India is the land of opportunities and the Covid era and the present geopolitical situation gives enormous impetus for Innovators, Startups and Entrepreneurs. India has climbed 4 spots and has been ranked 48thby the World Intellectual Property Organization in the Global Innovation Index 2020 rankings. These organisations are heavily biased in favor of other countries and still the ranking has improved and climbing up. In midst of the COVID -19 pandemic, it comes as an uplifting news for India and is a testament of its robust R&D Ecosystem. It is a remarkable achievement to be in a league of highly innovative developed nations all over the globe. The WIPO had also accepted India as one of the leading innovation achievers of 2019 in the central and southern Asian region, as it has shown a consistent improvement in its innovation ranking for the last 5 years.It is time that India brings a paradigm shift and aims to be in the top 25 countries in the next global innovation index rankings.
The consistent improvement in the global innovation index rankings is owing to the immense knowledge capital, the vibrant startup ecosystem, and the amazing work done by the public & private research organizations. The scientific ministries like the Department of Science and Technology, the Department of Biotechnology and the Department of space have played a pivotal role in the enriching the national innovation Ecosystem.
The NITI Aayog has been working tirelessly to ensure optimization of national efforts in this direction by bringing policy led innovation in different areas such as EVs, biotechnology, Nano technology, Space, alternative energy sources, etc. The India Innovation Index, which was released last year by the NITI Aayog, has been widely accepted as the major step in the direction of decentralization of innovation across all the states of India. A constant thrust in monitoring and evaluating India’s position in global rankings has be provided by the NITI Aayog, including the global innovation index.
MSMEs in India
India has approximately 6.3 crore MSMEs. The number of registered MSMEs grew 18.5% Y-o-Y to reach 25.13 lakh (2.5 million) units in 2020 from 21.21 lakh (2.1 million) units in 2019. The Indian MSMEs sector contributes about 29% towards the GDP through its national and international trade.
According to data shared by the MSME Minister in the Rajya Sabha, the registered MSME is dominated by micro enterprises at 22.06 lakh (2.2 million) units in 2020 from 18.70 lakh (1.8 million) units in 2019, while small enterprise units went up from 2.41 lakh (0.24 million) units to 2.95 lakh (0.29 million) units. Midsized businesses only increased from 9,403 units to 10,981 units during this period.MSMEs are being encouraged to market their products on the e-commerce site, especially through Government e-Marketplace (GeM), owned and run by the government, wherefrom Ministries and PSUs (public sector undertