invest in infrastructural facilities and development

programs which in turn helps in better standard of living and fast development of

the state as well as country.

But the country has been facing many glitches in order to collect taxes from tax

invaders. In actual sense the people who is liable to pay taxes has found many

ways of not paying it which creates additional pressure on the government as well

as people paying it as a result it can be said that the country‟s income is suffering.

The below given are the ways in which tax payers avoid paying taxes and how

they are penalized for such practices.

9.5 COMMON METHODS OF TAX EVASION:

There are two ways that a tax payer avoids paying tax, the first is tax avoidance

and other is tax evasion ie; when they are due. There is a splitting difference

between the two ways, tax avoidance is finding a loophole that exempts you from

paying taxes, but this isn‟t a illegal while other is not paying taxes when they are

actually due, which makes it strictly illegal. These are two ways in which people

evade taxes.

1. NOT PAYING TAXES WHEN THEY ARE DUE: This is the most common

and simplest way in which people try to evade taxes.

2. SMUGGLING: When certain goods moves across the political boundaries of a

country a tax is charged on these good which is payable but some individuals have

found out the secret route to avoids these taxes hence the evasion.

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3. SUBMITTING FALSE TAX RETURNS: With good support of legal and

financial advisor the taxpayer‟s submit false tax returns or provide incorrect tax

return which in turn help them to evade taxes or lessen these taxes.

4. INACCURATE FINACIAL STATEMENTS: The taxes which are to be paid by

the firm can be assumed with the help of the financial statement of the assessment

year. Hence by projecting false financial statements this declares less income as

compared to what they are entitled to pay, which results in tax avoidance.

5. CLAIMING EXEMPTION THROUGH FAKE DOCUMENTS: Government

does provide many tax exemptions to certain members of the society which helps

them to grow and increase their competitiveness. But is some cases the individual

does not qualify these exemption but due to their fake documents it helps them to

avail these tax exemption.

6. NOT REPORTING INCOME: Many organizations are not registered in India

and some of them who are registered do not provide any information related to

their income that they earn during the financial year. Having not reported the

income they do not have to pay taxes.

7. BRIBERY: Bribery and corruption are also the major factor that helps the tax

evaders to set them free from any taxes with paying a minimal amount.

8. STORING WEALTH OUTSIDE THE COUNTRY: Many organizations and

individuals store their wealth in tax havens commonly in Swiss bank and offshore

accounts and does not declare this income to their total wealth (also known as

„Black Money‟) which helps them to avoid taxes.

9.6 PENALTIES FOR TAX EVASION

There are many ways in which the income tax department penalizes the person or

organization that is found guilty of tax evasion.

Some of which are stated as below:

Collection of 100% to 300% of the tax penalty when the correct income is not

disclosed.

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On account of delay of payment, the assessing officer may impose tax penalties

but it should not exceeds the amount due in taxes

If the individual doesn‟t pay taxes within the stipulated time period he may be

charged with 200rs per day as an tax penalty

On account of fraudulent balance statement of the person can be penalized

within the range of 100% to 300% of the tax amount due.

In case the person fails to maintain proper accounts as directed by section 44AA

, he is entitled to pay a penalty of 25000Rs

If a company fails to provide a report or get itself properly audited then the

penalty of 0.5% or fine of Rs 1 lakh of the sales turnover whichever is less is

charged.

These are some of the tax penalties which is levied by the income tax department

and in some cases the individual has to pay a huge amount.

9.7 CONSEQUENCES OF TAX HAVEN OVER DEVELOPING

COUNTRIES:

Tax haven allow the individuals to hide money which could have been spent on

hospital, roads, schools and other public services.

Switzerland is one of the biggest financial centre‟s in the world and also known as

the largest tax haven. Switzerland accounts to a whopping US $ 2 trillion or so of a

world‟s offshore private wealth. In 1934 Switzerland made it a criminal offence to

violate bank secrecy, and if done so it was punishable in the form of monetary

fines or prison. Due to such a stringent law Swiss bank has, became a safest place

to hide money.

1. Due to strict laws, the Tax havens protect unethical sources of income.

For E.g.: The Madoff scandal, a multibillion dollar scheme organized by the

famous Wall Street financier Bernie Madoff.

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(the famous scandal in which dubbed many investors and the fraud accounted

around US $65 billion. It wouldn‟t have been possible without a strong network of

tax havens.

2. Tax havens corrupts markets, conceals insider dealings and supports

aggressive tax dodging by multinational companies:

For E.g.: Enron, the Houston based energy trading company declared itself as an

bankrupt, the company had good political relations and network in the country.

Later on the truth emerged as Enron had around 881 offshore subsidiaries and out

of which 692 alone was in Cayman Island (tax havens) for doing this fraud Enron

spent around US$3.5 billion in 1999-2000 to get tax exemption and to get his

company over sighted form tax authorities. Likewise the company paid around

US$88 million to its financial and legal advisor to avoid paying US$2 billion in

taxes. A US senate committee submitted a report of 2,700 pages and estimated that

it would tax around Ten years to unravel Enron‟s tax dodging schemes in detail.

3. Tax havens create a private world of secrecy and power for rich elites:

The scandal of Liechtenstein is one of them. Liechtenstein was already in the

blacklist of OECD for being the three most offending tax havens. To obtain the

details of tax invaders German secret service paid for CD which had all the

information of the tax invaders, wherein a IT worker turned out to be a whistle

blower and leaked all the information to German secret service and by the Mid-

February, homes of rich and famous were being raided, high profile CEOs were

being fired. The investigators brought out over 15000 clients with funds

approximately US$155-175 billion.

The cross border flow is estimated around US$1-1.6 trillion per year form tax

evasion, corruption and criminal activities.

4. TAX HAVENS WIDENS THE GAP BETWEEN RICH AND POOR

PEOPLE: The multinational company‟s owner and the global renowned brand

with proper pool of financial and legal advisor and with the help of tax havens they

reduce their tax bill to great extent which in turns creates burden on government to

generate tax revenue to run the state. It leads to increase in tax rates which creates

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an additional burden on common people to pay taxes hence it leads to

discrimination between poor and rich people

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CHAPTER 10:

MAKE IN INDIA

10.1 Key Policy Suggestions

10.2 The 25 key sectors of Make in India

10.3 Workability of Make in India initiative

10.4 Contribution to Indian economy by sector

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CHAPTER 10:

MAKE IN INDIA

The concept was first coined by the Hon‟ Prime Minister of India,

ShriNarendraModi on 25th of September 2014. Its workshop was organized on 29th

of December in the same year which was attended by the Hon‟ Prime Minister, the

Cabinet Ministers, Chief Secretaries of all the states and various corporate as well

as industrial leaders. The Make in India programme has its origin from the PM‟s

speech where he stated the “zero defect, zero effect” system by giving its simple

logical reasoning that if the nation manufactures any product of superior quality

then there will not be any loss or negative effect on company‟s sales creating huge

effect on its goodwill whereby increasing the strength and goodwill of the nation.

The prime objective of the concept of „Make in India‟ is job creation thereby

generating large scale employment opportunities. The skill enhancement of the 25

sectors which work in the development of the nation and is thus termed as the

backbone of the economy, to be focused majorly in the initiative and thus inviting

more and more FDI into these sectors. Under this initiative, several brochures of

the 25 sectors and their web portal was released, foreign equity of these sectors

were relaxed, the application for obtaining licenses was made available online for

ease and also the validity for renewable license was extended to 3 more years.

In August 2014, the cabinet also decided that these 25sectors to be focused on the

initiative and what share of FDI (Foreign Direct Investment) to be allowed on

these sectors which also included India‟s defense sector, which opened doors for

more and more advanced technologies into the Indian defense system.

10.1 THE KEY POLICIES SUGGESTED IN ‘MAKE IN INDIA’

INITIATIVE:-

1. Making Ease in business: India being numbered 142nd country among 190

countries in the ease in business with an index which is unfortunately below than

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the African countries. Make in India focuses on making India such a country

which will have a friendly environment for doing business for any international

company or business entity.

2. Skill and jobs for the Youth: Major objective is giving technical assistance

to Indian youth, making them skilled enough to perform any job skilfully and

giving these skilled youth more jobs as much as possible.

3. Making India „A Manufacturer‟: This policy initiates to invite more

international entities to India in-order to promote production in the country,

thereby promoting industrialization, this will make India a safe option for investing

and production of goods.

4. Getting away with archaic laws: Raising FDI‟S share and reducing the red

tape procedure as much as possible eliminating rigid and less important laws

which make India a difficult place to trade in.

5. 100 Smart cities : This step of make in India is targeting 100 cities to make

them smart cities in terms of affordable housing schemes, having more advanced

technologies in the colleges, school, hospitals etc.

6. Another main reason India opted for Make In India initiative is that India is

majorly depended for its FDI on the service sector and there is need to expand

itself more into manufacturing sector.

7. Four pillars of make in India concept are:-

New processes.

New infrastructure.

New Sectors.

New Mind Set

Some facts about „Make in India‟:

Logo : The Logo consist of a lion, made of steel ingots, symbolizes the pride of the

nation, its strength and wisdom. It is designed by US based design agency

“weident +kennedy” from Portland oregan.

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The Foregin direct investment has been raised to 49% after the „Make In India‟

Concept. Currently the biggest project in Make In India is the Delhi-Mumbai

Industrial corridor (DMIC) and the major drivers of this project are Japan Bank for

International Cooperation (JBIC), HUDCO, IIFCL, LIC and Department of public

policy (DIPP).

There are a number of companies that are attracted to India post the launch of

„Make in India‟ are Foxconn technology co.ltd, Sony, Lenovo, Karbonn, Airbus

SAS, apart from these the world‟s largest firms are planning to get into India‟s

defense business industry.

10.2 THE 25 KEY SECTORS IN WHICH THE ‘MAKE IN INDIA’

PRIMARILY FOCUSING:

Automobiles -100% FDI

Automobile component -100% FDI

Aviation:

- 100% FDI Greenfield airport projects

-49% FDI in domestic airlines

-49% FDI in non-scheduled air transport service

-79% FDI government approval route

-100% FDI ground handling services

-100% FDI maintenance and repair organization,flying trainingInstitution and

technical training institution.

Biotechnology – 100% FDI

Chemical-100% FDI

Construction-100% FDI

Defense Manufacturing – 49% FDI

Electrical Machinery -100% FDI

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Electronic System – 100% FDI

Food Processing -100% FDI

IT & BPM – 100% FDI

Leather- 100% FDI

Media and Entertainment- 74% FDI in Government route

Mining -100% FDI

Oil and Gases-100% FDI

Pharmaceutical- 100% FDI

Ports-100% FDI

Railways- 100% FDI

Renewable Energy- 100% FDI

Road and Highways-100% FDI

Space-74% in establishment and operation of satellite to ISRO & Department

of space and Research under government route

Textile and Garment-100% FDI

Thermal Power-100% FDI

Tourism and Hospitality-100% FDI

Wellness-100% FDI

By the end of 2015 Government of India received 1.20 lakhs crore Rupees

proposals from various big companies who were keenly interested in

manufacturing electronics in India. Smart phones export percentage has increased

from 19.9% to 24.8% by the end of year 2015. Ease of doing business‟ an index

organized by world bank in 2016 India managed to acquire 130th rank as the

previous of 134thbefore the „Make In India‟ project. Another survey done by

World Bank post „Make in India‟ among 17 cities of the world Ludhiana,

Hyderabad, Bhuwaneshwar, Gurgaon &Ahemdabad came up as top 5 cities to do

business. According to a report by Economic Times by the end of 2015 India

replaced China as top destination preferred by world‟s top most countries, by

attracting $63 million worth project FDI, companies like Foxconn&Sunedisonhave

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invested $5 million & $4 million respectively in India in 2015. The Make in India

project was also included in KPMG‟S 100 most innovative projects on the globe.

Make in India campaign is aiming to transform Indian economy from service-

driven growth model to labor intensive manufacturing driven growth model,

creating job for over 10 million people who join workforce every year.

10.3 WORKABILITY OF ‘MAKE IN INDIA’ INITIATIVE:

The revolutionary concept of Make in India has policies and schemes to be

launched in path of making India one of the leading nations of the world. The 4

policies of Make In India are:-

1. National manufacturing policy.

2. National intellectual policy.

3. Foreign direct investment policy.

4. New initiative policy.

1. National manufacturing policy.

This policy focuses on every activity that helps India to improve its manufacturing

sector; it works on infrastructure, availability of finance, skill development,

technology and exit mechanism etc.

The various objectives of the National manufacturing policy is:

a) To have an increased GDP up to 16-25 % till 2022.

b) Create nearly 100 million jobs till 2022.

c) Making sure that there is proper growth in manufacturing sector.

d) Giving equal opportunity to poor urban migrants to get skilled and have a

better life.

e) To increase technology and domestic value addition in our manufacturing

sector.

f) Increasing competitiveness to Indian manufacturing sector in Global market.

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2. National intellectual property:

As the name suggests this policy deals with the activity that creates, facilitates,

promotes and commercializes intellectual property and assets of the country.

The various objectives of the National intellectual property is:

a) Improving and strengthening the institutions and its employees, helps in

research and skill building which will boost the human resource.

b) Making the society aware about the economic, cultural and social advantages

of IPR (Intellectual property rights).

c) Making effective and efficient IPRs law.

d) Improve environmental protection, health care and food security.

e) Manipulate the generation of IPRs.

3. Foreign Direct Investment policy:

Apart from previous concept of FDI there have been quite few changes made by

present government of our country. This policy is the most vital of all as it is the

source of foreign income and helps the economy of India in many ways.

Changes occurred due to foreign direct investment policy:-

a) Tax policies are changed.

b) Insurance sector witnessed the change of FDI inflows from 26% to 49%.

c) Entries have been made easier for people to start their ventures.

d) FDI received for the defense sector will be used to manufacture small arms and

ammunitions for the army.

4. New Initiative Policy:-

This policy is designed to facilitate and focus on investment, protect intellectual

property and also foster, adapt and coming up with innovations.

New infrastructure in new initiative policy:

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a) Smart city mission for about 100 cities.

b) DMIC corridor

c) 14 new manufacturing and national Investment.

10.4 CONTRIBUTION TO INDIAN ECONOMY BY SECTOR:-

Make in India has boosted the Indian economy by attracting more FDI resulting

into highly increased GDP of India. The following are the sectors and their success

stories as a result of the Make in India campaign:-

1. AUTOMOBILES:

(A) Investors in India: Suzuki ,Nissan, Toyota and Honda [Japan], Piaggio and

FIAT [Italy], Volkswagen, BMW, Mercedes and Daimler [Germany], Renault

[France], Hyundai [south korea],Ford and General motors‟ [USA]

(B) The emergence of automotive in the countries are as follow: Kolkata-

Jamshedpur (East), Mumbai-Pune-Nashik-Aurangabad (west), Faridabad-Delhi-

Gurgaon [North], Chennai-Bengluru [South]

2. AVIATION

(A) Investors in India: Airbus [France], Air Asia, Malaysia Airports Holdings

Berhad [Malaysia], Honeywell Aerospace, GE Aviation, Alco fastening systems

Aerospace [USA], Fairfax [LONDON]

(B)Reasons to Invest: India will be 3rd largest aviation in market by 2020, The

traffic of the passenger is at 224 million in 2016.India has put effort in air markets

in the world with 0.04 trip per capital, India has planned to reach 800 aircraft by

2020.

(C)Investment opportunities: In 5 years India is going to add 300 business jets,300

small aircrafts and 250 helicopters, Around USD 3 billion is required to build

airports in new Mumbai and Mopa (Goa)

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3. BIO-TECHNOLOGY

(A) Investors in India: BPI, Limagrain, Sanofi Aventis(France), Endo

Pharmaceuticals, MylanInc, GE healthcare (USA), Bostch (Germany), Fresenius

(Singapore)

(B) Investment opportunities: The biotech parks are situated at Lucknow in Uttar

Pradesh, Karnataka, Kerala, Assam and Madhya Pradesh, There is very huge

volume that is not tapped yet so there is an opportunities for investors.

(C) Investment opportunities: Drug discovery and clinical trails, Medical devices

manufacturing, Bio-similars

Secondary agriculture, BIRAC has set a fund to boost the entrepreneurs in biotech

sectors by giving or supporting a fund of USD 150,000.

(4) CHEMICALS AND PETRO-CHEMICALS

(A) Investors in India: BASF, DYstar, Henkel and WackerMetroark (Germany),

ADEKA (Japan), AKZO NOBEL (Nertherlands), Syngemta (Switzerland)

(B) Investment opportunities: Agro chemicals are about 50% of production in

India is exported, In last 5 years the market of chemicals is reached till 14% and

the size of the market in future will reach USD 70 billion till 2020, the valuation of

Indian colorant industry is USD 6.8 billion and exports around 75%, There are

other segments like petro-chemicals, bio-pharm and bio-agricultural..

(5) CONSTRUCTION:

(A) Investors in India: veolia and Alstom [France], The trump organization and

Tishman Speyer [USA], GIZ [Germany], Ascendas [Singapore]

(B)Investment opportunities: construction development in retail, hospitality,

commercial and residential, There are solutions for smart cities and infrastructure

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backbone of road, water and drainage, skilled labors/workers, Green building

solutions.

(6) DEFENSE MANUFACTURING:

(A) Investors in India: Airbus, assault Aviation SA [France], Locked Martin,

Boeing India [USA], Pilatus [Switzerland], BAE India systems [UK]

(B)Financial support: In 2016-17 union budget the defense services provide USD

34.53 billons USD 12.09 billons for capital outlay for defense and USD 10.75

billons for capital acquisition for defense services. USD 1.33 billons is providing

to other segment like Army,Navy,joint staff and Air force.

(7) ELECTRICAL MACHINERY

(A) Investors in India: Hitachi, MHI and Toshiba [Japan], GE (USA), Legrand,

Alstom and Schneider Electric [France], Babcock [UK]

(B)Reasons to invest: A large human resources and workforce are available;there

will be increase in exports to neighbor countries, nowadays manufacturers are

coming up with new product designs.

(8) ELECTRONIC SYSTEM:

(A) Investors in India: GE, Flextronics, jabil, Delphi and Harman (USA), Bostch,

continental and liebherhavsgerate (Germany), M2I (Taivan), Huavei (China),

Panasonic, HMC MM (Japan)

(B) Reasons to invest: The Indian market is said to attract nearly USD 400 billion

till 2020, Indians have skilled manpower and they stand 3rd in scientists and

technicians in the world, Around 65% of the current demand is for electronic

products which complete by imports.

(9 FOOD PROCESSING :-

(A) Investors in India: Kraft, Mars, Kelloggs, Pepsi, Coca Cola and Amazon

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(USA), Mc Cain (Canada), Kagome and Yakult (Japana), Nestle (Switzerland)

(B)Reasons to invest: In agriculture resources India was at no.1 in the world. The

production are Millet,Ginger,Lemons and mangoes etc., In tea,sugar

cane,tomatoes,wheat and milk product India stand at second rank, In 3rd rank

India‟s production of cashew nuts,lettue,coconuts pepper, In other countries the

manpower is high compare to India.

(10)IT AND BPM

(A) Investors in India: Congnizant, IBM, Microsoft, Intel and TIBCO (USA),

Atos,Steria (France), Ricoh(Japan), Accenture (Ireland)

(B)Reasons to invest: The outsourcing market in global is 56% in BPM and IT,

There are various government policies has been introduce in the I.T sectors to

invest. There are big amount of skilled manpower in India in I.T sectors.

(11) LEATHER

(A) Investors in India: Feng tag hoes, Apache group (Taiwan), Itares (Italy)

(B) Reason to invest: Opportunity to capture the domestic market of India The

market of domestic will be huge in next 5 year from now and will capture USD18

billion by 2020

Law labor with trained manpower and with instate production unit

India has good relation and agreement of trade with Korea, Japan, Chile etc. and

also free trade agreement with some country like Australia, European Union etc.

(12)MEDIA AND ENTERTAINMENT:-

(A) Investors in India: News Corp,NBC universal,Blackstone (USA), Sony

(Japan), BBC (UK)

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(B)Reasons to invest: In 2014 in India the entertainment industry earn INR1026

billion, Till 2019 the entertainment industry is going to achieve INR 1964 billons,

India rank second in tv market and the turnover of tv households are 168 billons,

There are 7800 satellite tv channels,60000 local cable operators.

(13). MINING

(A) Investors in India: Rio Tinto, BHP Billiton, Australian Indian Resources

(Australia), De Beers (Anglo American)

(B) Reason to invest: Per capita steel consumption in India is four times lower than

the global world, It is convenient to exports because of strategic location in India,

Next 15 years the demand for various minerals an metal will increase

(14). OIL & GAS

(A) Investors in India: British petroleum, Shell, Hardy oil & gas plc. (UK), Niko

resources (Canada), OILEX limited (Australia)

(B) Reasons to invest: For growth in economy & increase in population year by

year, Oil & gas sector which is getting liberalized for private investors for increase

in domestic production, For the policy reform undertaken by Government for

removal of obstacles to investment in oil & gas sector, Private co. player an

important role in investment claim India produces more than 23% of India‟s crude

oil production. Reliance industry limited &Essar oil have become major refiners,

Upcoming opportunities in gas pipeline, city gas distribution (GGD), LNG,

petrochemical & refinery.

(15)PHARAMACEUTICALS:-

(A) Investors in India: Teva pharmaceuticals (Israel), Nipro corporation (Japan),

Procter, Johnson and Johnson (USA), Atra Zeneca (Sweden UK )

(B)Reasons to invest: Increase in the growth of pharmaceutical sector in India,

India generic drug account for 20% of global export in term of volume and the

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largest provider of medicines across the world, The cost of production is lower as

compare to US and UK, Skilled workforce as well as high manpower and technical

competence, Development of economy helps to improve the affordability for the

mediviers in the market

(16) PORTS AND SHIPPING:-

(A) Investors in India: AP Moller Maersk (Denmark), Psa Singapore (Singapore),

Dubai ports world (UAE), Royal BoskalisWestminister (Netherlands)

(B)Reasons to invest: The cargo traffic is handled by India is going to reach up to

1695 million metric tons by 2021-22, There are development policies which is

going to increase to 643 million metric tons, The capacity of handling cargo is

going to increase by 2021-21 is 2422 million metric tons.

(17). RAILWAYS

(A) Investors in India: EMD, GE (USA), Bombardier Transportation (Canada),

Siemens (Germany), Alston (France)

(B) Reasons to invest: Investment in railway Infrastructure segment through FDI

projects like high speed railway,coal mines & parts etc. Through FDI, Investment

in public private partnership (PPP) for provision of foot over bridges, Escalator &

Lifts at all major stations & junctions, Indian railways promote participation in

private equity through individual, Nao, trust, charitable institution corporate etc,

Facilities of wifi in more than 400 stations

(18). ROADS & HIGHWAYS

(A) Investors in India: Apollo, JLI, LOR, Consortium (UK), CIDBO Malaysia,

Consortium of gomuda, WCT Engineering (Malaysia), ERA-SIBMOST (Russia),

Galfar Engineering and contracting SAOG (Oman), Ramkey Infra and JPTEG,

RIL-AAA-JTEG consortium (China)

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(B)Reasons to invest: The contribution of the country‟s GDP is 6% &70% is with

road, 60% with freight & 90% passenger traffic, Till 2030 India is expecting

1,68,000 billion passenger km, Government has introduce and launched many

policies to upgrade the highways and expressways.

19) RENEWABLE ENERGY SECTOR:-

(A) Investors in India: Enercon (Germany), Vestas (Denmark), Applied materials

(USA)

(B)Reasons to invest: India is the 5th largest country in power generation as it

produces about 304.76 GW, Growing urbanization, growing prosperity in the

economy and risen per capita income has resulted into high demand to power

supply in the country, The National Solar Mission of India is said to be scaled-up

to100 GW from about 20 GW by 2022.This has created has wave of positive

responses among the existing as well as potential investors of this sector.

20) SPACE:-

(A) the Growth drivers in this sectors: Space science programs, Launch vehicles,

Space commerce.

(B)Reasons to Invest: The growth rate of India in space programme in last 4

decades has taken everyone‟s attention worldwide, These cost effective

programmes included launching 51 satellites for 20 countries for far and soon

India is willing to serve as a launch pad of the world, ISRO has built a healthy and

strong relation with numerous industrial enterprises both in public as well as

private sector and also ISRO has well equipped itself with latest technologies and

number of inter-planetary missions creating a tremendous scope in its as well as

nation‟s overall development.

21) TEXTILE AND GARMENT:-

(A) Investors in India: Rieter (Switzerland), Bilsar (Turkey), Nissinbo(Japan),

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Skaps(USA)

(B)Reasons to invest: Favorable and friendly trade environment and policies

encourages and contributes more startups and FDI to the economy, Availability of

raw materials and skilled labors is high which helps to reduce the cost of

production attracting major textile producers across the Globe, Ongoing market

access with Japan, Korea,ASEAN and other countries and regional comprehensive

economic partnership (RCEP)are also initiated for a better textile and garment

sector.

22) THERMAL POWER:

(A) Investors in India: CLP holdings (Hong Kong), GE energy (USA), Abellon

clean energy (Canada), Kosep (South Korea)

(B)Reasons to invest: The modified tariff policies of 2016 promises adequate

return on investment to all the investor of this sectors who provide power

generation, transmission and distribution of the electricity, The Ministry of Power

along with the government of India has started with the initiative of UMPPs (Ultra

Mega Power projects) which will have about 4000 MW thermal projects,

Guidelines has been finalized by The Ministry of Power regarding the tariff and

the policies for transparent process of bidding based on BOO (Build Own Operate)

basis.

23) TOURISM AND HOSPITALITY:-

(A) Investors in India: Accor (France), The Four Seasons Group (Canada),

Thomas Cook (UK), Expedia (USA)

(B)Reasons to Invest: India in the year 2012-13 recorded 6.88% GDP from

tourism and hospitability making this sector to b the 3rd largest foreign exchanger

of the nation, FEE (foreign exchange earnings) from this sector in 2015 was

around USD 21.07 million, India holds about 35 heritage sites,10 geographic zones

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and has most exotic diversification which gives India 1.62% of world tourism

receipts and also India holds 15th rank in international tourism receipts.

24) WELLNESS:

(A) Investors in India: Ayurveda Medicines Manufacturing (naturaceuticals, food

supplements etc.), specialized treatment centers, Medical tourism for rejuvenating

and curative treatments.

(B)Reasons to Invest: India acquires world most ancient knowledge of medicines

both for curative and preventive healthcare which has a growing demand

worldwide, Western world has a growing interest towards India‟s ancient

Ayurveda, yoga, naturopathy, Unani and siddhaetc.which is opening doors for

more and more foreign investors, Investors of corporate houses and increasingly

investing in AYUSH sector which includes the whole Ayurveda, herbal, and other

traditional wellness techniques of India.

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CHAPTER 11:

SPECIAL SCHEMES BY THE GOVERNMENT FOR

THE DEVELOPMENT OF MSME

11.1 Small and medium-sized enterprises (SMEs) Division Schemes

11.2

Development Commissioner Ministry of Micro, Small &

Medium Enterprises(DC-MSME) Schemes

11.3 National Small Industries Corporation(NSIC) Schemes

11.4 ARI Division Scheme

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CHAPTER 11:

SPECIAL SCHEMES BY THE GOVERNMENT FOR

THE DEVELOPMENT OF MSME

This chapter elaborates on the various schemes of the government, in specific to

the Micro, small and medium enterprises. The schemes and subsidies of the

government are for the sectors ranging from Agriculture and farmers, chemicals

and fertilizers, commerce and industry, communication and information

technology, micro small and medium enterprises, finance, food processing,

textiles, women and child, tourism, Housing and urban poverty alleviation,

corporate affairs, culture, rural development, science and technology, social

justice, tribal affairs and urban development. Each sector carries multiple

schemes and subsidies by the government for the development of the

entrepreneurs.

Below given are the schemes and subsidies developed by the government for

the development of entrepreneurs in the area of Micro, small and medium

enterprises.

The MSME‟s schemes are divided into 4 sections:

1. Small and medium-sized enterprises (SMEs) Division Schemes

2. Development Commissioner Ministry of Micro, Small & Medium

Enterprises(DC-MSME) Schemes

3. National Small Industries Corporation(NSIC) Schemes

4. ARI Division Scheme

The following are the schemes and subsidies that come under each section of

MSME’s.

11.1SMALL AND MEDIUM-SIZED ENTERPRISES (SMES) DIVISION

SCHEMES

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Source : www.sarkariyojna.co.in

1. Scheme for International Cooperation financial assistance, space rent

The scheme covers the following actions:

Commission of MSME business delegations to other nations for exploring new

areas of technology concoction/upgradation, facilitating shared ventures,

improving markets for MSMEs goods, overseas collaborations, etc.

Partaking of Indian MSMEs in global exhibitions, business fairs and buyer-seller

meetings in distant countries as well as in India, in which there is global

involvement.

Conducting global conferences and seminars on issues and themes of concern to

MSMEs.

Eligibility

1. State/Central ruled Organizations

2. Business/Enterprise links

3. Registered Societies/Trusts and Organizations linked with help and growth

of MSMEs

Benefits

International Cooperation scheme provides monetary assistance of up to 95% of

airfare and space lease for entrepreneurs. Support is provided on the basis of size

and variety of the enterprise. It also provides help for the costs incurred on the

International Cooperation

Assistance to Training Institutions (ATI)

Marketing Assistance

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delegations like shipment & insurance, local transportation,

clerical/communication services, printing of common brochures etc.

How to Apply

An Entrepreneur/Udyami Helpline: 1800-180-6763 has been provided for queries

connecting to this Scheme. Else the entrepreneur could apply online or

applications can be sent for monetary support in the approved form to the Director

(International Cooperation), Ministry of MSME, UdyogBhavan, New Delhi – 110

011

2. Assistance to Training Institutions (ATI)

Support is given to the training institutions in the form of fund for

conception/strengthening of infrastructure and support for conducting enterprise

development and 134kilfulness training programmes.

Beneficiaries: Any State/Union Territory Government/Management training

bodies, NGOs and other progressing agencies can apply for support for

conception or strengthening of infrastructure.

Training institutions who wish to carry out training programmes under the scheme

will have to register themselves with any of the three nationalized EDIs of the

department viz, NIESBUD, Noida; IIE Guwahati and ni-msme, Hyderabad.

Benefits: Utmost assistance for formation or strengthening of infrastructure will

be Rs.150 lakh on a basis, not exceeding 50% of project cost. Nevertheless, for

the North Eastern Region (including Sikkim), Andaman & Nicobar and

Lakshadweep, upper limit on matching basis would be Rs.270 lakh or 90% of plan

cost, whichever is less. Utmost support per trainee per hour for entrepreneurship

development and skill development programmes is Rs.50 (Rs.60 for NER, A&N

and Lakshadweep).

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How to Apply: An Entrepreneur/Udyami Helpline: 1800-180-6763 has been

provided for queries connecting to this Scheme. Organizations who wish to apply

should send their applications to the Director (EDI), Ministry of Micro, Small and

Medium Enterprises, UdyogBhawan, Rafi Marg, New Delhi – 110 107. Also the

training institutions who desire to conduct training programmes or individuals

who wish to register for training programmes under the scheme may visit

http://msmetraining.gov.in/

3. Marketing Assistance Scheme Financial assistance, air-fare, space

rent

The assistance is provided for following activities: Conducting exhibitions

overseas and contribution in global exhibitions/trade fairs. Co-sponsoring of

exhibitions arranged by other organizations/business

associations/agencies.Organizing buyer-seller meetings, thorough campaigns and

advertising promotion events

Eligibility: MSMEs, trade relations and further organizations associated to the

MSME sector

Benefits

1. Monetary assistance of up to 95% of the air-fare and space rent for

entrepreneurs.

2. Support is provided on the foundation of extent and type of the enterprise.

3. Monetary assistance for co-sponsoring would be limited to 40% of the net

costs, subject to a maximum sum of Rs.5 lakh.

How to Apply

An Entrepreneur/Udyami Helpline: 1800-180-6763 has been provided for queries

connecting to this Scheme. The applicants looking for assistance under this

scheme should connect to the nearest office of the National Small Industries

Corporation, with full information and rationalization.

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11.2 DEVELOPMENT COMMISSIONER MINISTRY OF MICRO, SMALL &

MEDIUM ENTERPRISES(DC-MSME) SCHEMES

Source : www.sarkariyojna.co.in

Credit Guarantee

Credit Linked Capital Subsidy for Technology Upgradation

ISO 9000/ISO 14001 Certification Reimbursement

Micro & Small Enterprises Cluster Development Programme

Micro Finance Programme

MSME Market Development Assistance (MDA)

National Awards (Individual MSEs)

Marketing Support/Assistance to MSMEs (Bar Code)

Entrepreneurial and Managerial Development of SMEs through Incubators

Enabling Manufacturing Sector to be Competitive through QMS & QTT

Building Awareness on Intellectual Property Rights (IPR)

Lean Manufacturing Competitiveness for MSMEs

National Manufacturing Competitiveness Programme (NMCP)

Design Clinic for Design Expertise to MSMEs Manufacturing sector (DESIGN)

Marketing Assistance & Technology Upgradation

Technology and Quality Upgradation Support to MSMEs

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Scheme for Credit Guarantee for Micro and Small Enterprises free loans

Ministry of Micro, Small and Medium Enterprises, Government of India and Small

Industries Development Bank of India (SIDBI), recognized a Trust named Credit

Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement

Credit Guarantee Fund Scheme for Micro and Small Enterprises. The body of

CGTMSE is being contributed by the Government of India and SIDBI.

Eligibility

Both present and new enterprises are qualified to be covered under the scheme.

Benefits

Guarantee free loans up to a maximum of Rs.50 lakh - for individual MSEs

How To Apply

An Entrepreneur/Udyami Helpline: 1800-180-6763 has been provided for queries

connecting to this Scheme. Candidates meeting the eligibility criteria may move

towards banks/financial institutions, which are qualified under the scheme, or

scheduled commercial banks and some Regional Rural Banks.

Scheme for Credit Linked Capital Subsidy (CLCS) for Technology

Upgradation

Industrial up gradation would normally mean creation of state-of-the-art or near

state-of-the-art technology. In the unstable mosaic of technology obtaining in more

than 7,500 goods in Indian small scale sector, technological upgradation would

mean a major step up from the present technology state to a substantially advanced

one involving enhanced productivity, and progress in the quality of products and

improved environmental surroundings as well as work environment for the entity.

It includes setting up of improved packaging techniques as well as anti-pollution

procedures and energy preservation equipment. Additionally, entities in need of

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introducing amenities for in-house testing and on-line quality control would meet

the criteria for support, as the same are a case of technology up-gradation.

Substitute of existing equipment/knowledge with the same equipment/ skill will

not meet the criteria for the subsidy under this scheme, nor would the scheme be

applicable to units upgrading with second-hand machinery.

Eligibility

Eligible beneficiaries for this scheme comprise of sole proprietorships,

partnerships, co-operative societies, and public and private limited companies in

the MSME sector.

Benefits

The revised scheme looks at facilitating technology upgradation by providing 15%

up-front capital funding to MSME units, including micro, coir, village and khadi

industrial units, on institutional funding, availed by them for orientation of well

reputable and enhanced technologies in specified sub-sectors/goods approved

under the scheme.

Revised CLCS has been amended as follows:

1. The upper limit on loans under the scheme has been increased from Rs.40 lakh to

Rs.1 crore

2. Charge of subsidy has been improved from 12% to 15%.

3. Permissible capital subsidy is calculated keeping in mind the procurement price of

the plant and machinery, instead of term loan disbursed to the beneficiary unit.

4. Practice of classification of MSME units in different slabs on the basis of their

current investment for determining eligible subsidy has been cancelled.

Scheme for ISO 9000ISO 14001 Certification Reimbursement for

Enterprises

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MSME‟s have emerged as vibrant and pulsating and is making a significant

contribution to industrial production, export and creation of employment. The

process of economic liberalization and market reforms has opened up India‟s

MSMEs to international competition. In order to develop the competitive strength

of MSME, the Government has introduced an incentive plan for their technological

up gradation/quality enhancement and environment management. The scheme

provides incentives to those MSMEs, cottage and ancillary units who have

acquired the certifications of ISO 9000/ISO 14001/HACCP certification. The

scheme is amended so as to include the cost expenditure for acquiring ISO-14001

certification.

Eligibility

1. Only registered entities of micro and small enterprises (MSMEs) are eligible to

avail the scheme.

2. The scheme is applicable to those MSME units who have already acquired ISO-

9000/ISO-14001/ HACCP certification standard certifications.

Benefits

The scheme includes reimbursements of charges for acquiring ISO-9000/ISO-

14001/HACCP certification to the extent of 75% of the cost incurred which is a

maximum of Rs.75,000 in each case.

Micro and Small Enterprises Cluster Development Programme (MSE-

CDP)

The Ministry has adopted cluster development as a key strategy for increasing

productivity and capacity building as well as competitiveness of MSMEs.

Clustering of units also enables them to provide various services to them, including

banks and credit facilities, to provide them with more economical services, thus

decreasing the costs and increasing the availability of services for these enterprises.

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Objective

1. To support growth and sustainability of MSMEs by addressing common challenges

such as improvement of equipments, skills, market access and access to funds.

2. To strengthen the productivity of MSMEs for common supportive action through

the formation of clusters, self-help groups, associations, etc.

3. To enhance the infrastructural amenities in the new/existing industrial regions of

MSMEs.

4. To set up common facility processes (for testing, training of personnel, raw

material, high-end treatment, check production processes etc.)

Benefits, the Cost of the project and the assistance provided by the

Government of India

1. Diagnostics testing - cost Rs.2.5 lakh.

2. Soft interventions - cost of project Rs.25 lakh, with 75% of the contribution by the

Government of India (Special cases: 90% contribution by the GoI for special

category States and for groups with more than 50% village/ Micro/ women and SC/

ST units).

3. Hard interventions, i.e., setting up of CFCs – the eligible project cost Rs.15 Crore

contribution of 70%by the Government of India (Special cases: 90% contribution

by the GoI for special category States and for groups with more than 50% village/

Micro/ women and SC/ ST units).

4. Infrastructure development in the new/existing industrial areas; with the eligible

project cost Rs.10 crore, with Government of India contribution of 60% (Special

cases: 80% contribution by the GoI for special category States and for groups with

more than 50% village/ Micro/ women and SC/ ST units).

Micro Finance Programme for MFIs / NGOs funding

The central government has initiated a scheme of microfinance, in collaboration

with the existing programme of SIDBI by way of contributing towards funds of

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security deposits needed from the NGOs to get the loan from SIDBI. The scheme

is operational in the under-developed States and regions of the country.

Benefits

The government of India provides monetory support for microfinance initiatives to

SIDBI, which is called „Portfolio Risk Fund‟(PRF). Currently SIDBI receives fixed

deposit equal to 10% of the principle amount. The capital investment of NGOs is

2.5% of loan amount (i.e., 25% of security deposit) and balance 7.5% (i.e., 75% of

security deposit) is adjusted from funds provided by the Government of India.

MSME Market Development Assistance (MDA) Scheme forIndividual

MSMEs, Industry

As part of the widespread policy package for MSMEs, the MSME-MDA scheme

has been initiated with a view to generating an increase in the participation of

representatives of MSME units. MDA is offered in three forms as mentioned

below:

Active participation in the worldwide exhibitions/fairs - For registered small &

micro manufacturing enterprises.

Monetary assistance for using Global Standards (GS1) in bar-coding.

Improved importance of bar-coding and financial assistance.

Benefits

The scheme offers support of up to 75% in respect of the travel fare for the

representatives of MSME‟s entrepreneurs in overseas fairs/trade delegations. The

scheme also has provision of monetary support for producing publicity material

and for contesting anti-dumping cases for MSMEs & associations.

National Awards (Individual MSEs) Scheme forentrepreneurs

MSMEs have shown tremendous growth and increase in terms of quality of

production, EXIM, technological innovation, research and development and import

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substitution, very much beyond the anticipated objectives of the setting up of

MSMEs. Entrepreneurial hard work have made it possible to fabricate a number of

items, which were until now imported. In quite a few cases, innovative variants so

produced are having additional features over their original versions and are

competent in solving a multitude of user challenges. All this has become possible

due to the ambitious and futurist spirit of entrepreneurs of MSMEs.

The Ministry of MSME with a view to recognize the efforts and contribution of

MSMEs gives National Awards annually to chosen entrepreneurs and enterprises

under the scheme of National Awards.

Eligibility

Those entrepreneurs having permanent registration and managing MSMEs are

elegibile to file Entrepreneurs‟ Memorandum Part-II. The entrepreneurs interested

should have their entities working for a minimum of 3 years in continuous

production or service.

Marketing Support Assistance to MSMEs (Bar Code) forEnterprises

Financial assistance

Through this scheme, the MSEs are encouraged and motivated to use bar-codes

through seminars inorder to receive the reimbursement of registration fees.

Benefits

The Reimbursement is provided for the registration fee for bar coding. It provides

for a reimbursement of 75% of the onetime fee and 75% for the next 3 years of

recurrent charge for the financial assistance to the entrepreneurs for the amount

paid as the registration charge for product barcode.

On getting registration for the use of barcode for products,

(http://www.gs1india.org/), take the following steps for reimbursement of fee:

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1. Filling of the prescribed application form by the entrepreneur for claiming

reimbursement on bar code.

2. The application form along with formats for supporting documents is said to be

available at the Director, MSME-DI, or can be downloaded from

http://www.dcmsme.gov.in/

3. The filled-in application form with required documents is to be submitted to the

office of MSME-DI which is available on the website: www.dcmsme.gov.in/

MSME-DO/DCmsmeaddress.html

Entrepreneurial and Managerial Development of SMEsthrough Incubators

funds

The scheme is initiated to provide early stage financial support for nurturing

innovative business ideas (new original technology, processes, goods, procedures,

etc.) which could be commercialized in a year. Under this scheme monetary

assistance is provided for setting up of incubators.

Beneficiaries

An entrepreneur or a MSME having innovative ideas set for commercialization can

register with the host institution (e.g., IITs, NITs, technical colleges, research

institutes, etc.).

Benefits

Financial support for setting up of „Business Incubators (BI)‟: The expenditure

may vary from Rs.4 to 8 lakh for each incubate, subject to overall ceiling of

Rs.62.5 lakh for each BI, which includes

1. Advancement of infrastructure Rs. 2.50 lakh

2. Orientation Rs1.28 lakh thus the total assistance per BI – Rs.66.50 lakh

3. Clerical expenses Rs. 0.22 lakh

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Enabling Manufacturing Sector to be Competitive throughQuality

Management Standards and Quality TechnologyTools

The scheme aims to create awareness and encourage MSEs to understand and

implement latest Quality Management Standards (QMS) and Quality Technology

Tools (QTT).

Eligibility

Expert entities like Quality Council of India (QCI), National Recruitment Board

for Personnel and Training, Consultancy Development Corporation, National

Productivity Council, Standardisation Testing & Quality Certification (STQC, a

Society under the Ministry of IT), IIQM (Indian Institute of Quality Management),

Industry Associations that have taken active interest in QMS/QTT, technical

institutions, engineering institutions and colleges, MSEs and similar bodies.

Benefits

1. Financial support for induction of appropriate course modules in technical

institutions

2. A total monetary contribution of Rs.425 lakh per year made by the Government

of India for introduction of course matter, teaching the trainer, awareness

seminars and other activities

3. Funding support of Rs.1.25 lakh per course to be provided for conducting

awareness programme.

1. The contribution of the government of India of Rs.2.5 lakh for professional study

on threatened products.

2. The contribution of the government of India of Rs.7.5 lakh for technical exposure

visit

3. The contribution of the government of India of Rs.2.5 lakh for procurement of

samples

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4. The contribution of the government of India of Rs.5 lakh for product

development

5. The contribution of the government of India of Rs.1.5 lakh for awareness of

improved products

6. The contribution of the government of India of Rs.2.5 lakh/unit to jacket cover

the costs of diagnostic study and for execution of Quality Technology

Tools/Quality Management Standards

7. The contribution of the government of India of Rs.2.5 lakh per SME for overseas

visit (25% and 50% cost to be collected by the micro and small enterprise

respectively)

Building Awareness on Intellectual Property Rights (IPR)

The basic objective of the scheme is to bring in awareness among the MSMEs

about IPR‟s - Intellectual Property Rights, to take steps inorder to protect their

ideas and business strategies. Effective use of IPR tools by MSMEs would also

help in technology upgradation and thereby increasing the competitiveness.

Benefits

Monetary support for conducting awareness/sensitization programmes on IPR,

pilot studies for selected clusters of industries, grant support for conducting

interactive seminars/workshops, providing grants for conducting focused training

on IPR, monetary support in the form of Grant on Patent/GI Registration, funding

support for setting up IP Facilitation Centre (IPFC) for MSME, funding support for

organizing interaction with international agencies.

1. Assistance by the government of India of Rs.1 lakh per awareness programme

2. Assistance by the government of India of Rs.2.5 lakh per pilot study

3. Assistance by the government of India of Rs.2 lakh per programme of

interactive seminar

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4. Assistance by the government of India of Rs.6 lakh per short term training

programme and Rs.45 lakh for an extensive training programme. For

registered Indian MSMEs, a single financial support limited up to Rs.25,000

on funding of domestic patent and Rs.2 lakh for international patent; for

registering as a Geographical Indications of Goods Act, one-time monetary

support limited to Rs.1 lakh

5. The overall financial Assistance by the government of India up to Rs.65 lakh

each for establishing IPFCs which will include one-time fund of Rs.45 lakh

and Rs.18 lakh as inveterate expenses for 3 years, and Rs.2 lakh as

miscellaneous expenses.

6. Monetary support by the government of India up to Rs.5 lakh and Rs.7.50 per

event for domestic interventions and international exchange programme

respectively.

Lean Manufacturing Competitiveness for MSMEs SchemeFinancial

assistance

The scheme is introduced to increase the manufacturing competitiveness of

MSMEs through the involvement of various Lean Manufacturing (LM) techniques.

This scheme can be enjoyed by all manufacturing MSEs with a condition that the

unit must be registered with the DIC.The units are expected to form an MC to

participate in the scheme involving 10 units (minimum 6), by signing a

Memorandum of Understanding (MoU) among themselves..

Benefits

Availability of Monetary assistance for the implementation of lean manufacturing

techniques, primarily the cost of lean manufacturing (80% of the cost subsidized by

the Government of India and 20% by the beneficiaries).

Method of application for the Scheme :

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1. Connect to the national monitoring and implementing unit or a group of

SMEs should be able to apply for the scheme, hence either a recognized SPV can

apply or a mini cluster can be formed by a group of 10 or more units.

2. The approval is given in two steps; first, the provisional approval and then

the final approval is received once the conditions for the provisional approval are

fulfilled.

National Manufacturing Competitiveness Programme(NMCP)

The National Manufacturing Competitiveness Council (NMCC) has finalized a

five-year national manufacturing programme. Ten schemes have been designed

for the various support processes for SMEs. Under this plan following schemes

are being implemented.

Marketing Assistance to MSMEs (Bar Code).

Support for managerial and entrepreneurial development of SMEs via

incubators.

Enabling industrialized sector to be viable through Quality Mgmgt Standards &

Quality Tech. Tools

Creating awareness on Intellectual Property Rights (IPR) for SME.

Assistance in marketing & technology upgradation plans for MSMEs.

Design Clinic for Design Expertise to MSMEs ManufacturingSector

(DESIGN)

The scheme is for rising competitiveness of MSMEs and hence to create awareness

on the significance of design and its learning.

Eligibility

1. industry associations, agencies and other technical institutions for conducting

seminars and workshops

2. MSMEs or groups of MSMEs

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3. Individuals (design students) as co-applicants in collaboration with the academic

institution

Benefits

1. Financial support for „Design Awareness‟ workshops & seminars

2. Financial support for implementing „Design‟ projects

3. Government of India contributes Rs.60,000 per seminar and 75% subject to a

maximum of Rs.3 lakh per workshop

4. 60% of the total accepted project expenditure or Rs.9 lakh, either is less, in case

of individual MSME or a set of not more than three MSME applicants

5. 60% of the total accepted project cost or Rs.15 lakh, either is less, in case of

individual MSME or a set of four or more MSME applicants

6. 40% of the principle to be contributed by the applicant MSME(s) in both cases

How to Apply

1. For holding workshops and seminars, agencies can directly apply to design clinic

centers across the nation.

2. For design projects, MSMEs can set off without a design company or with a

design academic institution, by submitting an application to Design Clinic Centre,

or through internet.

Marketing Assistance and Technology Upgradation Fundingsupport

This is a government of India initiative for the MSME‟s inorder to adopt the

modern marketing techniques by MSMEs, consistent with the requirement of

global markets. The scheme is divided into eight sub-components and assistance by

the government of India is available in various extents.

Benefits

Financial support for creating awareness on new packaging equipments.

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Group based studies on packaging position and must for upgradation

Financial support for conducting skill upgradation / expansion programmes for

modern marketing practices

Financial support for conducting trade competition studies

Funding support to MSMEs belonging to North-Eastern Region for contribution

in marketing events

Funding support (in the form of re-imbursement) to MSMEs for taking up

corporate governance practices

Financial support for setting up of advertising hubs

Re-imbursement to ISO 18000/ISO 22000/ISO 27000 certification for MSMEs

Assistance of the government of India for Rs.0.50 lakh per programme (GoI:unit

:: 80:20) - per awareness programme

For SC/ST/woman/physically handicapped entrepreneurs, a re-imbursement up to

Rs.30,000 per unit and for other MSME units for participation in state and district

level trade fairs, Rs.20,000 per person.

Funding support of Rs.30 lakh by the Government of India for marketing hubs,

plus Rs.5 lakh for furniture, IT, etc., and recurring expenses of Rs.15 lakh (80%

reimbursed by the Government of India and the other 20% of the principle

amount by the private units) for 2 years

For acquiring ISO certification a onetime re-imbursement of expenditure to the

extent of 75% subject to a maximum of Rs.1 lakh is provided.

Technology and Quality Upgradation Support to MSMEs fororganizations

The scheme supports the use of energy efficient technologies (EETs) in

manufacturing units so as to reduce the manufacturing expenditure and take up

clean progress mechanism.

Benefits

The benefits of this scheme are

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1. Capacity building of MSME for energy efficiency/clean development and linked

technologies

2. Use of energy efficient technologies in MSME units

3. Encouraging MSMEs to obtain product certification/licenses from

nationalized/global agencies

4. Financial support of 75% for awareness programmes subject to highest limit of

Rs.75,000 per programme

5. 25% of the project expenditure as subsidy by Government of India, balance

amount to be acquired through the loan from SIDBI/banks/financial institutions;

least contribution, as required by the funding agency, to be made by the MSME

6. 75% of the actual expenditure, subject to a highest Rs.15 lakh for setting up

Carbon Credit Centers

7. 75% grant to manufacturing MSME towards licensing of goods to

nationalized/global standards; highest allowance per MSME: Rs.1.5 lakh for

obtaining merchandise licensing to nationalized standards and Rs.2 lakh for

obtaining product licensing/marking to global standards.

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11.3 NATIONAL SMALL INDUSTRIES CORPORATION(NSIC) SCHEMES :

Source : www.sarkariyojna.co.in

Performance and Credit Rating

Bank Credit Facilitation

Raw Material Assistance

Single Point Registration

Infomediary Services

Marketing Intelligence Services Lease

Bill Discounting

Exhibition cum Marketing Development Business Park

Exhibition Hall, Hyderabad

IT Incubator

Exhibition Grounds, New Delhi

Software Technology and Business Parks

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Performance and Credit Rating Scheme for Micro, Mediumand Small

Enterprises

This scheme looks at establishing an independent, trusted third party outlook on

capabilities and credit-worthiness of MSEs, and makes credit accessible at

attractive interest rates. It envisions to enable MSMEs get recognition in global

trade, ensure timely sanctions of credit from banks and monetary institutions,

subsidized ranking fee structure for MSEs help vendors and/or buyers in

competence and capacity assessment of MSEs enables the MSEs to determine the

strengths and weaknesses of their existing operations and obtain corrective actions.

Salient features

The scheme is a permutation of credit and performance factors including, finance,

operations, business and management risk, allowing even rating scale for all rating

agencies. MSEs have the freedom to choose from those empanelled Rating

Agencies. The fee composition is turn-over based. Partial repayment of rating fee

may be obtained through NSIC.

Re-imbursement

Turnover of MSE Re-repayment of fee through NSIC

Up to Rs.50 lakh

75% of the fee or Rs.25,000

(whichever is less)

More than Rs.200 lakh

75% of the fee or Rs.40,000

(whichever is less)

Above Rs.50 to 200 lakh

75% of the fee or Rs.30,000

(whichever is less)

Table 12.1

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Bank Credit Facilitation

To meet the credit necessities of MSME units, NSIC has come into a

Memorandum of Understanding with various nationalized and private banks. By

way of syndication with these banks, NSIC arranges for credit hold (fund or non-

fund based limits) from banks without any expenditure to MSMEs.

Furthermore, MSMEs can raise their proficiency in terms of business and

technologies by getting rated through autonomous, well-known and trained rating

agencies empanelled with NSIC. MSEs which get rated under NSIC-Performance

and Credit Rating scheme have the freedom to get rated by any one of the rating

agencies of their liking. It also invariably boosts their creditability in business and

helps them in getting apt credit from banks at moderate rates of interest.

Scheme for Raw Material Assistance for Micro, Medium andSmall

Enterprises

The scheme stands in aid of MSEs by way of financially supporting the

procurement of raw materials. This in turn gives space to the MSEs to focus on

developing quality products.

Benefits

1. Monetary assistance for purchase of raw material up to 90 days

2. Assistance to avail economics of procurement like whole-sale large purchases,

discount, etc.

3. All measures related to the processes, documentations & an issue of the letter of

credit in case of imports is taken care and overseen with the help of the scheme.

The scheme can be applied and registered in contact with the regional & branch

offices of NSIC.

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Single Point Registration Scheme tender (SPRS)

The government in itself is the single largest purchaser of a variety of goods. The

Government Stores Purchase Programme was launched with a view to increase the

share of procurement from MSEs. In order to encourage the MSEs to buy their raw

materials from the government storages, the NSIC registers MSEs under a Single

Point Registration Scheme (SPRS).

Eligibility

MSEs which are registered with the Director of Industries (DI) or the District

Industries Centre (DIC) as manufacturing or service enterprises or having

acknowledgement of Entrepreneurs Memorandum (EM Part-II) are eligible for

registration with NSIC under SPRS.

MSEs which have already started their commercial business in production and

manufacturing / services but not completed one year of existence can be provided

with the Provisional Registration Certificate under SPRS with a funding limit of

Rs.5 lakh, which will hold a validity period of one year from the date of issue after

imposing the registration fee and receiving the required documents.

Benefits

The registered entities under the scheme will be eligible to get the benefits listed

below:

Free of cost issue of tender.

Exclusion from payment of Earnest Money Deposit (EMD)

The MSEs participating in the tender quoting a price within the price limit of

L1+15% are allowed to supply a portion up to 20% of a requirement by lowering

their price to L1 price.

Every Central government Department and the public sector units (PSU) shall set a

yearly target of a total annual procurement of products and services of a minimum

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of 20% rendered by MSEs; out of the fixed 20% purchase of goods and services

from MSEs, 4% is marked for the enterprises owned by Schedule Castes/Schedule

Tribe entrepreneurs..

In addition to the above, 358 items also reserved for exclusive purchase from MSE

sector which includes pickles, coir products, handicrafts and other handmade in-

house produced materials.

Scheme for Infomediary Services for business, technology and

Finance

Information technology is on the verge of taking over a critical place, with the kind

of innovations, researches, consultancies and technical advancements in the area.

With the increase in competition and the melting away of global borders, demand

for information and technology is reaching new heights. National Small Industries

Corporation-NSIC is offering Infomediary Services which is a one-way, one-stop,

one window array of aids that will provide vital information on business,

technology and finance, and also exhibit core strengths and competencies of Indian

SMEs thus help it to reach the world. The corporation is also contributing services

through its MSME Global Mart www.msmemart.com; which is a Business to

Business (B2B) and Business to Customer (B2C) compliant web portal in which

the services are available through annual membership.

Benefits: Platinum membership :A member, who joins both B2B and B2C

portals, will get unlimited access to all B2B and B2C features and is allowed to

upload images of 10 products on the MSME Global mart website.

1. Joining fee of Rs.10,000 + service tax for one year

2. Renewal charges of Rs.10,000 + service tax

3. For international clientele, US$ 250 for one year

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Gold membership

1. A member who wishes to join on the gold membership slab will be allowed the

features of any one portal i.e.; only B2B or B2C portal, whichever is opted for, and

allowed to upload images of 10 products.

2. Joining fee of Rs.5,000 + service tax for one year

3. Renewal charges of Rs.5,000 + service tax for one year

4. For international clientele, US$ 125 for one year

Basic member: Free, with limited access for B2B portal only

Scheme for Marketing Intelligence Services Lease forExporters, importers

Marketing Intelligence Cell attains and examines information of both existing and

potential consumers, to understand the market, determine existing and future

requirements and preferences, attitudes and nature of the market; and to evaluate

changes in industry environment that may influence the size and nature of the

market. The information includes:

1. Database of product-wise lot buyers and the buyers in Government/public sector

undertakings.

2. Database of price contracts of various Government divisions and Public Sector

Units.

3. Information on tenders announced by the Government and Public Sector Units.

4. Extending the list of Indian exporters to various countries, with lists of products

manufactured and services provided.

5. Database of global buyers with lists of products manufactured and services

provided.

6. Database of equipment suppliers & projects for MSMEs

7. Business collaborator meetings (arrange one-to-one meetings for overseas

delegations with Indian exporters)

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8. Market acumen reports available on web portals pertaining to several sectors,

trend analysis and export – import figures.

9. International library/database/list provision with: worldwide importers‟

directory, area explicit booklets, general and worldwide business related

magazines / articles / databases / booklets, information guides.

10. Database of micro & small enterprises registered with National Small Industries

Corporation for Government procurements, raw material assistance,

performance & credit rating schemes, list of MSME business relations

Benefits: Online request form: MSMEs willing to avail any marketing intelligence

services of NSIC may apply for:

1. Bulk purchaser in Government/public & private zones

2. Exporters and International buyers

3. Technology suppliers

4. Entities registered with NSIC under the SPRS

5. DGS & D registered suppliers

Scheme for Bill Discounting for Micro, Medium and SmallEnterprises

The scheme handles procurement and discounting of bills arising out of authentic

trade dealings i.e., purchase of products and services made by small scale units and

selling to reputed public limited companies/State and Central Government

Departments/Undertakings.

Bills drawn by the small-scale units for the produce made by them and duly

acknowledged by the purchaser will be funded by the security of bank guarantee in

favor of NSIC.

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Benefits

Assistance against the security of BG/SDR/FDR

Particulars Effective rate of

interest (w.e.f.,

20/09/2011)

(i) Units having valid SE 1A rating

under NSIC‟s rating scheme

12.40%

(ii) Units having valid SE 2A rating

under NSIC‟s rating scheme

12.90%

(iii) Units having valid SE 1B rating

under NSIC‟s rating scheme

12.90%

(iv) Other units 13.40%

Table 12.2

Scheme for Exhibition-cum-Marketing Development BusinessPark

exhibition, office space

The need of rising corporate and trade entrepreneurs for the establishment of their

operations in an extraordinary - business environment is increasing. To cater to

such requirements, an Exhibition-Cum-Marketing Development Business Park, a

five storied infrastructural facility, covering a vast area of 1,50,000 sq. ft. with the

availability of exhibition space on the ground floor and office space on the upper

floors have been constructed at NSIC-TSC Complex, ECIL Post, Hyderabad

spread over a rambling area of 8 acres.

Benefits

1. Aesthetics of building by providing ACP, structural glass work, fountains, etc.

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2. 100% power generator back-up facility

3. Enormous parking space

4. Capsule Lifts/elevators

5. Large column free space in office areas

6. Conference hall with a seating capacity of 100 persons

7. Exhibition hall of 18,000 sq. ft.

8. Restaurant / food space

9. Earthquake resistant structure

10. Polished granite flooring in all common areas

11. Two atriums for ventilation and natural lighting

12. CCTV for safety measures and surveillance

13. PA surround sound system

14. Modern fire-fighting technology for safety

15. Pleasing lush green setting all around the building

16. Rain water harvesting

17. Infrastructural development : Wide approach road for hassle-free traffic

movement

18. Wide corridors for easy movement

Scheme for Exhibition Hall, Hyderabad – a perfect venue fororganising

exhibitions conferences

Exhibitions/Merchandise display events are prearranged in the conference hall

to showcase competencies of MSEs and to capture global opportunities. The

exhibition complex is strategically positioned and has lush green surroundings.

It has very good transport connectivity.

Benefits

1. Exhibition hall of 18,000 sq.ft.

2. Conference hall with a seating capacity of 100 persons

3. Enormous two- wheeler & car parking space

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4. 100% power generator back-up facility

5. Restaurant

6. Natural calamity resistance structure

7. Two atriums for ventilation and natural lighting

8. CCTV for safety measures and surveillance

9. PA surround sound system

10. Modern fire- fighting system technology

11. Pleasing lush green countryside all around the building

12. 24 hrs. water supply through R.O. system

Scheme for IT Incubator for fostering, business, Enterprisesand computer

facilities

Promising technological and knowledge-based emerging ventures look at fostering

ideas from professionals for which the idea needs to go beyond the conventional

venture capital activity. Such entrepreneurial ideas have to be fostered and nurtured

in a conducive environment before they become attractive for venture capitalists.

Incubation centers are the need of the hour to fulfill this need.

This scheme has been initiated in order to create a long run, dependable

entrepreneurship development in the area of ICT especially among first generation

entrepreneurs, fostering the innovative ideas into commercially viable business

propositions, encouraging commercialization of R&D into profit making

commercial businesses.

Also, the scheme enhances the expertise of NSIC in extending personalized hand-

holding to start-up companies in order to become successful MSEs. A close

association and networking between Research and development and the industry is

part of the initiative, particularly to target beneficiaries. For the space and

infrastructure utilization of NSIC-TBI, the budding prospective entrepreneur shall

pay a monthly license charge to NSIC. In addition to the license charge, the

utilization of the business center, telephone expenditure and internet charges are

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also payable on actual depending on the use. Expert personalized services like

marketing, legal, accountancy are also chargeable.

Eligibility

Every persons who would like to become an entrepreneur or has established an

enterprise; groups of researchers´ from the nearby universities who are partially

funded by an industrial partner-in-charge and who develop products adapted to this

partner´s needs; students from various institutions and universities or ideally

potential employees of start-ups, who are in need of some practical preparation in

the industry; people who have established standing in the industry and would

consequently like to start product development on their own are all eligible to

apply.

Investors who monetarily commit themselves to researchers´ clusters as well as to

the start-ups at the incubator; clients and sales associates who are interested in

cooperation with researchers´ groups and start-ups at the incubator; industrialized

enterprises, universities and private training institutions which are interested in

transfer their know-how within the criteria of the incubator and mediate their

clients may also apply.

Benefits

Ready to move built-up space, computer hardware facilities, access to software

database and library, internet and business centre facilities

primary level training/counseling, handholding into fine tuning the business plans,

specialized training, close mentoring of services, market exposure

Advanced facilitation of seed capital/venture capital, market survey, support in

official formalities and documentation support

Sourcing of business partners, technology transfer, legal formalities for launch of

enterprise, selection process

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Scheme for Exhibition Grounds for enterprises, New Delhi

A platform to showcase competencies and strengths of small scale industries and to

capture market opportunities, the NSIC has established its own state-of-the-art

Exhibition Complex next to its corporate office. The Exhibition Complex is

strategically located which makes it easy for transportation and connectivity and

has lush green surroundings in the plush South Delhi area which enjoys good

connectivity from the international airport, New Delhi railway station and

commercial centers of Delhi like the Connaught Place and Nehru Place.

Benefits

1,500 sq. mtrs.of fully air-conditioned built-up area

16,000 sq. mtrs.of open space with hard standing base

Facility of cafeteria

Open theatre

Separate entry and exit gates.

Huge parking space to accommodate more than 1,000 cars.

500 KVA uninterrupted power supply through DG set

24 hours water supply

Facility available for conferences and business meetings

Scheme for Software Technology and Business Parks

NSIC has brought up Software Technology-cum-Business Parks in New Delhi and

Chennai for providing space to small and medium enterprises in advanced software

development and to IT/ITES/MSME units not registered with STPI or units that are

falling under the overall definition of MSME. Enterprises other than MSME such

as banks/Public Sector Units/financial institutions, corporate sector would also be

considered for allotment under the below scheme.

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Benefits

Facilities available: Built-up area in modules having areas varying from 400 sq. ft.

to 4,000 sq. ft. This enables units to start their business/operations with minimum

waiting period.

Speed data link: High-speed internet facility through satellite link is available. The

member units can avail 64 kbps to 2 Mbps dedicated leased channels. TCP/IP

connections are available for us to members.

Each member is also provided with one telephone line for a business promotion

and connectivity.

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11.4 ARI DIVISION SCHEME

Source : www.sarkariyojna.co.in

Prime Minister’s Employment Generation Programme(PMEGP)

The scheme is executed by Khadi and Village Industries Commission (KVIC) as

the apex agency at the nationalized level. At the state level, the scheme is

executed through State KVIC Divisions, State Khadi and Village Industries

Boards (KVIBs), District Industries Centers (DICs) and banks. The Government

Prime Minister Employment Generation Programme (PMEGP)

Janshree Bima Yojana for Khadi Artisans

Market Development Assistance (MDA)

R&D Activities of Coir Board Under Central Sector Plan of Science & Technology (S&T)

Rejuvenation, Modernization and Technology Upgradation of Coir Industry (REMOT)

CSS of Export Market Promotion

Skill Upgradation & Quality improvement and Mahila Coir Yojana

Development of Production Infrastructure (DPI)

Welfare Measures Scheme (Coir workers)

Programme for promotion of Village Industry Cluster - Rural Industry Service Centre (RISC) for Khadi and Village Industry

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subsidy under the scheme is given way by of KVIC through a select bank in-order

to reach the funds of beneficiaries/entrepreneurs into their bank accounts.

Eligibility

The entrepreneur or beneficiary should be least VIII standard passed for a venture

costing above Rs.10 lakh in the manufacturing sector, and above Rs.5 lakh in the

service sector. Only new projects are considered for sanction under PMEGP.

SHG-Self Help Groups and those belonging to BPL can avail the scheme under a

condition that they do not avail any benefits under any other scheme, entities

registered under Societies Registration Act, 1860, Co-operative Societies and

Charitable Trusts are also eligible.

All those entities who have registered and units that have already availed

Government subsidy under any other scheme of the government of India or State

Government are not eligible to enroll for this subsidy.

Benefits

The maximum cost of the project/unit admissible in manufacturing sector is Rs.25

lakh and in business/service sector is Rs.10 lakh. Levels of funding under

PMEGP:

Categories of beneficiaries under

PMEGP

Beneficiary’s

contribution (of

project cost)

Rate of

subsidy (of

project cost)

Area (location of project/unit)

UrbanRural

General category 10% 15%25%

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Special (including SC/ST/ OBC/

Minorities/Women, Ex-servicemen,

Physically handicapped, NER, Hill

and Border areas, etc.)

05% 25%35%

Table 12.3

In-order to apply for the same, the State Directors of KVIC in consultation with

KVIB and Director of Industries of the respective states will launch

advertisements locally and call for invitations for those interested, through print

& electronic media inviting applications along with project ideas and proposals

from prospective beneficiaries desiring to establish the enterprise units under

PMEGP.

JanshreeBimaYojana for Khadi Artisans

In association with the KVIC and the LIC-Life insurance corporation of India, a

group insurance in the name of Khadi KarigarJanshreeBimaYojana (JBY) in

specific for the Khadi Artisans was been launched. This scheme was designed by

KVIC in association with the Life Insurance Corporation of India (LIC)

Objective: it is an insurance cover to khadiKarigars and their families for natural

death of the insured due to accident and loss of both eyes and both limbs, plus a

scholarship up to 12th standard for two children

Eligibility

Khadi workers/Karigar aged between 18 years and 59 years and below or

marginally above the poverty line

Benefits

1. For death due to: (1) natural reasons – Rs.20,000; and (2) accident – Rs.50,000

2. For permanent disability (loss of two eyes or two limbs) – Rs.50,000.

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3. For partial disability (loss of one eye or one limb) – Rs.25,000.

4. Free add-on benefit: Scholarship of Rs.300 per quarter for children of Khadi

artisans.

Scheme for Market Development Assistance for KhadiFinancial

Assistance

A flexible, expansion stimulating and artisan oriented Market Development

Assistance (MDA) scheme hasbeen introduced. Under the MDA, monetary

assistance is provided to institutions @ 20% of the rate of production of khadi

and poly-vastra (poly clothes), to be shared among the artisans

manufacturinginstitutions and selling institutions in the ratio 25:30:45. MDA

allows the entities flexibility to use the support for improving the outlets,

products and production processes, besides encouraging the customers with

incentives etc.

Objective

Monetary assistance to Khadi institutions to use for improving the outlets,

production, processes or giving incentive to customers

Benefits

MDA subsidy is allowed @ 20% on cost of production of Khadi (cotton, silk,

woollen) and poly-vastra to the extent of manufacturing target approved by the

Standing Finance Committee (SFC) of KVIC for the year.

How To Apply

The total amount of MDA on production will be taken up by the manufacturing

institution from the KVIC and will be distributed amongst the stakeholder‟s viz.,

25% to spinners and weavers, 30% to producing institutions and 45% selling

institutions. Producing institutions have to submit a quarterly report of MDAbased

on the actual manufacturing achieved during the preceding quarter of the financial

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year. The difference, if any, should be adjusted in the last quarter of the financial

year on the basis of audit conducted by the Chartered Accountants. The MDA will

be preferably reimbursed electronically by the Divisional office of the KVIC on the

quarterly basis.

R and D Activities of Coir Board under the Central SectorPlan of Science

and Technology

The Coir Board has been responsible for the undertaking, assisting or encouraging

economic, technological and scientific research, also maintaining and assisting one

or more research institutions for their researches in the development and the use of

coir. Two Research and Development institutes, namely; CCRI, Alleppey and

CICT, Bengaluru are functioning under the Coir Board.

Objective

To encourage economic research with the maintenance and assisting of research

institutions - CCRI, Alleppey and CICT, Bengaluru

Eligibility

Assistance is provided only to the two R&D institute's functioning under the Coir

Board.

Benefits

The fund is released to the two Research and Development institutes: CCRI,

Alleppey and CICT, Bengaluru by the Government through the Coir Board for

Research and Development activities and creation of infrastructure & civil

construction/repairs, etc., relating to R&D activities only as specified in the action

plan under different programme heads of the scheme.

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Rejuvenation, Modernization and Technology Upgradation ofCoir

Industry (REMOT)

This is a credit linked scheme for setting up of coir units with venture cost up to

Rs.10 lakh plus one cycle of working capital which shall not exceed 25% of the

project cost. Working capital will not be considered for subsidy.

Eligibility

Any individual above 18 years of age with Indian citizenship can apply. There is

no income ceiling for the assistance for setting up of the project under REMOT

scheme, Assistance under the scheme is only available for projects for the

production of coir fibre/ yarn/ products, etc., coming under the coir sector.

Assistance will be made available to individuals, SHG‟s, NGO‟s and companies

registered under Societies Registration Act 1860, production of cooperative

societies, joint liability groups and charitable trusts. Women, SC/ST and the

Andaman and Nicobar Islands and Lakshadweep beneficiaries will be given

priority.

Benefits

The funding pattern of the scheme is

Bank loan - 55%

Government fund (margin money – subsidy) - 40%

Beneficiary‟s contribution - 5%

Scheme for CSS of Export Market Promotion for Indianexporters’ subsidy

Coir Board is implementing Export Market Promotion scheme in-order to carry out

a strategic and aggressive product and market specific awareness programmes for

advertisement and promotion of the coir and coir products in the global markets,

supporting export based industry on modernisation programme, and to attain an

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overall and long run sustainable development of Indian coir industry by

participating in international fairs/produce promotion

programmes/conferences/seminars etc thereby assisting entrepreneurs to participate

in such programmes through export market development assistance scheme.

Objective

For overall development of coir industry; to support modernisation of export

oriented units to popularize coir products in international markets, to participate in

international fairs, seminars etc

Eligibility

All micro, small and medium exporters, with FoB turnover of less than Rs.2 crore

worth coir and coir products in the previous year and micro, small & medium

entrepreneurs of coir and coir products, registered with the Coir Board, would be

eligible to register under the scheme, with a condition that they do not avail the

facility from any other source for the same reason or participated three times in the

same exhibition to the same destination, with assistance from the government.

Benefits

TA financial assistance of up to Rs.2 lakh is given to eligible coir exporters to

participate in the global fairs or product awareness programmes, etc. Support for

publicity material up to 25% of the production cost with over all ceiling of

Rs.15,000 is also admissible.

Skill Upgradation and Quality Improvement and Mahila CoirYojana

(MCY)

The scheme is for training individuals for the levels of supervisors, instructors and

artisans to meet the need of skilled manpower for the development and growth of

the coir industry. Transfer of technology to non-traditional areas by ways of the

development of the skill of coir workers is also a provision of the scheme. Training

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programmes and EDPs (Entrepreneurship Development Programmes) are held by

the Coir Board through its regional training centres.

Mahila Coir Yojana (MCY), in particular, works at women upliftment through the

provision of spinning equipment at lower rates after appropriate skill development

training.

Objective

Skill training to boost coir industry, and subsidisation of spinning equipment to

women to empower them

Eligibility

All micro, small and medium enterprises dealing with exports, with a FoB turnover

of less than Rs.2 crore worth coir and coir products in the past year and micro,

small & medium entrepreneurs of coir and coir products, registered under the Coir

Board, would be qualified to register under the scheme, with a condition that they

do not avail the facility from any other source for the same reason or participated

three times in the same exhibition to the same destination, with assistance from the

government.

Benefits

The training programme is of a duration of two months and a monthly

remuneration of Rs.750 is provided to the trainees. The returns for the trainer is

limited to Rs.5,000 per month. An amount of Rs.250 per month is provided by the

individual as monetary assistance to the training sponsoring agency to meet the

operational cost.

Under MCY, the Coir Board provides 75% rate of motorized rates/motorized

traditional rates as the one-time subsidy, subject to a ceiling of Rs.7,500 in the case

of motorized rates and Rs.3,200 for motorized traditional rates.

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Development of Production Infrastructure (DPI) Scheme forEnterprises in

India

Coir Board is implementing the plan scheme „Development of Production

Infrastructure‟ with an aim to provide modern infrastructure facilities to coir

production units, which in-turn results in the improvement of production and

quality of coir and also in the creation of employment opportunities especially for

women in the rural areas.

Objective

Provides modern infrastructure developments to production units leading to

increased and improved productivity, quality and employment opportunities

Eligibility

All the new coir processing units registered with Coir Board under Coir Industry

Registration, 2008, and registered with the DIC of the respective region of the

entire coir sector of the country with venture cost exceeding Rs.5 lakh each is

qualified for aid under the scheme.

Benefits

Under the DPI scheme, the Coir Board provides monetary assistance to the coir

manufacturing units @ 25% of the cost of equipment subject to a maximum of

Rs.6 lakh for setting up of a de-fibering unit, Rs.4 lakh for the automatic spinning

unit, and Rs.5 lakh for others including coir pith. For a fused or multiple units, the

maximum ceiling of financial assistance is Rs.9 lakh. The scheme also provides aid

in monetary assistance up to Rs.2 lakh for re-creating/renovation of the existing

units.

Scheme for Welfare Measures (Coir Workers) financialcompensation

The Coir Board has executed the plan scheme „Welfare Measures-Coir Workers

Group Personal Accident Insurance‟ for the monetary compensation to

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deceased/disabled coir worker or his family. The entire insurance premium is paid

by the Coir Board to the insurance company by ways of calling quotations. The

compensation is provided by the insurance company to the disabled coir workers or

nominee of the disabled or deceased coir workers.

Eligibility

Coir workers aged 18 years and above engaged in the industry are covered under

the insurance scheme. The disabled coir worker or nominee of the

disabled/deceased coir worker can apply for the claim. As per the suggestion by

some of the women from this group who also happens to be the majority in coir

manufacturing industries, the accident in their case mostly includes death and

disablement arising out of consequent complications which could be arising out of

pregnancy, childbirth, caesarean hysterectomy, removal of the breast as well as

murder and rape, etc.

Benefits

Compensations payable under the scheme are given below.

1. Accident death: Rs.50,000

2. Permanent total disability: Rs.50,000

3. Permanent partial disability: Rs.25,000

4. Provision for finger cut: Depending upon the finger and limited to applicable

percentages of capital sum insured.

Programme for Promotion of Village Industry Cluster -Rural Industry

Service Centre (RISC) for Khadi and VillageIndustries

RISC is the Common Facility Unit which aims to provide necessary services and

infrastructural support to local units to upgrade their production capacity, skill

upgradation and market promotion.

RISC must cover one of the following services:

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Provide testing facilities by launching a laboratory to ensure quality of the

products.

Provide advanced machinery/equipment to be utilized as common utility facilities

by closeby units/artisans to improve manufacturing capacity or value the addition

of the product.

Provide attractive and appropriate packaging facilities and machineries to local

units/artisans for better advertisement and promotion of the products.

Eligibility

Farmers, NGOs, individual entrepreneurs, groups of unorganized and organized

sector and cooperatives which include Self- Help Groups (SHGs), rural youth, etc.

Benefits

Maximum of Rs.25 lakh with entrepreneurs contribution of 25% releases will be

made by the Commission in 3 equal installments after the institution utilizes its

own proportionate contribution of sanctioned amount of the project.

1. Skill development & training and/ or product brochure establishment should

acquire the required instructions for staff functioning of project/prepare product

brochure, etc., from own contribution. Maximum 10% of project cost

2. Pre- operative & post-commissioning costs: Institution should make expenditure

towards the expenses of preparation of project report, etc., emergencies,

travel/transport, miscellaneous expenses, etc., from own contribution. Maximum

5% of project cost.

3. Building/infrastructure subject to evaluation by appropriate authority. Maximum of

15% of project cost should be borne.

4. Plant & machinery for production or testing facilities and packaging with sales tax

number affiliation to Association / Federation. Minimum 50% of project cost

5. Raw material/new design for product Diversification, etc. Maximum 25% of

project cost.

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CHAPTER 12:

RISKS FACED BY ENTRERPENEURS

12.1 Identification of Risk factors faced by India‟s MSME

12.2 The Internal Challenges Faced By The MSMEs.

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CHAPTER 12:

RISKS FACED BY ENTRERPENEURS

12.1IDENTIFICATION OF RISK FACTORS FACED BY INDIA’S MSME’S

With the help of the detailed discussions with the entrepreneurs/knowledgeable

persons regarding the challenges faced by them in the smooth running of an MSME,

the following factors of risks and challenges have been identified.

In the last decade many changes have taken place in the economy mainly in the

corporate sector. Today, the Business world is not stable and in-transparent, laced

with uncertainty; it keeps on changing and leading to many challenges and

opportunities. Particularly small & medium sized enterprises are facing many unique

challenges in the Business world which has led to change in Practices, Technologies

and also identify the opportunities arising at the right time and face them with the

right strategy.

The Risks faced by entrepreneurs are of two types i.e. Internal & External, here the

External Risks are the environmental Conditions which are beyond the control of the

organization. The External Risk Factors are as follows,

Types of Risks: Risks Factors can be of 4 types i.e. Political, Environmental,

Social& Technological.

To identify these risks, PEST analysis is done.

PEST Analysis stands for Political, Environmental, Social and Technological. This

technique was developed by Francis Aguilar (Book, Scanning the Business

Environment-1967) he elaborated on the technique to study and analyze the Risks

taking place in the organization.

Political Factors-

The factors involve the following,

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Political Climate and stability.

Political Philosophy and stability.

Stand on opposition Parties on business.

Level of Political Mortality.

Taxation policies.

Law and order situation.

The Political environment of a region plays an important role on growth and

developments of MSME. The Government plays an important role as a Promoter,

Planner and Regulator of Business firms .The Ideologies of Government plays an

essential role influencing the growth in business.

Economic Factors-

The Economic factors are as follows-

Money supply.

Trade Restrictions.

Industrial Production.

State of MSME business cycle.

Distribution of income within People.

Government monetary & fiscal policies.

Productivity of factors of production.

Stock of food grains and essential conditions.

Economic state refers to the overall country economy. It plays a vital role in growth

of Industries and profitability of Individual Firms. The survival and business of

industry largely depend on Purchasing power of people which is dependent on

Economic status of country.

Social factors-

The Social risks are as follows-

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Social traditions.

Beliefs.

Values.

Literacy of the population.

Extent of social satisfaction.

Conflicts.

Religious languages.

It includes the lifestyles and values that characterize the Society in which the

different industries or Firms operate. A class is identified by occupation, lifestyle,

and income; a social environment plays an important role for the organization to

obtain its goals, Market its goods and services. It also helps to identify the

opportunities and threats in an organization.

Technological Factors-

Technological risks includes-

Computing Speed affects the design and manufacture of products.

Internet technologies are changing business models and challenging the

Old/Traditional structure.

Dissemination or Technological Acquisition.

Business and Technology are interrelated with each other; technological changes

may bring new opportunities to the organization. The changing technology may

affect the demand for a firm‟s product & services. The advancement in Technology

can reduce or improve opportunities for an organization. These changes will bring

new products into market & ultimately lead to death of existing products.

Internal Factors:

MSMEs play a vital role and it is necessary for the growth of the Economy. Indian

Market is growing rapidly and Indian businessmen and entrepreneurs are making

very good progress in various industries and service sectors like Manufacturing,

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Processing, Textile and Garments, Retail, IT, Agro and Service Sector,

Pharmaceutical, etc. MSMEs are now having greater opportunities for growth

expansion and diversification in the different sectors of Indian market. It is very

important to empower the MSME sector to utilize the limited resources i.e. both

human and economic, which they have in an optimum manner.

The MSME‟s hold a lot of importance in the Indian market and in the growth of the

Economy, but the sector faces some stiff challenges and does not get the required

support from the government or the Institutions which are helpful for financial,

corporate or business issues faced by the MSME‟s, thus this prove to be the biggest

problem in the growth path of MSMEs.

In the world of any business entity there is a need of a robust risk management

system but the MSMEs need much more than those as the resources are limited as

the size varies from one another. The large corporate entities are well trained

professional personnel who take care of many aspects related to risk of the entities.

The units which take risk must operate within approved procedures, limits and

controls. There exists a major difference between the way they function and the way

they will be served in the financial market, as the character and integrity of the

promoter and owner are the prime and critical credit indicator and hence play a large

role in the risk taking of the business of MSMEs in the economy. In MSME

business, the gut feeling to achieve which is subjective is more relied upon than the

pure analysis and they are more objective-oriented. Hence, both the business and

professional relationships are summed into one in MSMEs. Small to medium

businesses are exposed to risks all the time in the market. Such risks can directly

affect day-to-day operations, decrease revenue or increase expenses of the

enterprise. Most business managers know naturally that they should have insurance

policies to cover risks to their own life and property. There are many other

innumerable risks that all business managers‟ face, some of which are overlooked or

ignored by the managers in their business or some are backed by the manager on its

own. Every business is subject to possible losses from unmanaged risks due to less

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knowledge about the situation. Sound risk management should reduce the chance

that a particular event will take place and, if it does take place, sound risk

management should reduce its impact in the business and should take a chance to

improve the factors. Sound risk management also protects and guides the business

wealth from going in to a sick position of the company. Risk management starts by

checking possible threats and then implements processes to minimize or nullify them

in the longer run of the business.

Well defined risk management can produce the following benefits:

• Lower insurance Surcharges

• Reduces chances of legal action

• Reduced losses of cash or stock.

• Reduced business time to produce results.

The below given passages identifies some of the risks and areas where risks may

unfold. The MSME sectors unveilsome specific risks, some of which are discussed

as under:

12.2 THE INTERNAL CHALLENGES FACED BY THE MSMES ARE:

Structure of Business Entity

The business entities under SME sectors are mostly proprietorship and partnership

concerns. Few are private limited or closely held public limited companies or joint

limited company. Thus, structure itself proves to be risky due to lack of

professionalism and overdependence on one or two key persons for running the

company in a way to get a return. Lenders and other stakeholders in the MSME

sector cannot afford to forget this fact there only one person or two who would be

working to make the company work as a manger and with all the role involved.

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Credit: Credit is the lifeline of business, in Small businesses there is always a need

and lack of capital and money markets. Investors who are investing are not willing to

invest in small companies, in India, there is no 100% support from the banks to the

small manufacturing enterprises and only about 16% of total bank credit finds its

way to this sector. Total requirements are about 20% for small manufacturing

enterprise but only 8% annual lending is received despite it‟s a priority sector for

lending.

Tough Competition and Insufficient Margin

By virtue of the fact that most of the entities in SME sector are small participate in

their field; they may have to encounter tough competition from the bigger players in

the field with new innovation to stand in the market. They face the pressure on their

margin price and have to absorb the high input cost to stand against the bigger

player.

Infrastructure: Poor Infrastructure facilities including power, water and roads and

inadequate market linkages are the key factors that have constrained growth in the

sector.

Manpower: Lack of skilled manpower for manufacturing, marketing, etc. at

affordable cost. Also the follow-up with various government agencies to resolve

problems due to lack of manpower and knowledge is a big issue.

Finance: Absence of adequate finance to the MSME is the biggest challenge faced

by the industry. The institution which help with funding have very limited exposure

in the sector due to higher risk and limited access of MSMEs to immovable

collateral. MSMEs are facing monetary problems because they do not have enough

capital in the country. Because of the weak economic base, they are not able to take

financial assistance from the banks. But they can obtain credit from money lenders

at a high rate of interest and are thus, exploited in practice.

Low Collection in Account Receivables

As it indicate the increasing trend of outstanding receivables in the small scale

industry India (SSI) sectors, there exists collection risk in the receivable portfolio of

SME sectors for the reason that SMEs cannot control terms to their customers. As

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SME sector business entity is at the receiving end, this may put force on the liquidity

position of the business entity. However, the track record of SMEs as borrowers

reveals that the default rate is low that bad debts may be the result of banks

restricting their exposure to this sector.

Incapacity to go for Technological Progress

With very little financial resources and poor ability for leveraging the financial

structure, the SME sectors mostly have less technology and won‟t have the resource

to go for highly advanced technological which would help them optimize their

available resources in the better way and at a high end results from the process.

Market Access: In today‟s world, small enterprises can hardly match the advertising

support or distribution reach of a large corporation. There is an ineffective marketing

strategy.

Procedures: Government and bank procedures like Complicated Service Tax,

Customs, Shipping, Exports procedures or paperwork coupled with inspections

remain a major hurdle in growth of small units.

Problems of Storage, Designing, Packing and Product Display.

Lack of access to Global Markets.

Low Production Capacity.

Constraints on modernization and expansion.

Non-availability of suitable technology.

Inefficiencies of supply chain

Monetary issues

An increase in domestic and global competition

Lack of infrastructure like roads, warehousing, water supply.

Barriers to enter International Market: MSMEs always have shortage of working

capital to finance exports. They are unable to contact potential overseas customers.

They lack quality, standards, and specifications and are unfamiliar with foreign

business practices.

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The MSMEs need to be educated and informed about the latest developments taking

place globally and should be helped to acquire skills necessary to keep pace with the

global developments.

For the solutions of the challenges faced by MSME sector and to have the

opportunities in the market, the Chamber of Commerce has developed some

promotional strategies to support the MSMEs. The Chamber encourages MSMEs to

adapt innovative ideas and concepts for the promotion of their business. The goal is

to promote thorough organizing Seminars, Conferences and Workshops, provide

Training Programs and other promotional activities to educate & create awareness

amongst the MSMEs.

Problem of Raw Material: The small and micro enterprises are facing the problem

of raw materials. There is an absolute scarcity of raw materials, poor quality of raw

materials and a high cost. The modern small scale industries are involved in

manufacturing highly sophisticated products which results into a serious problem of

raw materials on their production efforts. The quality and quantity of the raw

materials is not satisfactory and due to financial problems these sectors are not able

to secure the raw materials in large quantities in the competitive market.

Problem of Marketing: One of the major problems faced by MSME is in the field

of marketing. The small and micro enterprises do not possess marketing skills. They

are lacking in the quality of the products as compared to the large enterprises. To

protect MSME from competitive pitfall, the government has secured certain items

for the small-scale industries. The National Small Industries Corporation which was

set up in 1955 is also helping the small sectors in gaining the orders and locating

them in the markets. Also, they are lacking in co-ordination among the various

support organizations for the promotion and development of these industries.

Absence of vertical growth: There is lack of ancillarisation and sub-contracting

which restricts the growth of small scale industries with large scale industries. Even

the small scale industry policy does not identify the industries, which is suitable for

ancillarisation and sub-contracting to exploit economies.

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Problem of Out-dated Technology: Most of the small-scale industries are

depended upon old techniques and equipment. Due to the limited capacity and

capital, they find it very difficult to modernize their plant and machinery. In the

absence of modern technology the quality of product and productivity tend to be

low. Cost of production per unit remains high.

Inadequate Infrastructure: Infrastructure quality and quantity of transportation,

communications and other basic services particularly in backward areas is another

problem. Infrastructure gap results in underutilization of capacity and wastages. For

example, instability of voltage, unscheduled power cuts and long delays in getting

power connections are common. Poor communication and transportation, low

quality of civic services, etc. are detrimental to efficient and time bound production

so essential in a competitive world.

Poor Project Planning: In the absence of education and experience, small-scale

businessman often depends upon consultants. They are not able to understand

project details, because of its poor planning; the problem of cost and time arises.

Other Problems: Shortage of trained technicians, technological obsolescence, and

insufficient managerial expertise is also one of the problems faced by MSME. This

took place because of lack of coordination among the organizations set up for the

development of small scale industries. The cost structure is inappropriate and quality

consciousness is still low which affects the position of the industries.

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CHAPTER 13

STRATEGIES ADOPTED BY ENTREPRENEURS TO

OVERCOME RISKS IN BUSINESSES.

13.1 Kinds of Risk Management Strategy

13.2 Kinds of Strategies Implemented by Entrepreneurs

13.3 The Governments Focus to Bring in Growth and Development

13.4

Reforms By The Government To Promote Entrepreneurship In

India

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CHAPTER 13

STRATEGIES ADOPTED BY ENTREPRENEURS TO

OVERCOME RISKS IN BUSINESSES.

The Micro small and medium enterprises play a very important role in the

economic development of the country. The MSMEs play an important role in the

Indian economic growth by contributing 40% in the industrial output, 45% of the

Export and the employing close to 70 million people wherein it createsmore than

3.5 million employment opportunities every year, even though they are faced by

challenges every day. Challenges like,

Insufficient marketing business strategy

Modern & inflation of market

Scarcity of Manpower & Knowledge

Deficit of new technology innovation

The burden of monitoring the work alone or with less employee base

SMEs unable to create benefits from CSR

Lack of technology, training and investment necessary to make improvement

Much pressing need to improve the quality of technology in the market

Price competition and limited consumer‟s pressure

CREDIT Gap

New method of finance

13.1 KINDS OF RISK MANAGEMENT STRATEGY:

After the risk has been identified and evaluated, an entrepreneur develops a plan or

a Risk Management Strategy to reduce the impact of an unexpected event. This

plan manages risks in various ways:

Risk avoidance

Risk sharing

Risk reduction

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Risk transfer

Each of these management techniques can be an effective tool in reducing

individual risks and the risk profile of the entrepreneurial venture. These strategies

capture the risk management approach for each identified risk event and the

actions the risk management team will take to reduce or eliminate the risk.

A risk avoidance technique involves reducing the risk by eliminating its cause. It

involves selecting/choosing existing/old technology over the new technology

because the existing technology has been used and proven earlier, even though the

new technology may give better result. Proven and existing technologies or

procedures are preferred over new process because they are tested and used and

thus a proved one. Risk avoidance can be implemented by stating policies,

training, education and technologies.Risk avoidance is used to overcome

technology risk. The entrepreneur may keep alternative vendor ready in case one

vendor refuses.

Risk Transfer Method involves transfer of risk from the company to another

party, like purchasing insurance will transfer the risk from the company to the

insurance company, example, buying insurance for transport of goods will take

responsibilities of any loss occurring during transportation.

In the Risk Reduction Method,companies often buy/purchase guarantee or

security on currency rate in order to reduce risk on foreign funds due to fluctuation

in currency exchange rate. For this purpose they hire experts who keep a check on

the companies‟ technical plans and strategies.

Risk Sharing involves formation of joint ventures to share the responsibilities and

risk activities, companies working on international project will make joint venture

with company located in that country. So that it will reduce their political, legal

&labor related risk.

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13.2 KINDS OF STRATEGIES IMPLEMENTED BY ENTREPRENEURS

Strategy is the primary building block of competitive advantage. This

encompasses a range of activities in which firms engage to establish and sustain

competitive advantage.

Entrepreneurial Strategy is the means through which an organization establishes

its fundamental set of relationships with its environment. It is characterized by

widespread and simultaneous change in the pattern of decisions taken by an

organization.

1. Study the competition.

As an entrepreneur, it is important to know who the competitors in the market are

and also about the rival product and the service being offered by the competitors. It

is very important to use the competition‟s weakness. This gives the entrepreneur

information about how to market your product and how will the services stand out.

2. Conservation of cash irrespective of how good the business is.

Conservative use of money will help the entrepreneur to deal with any rough

situation that arises. This will help the individual to survive most unforeseen

circumstances.

3. Research of emerging products and services:

Continual research in the emerging products and services could improve your

company's operations, taking advantage of the technology and thus could help

entrepreneurs to manage time more efficiently or a service that lets them delegate

ordinary tasks to free up more time for priority projects

4.To never tackle huge markets at first.

Never expand into large markets in the initial stages.Niche marketing can be

extremely cost effective if three things are kept in mind:

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1. Meet the market‟s unique needs by offering something new and innovative.

2. Speak the market‟s language and understand its needs.

3. The entrepreneur‟s language should be in synch even for the minor aspects of a

marketing campaign like the company's slogan.

5.Customer feedback and adapt to the requirements and changes:

Entrepreneurs can evolve and expand their business only when they're listening to

customer feedback. It may not mean much if one customer doesn‟t like or

appreciate the product but if this is same for many customers and they're

requesting for another feature then it is wise for the entrepreneur to listen, take up

the criticism and be ready to adapt. Entrepreneurs always need to be adaptive

depending upon the needs of the consumers. Whether the entrepreneur isonly

simplifying a product or responding to new trends, paying close attention to

customer feedback or adapting the marketing plan, all that the entrepreneur needs

to consider is Customer‟s Feedback.

6. Respond to change.

Being flexible, accepting change and adapting to business operations is all what an

entrepreneur needs to remember. A lack of adaptability can result in loss in

customers, profits and even business failure.

7.Growth orientation:

Motivation and education plays a very key role in the growth of any business.

8.Adequate firm resources:

Resources include financial as well as human resource.Market is not just finding

new customers but finding gaps that can be satisfied in an economically viable

way.It should not only find out the solution of the customer but also take care of

their preferences.

190

9.Develop new connection to the customers.

To connect more closely to the customers, it is important for MSMEs to leverage

BRANDING. It builds reliability amongst the customers. It also creates good will

and enhances the position in the market.

10.Inorganic growth strategy:

It includes acquisition, mergers, strategic partnership and joint ventures.

11.Marketing strategy:

Internet is a vast marketing tool. Customer relationship management

(CRM),Digital advertising, Information and communication technology and E-

marketing,focus on fresh ideas and innovations,cluster approach etc.There is no

single advertising, promotional or any marketing strategy that will work in

isolation. Marketing strategies, advertisements and promotional channels that will

be used will completely depend on the product or service you provide, and the

customers you are trying to reach. The objective is to create a plan that integrates

all of the primary marketing channels for your business (e.g., Print Advertising,

Brochures, Yellow Pages advertising, Websites, Online Advertising, Targeted

Direct Mail, Public Speaking, Networking, Incentives). While you are creating

your marketing plan - for today and tomorrow –it is necessary to be sure to identify

all channels and to identify them that will lead you to your targeted customer

13.3 THE GOVERNMENTS FOCUS TO BRING IN GROWTH AND

DEVELOPMENT

Three Pillars - In order to maximize the utilization of the resources, the

government is trying to focus on three major pillars of growth and development.

1. Infrastructure

The National Investment and Manufacturing Zone (NIMZ) is considered to be a

major industrial green field township which promotes world class manufacturing

191

activities. Providing land specifically to MSME at reasonable rates helps them to

set up their business even during industrial clusters. Within these clusters, MSMEs

are provided with technological support from various regional institutions and

R&D facilities. In order to enhance connectivity for MSME businesses, modern

cities require infrastructure investment in roads, rail, air and water, for which the

government plans to bring in large scale development in all the three modes to

bring in an ease n the logistics ad supply chain functions of businesses.

2. Finance

Expanding the investment opportunities in MSME to High Net Worth Individuals

(HNWI) will ensure additional growth in the sector. To optimize the scope of

growth and increase the investment opportunities, tax pass through status is given

to venture capital funds which have their main focus on MSMEs. Apart from this,

MSME can also raise debt from banks. They are being providing with incentives

for lending to MSME. These funding can also be obtained through government

initiatives.

3. Skilled Labour

One of the major drawback faced by Indian MSME sector is lack of skilled labour.

According to the facts, huge skilled workforce is required in the next 7 years in

most of the sectors except agriculture. In order to reduce the gap between demand

and supply of skilled manpower, government has taken certain initiatives to

improve quality and innovation in vocational education. Few such initiatives

provide skill training across sectors. These trainings will be incentivized through

skill loan schemes, by providing scholarships to candidates who complete skill

training programmes successfully.

Thus MSMEs have played an important role in the overall industrial development

and the economic growth in the country. TheMSMEs need to be educated and

informed of the latest developments, techniquesalong with the ways of improving

192

technologies and helpto acquire skills necessary which help us to develop the

country‟s economy.

13.4 REFORMS BY THE GOVERNMENT TO PROMOTE

ENTREPRENEURHIP IN INDIA

National Policy for Skill Development And Entrepreneurship 2015

This national policy for skill development and entrepreneurship scheme has been

approved by Prime Minister, ShriNarendraModi as India‟s first integrated national

policy for skill development and entrepreneurship in the year 2015. This policy

undertakes the need for an effective promotion of entrepreneurship as the key to

flourishing skills of the youth power of the nation.

The goal of the policy is “to create an ecosystem of empowerment by providing

skills on a large scale at a speed with high standards and to promote a culture of

innovation based entrepreneurship which can generate wealth and employment so

as to ensure sustainable livelihoods for all citizens in the country”.

To achieve this vision, the policy has four thrust areas. It has key obstacles to

skills, which includes lack of integration with formal education, lack of focus on

outcomes, low quality of training infrastructure and trainers, low aspirational value

etc. This policy also focuses on the supply and demand of skills by bridging skill

gaps, promoting industry engagement, leverage technology and promoting greater

opportunities for training. This policy also focuses on equity which targets skilling

opportunities for geographically marginalized and disadvantaged groups. This

policy also focuses to promote women entrepreneurship and also focus to educate

individuals through the entrepreneurship development programmes.

The objective of this policy is to provide skills to large number of persons at the

same time with speed, quality and sustainability. It also focuses to provide

framework to all skilling activities that is carried out within the country.

193

Approach adopted in the policy: the policy focuses on skill development to

improved productivity and employment opportunities for the growth of the

economy and also to develop entrepreneurship in the nation.

Start-up India initiative

This scheme is mainly to encourage entrepreneurship among the youth of India.

Under this scheme the government provides funds and incentives to budding

entrepreneurs to set-up their business in the market, through which the exemption

in various factors and benefit for business can be acquired. This scheme helps new

entrepreneurs to start up their own business by taking benefit of these government

exemptions. This will help both the entrepreneurs and thus the nation, as it will

have a direct impact on the national income and a direct impact on the employment

ratio, young budding entrepreneurs can freely do their business with the help of

government benefit schemes. Under this scheme women are also encouraged to

start their business. Women receive the capital required to start the business, which

in turn encourages them into startups. This initiative will provide a new dimension

to entrepreneurship and help in setting up of network of start-ups in the country.

This initiative will also attract much outsider business thereby increasing the

capital and the technology to increase in the economy.

Mudra bank

This bank has been set up on the 8th April 2015 for the development of

entrepreneurs in India and to provide funding to the non-corporate small business

sector. This Mudra bank provides finance to banks, MFIs, NBFCs, etc for loans to

micro units with limit from Rs 50,000 to 10 lakhs. Under the Mudra Bank, the

government has launched three schemes namely Shishu ,Kishor, and Tarun to help

them in growth and to provide funds to entrepreneurs. Rs 20,000 crore has been

allotted to Mudra bank to give credit facility to small business and manufacturing

units

194

National Skill Development Mission

National skill Development Mission was launched on 15th July 2015 on the eve of

World Youth Skills Day. The Mission was developed to create awareness of the

various Sectors and States in terms of skill training activities to achieve the vision

„Skilled India‟. This scheme mainly focuses on the vision of „Skilled India‟ and

thus works towards empowering the country in order to make the people with

strength of skill.

Entrepreneurship Development Scheme

Entrepreneurship Development Scheme is currently developed by the Ministry of

Skill Development and Entrepreneurship. The scheme is being designed of various

factors like entrepreneurship education curriculum,entrepreneurship hubs,

promotion of entrepreneurship among women and minorities, web and mobile

based networking platform, national entrepreneurship day, social entrepreneurship

etc. This scheme is helpful for entrepreneurship growth.

PradhanMantriKaushalVikasYojana(PMKVY)

PradhanMantriKaushalVikasYojana is the scheme of the Ministry of Skill

Development & Entrepreneurship (MSDE).

The main aim of this scheme is to enable large number of youngsters to take

industry related skill training which will help them to get a better livelihood.

It aims to offer jobs to 24 lakh youngsters all over India. On 3rd March 2016,

15,99,895 people have been enrolled, 9,56,871 completed trainings and 2,90,002

got certified under PradhanMantriKaushalVikasYojana. The skill certificate will

be awarded to those certified under PMKVY which will act as authenticate skill

certification under recognition of Prior Learning (RPL).

Under this Scheme, Training and Assessment fees are completely paid by the

Government. This scheme is a skill development initiative scheme of the

Government of India for standardization and recognition of skills.For this project

195

an outlay of Rs120 billion has been approved by the cabinet. This scheme helps to

increase overall production of the country. The National Skill Qualification

Framework (NSQF) would work as a benchmark of training programs carried out

under the PM KaushalVikasYojana. This scheme would also award monetary

rewards to the trainees after completion and the certifications which would be

carried out by third party assessment bodies. The average reward that would be

given to each trainee would be around 8000. Sachin Tendulkar has become the

brand ambassador of KaushalVikas Scheme. There are some eligibility conditions

for skill India; these are the following conditions,

Youth with only Indian Nationality may enroll

Youth should be willing to work in a sector for which they are eligible

The youth should compulsorily have a one year certification programme from the

start day of the scheme.

196

CHAPTER 14

DATA ANALYSIS

14.1 Test of Reliability

14.2 Administration of the Questionnaire

14.3 Data Interpretation and Hypothesis Testing

14.4 Summarisation of Findings

197

CHAPTER 14

DATA ANALYSIS

The questionnaire was circulated among 293 entrepreneurs, out of which a total of

263 reliable and valid filled data instruments were received.

The structure of the same is as follows:

EDUCATION NUMBER

School 80

Degree 30

Post Graduate 153

Total 263

Table 15.1

AGE NUMBER

25-35 142

36-45 61

45 and above 60

Total 263

Table 15.2

INDUSTRY NUMBER

Manufacturing 52

Service 93

I.T. 64

Others 54

Total 263

Table 15.3

From the data the following analysis has been derived.

14.1 TEST OF RELIABILITY:

On the basis of the pilot testing, a reliability test was conducted to ascertain the

research parameters and to test the validity and reliability of the instruments used

198

in the study and received a reliability test on Cronbach Alpha as 0.819 which

proves the reliability of the questionnaire.

The reliability was conducted on the same through a pilot study of 50 filled in

questionnaire as follows:

Reliability Statistics

Cronbach's Alpha Cronbach's Alpha Based on

Standardized Items

N of Items

.814 .819 19

Table 15.4

14.2 ADMINISTRATION OF THE QUESTIONNAIRE

The filled-in questionnaire was collected from the entrepreneurs in the following

ways;

Through personal contact

Through E-mail

Through a common Site (SurveyMonkey.com)

The study was conducted with a sample of 50 entrepreneurs in and around Mumbai

city following which the questionnaire was slightly revised. The finalized

questionnaire was taken across to the entrepreneurs in Mumbai and Pune.

14.3DATA INTERPRETATION AND HYPOTHESIS TESTING

Socio-Demographic profile of the entrepreneurs

This section includes the demographic factors of the entrepreneurs, the profile of

the respondents and the kind of industry they are involved in, followed by the

correlation of the demographic factors with the kind of risks that are faced by the

entrepreneurs. It attempts to give a detail of the profiles of the entrepreneurs and

the factors of risks faced by them.

199

14.3.1. DEMOGRAPHIC : AGE

Particulars Frequency Percent Valid Percent

Category

25-35 142 54.0 54.0

36-45 61 23.2 23.2

Above

45 60 22.8 22.8

Total 263 100.0 100.0

Table 15.5

Age Distribution: The Age of the Entrepreneur has been used to determine the

kind of risks that the entrepreneur is facing. The frequency and the percentage

chart shows that the analysis was done on a majority of male entrepreneurs with

the highest of 54% of entrepreneurs in the age group of 25-35 years, 23% of

entrepreneurs in the age group of 36-45 years and 22% entrepreneurs in the age

group of 46 and above. This shows that the entrepreneurs ventured in the age

group of 25-35, this is mostly the age wherein the entrepreneur either finishes

his/her college life and moves into business or a time frame when the entrepreneur

experiences the work life and feels best to move out and make an entity of his own.

14.3.2. DEMOGRAPHIC : EDUCATION QUALIFICATION

Particulars Frequency Percent Valid

Percent

Category

School 35 13.3 13.3

Junior

College 45 17.1 17.1

200

Degree\

Graduate 144 56.0 56.0

Post

Graduate 12 4.6 4.6

Total 263 100.0 100.0

Table 15.6

The Education Qualification of the entrepreneur is used to determine the level of

risks that the entrepreneur is facing on account of his qualification. The frequency

and the percentage chart shows that out of the total responses about 13% of the

entrepreneurs have completed school as their qualification, 17% of entrepreneurs

having completed junior college and the rest 56% of entrepreneurs being graduates

and a very small number, almost negligible 4% of entrepreneurs being post

graduates . This shows that today‟s entrepreneurs have started their business

enterprises post their graduation. This makes them well educated, Independent and

knowledgeable in order to startup their businesses.

14.3.3. DEMOGRAPHIC : TYPE OF INDUSTRY

Particulars Frequency Percent Valid

Percent

Category

Manufacturing 52 19.8 19.8

Service 93 35.4 35.4

IT 64 24.3 24.3

Others 54 20.5 20.5

Total 263 100.0 100.0

Table 15.7

201

The Type of Industry is a factor in the research in-order to determine the kind of

risk faced by the entrepreneur on account of the kind of industry the entrepreneur

is in. From the above chart, it is seen that about 20% of entrepreneurs are from the

field of manufacturing, 35% from service, 24% from information technology (IT)

and another 20% from „Other‟ streams which include Real Estate, Pharmaceuticals

and Hospitals.

HYPOTHESIS TESTING

In this section, the various hypothesis will be tested and proved by ways of

statistical data received by way of the questionnaire and the analysis with the help

of the research instrument SPSS software.

The below given are the charts and tables used to prove the analysis and the

relationship between various variables, thus proving the facts in Hypothesis.

HYPOTHESIS 1:

H01 – There is no effect of age of the entrepreneur on the factors of risk faced by

him

H11 – The impact of risks differs with varied ages

Relation between Age and the Kind of Risk Faced While Starting The

Enterprise

Age

25-35 36-45 Above 45 Total

Count Column

N %

Count Column

N %

Count Column

N %

Count Column

N %

Q1

Problems

faced

while

starting

No family

support 11 7.7% 7 11.5% 8 13.3% 26 9.9%

Finance /

capital 43 30.3% 45 73.8% 35 58.3% 123 46.8%

202

enterprise Governme

nt policies /

licenses

88 62.0% 13 21.3% 12 20.0% 113 43.0%

Logistics

and

transportati

on

1 0.7% 6 9.8% 2 3.3% 9 3.4%

Market

Unavailabili

ty

7 4.9% 7 11.5% 4 6.7% 18 6.8%

Competitio

n 34 23.9% 22 36.1% 17 28.3% 73 27.8%

Other 0 0.0% 1 1.6% 2 3.3% 3 1.1%

Total 142 100.0% 61 100.0% 60 100.0% 263 100.0%

Table 15.08

In the above table correlating the Age and risk factors faced by entrepreneurs, it

shows that the highest risks faced by the entrepreneurs in the age group of 25 to 35

is the government policies or licenses with a high percentage of 62%, whereas the

age groups of 35 and above faces high risks of finance or capital accumulation.

This shows that the younger generation of entrepreneurs faces risks more with

government policies than with the older age group who faces risks of funds. With

this it can be assumed that the individuals with higher age groups find it difficult to

gather funds from their friends, families or banks due to the possibility of low

repayment periods and so on also the higher ager groups do not show much of

risks in the government factors since they are more experienced in handling the

government and policy matters whereas the younger age groups of 25-35 find it

comparatively difficult to manage the licenses for the business and handling the

government procedures and policies.

203

Pearson Chi-Square Tests

Age

Q1 Problems faced while

starting enterprise

Chi-square 104.924

df 14

Sig. .000*,b,c

Table 15.09

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a significant difference in the

level of risks faced by the entrepreneurs belonging to different age groups as seen

by the p value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of age of the entrepreneur on the

factors of risk faced by him

HYPOTHESIS 2:

H02 – The education Qualification of the entrepreneur has no effect on level of risk

faced by the entrepreneur

H12 - The education Qualification of the entrepreneur determines the level of risk

Relation between Education Qualifications of the Entrepreneur by Factors of

Risks Faced By Them

Education

School/Junior

College

Degree Graduate & PG Total

Count Column

N %

Count Column

N %

Count Column N

%

Count Column N

%

204

Q1

Problems

faced

while

starting

enterprise

Problems you

faced while

starting your

enterprise -

No family

support

11 13.8% 5 16.7% 10 6.5% 26 9.9%

Finance

/capital 56 70.0% 17 56.7% 50 32.7% 123 46.8%

Government

policies

/licenses

13 16.2% 14 46.7% 86 56.2% 113 43.0%

Logistics and

transportation 2 2.5% 1 3.3% 6 3.9% 9 3.4%

Market

Unavailability 7 8.8% 3 10.0% 8 5.2% 18 6.8%

Competition 26 32.5% 8 26.7% 39 25.5% 73 27.8%

Other 2 2.5% 0 0.0% 1 0.7% 3 1.1%

Total 80 100.0% 30 100.0% 153 100.0% 263 100.0%

Table 15.10

In the above given table, it is clear that the risk of finance is maximum for the

entrepreneurs with basic education of school or junior college and also in those

who have left their degrees mid way, this might be the reason since the banks for

loans of friends of families do not believe in the people with lesser qualification

whereas those having the highest qualification of post graduation face the most

difficult as government policies and the licensing process. This could be because

of the low tolerance level of those entrepreneurs who are well educated with

knowledge and also carry the experience and the funds to start the business and

also the knowhow of the schemes and policies that are available for the

entrepreneurs from the government yet find it disheartening when the polices and

205

the registration process or other help from the government is not easily available at

the grass root level where such subsidies are most required.

Pearson Chi-Square Tests

Education

Q1 Problems faced while

starting enterprise

Chi-square 75.116

df 14

Sig. .000*,b,c

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have expected cell

counts less than 5.

Table 15.11

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a significant difference in the

level of risks faced by the entrepreneurs belonging to different education

qualifications as seen by the p value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of education qualification of the

entrepreneur on the factors of risk faced by him

HYPOTHESIS 3:

H03 – The type of Industry of the entrepreneur has no effect on the level of risk

H13 - The type of Industry of the entrepreneur has a direct effect on the level of risk

Relation BetweekThe Type Of Industry And Factors Of Risks Faced By

Entreprenbeurs In Starting Their Enterprises

Type of Industry

206

Manufacturing Service IT Others Total

Count Column

N %

Count Column

N %

Count Column

N %

Count Column

N %

Count Column

N %

Q1

Problems

faced

while

starting

enterprise

Problems you

faced while

starting your

enterprise -

No family

support

3 5.8% 12 12.9% 2 3.1% 9 16.7% 26 9.9%

Finance/

capital

32 61.5% 55 59.1% 1 1.6% 35 64.8% 123 46.8%

Government

policies/

licenses

16 30.8% 22 23.7% 59 92.2% 16 29.6% 113 43.0%

Logistics and

transportation 3 5.8% 5 5.4% 0 0.0% 1 1.9% 9 3.4%

Market

Unavailability 5 9.6% 7 7.5% 0 0.0% 6 11.1% 18 6.8%

Competition 19 36.5% 26 28.0% 2 3.1% 26 48.1% 73 27.8%

Other 2 3.8% 0 0.0% 0 0.0% 1 1.9% 3 1.1%

Total 52 100.0% 93 100.0% 64 100.0% 54 100.0% 263 100.0%

Table 15.12

From the above table it is clear that the maximum risk faced by the manufacturing

sector of MSME‟s is the capital. The reason behind this is the heavy cost of

machinery and the raw materials that is required in order to function the

manufacturing units. The service sector faced the maximum risk of finance

followed by stiff competition. The IT (information technology) faced the greatest

risk of the government policies and licensing, this is either because of low

awareness of the kinds of government structuring for the IT sector or because the

government might not be helping the IT sector in the kinds of personalized

207

subsidies that could be available to them. Also in opur nation, even though there

are IT giants in the making, yet there is no strong motivation from the government

into taking the IT capacities of the nation into the ends of the world. The others

which includes the Hospitals, dispensaries, pharmaceuticals and real estate

developers face the most competition on funds and then on competition. The

reasons being the high cost of setup required in building businesses in this sector,

followed by the competition faced by them in running the businesses.

Pearson Chi-Square Tests

Type of Industry

Q1 Problems faced while

starting enterprise

Chi-square 211.929

df 21

Sig. .000*,b,c

*. The Chi-square statistic is significant at the .05 level.

Table 15.13

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a significant difference in the

level of risks faced by the entrepreneurs belonging to different types of Industries

as seen by the p value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of the type of Industry of the

entrepreneur on the factors of risk faced by him

HYPOTHESIS 4:

H04 - The entrepreneurs are not aware of the government policies

H14 - The government policies are well published and aware to the entrepreneurs

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AWARENESS OF THE GOVERNMENT POLICIES BY THE ENTREPRENEURS

WITH RESPECT TO THE DEMOGRAPHICS

Awareness of the Government Policies by the Entrepreneurs With Respect To

the Age of the Entrepreneur

Age

25-35 36-45 Above 45 Total

Count Column

N %

Coun

t

Column

N %

Coun

t

Column

N %

Coun

t

Column

N %

Q15 Are you

aware of the

various

support

policies of the

government?

Training 22 15.6% 15 26.3% 11 19.6% 48 18.9%

Finance 35 24.8% 35 61.4% 30 53.6% 100 39.4%

Export-

Import 23 16.3% 21 36.8% 23 41.1% 67 26.4%

Marketing 30 21.3% 22 38.6% 22 39.3% 74 29.1%

None 96 68.1% 15 26.3% 19 33.9% 130 51.2%

Total 141 100.0% 57 100.0% 56 100.0% 254 100.0%

Table 15.14

The above table based on the age of the entrepreneur, the entrepreneurs in the age

group of 25 to 35 had no idea of any of the policies of the government. This could

be because of the reason that the younger entrepreneurs are unaware or uninformed

about the various support policies of the government,

The age groups of 36 to 45 and 45 to above had some information with Finance

policies of the government, with the experience in business, these entrepreneurs

are wise enough to understand the strength of funds that helps in the smooth flow

of the organization. Also this is this is in specific to the subsidies or the interest

rate exemptions that the government keeps for the businesses of MSME‟s.

209

Pearson Chi-Square Tests

Age

Q15 Are you aware of the various support policies

of the government? - Training

Chi-square 95.071

df 10

Sig. .000*

*. The Chi-square statistic is significant at the .05 level.

Table 15.15

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a significant difference in the

level of awareness by the entrepreneurs belonging to different age groups as seen

by the p value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of age of the entrepreneur on the

level of awareness.

Awareness of The Government Policies By The Entrepreneurs With Respect To

The Education Qualification of The Entrepreneur

Education

School/Junior

College

Degree Graduate &

PG

Total

Count Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Q15 Are you

aware of the

various support

policies of the

Training 15 19.5% 9 32.1% 24 16.1% 48 18.9%

Finance 44 57.1% 18 64.3% 96 64.4% 100 39.4%

210

government? Export-

Import 32 41.6% 5 17.9% 30 20.1% 67 26.4%

Marketing 30 39.0% 11 39.3% 33 22.1% 74 29.1%

None 23 29.9% 11 39.3% 38 25.5% 130 51.2%

Total 77 100.0

% 28

100.0

% 149

100.0

% 254

100.0

%

Table 15.16

From the above table, it is clear that inspite of the difference in the education

levels of the entrepreneurs. All entrepreneurs have knowledge on the finance

support policies of the government. This shows the importance that is felt by the

entrepreneurs in saving their hard earned funds and utilizing it effectively in the

working of the entity. Hence it is clear that the government needs to move further

and extend their support to the MSME‟s in providing them the financial subsidies

that will help boost the progress in businesses.

Table 15.17

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a significant difference in the

Pearson Chi-Square Tests

Education

Q15 Are you aware of the various support

policies of the government? - Training

Chi-square 81.198

df 10

Sig. .000*

Results are based on non-empty rows and columns in each innermost sub table.

*. The Chi-square statistic is significant at the .05 level.

211

level of awareness faced by the entrepreneurs belonging to different education

qualifications as seen by the p value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of the education background of the

entrepreneur on the level of awareness.

Awareness of the Government Policies by The Entrepreneurs With Respect To

The Type of Industry of The Entrepreneur

Type of Industry

Manufacturing Service IT Others Total

Coun

t

Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Q15 Are you

aware of the

various

support

policies of the

government?

Training 9 17.3% 26 29.5% 3 4.7% 10 20.0% 48 18.9%

Finance 29 55.8% 53 60.2% 2 3.1% 16 32.0% 100 39.4%

Export-

Import 19 36.5% 30 34.1% 1 1.6% 17 34.0% 67 26.4%

Marketing 21 40.4% 38 43.2% 2 3.1% 13 26.0% 74 29.1%

None 19 36.5% 25 28.4% 60 93.8% 26 52.0% 130 51.2%

Total 52 100.0

% 88

100.0

% 64

100.0

% 50

100.0

% 254

100.0

%

Table 15.18

Based on the above table in connection with the type of Industry of the

entrepreneur it is clear that the Manufacturing sector and the service sector have most

knowledge of the finance policies of the government. Whereas in the IT industry, the

Healthcare sector, the pharmaceutical and other kinds of business entities, most of the

entrepreneurs had no idea of the kind of government policies offered by the

government in specialization to the fields in specifics.

212

Pearson Chi-Square Tests

Type of Industry

Q15 Are you aware of the various support

policies of the government? - Training

Chi-square 202.536

df 15

Sig. .000*

*. The Chi-square statistic is significant at the .05 level.

Table 15.19

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a significant difference in the

level of awareness faced by the entrepreneurs belonging to different types of

industries as seen by the p value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of the type of industry of the

entrepreneur on the level of awareness.

HYPOTHESIS 5 :

H05 - The government is not a source of support to the entrepreneurs.

H15 - The government is standing strong in support of the entrepreneurs.

UNDERSTANDING THE ASSISTANCE RECEIVED BY THE ENTREPRENEURS

FROM THE GOVERNMENT IN CORRELATION TO THE DEMOGRAPHICS

Understanding The Assistance Received By The Entrepreneurs From The

Government In Correlation With The Age Of The Entrepreneur

Age

213

25-35 36-45 Above

45

Total

Count Count Count Count

Q17 What kinds of

help/assistance have

you received from the

government?

Loan 9 22 10 41

Training 4 1 1 6

Easy policies / Tax

holiday 9 7 7 23

Subsidy on water,

electricity 2 6 4 12

No help 124 36 42 202

Total 142 61 60 263

Table 15.20

Pearson Chi-Square Tests

Age

Q17 What kinds of help/assistance have you

received from the government? - Loan

Chi-square 60.329

df 10

Sig. .059*,b

*. The Chi-square statistic is significant at the .05 level.

Table 15.21

According to the above given table, it is clearly seen that there is no significant

difference between the means i.e. there is no significant difference in the level of

help received by the entrepreneurs belonging to different age groups as seen by the

p value = .059 (> 0.05)

Therefore, Ho is Accepted.

Hence it is clear that there is no help received by the entrepreneur from the

government

214

Understanding The Assistance Received By The Entrepreneurs From The

Government In Correlation With The Education Qualification Of The

Entrepreneur

Education

School/J

unior

College

Degree Graduate &

PG

Total

Count Count Count Count

Q17 What kinds of

help/assistance have

you received from the

government?

Loan 15 7 19 41

Training 2 2 2 6

Easy policies / Tax

holiday 10 3 10 23

Subsidy on water,

electricity 5 2 5 12

No help 57 19 126 202

Total 80 30 153 263

Table 15.22

Pearson Chi-Square Tests

Education

Q17 What kinds of help/assistance have you

received from the government?

Chi-square 17.311

df 10

Sig. .068a,b

a. More than 20% of cells in this subtable have expected cell counts less than 5.

Table 15.23

215

According to the above given table, it is clearly seen that there is no significant

difference between the means i.e. there is no significant difference in the level of

help received by the entrepreneurs belonging to different education qualifications

as seen by the p value = .068 (> 0.05)

Therefore, Ho is Accepted.

Hence it is clear that there is no help received by the entrepreneur from the

government

Understanding The Assistance Received By The Entrepreneurs From The

Government In Correlation With The Type of Industry of The Entrepreneur

Type of Industry

Manufact

uring

Service IT Others Total

Count Count Count Count Count

Q17 What kinds of

help/assistance have

you received from

the government?

Loan 14 19 1 7 41

Training 0 4 1 1 6

Easy policies / Tax

holiday 3 9 2 9 23

Subsidy on water,

electricity 5 2 0 5 12

No help 35 63 62 42 202

Total 52 93 64 54 263

Table 15.24

Based on the statistics in the above table, out of all the entrepreneurs responses

received, the maximum response for the kind of help received from the

government to the entrepreneurs has been an alarming Zero. According to the

216

study, the entrepreneurs have not received any hep in terms of loans or training or

policies by the government.

Pearson Chi-Square Tests

Type of Industry

Q17 What kinds of help/assistance have you

received from the government? - Loan

Chi-square 58.658

df 15

Sig. .061*,b

*. The Chi-square statistic is significant at the .05 level.

Table 15.25

According to the above given table, it is clearly seen that there is no significant

difference between the means i.e. there is no significant difference in the level of

help received by the entrepreneurs belonging to different types of Industries as

seen by the p value = .068 (> 0.05)

Therefore, Ho is Accepted.

Hence it is clear that there is no help received by the entrepreneur from the

government based on the type of Industry.

HYPOTHESIS 6:

H06 - The entrepreneurs have very limited or no expectation from the government

in terms of enterprise formulation.

H16 - The entrepreneurs have high expectation from the government in terms of

enterprise formulation.

ENTREPRENEURS EXPECTATIONS FROM THE GOVERNMENT

TOWARDS DOCUMENTATION WITH RESPECT TO THEIR

DEMOGRAPHICS

217

Entrepreneurs Expectations from the Government towards Documentation With

respect To the Age of the Entrepreneur

Age

25-35 36-45 Above

45

Total

Count Count Count Count

Q21 What are your

expectations from the

government in terms of

easy documentations?

Easy licensing 110 30 31 171

Easy renewals 95 22 24 141

Single window

clearance 98 23 17 138

Less number of

documentations 106 21 23 150

Others 0 0 0 0

Total 142 61 60 263

From the above table, it is clear that in all the age groups the entrepreneurs

expected easy licensing, followed by less number of documentation.

Table 15.26

Pearson Chi-Square Tests

Age

Q21 What are your expectations from the

government in terms of easy documentations?

Easy licensing

Chi-square 117.405

df 8

Sig. .000*,b

Results are based on nonempty rows and columns in each innermost sub-table.

218

*. The Chi-square statistic is significant at the .05 level.

Table 15.27

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a difference in the level of

expectation of the entrepreneurs belonging to different age groups as seen by the p

value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of age of the entrepreneur on the

level of expectation

Entrepreneurs Expectations From The Government Towards Documentation

With respect To The Education Qualification Of The Entrepreneur

Education

School/J

unior

College

Degree Graduate &

PG

Total

Count Count Count Count

Q21 What are your

expectations from the

government in terms of

easy documentations?

Easy licensing 45 16 110 171

Easy renewals 24 15 102 141

Single window

clearance 27 17 94 138

Less number of

documentations 30 18 102 150

Others 0 0 0 0

Total 80 30 153 263

Table 15.28

219

According to the table given above, the analysis shows that the entrepreneurs with

their qualification of School and college are expecting easy bank policies and easy

licensing, the entrepreneurs with the qualification of a degree has shown interest in

less number of documentation followed by single window clearance and followed

by easy licensing and the most upper ended qualification of Graduate and PG have

expected easy licensing followed by easy less number of documentation and easy

renewals.

Pearson Chi-Square Tests

Education

Q21 What are your expectations from the

government in terms of easy documentations?

Easy licensing

Chi-square 71.009

df 8

Sig. .000*,b

Results are based on nonempty rows and columns in each innermost subtable.

*. The Chi-square statistic is significant at the .05 level.

Table 15.29

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a difference in the level of

expectation of the entrepreneurs belonging to different education qualifications as

seen by the p value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of the education qualification of

the entrepreneur on the level of expectation.

Entrepreneurs Expectations From The Government Towards Documentation

With respect To The Type of Industry Of The Entrepreneur

220

Type of Industry

Manufac

turing

Service IT Others Total

Count Count Count Count Count

Q21 What are your

expectations from the

government in terms

of easy

documentations?

Easy licensing 30 47 61 33 171

Easy renewals 27 32 60 22 141

Single window

clearance 23 34 59 22 138

Less number of

documentations 24 45 61 20 150

Others 0 0 0 0 0

Total 52 93 64 54 263

Table 15.30

According to the table given above, the analysis shows that the entrepreneurs in

the Manufacturing sector expect easy licensing followed by easy renewals,

whereas the entrepreneurs in the Service sector have expectations of easy licensing

followed by less number of documentations and the IT sector have their

expectations on less number of documentation and easy licensing is the same

demands of the people followed by easy renewals.

Pearson Chi-Square Tests

Type of Industry

Q21 What are your expectations from the

government in terms of easy

documentations? Easy licensing

Chi-square 201.641

df 12

Sig. .000*,b

221

Results are based on nonempty rows and columns in each innermost subtable.

*. The Chi-square statistic is significant at the .05 level.

Table 15.31

According to the above given table, it is clearly seen that there is a significant

difference between the means i.e. there is clearly a difference in the level of

expectation of the entrepreneurs belonging to different types of Industries as seen

by the p value = .000 (< 0.05)

Therefore, Ho is Rejected.

Hence it is clear that there is a significant effect of the type of industry of the

entrepreneur on the level of expectation.

Hence, based on the above tables and conclusions, it is evident that the

entrepreneurs have good expectations from the government in terms of easy

documentation, simplified procedures and policies of the government.

222

CHAPTER 15

FINDING OF THE STUDY, CONCLUSION AND

SUGGESTIONS

SUMMARISATION OF FINDINGS

The environment and the cultures of entrepreneurship is evolving all around the world

with the stream of start-ups arising, with a fun filled work place culture and with

investors running in to bright ideas asking to get funded. Having said that, it cannot be

ignored that today‟s start-ups also face many risks and problems that could be reduced

with the timely intervention from the government. There has been an evident gap

between the government‟s support and the need of the enterprise which needs to be

tackled and now is the time to bridge the gap.

The analysis was done on a majority of male entrepreneurs with 54% of entrepreneurs in

the age group of 25-35 years, 23% of entrepreneurs in the age group of 36-45 years and

22% entrepreneurs in the age group of 46 and above, with 13% of the entrepreneurs

interviewed having completed school as their qualification, 17% of entrepreneurs having

completed junior college, 11% of entrepreneurs having dropped out of degree/graduation

and the rest 56% of entrepreneurs being post graduates. 19% of entrepreneurs from the

field of manufacturing, 35% from service, 24% from information technology (IT) and

another 20% from other which include real estate, pharmaceuticals and health and

hospitals.

It is found from the analysis that most of the entrepreneurs have good support from their

families in terms of moving from a job to a self-owned business, it was also known that

some entrepreneurs have faced issues from families as reluctance from the family in

moving from a job to an enterprise, this is keeping in mind the risks and issues faced by

the entrepreneurs in terms of entrepreneurship. It was also noticed that most

entrepreneurs faced problems of difficult loan procedures followed by the no availability

of a capitalist or a funder. As a solution, most entrepreneurs depended on family

223

contributions and friends for their source of funds. As expectations from the government,

it was seen that the easy Licensing was the highest followed by less number of

documentations, followed by easy document renewals, and the least being single

window clearance keeping in mind that the analysis shows a minor difference of scale in

the 4 given options.

The analysis is divided also on the basis of dependable variables namely, 1) Age 2)

Education 3) Type of Industry.

In order to find out the number of entrepreneurs who face the problems, a question on

the kinds of problems was asked, from the analysis it has been found that the younger

age group faces the highest challenge in terms of the problems faced by government

policies and the older age groups ranging from 36years and above, face capital as their

highest challenge. In terms of the education qualification of the entrepreneurs, it has

been noticed that the education qualification of an entrepreneur is no barrier to the level

of risk faced by them. The less, the moderate educated and the highly educated, all three

face the risks with respect to finance and funds thus followed by the risks they face by

the government regulations and policies. It has been analysed that the manufacturing and

service face capital or funds as a threat followed by tough competition whereas the

Information Technology finds the government policies to be on the highest threat than

anyone else.

On the basis of the question in specific to financial or fund related problems faced by the

entrepreneur, it is analysed that in the age group of 25-35 years, the factor of difficulty in

loan procedures have been the most difficult, whereas the other age groups of 36 years

and above, have found it very different in the kinds of financial risks faced by them ,

according to the research it is found that the people over the age groups of 35 and above

have found a huge difficulty in finding a capitalist or a funder in terms of financing the

entity. This might be because of the reason that the age plays a major factor in

convincing an investor to invest in the business. It could also mean that the venture

capitalists find it easier to connect with the younger generation in funding the entity. The

224

people above the age groups of 45 have also found it difficult to gain loans and

procedures since the banks too might not be in a position to depend on a mid-aged

entrepreneur to run or function of the smooth flow of the entity.

in specific to the kind of risks faced by entrepreneurs in Finance, the entrepreneurs with

the education of school and junior college faces highest risk of Non availability of a

venture capitalist or a funder followed by difficulty in loan procedures whereas the

entrepreneurs with Degree and further education find it very difficult to get through loan

procedures. This is mainly because the less educated individuals are not much

appreciated by the venture capitalists or funders this might be because of the fact that the

venture capitalists or the funders may have a feeling that the less educated would be less

knowledgeable about the business or the working of the business. Whereas for the

entrepreneurs who have completed their degree or have further studies face difficulties in

loan procedures, this could be mainly because of the tedious procedures for the loans

also for the well-educated entrepreneurs, their first option for funds or finance would be

from family and friends following the fact that they depend on venture capitalist or a

funder and hence the conclusion.

In-terms of the distribution by Industry, the manufacturing sector faces the highest issue

as the difficulty in loan procedures followed by non-availability in capitalist or funder.

The service sector aced the highest problem to be the non-availability of capitalist and

funder followed by difficult loan procedures. The IT faced the highest si the difficulty in

loan procedures and finally the category of other which includes the medical fraternity,

the pharmaceutical industry, real estate and other such small entities face the highest risk

as the non-availability of capitalist or funder

Hence it is analysed that all three sectors face varied levels of problems with respect to

the finances.

The analysis indicates the ways and means of how they overcame the risk of funds and

finances, it was analysed that the younger age groups (25-35 years) overcome the

problems related to funds by way of family contributions, the age group of 36-45

225

overcome the problems of funds with the help of loans from banks, and the age group of

45 and above face the problems of funds by way of both borrowing from friends and

loans. The younger generation keeps itself away from the loan procedures and as the

people get older and personal priorities take a stand, hence they move in to take loans

from the banks rather than family contributions. In terms of education qualification it is

noted that, the people with lower qualification has solved the problem of funds by

borrowing from friends and family. The people having a degree have maximum family

contributions followed by loans from banks, the graduates and post grads have

maximum family contributions in a large number. In terms of industrial sectors, it has

been analyzed that the manufacturing sector overcomes the problems related to finance

with the help of family contributions, the service industry mostly takes loans followed by

borrowing from friends, a whooping number from the IT has been shown as taking funds

by ways of family contributions.

The analysis also indicated the solutions of the entrepreneurs who overcame the

problems related to business or competition or location, it was interesting to know that

inspite of risks in finance, competition, business or government, the entrepreneurs from

every sector, every age group and every qualification has „adjusted to the

competition/Adjusted to the location‟ by means of their businesses or issues or locations

or any other factor that is pertaining to the business.

The analysis revealed the kinds of help/assistance that the entrepreneurs have received

from the government in terms of funds, loans, trainings or any subsidies it was surprising

to know that majority of the people have not received any help or support from the

government by ways of finance, marketing, training or business.

It also brought about the problems related to the government policies that were faced by

the entrepreneurs when they started the business, it was analyzed that all age groups

found the government policies tedious and most also had no awareness of the policies of

the government. On the basis of qualification it was interestingly found that education

has high impact in the awareness of the policies. Higher the education better is the

226

awareness of policies. The lower educated ones said that they were unaware of the

policies and also that they had no problems which clearly shows that the less educated

entrepreneurs either outsourced or haven‟t even registered their entity. On account of the

kind of industry, it was found that on an average all the three industries found the

government policies tedious to understand and implement.

The analysis revealed the ways they chose to overcome the problems related to

government policies, almost all the age groups said that they were unregistered and some

others mentioned that they hit the wall everywhere and finally done the registration and

other formalities through agents. On the basis of education it was noted that the lower

educated said that they overcame the problems through agents followed by a general

idea that most of them were unregistered. By means of distribution by industry type,

almost all the units said that they were unregistered and the others mentioned that they

did the registration and other formalities through agents and the expectation from the

government, onan equal note, almost all the entrepreneurs want all the four factors on an

approximate equal note namely, easy licensing, easy renewals, single window clearances

and less number of documentations. This shows there is a high need for the government

to realize the gaps in the registration and the entrepreneurial structure of the country.

CONCLUSION OF THE STUDY

MSME‟s are considered to be one of the major segments of Indian economy. It plays an

important role in employment generation, production system, increasing exports and

GDP. This indirectly leads to economic development of the nation. In order to acquire

technological effectiveness joint efforts is required both on the part of government and

MSME‟s. The analysis was carried out to judge the level of risks by ways of three major

demographic factors namely, Age, Education Qualification and Type of Industry.

In this research study, it can be clearly derived that the entrepreneurs in the nation face

high risk in starting their enterprises. Risks like finance, government policies, social

stigma‟s, registrations procedures and others. It is the responsibility of the government to

227

work towards the building of businesses, this could be one major cause for the

undeveloped condition of the nation today, wherein the harvest is plentiful but the

labourers are few. Wherein the scope for employment generation is plentiful but the

starters are few. There is need for more business to flow, need for more enterprises to get

established, all of which will work towards the strengthening of the economy. The

government needs to help the entrepreneurs to plunge into entrepreneurship, give them

the leisure of tax and get them free from the worry of risks involved in start-ups. It is

only when the entrepreneurs receive the strength and support, will they work towards the

building of the economy thereby starting businesses.

The largest strength of the nation being the Youth, the government needs to bring in

policies for the younger minds, the young generation has to be revived, this resource

includes the college students/the dropouts/the post graduates, the policies that would

enable them to bring out wings and thus enable them to explore and discover the

opportunities that is waiting in-store for them to experience.

The nation also has a large stratum of the society which belongs to the Bottom of the

Pyramid which is considered as the lowest yet the most promising are for business and

entrepreneurs to expand ad flourish. Being one the fastest growing economies in the

world, with a pace of 7.6% of growth rate in the year 201, India is on its way to become

the super power and a very important consumer worldwide. According to the research

conducted by Deutsche Bank (2010), there are between 30 million to 300 million lower

middle class people in the nation. According to the report by the National Council for

Applied Economic Research (NCAER) centre for Macro Consumer Research by 2015-

16, stated that India will grow to be a nation with 53.3 million middle class households,

which would be of 267 million people in the said category. With a country with such

strength in business resources, the consumers waiting for more technology and

advancements that help them to live their daily lives with easy. There is an urgent need

for the government to bring in strategies to bring those out of the closed doors by giving

them a platform to experiment and discover.

228

There is also a need for the new and advanced research in technological advancements,

which calls for the need in incubation centres to be put up at various states which makes

it accessible for the young minds to gear themselves up for their ideas and helps them

launch into the market.

Furthermore, according to the statistics of National Council For Applied Economic

Research (NCAER) centre for Macro Consumers, it reveals that the number of the

middle class households in India in 2025-26 is expected to increase to more than double

to what it was in the statistics of the year 2015-16, from a 53.3 million middle class

households to a 113.8 million households which comes up to 547 million individuals in

the nation., which directly means that the consumer base is set to increase at a very large

pace and this would require the nation and its government to create a market which is

ready to receive a consumer this large and with the kind of people who are ready to

produce, market and sell the goods created by them. For which the government requires

to create a platform with schemes, subsidies and policies which are ready to open the

markets for such a greater demand.

This sector should have a proactive approach wherein the government should have long

term strategy to retain themselves in the changing economic scenario and progress

themselves beyond the current GDP growth. The MSME sector has been termed as

“Engine of Growth” for budding economies. Poor infrastructure and less sufficient

market link are some of the important factors that have brought a decline in the growth

of MSME sector. Moreover lack of appropriate access to finance has also been the

biggest challenge. In order to solve this problem support given by national and state

government to MSMEs is not enough. It is essential that the entrepreneurs take necessary

steps along with the government support for further developments. It is highly essential

to nurture this sector for the economic well-being of the nation. Clear and simple

policies are to be made so that these enterprises can understand them and implement it in

their business to secure benefits.

229

The MSME sector in India has observed important changes in the post liberation period

since 1991. The facts clearly show that the number of units has increased, which lead to

growth in investment and employment. There is also a great amount of export and the

products of MSME are accepted by both by domestic and international market. However

the challenges they face creates difficulty for them to compete globally. Business

competition in the coming years will even become stronger with an increasingly more

developed, open and integrated economy. In order to tackle this, new measures must be

taken to enable enhancement of competitiveness of MSME.

The growth of entrepreneurship directly affects the economic development of the

economy. The objectives of the study has brought forth certain conclusions with respect

to the study, it has been found that risk in finances is seen highly in the age group of 25-

35, graduates and post graduates face the highest risk in finance, and Information

Technology faces the highest risk in finance followed by manufacture and services both

being equal in the risk factor.The age of 25-35 face a significant high risk in government

policies, Graduates and post graduates face the highest risk In government policies, risk

of government policies is being faced the highest by the IT sector.Business risk is

equally shared by the age groups of 36-45 and 45 and above, but the age group of 45 and

above having this risk on a higher note., the youngest ages of 25-35 face the highest in

business risks in the business, business risk is being faced the highest by the service

sector. The risk of location is equally shared by the age groups of 36-45 and 45 and

above, but the age groups of 25-35 have significantly low risk than the others,

entrepreneurs having school education find it most difficult in the location followed by

those having a degree. Risk of location is being faced the highest by the sector that

includes pharmaceutical, healthcare and others.

It has been noticed that age or location is not a factor of hindrance in the risks faced by

the entrepreneurs. The government needs to take steps so as to enable the entrepreneurs

to have lesser burdens of varied risks when they start their enterprises. This will not only

enhance the current entities that are working, but also motivate and encourage the new

230

vibrant youth of India to bring in new thoughts and ideas so as to foster the spirit of

entrepreneurship.

The main purpose of this research is to study of how the entrepreneurs managed the

micro, small and medium enterprises and what are the various problems faced by these

by these enterprises. It also shows how the role of MSMEs has helped in economic and

restructuring development of India. Empirical data revealed the hurdle like financial

constrain and issues relating to power, raw material procurement should be more

effectively dealt by the government. MSMEs have played a major role in employment

generation in India. Due to the acute power shortage, industrial units are managing only

50 per cent of the optimum capacity and the situation has turned from bad to worse

without inability to pay even the "salary” of the workers. Since most of the enterprises

complained about the non-availability of labour, the government needs to look at ways in

making skilled labour available. Simple and clear policies and acts are to be made so that

these enterprises can understand them and utilize as well as implement them in the

business for compliance and secure benefits. There are many government schemes but

from the study it has been clearly observed that most of these enterprises are not aware

and do not understand how they can benefit out of them.

There is a huge gap existing between the ideal situation and the reality. Given the

picture, to expect speedy adoption of PEST and SWOT analysis tools by MSMEs is

almost impossible. In fact, most of the entrepreneurs became more confused after

exposing to the various techniques. This is indeed a great challenge – to take them from

where they are now, to a level of strategic planning comparable to that of the large

corporations. For those MSMEs with some experience on strategic management, and can

also afford the time

From there, the entrepreneurs can select an assortment of the tools to add on to their

current configurations. The addition must be done to suit their needs, time availability

andof course the bill. With benefits coming through as a result of the approach,

entrepreneurs can then extend the application, by using more of the building blocks

231

given. It is believed that by using the right combination, noticeable results can be safely

expected

On critical analysis of all the above vital points, it is observed that business has one

objective; to make it a success and earn profit. As it is said, “Prevention is better than

cure”, being proactive and creating systems Standard Operating Procedures (SOP) and

control systems will avoid and minimize risk.

Strong strategies have to be developed to neutralize the risk element. One can kill the

business, if not handled properly and a continuous feedback mechanism should be

maintained. Therefore, it is essential that a proper strategy for handling any expected risk

is essential for any business.

SUGGESTIONS

An entrepreneur is a person with an ability to see things differently, when the people see

an issue or a challenge or a problem, the entrepreneur sees an opportunity.

The Indian government needs to look at the grassroots in order to tackle the situation of

ignorance and fear. To start with, the government needs to look at the Chinese and work

a similar model for India, into bringing this large human resource and making them

skilled by providing them the necessary skills and techniques. The Chinese government

takes personalised care into educating the masses about entrepreneurial know-how. Also,

the Chinese government has planned and provided for schemes, subsidies and incentives

for the student entrepreneurs. All education institutes in China hold a national business

Plan Competition annually wherein each competition is arranged by the different

universities but co-held by the different ministries of the government. Such competitions

move from the College level, to the district to the national level and almost all the

schools and colleges participate in the competition. The younger students are made to

experience the show in order to be ready for such a platform in their future. In China,

many universities also have their own incubator for the student start-ups. These

incubators are in collaboration with government ministries ad are setup at affordable

232

prices. In the same way such competitions need to be held and promoted in order to

enhance and promote entrepreneurship in the country.

Refining techniques for entrepreneurship education: the universities are required to

make clear defined syllabus and teaching materials for their students to imbibe the spirit

of entrepreneurship. There is a need for proper curriculum with detailed description for

the students to explore the subject and motivate them to pick up the kind of business that

they would be interested to do.

Another problem that arises for the MSME‟s is the issue of acute power shortage

specially in the rural areas, in such situations, the business comes to a standstill and

causes losses to the entrepreneurs. Such a situation will bring in more problems for the

payment of clients, vendors and workers. Hence a continual uninterrupted and subsidised

power supply should be provided by the government to the MIDC‟s in the country. This

will itself bring in development of the MSME and the rural poor.

Inorder to encourage citizens to take up entrepreneurship, the government along with the

education institutes must encourage research in entrepreneurship ad start-up businesses.

This could be done in collaboration with the Indian and International universities. Such a

step will surely bring a remarkable change in the area of entrepreneurship education.

Most of the enterprises also face the problem of lack of skilled labour. The labour laws

and policies needs to be amended according to the global standards.

Gender related discrimination against the women must be stopped, and a conducive

micro economic environment must be created in order to build an ease to businesses and

reduce the barriers that work against economic growth.

Suggestion to the Entrepreneurs: To overcome the challenges in finding funding for the

start-ups, the entrepreneur needs to sell his/her idea and the vision of the company to

potential investors. Also explore various sources of finance like, banks and government

schemes. Angel Investors and Crowd Funding is another way that the entrepreneurs can

233

find funding for their enterprises. He/she also needs to make sure that the team also

needs to see the future of the enterprise and the entrepreneur sees.

It is also essential the entrepreneur finds out a location that has fast growth in population,

technology, amenities and logistical and supply chain ease for doing business.

The most common challenges faced by the entrepreneurs are developing the business

idea and the vision for the business, Assembling a business team, raising funds for the

enterprise, finalising the right business location, finding good employees, customers,

clients, handling competition, financial challenges of foreseen expenses, lack of support

from family and friends, social pressure, negative thoughts, lack of marketing and sales

facilities and the lack of infrastructural facilities required to run the business. Hence it is

required to overcome the challenges in order to facilitate a smooth flow of business.

Assistance must be provided by the government to ensure the availability of trained and

professional managers for the MSME. The government might also have to re-consider or

reframe the policy initiatives to incentivise MSME‟s to achieve the economies of scale,

whereby allowing special incentives for the larger fund flow of venture capital and

private equity funds into the sector.

234

CHAPTER 16

RECOMMENDATIONS

The discussions with knowledgeable people indicated that there is a need to understand

the vastness of this land in terms of its culture, diversity, language, castes and creed due

to which the penetration of the government into all areas becomes difficult. Although the

government is trying to make ways for its citizens in terms of favourable policies and

subsidies for new entrepreneurs and there has been changes but inconsistent with slow

progress.

Requirement of a pro-active Non-Government or Government institutions.

There has to be clear rules and policies stated for the entrepreneurs. Departments and

ministries distinguished with clear benchmarks for the smooth help and guidance of

entrepreneurs. The existing entrepreneurial divisions need to move out of the old ways of

government offices and have computerized and fast ways of brining solutions to the

entrepreneurs in personally. The decisions made by the top level ministry needs to be

clearly channelized and the order of implementing the policies needs to be put across to

them so as to enable a hassle free execution plan for the entrepreneurs. The registration

processed needs to be simplified, with clear information on documentations that are

needed for starting an enterprise in every field, policies and rules have to be simplified

and taxes reduced. On the other side, an active participation of the people n the

government functioning and continuous updating of policies and rules is expected from

the entrepreneurs. The entrepreneurs are required to keep themselves updated to the

policies of the government, the trainings and the subsidies provided to them. They have

to be continually in touch with the government organizations in-order to get updated on

the new policies of the government. Thus making it a healthy environment for the

entrepreneurs and the government can make sure that there is growth in economy.

235

Financial Institutions

The biggest fear faced by today‟s entrepreneurs is the availability of capital. On the basis

of analysis, it has been found that the maximum number of entrepreneurs depends on

family contributions and monetary help from friends but very less are dependent on the

government bodies.

It clearly shows that the existing bodies have unfriendly rules and policies and hence the

entrepreneurs make their own way in finding funds, hence there has to be an increase in

the financial institutions and capital funding agencies and government bodies in the

country. There has to be more accessibility of entrepreneurs towards the same. Easy loan

availability and tax exemptions have to be incorporated in the working structure of the

country; these factors will surely help in building the entrepreneurial development of the

country.

Land availability and skill development

The availability of land and space for the entrepreneurs is another hurdle in their way;

hence the government needs to work towards availability of more special economic

zones (SEZs). The regulatory bodies have to be simplified and the policies need to be

reworked. The number of licenses required by the startups has to be reduced and ease n

documentation and licensing should be experienced by the entrepreneurs. There needs to

be more skill development workshops conducted and the government needs to promote

the same among the younger generation in colleges and universities via institutions like

WTC and NABARD. A model and promotion and development needs to be created by

the government along with the universities and thus the development of incubation

centers could bring a higher increase in the number of start-ups into the country, thus

creating large scale employment opportunities for the citizens. There has to be specific

funds located for more skill development and the HRD ministry needs to oversee to

make sure that the younger minds n the country are challenged to think beyond their

capacities in terms of idea generation and enterprise development. The government has

to see the education sector as a powerful tool to push the spirit and passion of

236

entrepreneurship and this can be majorly done with tie-ups with corporate and

educational institutes, thus building a space and developmental workshops with

personalized handholding to those students who show a passion to begin an enterprise.

It is clearly understood that only if the government take a strong stand towards the

development of the people only then will the development of the country take place. The

government needs to work towards simple policies, tax exemptions, easy loans

availability, easy licensing and skill development initiatives and thus will be a rise of a

new and vibrant India with skill, expertise and employment generation everywhere all

across the nation, only then will the nation see a new light towards the equality in

regional development of the country.

237

CHAPTER 17

FUTURE SCOPE OF STUDY

This study has immense scope in specific to various sectors of the economy, due to

constrain of cost and time of the research, this research could not be extended beyond

Mumbai and Pune, hence this research extends its scope to various specific states and

cities of the nation, trying to find the challenges faced by entrepreneurs from various

fields and various states and cities, it would also help to understand the policies of the

various state governments, political stability and the restrictions to the entrepreneurs in

their respective home states. This research has immense scope to spread into various

sectors be it pharmacy, manufacturing, service, medicine, automobile or others. Further

areas of research could give deeper insights to the spectrum. Such a research in various

areas and sectors would hold immense array of opportunities which enable the citizens to

explore in varied areas of businesses.

1. Such studies would help develop Managerial capabilities, it can bring in new areas of

improved ideas, thoughts and practices which would enable entrepreneurs to improve

and excel in their businesses.

2. Further research can bring in difficulties faced by the start-ups of today, which can

help bring in models and strategies in order to mitigate such risks.

3. With the spread of such research n various places and states of the country, it can bring

upon various cultural barriers that the entrepreneurs face in terms of domestic exports

within the country, it can bring in light various policies that can work towards the

betterment and development of the future of entrepreneurship in the country.

238

4. A study conducted by EDII - Entrepreneurship Development Institute, India states that

the major reason people do not get into start-ups is because they are not confident, feel

incapable and also lack knowledge in starting enterprises. This can be averted by ways

of making new opportunities for the people to explore identify, thus handhold them to

their areas of businesses.

The research can bring in various standard frameworks and sustainable business

models that can allow entrepreneurs to follow those models for a less dependable and

fool proof business plan.

239

Annexure - I

BIBLIOGRAPHY

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Business and Management, Volume 2 ~ Issue 6 (2014) pp: 20-2,

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Enterprises (Msmes) In India in the Era of Globalization, Dr .J.ANURADHA,

Quest Journals

12. JagapathiRao, G, V (2010) “A Study on Socio Economic Background of

Entrepreneurs, in Small Scale Industries”, in Indian Journal of Marketing,

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14. James Manalel (1994) “Role of Incentives in the Development of SSI Units in

Kerala, in Ph.D. thesis, Cochin University, Cochin.

15. Jaya Sing (2003) “SSIs, Small Industries, Big Scope”, in the Kisan World,

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16. JayalakshmiSrikumar, U (2006) “SMEs and Global Competitiveness

Strategies for Survival and Growth in the WTO Era”, in The ICFAI Journal of

Industrial Economist, Vol.III (4), pp. 70-82.

17. KrishnaveniMuthiah and SudhaVenkatesh (2012) “A Study on Barriers

Affecting the Growth of Small Scale Industries in India”, in the Indian

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18. Kumar N.B, Gugloth, Micro, Small And Medium Enterprises In The 21st

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RESEARCH ANALYSIS, Vol 3 Issue: 1 Jan 2014: ISSN number 2277-

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21. Murthy (1980) “Financing of SSI in Rayalaseema”, in Ph.D. thesis,

Sri.Venteshwara, University, Anantapur.

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www.iosrjournals.org

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25. Nirmal , K, Gupta (1995), “Small Industry”, in the AnmolPublications, p. 56

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Banks To SME Customers”, in the SSRN, http://ssrn.com, pp. 1-24.

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29. Raju B, Y (2008) “Small and Medium Enterprises (SMEs) in India: Past,

Present and Future, in the PHDCCI Working Paper, p. 10.

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243

Annexure -II

WEBLIOGRAPHY

1. http://iveybusinessjournal.com/publication/indian-entrepreneurship-and-the-

challenges-to-indias-growth/

2. https://en.wikipedia.org/wiki/Entrepreneurship

3. www.smechamberofindia.com/about_msmes.aspx

4. msme.gov.in/

5. https://www.dnb.co.in/SME_cluster_series2012_Indore/PDF/MSMEs_in_Indi

a.pdf

6. http://msme.gov.in/WriteReadData/DocumentFile/MSME%20ANNUAL%20

REPORT%202014-15_English.pdf

7. http://www.msmementor.in/MSME_Sector_India.asp

8. https://en.wikipedia.org/wiki/Ministry_of_Micro,_Small_and_Medium_Enterp

rises

9. http://indiamicrofinance.com/micro-small-enterprises-india.html

10. http://ficci.in/spdocument/20143/Grant-Thornton-FICCI%20MSME.pdf

11. www.mced.nic.in

12. www.doingbusinessinmaharashtra.org/DIC_schemes.aspx

13. www.msde.gov.in

14. http://yourstory.com?2016/01/maharashtra-women-entrepreneur-policy/

15. http://www.indiafilings.com/learn/maharashtra-subsidy-schemes/

16. www.maharashtratourism.gov.in

17. www.midcindia.org

18. http://www.Maharashtra.gov.in

19. www.dot.gov.in

20. http://mmrda.maharashtra.gov.in/

244

21. M. I. D. Corporation, "WELCOME TO MAHARASHTRA INDUSTRIAL

DEVELOPMENT CORPORATION," 2016. [Online]. Available:

http://www.midcindia.org/home. Accessed: Feb. 4, 2017.

22. "Maharashtra state Khadi & village industries board,". [Online]. Available:

http://www.mskvib.org/index.php. Accessed: Feb. 4, 2017.

23. "Portal home,". [Online]. Available: https://www.maharojgar.gov.in.

Accessed: Feb. 4, 2017.

24. A. R. Reserved, "Dairy development,". [Online]. Available:

http://dairy.maharashtra.gov.in/en. Accessed: Feb. 4, 2017.

25. महाराष्ट्रमत्स्योद्योगविकासमहामंडळ - महाराष्ट्रमत्स्योद्योगविकासमहामंडळ,"

2012. [Online]. Available: https://mfdc.maharashtra.gov.in/MFDCHome.aspx.

Accessed: Feb. 4, 2017.

26. The Maharashtra Agro industries development Corpotation Ltd. (MAIDC),"

2014. [Online]. Available: http://www.maidcmumbai.com/home. Accessed:

Feb. 4, 2017.

27. Available: http://www.mced.nic.in/. Accessed: Feb. 4, 2017.

28. http://ediindia.org/e-reports/

29. BusinessAlligator.com

30. NDTV

31. Times Of India

32. MapsOfIndia.com

33. TopCount.com

34. RealityVeiws.com

35. Wikipedia.org

36. NewsRoomPost.com

37. The Hindu

38. MakeInIndia.com

39. www.wap.business-standard.com

40. www.msme.gov.in

245

41. www.accountlearning.com

42. www.tackletaxhavens.com

43. www.economictimes.com

44. Small and Medium Business Development Chamber of India - website

45. Ministry of Micro Small and Medium Enterprises - website

246

Annexure - III

QUESTIONNAIRE

QUESTIONNAIRE FOR ENTREPRENEURS

Serial No : __________________

(Please fill the information requested below for Research. This study is basically a research to study

the management of risk in the growth of micro and small enterprise in India.

Your information will be coded and will remain highly confidential.

Section A : Demographic Profile

AGE 25-35 Yrs 35-45 Yrs 45-55 Yrs 55-65 Yrs

GENDER Male Female

EDUCATION School Jr. College Degree Graduate Post

Graduate

INDUSTRY

TYPE

Manufacturing Service IT Others

TURNOVER

PRODUCTS

MANUFACTURED

YEAR OF

247

ESTABLISHMENT

Number of employees: _________________________________

Location: ____________________________________________

SECTION B :

Factors Influencing the growth of MSME’s and the Risks involved in starting enterprises.

Q1 : What were the problems you faced while starting your enterprise ?

No family support

Finance/capital

Government policies/licenses

Logistics and transportation

Market Unavailability

Competition

Other _________________________________

Q2 :Whatkinds of risks have you come across in finding sources of funds when you started the

business?

(Please rate the degree of risks faced by you on a scale of 1 to 5,

with 1 being the lowest and 5 being the highest)

Don‟t know No Risk Yes but little risk Neutral Highest Risk

1 2 3 4 5

PARTICULARS SCORE

RISKS RELATED TO FINANCE

248

Q2.1 : FUNDS

Q2.2 : KNOWLEDGE ABOUT LOANS

Q2.3 : GOVERNMENT SUBSIDY

Q2.4 : FAMILY BORROWINGS

Q2.5 : HIGH INTEREST RATES

Q2.6 : MONEY LENDERS

Q2.7 : PROPERTY MORTGAGE BY BANKS

Q2.8 : GOLD LOANS

RISKS RELATED TO GOVERNMENT POLICIES

Q2.9 : MULTIPLE WINDOW POLICY

Q2.10 : TAXES

RISKS RELATED TO BUSINESS

Q2.11 : COMPETITION

Q2.12 : UNAVAILABILITY OF RAW MATERIALS

Q2.13 : UNAVAILABILITY OF SKILLED LABOUR

Q2.14 : NO PROPER MACHINERY

RISKS RELATED TO LOCATION

Q2.15 : INACCESSIBLE TO THE CITY

Q2.16 : AWAY FROM THE MARKET

Q2.17 : UNAVAILABILITY OF WATER

Q2.18 : UNAVAILABILITY OF ELECTRICITY

Q2.19 : ACCOMMODATION OF LABOUR

I- FAMILY RELATED

Q3 :Did you face any issues related to support from your family when you started your enterprise?

Yes

No

May be

249

Q4 :If No,what kind of family issues did you face when you started the business?

Family has been supportive-No problem

Distrust in Businesses

Reluctance in moving from a Job to business

Fear of financial losses/risks

Fear of Inexperience

Other _________________________________

Q5 : How did you overcome the problems related to family?

Family has been always supportive

Convinced Family

Disapproved but gradually joined in

Other _________________________________

II - FINANCE/FUNDS RELATED

Q6 : Did you face any problems related to finance/funds?

Yes

No

Q7 : If yes, what was the kind of problem/s faced by you ?

Difficult loan procedures

Bank mortgage

Non-availability of a capitalist/funder

Other__________________________

Q8: How did you overcome the problems related to Finances/funds?

Loan from Banks

Crowd Funding

Borrowed from Friends

Took some-one as financial partner

250

Relatives‟ belongings (Gold/Property)

Family contributions

Government funds/Subsidy

Other _________________________________

III – BUSINESS/COMPETITION RELATED

Q9 : Did you have any problems related to Business/Competition?

Yes

No

Q10 : If Yes, How did you overcome the problems related to Business/Competition?

Outsourced raw materials

Purchase of raw materials

Outsourced marketing / selling

Adjusted to the competition

My product/Service has aUSP

I have strong mentors for guidance

Other __________________________________

Q11 :How did you overcome the problems related to Location?

Had small issues initially but gradually adjusted to the location

Took land / shed from the government

Took help from family

Started another line of business :__________________

Other _______________________________________

IV – GOVERNMENT TRAININGS AND POLICIES RELATED

Q12 :Did you have any formal education/training in the area of your business?

Yes----- was it useful? ______________________________________

251

No----- why not? ________________________________________

Q13 : Did you feel the need for any training ?

Yes----- was it useful? ______________________________________

No----- why not? ________________________________________

Q14 : How important are the following parameters to you with respect to your enterprise.

Rate your degree on a scale of 1 to 5, with 1 being the lowest and 5 being the highest

Not at all No Neutral Yes Absolutely

1 2 3 4 5

Particulars

Q14.1 : Do you want to approach the government for the needs of your

enterprise?

Q14.2 : Are you aware of the ways to approach the government for the needs

of your enterprise?

Q14.3 : Would you like to get trained in the area of your business?

Q14.4 : Would you be open to the government extending their support in

terms of Trainings?

Q14.5 : Have you had any difficulty in approaching the government bodies

for the smooth functioning of the enterprise?

Q15 :Are you aware of the various support policies of the government?

Particulars TRAINING FINANCE EXPORT/

IMPORT

MARKETING

YES

NO

MAY BE

Q16 :Have you approached the government or any private institution for any training and

development need of your company?

252

Yes Needed but did not have any

training Not Needed

Q17 :What kinds of help/assistance have you received from the government?

Loan

Training

Easy policies / Tax holiday

Subsidy on water, electricity

No help

Q18 :What kinds of problems related to government policies were faced when you started the

business?

No awareness of the policies

Did not know of whom to approach

Found the government policies tedious

No problems-Positive

Other _________________________________

Q19 :How did you overcome the problems related to government Policies?

Still unregistered

Hit the wall everywhere

It was easy

Through Agent

Other _________________________________

Q20 :How did you overcome the difficulty of approaching the government bodies?

253

Q21 :What are your expectations from the government in terms of easy documentations?

Easy licensing

Easy renewals

Single window clearance

Less number of documentations

Q22 :Have you heard of the ‘Make in India’ concept?

Yes

No

May be

Q23 :Do you believe that the government is trying to extend help to you through the ‘Make in India’

concept?

Yes

No

May be

***************************** THANK YOU FOR YOUR PATIENCE ***************************

254

ANNEXURE IV

STATISTICAL TABLES OF SPSS

The below given are the charts proved by way of SPSS software into reaching the

findings of this research study.

FREQUENCY TABLES FOR FINDING ERRORS

Single Response Frequency Tables

Age

Frequency Percent Valid Percent Cumulative

Percent

Valid

25-35 142 54.0 54.0 54.0

36-45 61 23.2 23.2 77.2

46-55 50 19.0 19.0 96.2

56-65 10 3.8 3.8 100.0

Total 263 100.0 100.0

Gender

Frequency Percent Valid Percent Cumulative

Percent

Valid

Male 248 94.3 94.3 94.3

Female 15 5.7 5.7 100.0

Total 263 100.0 100.0

Education

Frequency Percent Valid Percent Cumulative

Percent

255

Valid

School 35 13.3 13.3 13.3

Junior College 45 17.1 17.1 30.4

Degree 30 11.4 11.4 41.8

Graduate 141 53.6 53.6 95.4

Post Graduate 12 4.6 4.6 100.0

Total 263 100.0 100.0

Type of Industry

Frequency Percent Valid Percent Cumulative

Percent

Valid

Manufacturing 52 19.8 19.8 19.8

Service 93 35.4 35.4 55.1

IT 64 24.3 24.3 79.5

Others 54 20.5 20.5 100.0

Total 263 100.0 100.0

Annual Turnover

Frequency Percent Valid Percent Cumulative

Percent

Valid

Up to 10 Lakhs 132 50.2 51.2 51.2

11-25 Lakhs 62 23.6 24.0 75.2

26 Lakhs to 1 Crore 53 20.2 20.5 95.7

Above 1 Crore 11 4.2 4.3 100.0

Total 258 98.1 100.0

Missing System 5 1.9

Total 263 100.0

256

No. of employees

Frequency Percent Valid Percent Cumulative

Percent

Valid

0-10 218 82.9 84.5 84.5

11-20 18 6.8 7.0 91.5

21-30 9 3.4 3.5 95.0

31-40 6 2.3 2.3 97.3

Above 40 7 2.7 2.7 100.0

Total 258 98.1 100.0

Missing System 5 1.9

Total 263 100.0

Risks you have come across in finding sources of funds when you started

the business - Q2.1 : FUNDS

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 39 14.8 15.0 15.0

Yes, Little Risk 131 49.8 50.4 65.4

Moderate Risk 32 12.2 12.3 77.7

High Risk 58 22.1 22.3 100.0

Total 260 98.9 100.0

Missing System 3 1.1

Total 263 100.0

Q2.2 : KNOWLEDGE ABOUT LOANS

Frequency Percent Valid Percent Cumulative

Percent

257

Valid

No Risk 65 24.7 24.7 24.7

Yes, Little Risk 127 48.3 48.3 73.0

Moderate Risk 69 26.2 26.2 99.2

High Risk 2 .8 .8 100.0

Total 263 100.0 100.0

Q2.3 : GOVERNMENT SUBSIDY

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 102 38.8 38.8 38.8

Yes, Little Risk 32 12.2 12.2 51.0

Moderate Risk 31 11.8 11.8 62.7

High Risk 98 37.3 37.3 100.0

Total 263 100.0 100.0

Q2.4 : FAMILY BORROWINGS

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 75 28.5 28.5 28.5

Yes, Little Risk 48 18.3 18.3 46.8

Moderate Risk 36 13.7 13.7 60.5

High Risk 104 39.5 39.5 100.0

Total 263 100.0 100.0

Q2.5 : HIGH INTEREST RATES

Frequency Percent Valid Percent Cumulative

Percent

258

Valid

No Risk 55 20.9 20.9 20.9

Yes, Little Risk 40 15.2 15.2 36.1

Moderate Risk 35 13.3 13.3 49.4

High Risk 133 50.6 50.6 100.0

Total 263 100.0 100.0

Q2.6 : MONEY LENDERS

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 72 27.4 27.4 27.4

Yes, Little Risk 115 43.7 43.7 71.1

Moderate Risk 28 10.6 10.6 81.7

High Risk 48 18.3 18.3 100.0

Total 263 100.0 100.0

Q2.7 : PROPERTY MORTGAGE BY BANKS

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 88 33.5 33.5 33.5

Yes, Little Risk 27 10.3 10.3 43.7

Moderate Risk 34 12.9 12.9 56.7

High Risk 114 43.3 43.3 100.0

Total 263 100.0 100.0

Q2.8 : GOLD LOANS

Frequency Percent Valid Percent Cumulative

Percent

259

Valid

No Risk 95 36.1 36.1 36.1

Yes, Little Risk 33 12.5 12.5 48.7

Moderate Risk 24 9.1 9.1 57.8

High Risk 111 42.2 42.2 100.0

Total 263 100.0 100.0

Q2.9 : MULTIPLE WINDOW POLICY

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 49 18.6 18.6 18.6

Yes, Little Risk 47 17.9 17.9 36.5

Moderate Risk 27 10.3 10.3 46.8

High Risk 140 53.2 53.2 100.0

Total 263 100.0 100.0

Q2.10 : TAXES

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 49 18.6 18.6 18.6

Yes, Little Risk 53 20.2 20.2 38.8

Moderate Risk 52 19.8 19.8 58.6

High Risk 109 41.4 41.4 100.0

Total 263 100.0 100.0

Q2.11 : COMPETITION

Frequency Percent Valid Percent Cumulative

Percent

260

Valid

No Risk 18 6.8 6.8 6.8

Yes, Little Risk 112 42.6 42.6 49.4

Moderate Risk 31 11.8 11.8 61.2

High Risk 102 38.8 38.8 100.0

Total 263 100.0 100.0

Q2.12 : UNAVAILABILITY OF RAW MATERIALS

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 142 54.0 54.0 54.0

Yes, Little Risk 43 16.3 16.3 70.3

Moderate Risk 42 16.0 16.0 86.3

High Risk 36 13.7 13.7 100.0

Total 263 100.0 100.0

Q2.13 : UNAVAILABILITY OF SKILLED LABOUR

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 146 55.5 55.5 55.5

Yes, Little Risk 41 15.6 15.6 71.1

Moderate Risk 36 13.7 13.7 84.8

High Risk 40 15.2 15.2 100.0

Total 263 100.0 100.0

Q2.14 : NO PROPER MACHINERY

Frequency Percent Valid Percent Cumulative

Percent

261

Valid

No Risk 165 62.7 62.7 62.7

Yes, Little Risk 33 12.5 12.5 75.3

Moderate Risk 38 14.4 14.4 89.7

High Risk 27 10.3 10.3 100.0

Total 263 100.0 100.0

Q2.15 : INACCESSIBLE TO THE CITY

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 166 63.1 63.1 63.1

Yes, Little Risk 29 11.0 11.0 74.1

Moderate Risk 39 14.8 14.8 89.0

High Risk 29 11.0 11.0 100.0

Total 263 100.0 100.0

Q2.16 : AWAY FROM THE MARKET

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 164 62.4 62.4 62.4

Yes, Little Risk 29 11.0 11.0 73.4

Moderate Risk 38 14.4 14.4 87.8

High Risk 32 12.2 12.2 100.0

Total 263 100.0 100.0

Q2.17 : UNAVAILABILITY OF WATER

Frequency Percent Valid Percent Cumulative

Percent

262

Valid

No Risk 181 68.8 68.8 68.8

Yes, Little Risk 27 10.3 10.3 79.1

Moderate Risk 30 11.4 11.4 90.5

High Risk 25 9.5 9.5 100.0

Total 263 100.0 100.0

Q2.18 : UNAVAILABILITY OF ELECTRICITY

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 167 63.5 63.5 63.5

Yes, Little Risk 30 11.4 11.4 74.9

Moderate Risk 29 11.0 11.0 85.9

High Risk 37 14.1 14.1 100.0

Total 263 100.0 100.0

Q2.19 : ACCOMMODATION OF LABOUR

Frequency Percent Valid Percent Cumulative

Percent

Valid

No Risk 156 59.3 60.0 60.0

Yes, Little Risk 42 16.0 16.2 76.2

Moderate Risk 33 12.5 12.7 88.8

High Risk 29 11.0 11.2 100.0

Total 260 98.9 100.0

Missing System 3 1.1

Total 263 100.0

263

Did you face any issues related to support from your

family when you started your enterprise?

Frequency Percent Valid Percent Cumulative

Percent

V

a

l

i

d

Yes 63 24.0 24.0 24.0

No 189 71.9 72.1 96.2

May be 10 3.8 3.8 100.0

Total 262 99.6 100.0

M

i

s

s

i

n

g

System 1 .4

Tota

l 263 100.0

How did you overcome the problems related to family?

Frequency Percent Valid

Percent

Cumulative

Percent

Valid

Family has

been always

supportive

111 42.2 42.2 42.2

Convinced

Family 53 20.2 20.2 62.4

Disapproved

but gradually

joined in

93 35.4 35.4 97.7

Others 6 2.3 2.3 100.0

264

Total 263 100.0 100.0

Did you face any problems related to finance/funds?

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 207 78.7 79.6 79.6

No 53 20.2 20.4 100.0

Total 260 98.9 100.0

Missing System 3 1.1

Total 263 100.0

Did you have any problems related to Business/Competition?

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 238 90.5 90.5 90.5

No 25 9.5 9.5 100.0

Total 263 100.0 100.0

Did you have any formal education/training in the area of your

business?

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 93 35.4 35.4 35.4

No 170 64.6 64.6 100.0

Total 263 100.0 100.0

Did you feel the need for any training?

Frequency Percent Valid Percent Cumulative

Percent

265

Valid

Yes 156 59.3 59.3 59.3

No 107 40.7 40.7 100.0

Total 263 100.0 100.0

Have you approached the government or any private institution for any training and

development need of your company?

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 24 9.1 9.2 9.2

Needed but did not have

any training 113 43.0 43.1 52.3

Not needed 125 47.5 47.7 100.0

Total 262 99.6 100.0

Missing System 1 .4

Total 263 100.0

How did you overcome the difficulty of approaching the government bodies?

Frequency Percent Valid

Percent

Cumulativ

e Percent

Valid

215 81.7 81.7 81.7

A, I was working with one

Organisation then started this

business was aware about

Policies

1 .4 .4 82.1

By having Agent 1 .4 .4 82.5

By hiring an agent but the

charges of him was too

expensive

1 .4 .4 82.9

266

By using effective marketing

skill 1 .4 .4 83.3

By Using Latest Technology 1 .4 .4 83.7

Collect the information about

the Documentation & policies

by getting in contact with

related govt portfolios

1 .4 .4 84.0

Communicated with officers

and explained the situtation 1 .4 .4 84.4

Complex Procedure 1 .4 .4 84.8

Did not approach 1 .4 .4 85.2

Did Not approached

Government 1 .4 .4 85.6

Did not face 1 .4 .4 85.9

From Contacts Associates &

Friends 1 .4 .4 86.3

help from friend 1 .4 .4 86.7

Help from Friend 1 .4 .4 87.1

Help from friends 1 .4 .4 87.5

help from relatives 1 .4 .4 87.8

Helps from business partner 1 .4 .4 88.2

Helps from friend 1 .4 .4 88.6

Helps from Friends 1 .4 .4 89.0

Helps from others 1 .4 .4 89.4

Helps from Relatives 1 .4 .4 89.7

267

Hired an agent who has

adequate knoeledge with

respect to govt policies

1 .4 .4 90.1

I have not registered my

business 1 .4 .4 90.5

I Never tried to approach

government 1 .4 .4 90.9

I used to approach myself 2 .8 .8 91.6

Internet,advice from

experience entrepreneurus 1 .4 .4 92.0

Issues like facts, logistics,

local bodies 1 .4 .4 92.4

It was not difficult 1 .4 .4 92.8

No Difficulties 1 .4 .4 93.2

No Difficulty 1 .4 .4 93.5

No difficulty from govrnment 2 .8 .8 94.3

No Problem 1 .4 .4 94.7

Not Applicable 2 .8 .8 95.4

Not approached yet 1 .4 .4 95.8

Skill using 1 .4 .4 96.2

There is no proper way and

support from govt. bodies 1 .4 .4 96.6

Thought Friends 1 .4 .4 97.0

Through agent by clearing

documentation work 1 .4 .4 97.3

268

Through Agent by clearing

documentation work 1 .4 .4 97.7

Through Political 1 .4 .4 98.1

Through proper channels 1 .4 .4 98.5

Utilised private agent for

documentation work 1 .4 .4 98.9

We used to spend time to

meet govt authorities & get

regrets

1 .4 .4 99.2

with the help of agent 1 .4 .4 99.6

with the help of family Friend 1 .4 .4 100.0

Total 263 100.0 100.0

Have you heard of the ‘Make in India’ concept?

Frequenc

y

Percent Valid Percent Cumulative

Percent

Valid

Yes 229 87.1 87.1 87.1

No 33 12.5 12.5 99.6

May be 1 .4 .4 100.0

Total 263 100.0 100.0

Do you believe that the government is trying to extend help to you through the

‘Make in India’ concept?

Frequenc

y

Percent Valid Percent Cumulative

Percent

Valid

Yes 85 32.3 32.3 32.3

No 48 18.3 18.3 50.6

May be 130 49.4 49.4 100.0

269

Total 263 100.0 100.0

MULTIPLE RESPONSE TABLES

Count Column N %

Q1 Problems faced while

starting enterprise

No family support 26 9.9%

Finance/capital 123 46.9%

Government policies/licenses 113 43.1%

Logistics and transportation 9 3.4%

Market Unavailability 18 6.9%

Competition 73 27.9%

Other 2 0.8%

Total 262 100.0%

Count Column N %

Q4 If Yes, what kind of

family issues did you

face when you started

the business? - Family

has been supportive-No

problem

Family has been

supportive-No problem 102 38.8%

Distrust in Businesses 6 2.3%

Reluctance in moving

from a Job to business 122 46.4%

Fear of financial

losses/risks 43 16.3%

Fear of Inexperience 17 6.5%

Others 1 0.4%

Total 263 100.0%

270

Count Column N %

Q7 If yes, what was

the kind of problem/s

faced by you? -

Difficult loan

procedures

Difficult loan procedures 157 59.9%

Bank mortgage 46 17.6%

Non-availability of a

capitalist/funder 98 37.4%

Others 11 4.2%

Total 262 100.0%

Count Column N %

Q8 How did you

overcome the

problems related

to

Finances/funds?

- Loan from

Banks

Loan from Banks 75 28.5%

Crowd Funding 5 1.9%

Borrowed from Friends 71 27.0%

Took some-one as financial

partner 14 5.3%

Relatives’ belongings

(Gold/Property) 46 17.5%

Family contributions 139 52.9%

Government funds/Subsidy 4 1.5%

Others 6 2.3%

Total 263 100.0%

Count Column N %

Q10 If Yes, How did Outsourced raw materials 18 6.8%

271

you overcome the

problems related to

Business/Competitio

n? - Outsourced raw

materials

Purchase of raw materials 18 6.8%

Outsourced marketing /

selling 27 10.3%

Adjusted to the

competition 187 71.1%

My product/Service has

aUSP 26 9.9%

I have strong mentors for

guidance 29 11.0%

Others 4 1.5%

Total 263 100.0%

Count Column N %

Q11 How did you

overcome the

problems related to

Location?

How did you overcome the

problems related to

Location?

225 86.5%

Took land / shed from the

government 9 3.5%

Took help from family 26 10.0%

Started another line of

business 6 2.3%

Others 1 0.4%

Total 260 100.0%

Count Column N %

Q15 Are you aware Training 48 35.8%

272

of the various support

policies of the

government?

Finance 100 74.6%

Export-Import 67 50.0%

Marketing 74 55.2%

Total 134 100.0%

Count Column N

%

Q17 What kinds of

help/assistance have you

received from the

government? - Loan

Loan 41 15.6%

Training 6 2.3%

Easy policies / Tax holiday 23 8.8%

Subsidy on water, electricity 12 4.6%

No help 201 76.7%

Total 262 100.0%

Count Column N %

Q18 What kinds of

problems related to

government policies were

faced when you started

the business? No

awareness of the policies

No awareness of the

policies 63 24.0%

Did not know of whom to

approach 44 16.7%

Found the government

policies tedious 122 46.4%

No problems-Positive 65 24.7%

Others 2 0.8%

Total 263 100.0%

273

Count Column N %

Q19 How did you

overcome the problems

relating to Govt. policies

Still unregistered 110 41.8%

Hit the wall everywhere 37 14.1%

It was easy 44 16.7%

Through Agent 51 19.4%

Others 24 9.1%

Total 263 100.0%

Count Column N %

Q21 What are your

expectations from the

government in terms

of easy

documentations?

Easy licensing

Easy licensing 171 65.0%

Easy renewals 141 53.6%

Single window clearance 138 52.5%

Less number of

documentations 150 57.0%

Others 0 0.0%

Total 263 100.0%

EXPLORATORY FACTOR ANALYSIS - Q2. RISKS

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy. .865

Bartlett's Test of

Sphericity Approx. Chi-Square

2896.38

7

274

df 171

Sig. .000

Communalities

Initial Extractio

n

Risks you have come across in finding

sources of funds when you started the

business - Q2.1 : FUNDS

1.000 .639

Q2.2 : KNOWLEDGE ABOUT LOANS 1.000 .399

Q2.3 : GOVERNMENT SUBSIDY 1.000 .653

Q2.4 : FAMILY BORROWINGS 1.000 .577

Q2.5 : HIGH INTEREST RATES 1.000 .708

Q2.6 : MONEY LENDERS 1.000 .462

Q2.7 : PROPERTY MORTGAGE BY

BANKS 1.000 .713

Q2.8 : GOLD LOANS 1.000 .742

Q2.9 : MULTIPLE WINDOW POLICY 1.000 .582

Q2.10 : TAXES 1.000 .628

Q2.11 : COMPETITION 1.000 .420

Q2.12 : UNAVAILABILITY OF RAW

MATERIALS 1.000 .555

Q2.13 : UNAVAILABILITY OF SKILLED

LABOUR 1.000 .560

Q2.14 : NO PROPER MACHINERY 1.000 .657

Q2.15 : INACCESSIBLE TO THE CITY 1.000 .718

Q2.16 : AWAY FROM THE MARKET 1.000 .627

275

Q2.17 : UNAVAILABILITY OF WATER 1.000 .774

Q2.18 : UNAVAILABILITY OF

ELECTRICITY 1.000 .736

Q2.19 : ACCOMMODATION OF LABOUR 1.000 .594

Extraction Method: Principal Component Analysis.

Total Variance Explained

Co

mp

one

nt

Initial Eigenvalues Extraction Sums of

Squared Loadings

Rotation Sums of Squared

Loadings

Total % of

Varianc

e

Cumulat

ive %

Total % of

Varianc

e

Cumulat

ive %

Total % of

Varianc

e

Cumul

ative

%

1 6.097 32.092 32.092 6.097 32.092 32.092 5.265 27.712 27.712

2 4.456 23.452 55.544 4.456 23.452 55.544 4.758 25.044 52.756

3 1.191 6.267 61.811 1.191 6.267 61.811 1.720 9.055 61.811

4 .959 5.047 66.858

5 .887 4.669 71.527

6 .700 3.686 75.213

7 .654 3.442 78.655

8 .558 2.938 81.593

9 .507 2.668 84.261

10 .441 2.319 86.581

11 .407 2.142 88.722

12 .380 1.999 90.721

13 .347 1.826 92.548

14 .303 1.597 94.144

276

15 .293 1.541 95.685

16 .262 1.379 97.064

17 .233 1.227 98.291

18 .194 1.023 99.314

19 .130 .686 100.000

Extraction Method: Principal Component Analysis.

Component Matrixa

Component

1 2 3

277

Risks you have come across in finding sources

of funds when you started the business - Q2.1 :

FUNDS

.405 .629

Q2.2 : KNOWLEDGE ABOUT LOANS .527

Q2.3 : GOVERNMENT SUBSIDY -.514 .623

Q2.4 : FAMILY BORROWINGS -.462 .600

Q2.5 : HIGH INTEREST RATES .755

Q2.6 : MONEY LENDERS .537

Q2.7 : PROPERTY MORTGAGE BY BANKS .765

Q2.8 : GOLD LOANS -.428 .740

Q2.9 : MULTIPLE WINDOW POLICY .626

Q2.10 : TAXES -.516 .599

Q2.11 : COMPETITION .599

Q2.12 : UNAVAILABILITY OF RAW

MATERIALS .708

Q2.13 : UNAVAILABILITY OF SKILLED

LABOUR .742

Q2.14 : NO PROPER MACHINERY .744

Q2.15 : INACCESSIBLE TO THE CITY .744

Q2.16 : AWAY FROM THE MARKET .701

Q2.17 : UNAVAILABILITY OF WATER .717 .430

Q2.18 : UNAVAILABILITY OF ELECTRICITY .730

Q2.19 : ACCOMMODATION OF LABOUR .713

Extraction Method: Principal Component Analysis.

278

a. 3 components extracted.

Rotated Component Matrixa

Component

1 2 3

Q2.1 : FUNDS .757

Q2.2 : KNOWLEDGE ABOUT LOANS .613

Q2.3 : GOVERNMENT SUBSIDY .790

Q2.4 : FAMILY BORROWINGS .750

Q2.5 : HIGH INTEREST RATES .751

Q2.6 : MONEY LENDERS .512

Q2.7 : PROPERTY MORTGAGE BY BANKS .833

Q2.8 : GOLD LOANS .861

Q2.9 : MULTIPLE WINDOW POLICY .756

Q2.10 : TAXES .774

Q2.11 : COMPETITION -.405

Q2.12 : UNAVAILABILITY OF RAW MATERIALS .659

Q2.13 : UNAVAILABILITY OF SKILLED LABOUR .659

Q2.14 : NO PROPER MACHINERY .767

Q2.15 : INACCESSIBLE TO THE CITY .841

Q2.16 : AWAY FROM THE MARKET .788

Q2.17 : UNAVAILABILITY OF WATER .876

Q2.18 : UNAVAILABILITY OF ELECTRICITY .855

279

Q2.19 : ACCOMMODATION OF LABOUR .752

Extraction Method: Principal Component Analysis.

Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 4 iterations.

Exploratory Factor Analysis shows three types of RISK factors.

Facor-1: Resources like Raw material, Labour, Water, Electricity eyc.

Factpr-2: Financial Aspects.

Factor-3: Availability of Loans, Capital.

Reliability - RISK Scale

Reliability Statistics

Cronbach's Alpha Cronbach's Alpha Based

on Standardized Items

N of Items

.814 .819 19

Summary Item Statistics

Mea

n

Minimum Maximum Range Maximum /

Minimum

Variance N of Items

Inter-Item Correlations .192 -.401 .771 1.172 -1.925 .091 19

Item-Total Statistics

Scale

Mean if

Item

Deleted

Scale

Variance if

Item

Deleted

Corrected

Item-Total

Correlation

Squared

Multiple

Correlation

Cronbach's

Alpha if Item

Deleted

Q2.1 : FUNDS 58.28 98.730 .341 .336 .809

280

Q2.2 : KNOWLEDGE

ABOUT LOANS 58.65 101.769 .284 .218 .811

Q2.3 : GOVERNMENT

SUBSIDY 58.21 97.677 .268 .629 .814

Q2.4 : FAMILY

BORROWINGS 58.04 98.055 .274 .543 .813

Q2.5 : HIGH INTEREST

RATES 57.75 93.196 .501 .661 .799

Q2.6 : MONEY

LENDERS 58.49 95.090 .512 .408 .800

Q2.7 : PROPERTY

MORTGAGE BY

BANKS

58.02 92.877 .464 .738 .801

Q2.8 : GOLD LOANS 58.11 93.976 .410 .705 .805

Q2.9 : MULTIPLE

WINDOW POLICY 57.70 97.041 .337 .559 .809

Q2.10 : TAXES 57.84 99.124 .263 .640 .813

Q2.11 : COMPETITION 57.86 103.320 .102 .382 .820

Q2.12 :

UNAVAILABILITY OF

RAW MATERIALS

58.79 96.807 .387 .534 .806

Q2.13 :

UNAVAILABILITY OF

SKILLED LABOUR

58.80 98.673 .290 .558 .811

Q2.14 : NO PROPER

MACHINERY 58.96 94.983 .508 .675 .800

Q2.15 : INACCESSIBLE

TO THE CITY 58.95 94.173 .536 .661 .798

Q2.16 : AWAY FROM

THE MARKET 58.92 96.433 .412 .595 .805

281

Q2.17 :

UNAVAILABILITY OF

WATER

59.07 93.774 .593 .697 .796

Q2.18 :

UNAVAILABILITY OF

ELECTRICITY

58.93 93.319 .552 .704 .797

Q2.19 :

ACCOMMODATION OF

LABOUR

58.94 96.199 .446 .555 .803

SPLIT HALF RELIABILITY

Reliability Statistics

Cronbach's Alpha

Part 1

Value .656

N of Items 10a

Part 2

Value .640

N of Items 9b

Total N of Items 19

Correlation Between Forms .838

Spearman-Brown

Coefficient

Equal Length .912

Unequal Length .912

Guttman Split-Half Coefficient .909

a. Q2.1 : FUNDS, Q2.3 : GOVERNMENT SUBSIDY, Q2.5 : HIGH INTEREST RATES, Q2.7 :

PROPERTY MORTGAGE BY BANKS, Q2.9 : MULTIPLE WINDOW POLICY, Q2.11 :

COMPETITION, Q2.13 : UNAVAILABILITY OF SKILLED LABOUR, Q2.15 : INACCESSIBLE

TO THE CITY, Q2.17 : UNAVAILABILITY OF WATER, Q2.19 : ACCOMMODATION OF

LABOUR.

282

b. The items are: Q2.2 : KNOWLEDGE ABOUT LOANS, Q2.4 : FAMILY BORROWINGS,

Q2.6 : MONEY LENDERS, Q2.8 : GOLD LOANS, Q2.10 : TAXES, Q2.12 : UNAVAILABILITY

OF RAW MATERIALS, Q2.14 : NO PROPER MACHINERY, Q2.16 : AWAY FROM THE

MARKET, Q2.18 : UNAVAILABILITY OF ELECTRICITY.

Q1 PROBLEMS FACED WHILE STARTING ENTERPRISESBY AGE,

EDUCATION&TYPE OF INDUSTRY

Q1 by Age

Age

25-35 36-45 Above 45 Total

Coun

t

Colum

n N %

Co

unt

Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Q1

Problem

s faced

while

starting

enterpri

se

No family

support 11 7.7% 7 11.5% 8 13.3% 26 9.9%

Finance

/capital 43 30.3% 45 73.8% 35 58.3% 123 46.8%

Governm

ent

policies/li

censes

88 62.0% 13 21.3% 12 20.0% 113 43.0%

Logistics

and

transport

ation

1 0.7% 6 9.8% 2 3.3% 9 3.4%

Market

Unavaila

bility

7 4.9% 7 11.5% 4 6.7% 18 6.8%

Competiti

on 34 23.9% 22 36.1% 17 28.3% 73 27.8%

Other 0 0.0% 1 1.6% 2 3.3% 3 1.1%

283

Total 142 100.0

% 61

100.0

% 60

100.0

% 263

100.0

%

Pearson Chi-Square Tests

Age

Q1 Problems faced while starting

enterprise

Chi-square 104.924

df 14

Sig. .000*,b,c

Results are based on nonempty rows and columns in each innermost

subtable.

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have expected cell counts less than

5.

c. The minimum expected cell count in this subtable is less than one.

Comparisons of Column Proportionsb

Age

25-35 36-45 Above 45

(A) (B) (C)

Q1

Problems

faced while

starting

enterprise

Problems you faced while

starting your enterprise -

No family support

Finance/capital A A

Government

policies/licenses B C

Logistics and transportation A

Market Unavailability

284

Competition

Other .a

Results are based on two-sided tests with significance level .05. For each

significant pair, the key of the category with the smaller column proportion

appears under the category with the larger column proportion.

a. This category is not used in comparisons because its column proportion is

equal to zero or one.

b. Tests are adjusted for all pairwise comparisons within a row of each

innermost subtable using the Bonferroni correction.

Q1 by Education

Education

School/Junior

Cpllege

Degree Graduate & PG Total

Coun

t

Colum

n N %

Coun

t

Column

N %

Count Column

N %

Count Column

N %

Q1

Problem

s faced

while

starting

enterpri

se

Problems

you faced

while

starting

your

enterprise

- No family

support

11 13.8% 5 16.7% 10 6.5% 26 9.9%

Finance

/capital 56 70.0% 17 56.7% 50 32.7% 123 46.8%

Governme

nt policies

/licenses

13 16.2% 14 46.7% 86 56.2% 113 43.0%

285

Logistics

and

transportati

on

2 2.5% 1 3.3% 6 3.9% 9 3.4%

Market

Unavailabil

ity

7 8.8% 3 10.0% 8 5.2% 18 6.8%

Competitio

n 26 32.5% 8 26.7% 39 25.5% 73 27.8%

Other 2 2.5% 0 0.0% 1 0.7% 3 1.1%

Total 80 100.0

% 30 100.0% 153 100.0% 263 100.0%

Pearson Chi-Square Tests

Education

Q1 Problems faced while

starting enterprise

Chi-square 75.116

df 14

Sig. .000*,b,c

Results are based on nonempty rows and columns in each innermost subtable.

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have expected cell counts less than 5.

c. The minimum expected cell count in this subtable is less than one

Comparisons of Column Proportionsb

Education

School/Junior

Cpllege

Degree Graduate

& PG

(A) (B) (C)

286

Q1 Problems

faced while

starting

enterprise

Problems you faced

while starting your

enterprise - No

family support

Finance/capital C C

Government

policies/licenses A A

Logistics and

transportation

Market

Unavailability

Competition

Other .a

Results are based on two-sided tests with significance level .05. For each

significant pair, the key of the category with the smaller column proportion

appears under the category with the larger column proportion.

Q1 by Type of Industry

Type of Industry

Manufacturin

g

Service IT Others Total

Count Colu

mn N

%

Coun

t

Colu

mn N

%

Cou

nt

Colu

mn N

%

Cou

nt

Colu

mn N

%

Cou

nt

Colu

mn N

%

287

Q1

Proble

ms

faced

while

starting

enterpri

se

Problems

you faced

while

starting

your

enterprise

- No

family

support

3 5.8% 12 12.9

% 2 3.1% 9

16.7

% 26 9.9%

Finance/

capital

32 61.5

% 55

59.1

% 1 1.6% 35

64.8

% 123

46.8

%

Governm

ent

policies/

licenses

16 30.8

% 22

23.7

% 59

92.2

% 16

29.6

% 113

43.0

%

Logistics

and

transporta

tion

3 5.8% 5 5.4% 0 0.0% 1 1.9% 9 3.4%

Market

Unavailab

ility

5 9.6% 7 7.5% 0 0.0% 6 11.1

% 18 6.8%

Competiti

on 19

36.5

% 26

28.0

% 2 3.1% 26

48.1

% 73

27.8

%

Other 2 3.8% 0 0.0% 0 0.0% 1 1.9% 3 1.1%

Total 52 100.0

% 93

100.0

% 64

100.0

% 54

100.0

% 263

100.0

%

Pearson Chi-Square Tests

Type of Industry

288

Q1 Problems faced while

starting enterprise

Chi-square 211.929

df 21

Sig. .000*,b,c

Results are based on nonempty rows and columns in each innermost

subtable.

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have expected cell counts less

than 5.

c. The minimum expected cell count in this subtable is less than one.

Comparisons of Column Proportionsb

Type of Industry

Manufa

cturing

Service IT Others

(A) (B) (C) (D)

Q1 Problems

faced while

starting

enterprise

Problems you

faced while

starting your

enterprise - No

family support

Finance/capital C C C

Government

policies/licenses A B D

Logistics and

transportation .a

Market

Unavailability .a

289

Competition C C C

Other .a .a

Results are based on two-sided tests with significance level .05. For each significant

pair, the key of the category with the smaller column proportion appears under the

category with the larger column proportion.

a. This category is not used in comparisons because its column proportion is equal to

zero or one.

b. Tests are adjusted for all pairwise comparisons within a row of each innermost

subtable using the Bonferroni correction.

Q7 WHAT WAS THE KIND OF PROBLEM/S FACED BY YOU?

KINDS OF RISKS IN FUNDS BY EDUCATION

Education

School/Junior

College

Degree Graduate &

PG

Total

Coun

t

Colum

n N %

Coun

t

Colum

n N %

Coun

t

Colum

n N %

Coun

t

Colum

n N %

Q7 If

yes,

what was

the kind

of

problem/

s faced

by you?

Difficult

loan

procedure

s

34 42.5% 19 63.3% 104 68.0% 157 59.7%

Bank

mortgage 12 15.0% 8 26.7% 26 17.0% 46 17.5%

Non-

availability

of a

capitalist/f

under

39 48.8% 12 40.0% 47 30.7% 98 37.3%

Others 5 6.2% 1 3.3% 6 3.9% 12 4.6%

290

Total 80 100.0

% 30

100.0

% 153

100.0

% 263

100.0

%

Pearson Chi-Square Tests

Education

Q7 If yes, what was the

kind of problem/s faced

by you? - Difficult loan

procedures

Chi-square 24.661

df 8

Sig. .002*

Results are based on nonempty rows and columns

in each innermost subtable.

*. The Chi-square statistic is significant at the .05

level.

Comparisons of Column Proportionsa

Education

School/Junio

r College

Degree Graduate &

PG

(A) (B) (C)

Q7 If yes, what

was the kind of

problem/s faced

by you? - Difficult

loan procedures

If yes, what was the

kind of problem/s

faced by you? -

Difficult loan

procedures

A

Bank mortgage

Non-availability of a

capitalist/funder C

Others

Results are based on two-sided tests with significance level .05. For each significant

pair, the key of the category with the smaller column proportion appears under the

category with the larger column proportion.

291

a. Tests are adjusted for all pairwise comparisons within a row of each innermost

subtable using the Bonferroni correction.

KINDS OF RISKS IN FUNDS BY AGE

Age

25-35 36-45 Above 45 Total

Coun

t

Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Coun

t

Colum

n N %

Q7 If

yes,

what

was

the

kind of

proble

m/s

faced

by

you?

Difficult

loan

procedur

es

102 71.8% 28 45.9% 27 45.0% 157 59.7%

Bank

mortgage 24 16.9% 9 14.8% 13 21.7% 46 17.5%

Non-

availabilit

y of a

capitalist/

funder

41 28.9% 33 54.1% 24 40.0% 98 37.3%

Others 4 2.8% 4 6.6% 4 6.7% 12 4.6%

Total 142 100.0

% 61

100.0

% 60

100.0

% 263 100.0%

Pearson Chi-Square Tests

Age

Q7 If yes, what was the kind of

problem/s faced by you? -

Difficult loan procedures

Chi-square 34.002

df 8

Sig. .000*

Results are based on nonempty rows and columns in each innermost

subtable.

292

*. The Chi-square statistic is significant at the .05 level.

Comparisons of Column Proportionsa

Age

25-35 36-45 Above 45

(A) (B) (C)

Q7 If yes, what was

the kind of problem/s

faced by you? -

Difficult loan

procedures

If yes, what was the kind

of problem/s faced by

you? - Difficult loan

procedures

B C

Bank mortgage

Non-availability of a

capitalist/funder A

Others

Results are based on two-sided tests with significance level .05. For each significant

pair, the key of the category with the smaller column proportion appears under the

category with the larger column proportion.

a. Tests are adjusted for all pairwise comparisons within a row of each innermost

subtable using the Bonferroni correction.

KINDS OF RISKS IN FUNDS BY THE TYPE OF INDUSTRY

Type of Industry

Manufacturi

ng

Service IT Others Total

Cou

nt

Colu

mn N

%

Coun

t

Colu

mn N

%

Coun

t

Colu

mn N

%

Coun

t

Colum

n N %

Cou

nt

Column N

%

293

Q7 If

yes,

what

was the

kind of

problem

/s faced

by you?

Difficult

loan

procedur

es

29 55.8

% 42

45.2

% 63

98.4

% 23 42.6% 157 59.7%

Bank

mortgage 13

25.0

% 20

21.5

% 2 3.1% 11 20.4% 46 17.5%

Non-

availabilit

y of a

capitalist/

funder

24 46.2

% 43

46.2

% 3 4.7% 28 51.9% 98 37.3%

Others 3 5.8% 5 5.4% 0 0.0% 4 7.4% 12 4.6%

Total 52 100.0

% 93

100.0

% 64

100.0

% 54

100.0

% 263 100.0%

Pearson Chi-Square Tests

Type of Industry

Q7 If yes, what was the kind of problem/s faced by you?

- Difficult loan procedures

Chi-square 110.830

df 12

Sig. .000*,b

Results are based on nonempty rows and columns in each innermost sub table.

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have expected cell counts less than 5.

Comparisons of Column Proportionsb

Type of Industry

Manufacturing Service IT Others

294

(A) (B) (C) (D)

Q7 If yes, what

was the kind of

problem/s

faced by you? -

Difficult loan

procedures

If yes, what was the

kind of problem/s

faced by you? -

Difficult loan

procedures

A B D

Bank mortgage C C C

Non-availability of a

capitalist/funder C C C

Others .a

Results are based on two-sided tests with significance level .05. For each significant pair,

the key of the category with the smaller column proportion appears under the category

with the larger column proportion.

a. This category is not used in comparisons because its column proportion is equal to

zero or one.

b. Tests are adjusted for all pairwise comparisons within a row of each innermost subtable

using the Bonferroni correction.

STRATEGIES/WAYS ADOPTED BY ENTREPRENEURS TO MITIGATE

THE FACTORS OF FINANCIAL RISKS

HOW DID YOU OVERCOME THE PROBLEMS RELATED TO FINANCES/FUNDS/

BY WAY OF EDUCATION

Education

School/Junio

r College

Degree Graduate &

PG

Total

Cou

nt

Colum

n N %

Coun

t

Colu

mn N

%

Cou

nt

Colum

n N %

Coun

t

Colu

mn N

%

295

Q8 How

did you

overcom

e the

problem

s related

to

Finance

s/funds?

Loan from

Banks 32 40.0% 12

40.0

% 31 20.3% 75

28.5

%

Crowd Funding 2 2.5% 1 3.3% 2 1.3% 5 1.9%

Borrowed from

Friends 29 36.2% 10

33.3

% 32 20.9% 71

27.0

%

Took some-

one as

financial

partner

9 11.2% 3 10.0

% 2 1.3% 14 5.3%

Relatives’

belongings

(Gold/Property)

17 21.2% 4 13.3

% 25 16.3% 46

17.5

%

Family

contributions 25 31.2% 15

50.0

% 99 64.7% 139

52.9

%

Government

funds/Subsidy 1 1.2% 2 6.7% 1 0.7% 4 1.5%

Others 3 3.8% 0 0.0% 3 2.0% 6 2.3%

Total 80 100.0

% 30

100.0

% 153

100.0

% 263

100.0

%

Pearson Chi-Square Tests

Education

Q8 How did you overcome the problems

related to Finances/funds? - Loan from

Banks

Chi-

square 64.382

df 16

Sig. .000*,b,c

296

Results are based on nonempty rows and columns in each innermost

subtable.

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have expected cell counts less

than 5

c. The minimum expected cell count in this subtable is less than one.

Comparisons of Column Proportions

Education

School/Junio

r College

Degree Graduate &

PG

(A) (B) (C)

Q8 How

did you

overcome

the

problems

related to

Finances/

funds? -

Loan

from

Banks

How did you

overcome the

problems related to

Finances/funds? -

Loan from Banks

C

Crowd Funding

Borrowed from

Friends C

Took some-one as

financial partner C C

Relatives’ belongings

(Gold/Property)

Family contributions A

Government

funds/Subsidy

Others .a

297

Results are based on two-sided tests with significance level .05. For each

significant pair, the key of the category with the smaller column proportion

appears under the category with the larger column proportion.

a. This category is not used in comparisons because its column proportion

is equal to zero or one.

b. Tests are adjusted for all pairwise comparisons within a row of each

innermost subtable using the Bonferroni correction.

HOW DID YOU OVERCOME THE PROBLEMS RELATED TO FINANCES/FUNDS/

BY WAY OF AGE

Age

25-35 36-45 Above 45 Total

Count Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Q8 How

did you

overcome

the

problems

related to

Finances/f

unds?

Loan from

Banks 23 16.2% 28 45.9% 24 40.0% 75 28.5%

Crowd

Funding 3 2.1% 0 0.0% 2 3.3% 5 1.9%

Borrowed

from

Friends

27 19.0% 21 34.4% 23 38.3% 71 27.0%

Took

some-one

as financial

partner

5 3.5% 7 11.5% 2 3.3% 14 5.3%

Relatives’

belongings

(Gold/Prop

erty)

21 14.8% 14 23.0% 11 18.3% 46 17.5%

Family

contribution

s

104 73.2% 17 27.9% 18 30.0% 139 52.9%

298

Governme

nt

funds/Subs

idy

0 0.0% 3 4.9% 1 1.7% 4 1.5%

Others 2 1.4% 1 1.6% 3 5.0% 6 2.3%

Total 142 100.0

% 61

100.0

% 60

100.0

% 263

100.0

%

Pearson Chi-Square Tests

Age

Q8 How did you overcome

the problems related to

Finances/funds? - Loan

from Banks

Chi-square 104.590

df 16

Sig. .000*,b,c

Results are based on nonempty rows and columns in each

innermost subtable.

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have expected cell

counts less than 5.

c. The minimum expected cell count in this subtable is less than

one.

Comparisons of Column Proportionsb

Age

25-35 36-45 Above 45

(A) (B) (C)

Q8

How

did

you

How did you overcome

the problems related to

Finances/funds? - Loan

from Banks

A A

299

overc

ome

the

proble

ms

relate

d to

Finan

ces/fu

nds? -

Loan

from

Banks

Crowd Funding .a

Borrowed from Friends A

Took some-one as

financial partner

Relatives’ belongings

(Gold/Property)

Family contributions B C

Government

funds/Subsidy .a

Others

Results are based on two-sided tests with significance level .05. For

each significant pair, the key of the category with the smaller column

proportion appears under the category with the larger column

proportion.

a. This category is not used in comparisons because its column

proportion is equal to zero or one.

b. Tests are adjusted for all pairwise comparisons within a row of

each innermost subtable using the Bonferroni correction.

HOW DID YOU OVERCOME THE PROBLEMS RELATED TO FINANCES/FUNDS/

BY WAY OF TYPE OF THE INDUSTRY

Type of Industry

Manufactur

ing

Service IT Others Total

Co

unt

Colu

mn N

%

Cou

nt

Colu

mn N

%

Cou

nt

Colu

mn N

%

Cou

nt

Colu

mn N

%

Cou

nt

Colu

mn N

%

300

Q8 How

did you

overcome

the

problems

related to

Finances/f

unds?

Loan from

Banks 19

36.5

% 38

40.9

% 1 1.6% 17

31.5

% 75

28.5

%

Crowd

Funding 2 3.8% 3 3.2% 0 0.0% 0 0.0% 5 1.9%

Borrowed

from Friends 7

13.5

% 33

35.5

% 3 4.7% 28

51.9

% 71

27.0

%

Took some-

one as

financial

partner

6 11.5

% 4 4.3% 0 0.0% 4 7.4% 14 5.3%

Relatives’

belongings

(Gold/Propert

y)

8 15.4

% 20

21.5

% 2 3.1% 16

29.6

% 46

17.5

%

Family

contributions 25

48.1

% 28

30.1

% 61

95.3

% 25

46.3

% 139

52.9

%

Government

funds/Subsid

y

0 0.0% 2 2.2% 0 0.0% 2 3.7% 4 1.5%

Others 1 1.9% 3 3.2% 0 0.0% 2 3.7% 6 2.3%

Total 52 100.0

% 93

100.0

% 64

100.0

% 54

100.0

% 263

100.0

%

Pearson Chi-Square Tests

Type of

Industry

Q8 How did you Chi-square 174.441

301

overcome the problems

related to

Finances/funds? - Loan

from Banks

df 24

Sig. .000*,b,c

Results are based on nonempty rows and columns in

each innermost subtable.

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have

expected cell counts less than 5.

c. The minimum expected cell count in this subtable is

less than one

Comparisons of Column Proportionsb

Type of Industry

Manufactur

ing

Service IT Others

(A) (B) (C) (D)

Q8 How did you

overcome the

problems related

to

Finances/funds?

- Loan from

Banks

How did you

overcome the

problems related

to

Finances/funds? -

Loan from Banks

C C C

Crowd Funding .a .a

Borrowed from

Friends A C A C

Took some-one as

financial partner .a

Relatives’

belongings

(Gold/Property)

C C

302

Family

contributions A B D

Government

funds/Subsidy .a .a

Others .a

Results are based on two-sided tests with significance level .05. For each significant pair,

the key of the category with the smaller column proportion appears under the category with

the larger column proportion.

a. This category is not used in comparisons because its column proportion is equal to zero

or one.

b. Tests are adjusted for all pairwise comparisons within a row of each innermost subtable

using the Bonferroni correction.

STRATEGIES ADOPPTED BY INDIVIDUALS TO OVERCOME RISKS IN

BUSINESS OR COMPETITION

Education

School/Junior

College

Degree Graduate &

PG

Total

Count Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Cou

nt

Colum

n N %

Q10 If Yes,

How did

you

overcome

the

problems

related to

Business/

Competitio

n?

Outsourced

raw materials 12 15.0% 1 3.3% 5 3.3% 18 6.8%

Purchase of

raw materials 10 12.5% 4 13.3% 4 2.6% 18 6.8%

Outsourced

marketing /

selling

17 21.2% 2 6.7% 8 5.2% 27 10.3%

303

Adjusted to

the

competition

50 62.5% 22 73.3% 115 75.2% 187 71.1%

My

product/Servi

ce has aUSP

8 10.0% 3 10.0% 15 9.8% 26 9.9%

I have strong

mentors for

guidance

9 11.2% 4 13.3% 16 10.5% 29 11.0%

Others 2 2.5% 0 0.0% 2 1.3% 4 1.5%

Total 80 100.0

% 30

100.0

% 153

100.0

% 263

100.0

%

Pearson Chi-Square Tests

Education

Q10 If Yes, How did you

overcome the problems

related to

Business/Competition? -

Outsourced raw

materials

Chi-square 42.821

df 14

Sig. .000*,b,c

Results are based on nonempty rows and columns

in each innermost subtable.

*. The Chi-square statistic is significant at the .05

level.

b. More than 20% of cells in this subtable have

expected cell counts less than 5

c. The minimum expected cell count in this subtable

is less than one.

304

Comparisons of Column Proportionsb

Education

School/Jun

ior College

Degree Graduate &

PG

(A) (B) (C)

Q10 If Yes, How

did you

overcome the

problems related

to

Business/Compe

tition? -

Outsourced raw

materials

If Yes, How did you

overcome the

problems related to

Business/Competition?

- Outsourced raw

materials

C

Purchase of raw

materials C C

Outsourced marketing

/ selling C

Adjusted to the

competition

My product/Service

has aUSP

I have strong mentors

for guidance

Others .a

Results are based on two-sided tests with significance level .05. For each

significant pair, the key of the category with the smaller column proportion appears

under the category with the larger column proportion.

a. This category is not used in comparisons because its column proportion is equal

to zero or one.

b. Tests are adjusted for all pairwise comparisons within a row of each innermost

subtable using the Bonferroni correction.

305

Age

25-35 36-45 Above 45 Total

Count Colum

n N %

Coun

t

Colum

n N %

Coun

t

Colum

n N %

Coun

t

Colum

n N %

Q10 If Yes,

How did you

overcome the

problems

related to

Business/Com

petition?

Outsourced

raw materials 4 2.8% 10 16.4% 4 6.7% 18 6.8%

Purchase of

raw

materials

6 4.2% 7 11.5% 5 8.3% 18 6.8%

Outsourced

marketing /

selling

11 7.7% 11 18.0% 5 8.3% 27 10.3%

Adjusted to

the

competition

115 81.0% 32 52.5% 40 66.7% 187 71.1%

My

product/Serv

ice has

aUSP

8 5.6% 6 9.8% 12 20.0% 26 9.9%

I have

strong

mentors for

guidance

11 7.7% 12 19.7% 6 10.0% 29 11.0%

Others 3 2.1% 0 0.0% 1 1.7% 4 1.5%

Total 142 100.0% 61 100.0% 60 100.0% 263 100.0

%

306

Pearson Chi-Square Tests

Age

Q10 If Yes, How did you

overcome the problems

related to

Business/Competition? -

Outsourced raw

materials

Chi-square 56.312

df 14

Sig. .000*,b,c

Results are based on nonempty rows and columns

in each innermost subtable.

*. The Chi-square statistic is significant at the .05

level.

b. More than 20% of cells in this subtable have

expected cell counts less than 5.

c. The minimum expected cell count in this

subtable is less than one.

Comparisons of Column Proportionsb

Age

25-35 36-45 Above 45

(A) (B) (C)

Q10 If Yes, How did you

overcome the problems

related to

Business/Competition? -

Outsourced raw

materials

If Yes, How did you

overcome the problems

related to

Business/Competition? -

Outsourced raw

materials

A

Purchase of raw

materials

307

Outsourced marketing /

selling

Adjusted to the

competition B

My product/Service has

aUSP A

I have strong mentors for

guidance A

Others .a

Results are based on two-sided tests with significance level .05. For each significant

pair, the key of the category with the smaller column proportion appears under the

category with the larger column proportion.

a. This category is not used in comparisons because its column proportion is equal to

zero or one.

b. Tests are adjusted for all pairwise comparisons within a row of each innermost

subtable using the Bonferroni correction.

Type of Industry

Manufactur

ing

Service IT Others Total

Cou

nt

Colu

mn

N %

Cou

nt

Colu

mn

N %

Cou

nt

Colu

mn

N %

Cou

nt

Colu

mn

N %

Cou

nt

Colu

mn

N %

Q10 If

Yes,

How did

you

overcom

e the

problems

related to

Business

Outsourced

raw materials 7

13.5

% 7 7.5% 1 1.6% 3 5.6% 18 6.8%

Purchase of

raw materials 6

11.5

% 4 4.3% 1 1.6% 7

13.0

% 18 6.8%

Outsourced

marketing /

selling

6 11.5

% 10

10.8

% 1 1.6% 10

18.5

% 27

10.3

%

308

/Competi

tion?

Adjusted to

the

competition

27 51.9

% 67

72.0

% 60

93.8

% 33

61.1

% 187

71.1

%

My

product/Servi

ce has aUSP

9 17.3

% 8 8.6% 0 0.0% 9

16.7

% 26 9.9%

I have strong

mentors for

guidance

8 15.4

% 14

15.1

% 2 3.1% 5 9.3% 29

11.0

%

Others 1 1.9% 2 2.2% 0 0.0% 1 1.9% 4 1.5%

Total 52 100.

0% 93

100.

0% 64

100.

0% 54

100.

0% 263

100.

0%

Pearson Chi-Square Tests

Type of

Industry

Q10 If Yes, How did you

overcome the problems

related to

Business/Competition? -

Outsourced raw

materials

Chi-square 73.926

df 21

Sig. .000*,b,c

Results are based on nonempty rows and columns in

each innermost subtable.

*. The Chi-square statistic is significant at the .05 level.

b. More than 20% of cells in this subtable have

expected cell counts less than 5.

c. The minimum expected cell count in this subtable is

less than one.

Comparisons of Column Proportionsb

Type of Industry

309

Manufact

uring

Service IT Others

(A) (B) (C) (D)

Q10 If Yes,

How did you

overcome the

problems

related to

Business/Co

mpetition? -

Outsourced

raw materials

If Yes, How did you

overcome the problems

related to

Business/Competition? -

Outsourced raw

materials

Purchase of raw

materials

Outsourced marketing /

selling C

Adjusted to the

competition A B D

My product/Service has

aUSP .a

I have strong mentors

for guidance

Others .a

Results are based on two-sided tests with significance level .05. For each significant pair, the

key of the category with the smaller column proportion appears under the category with the

larger column proportion.

a. This category is not used in comparisons because its column proportion is equal to zero or

one.

b. Tests are adjusted for all pairwise comparisons within a row of each innermost subtable

using the Bonferroni correction.

310

************************* In the Holy and Matchless name – JESUS CHRIST ********************

YES & AMEN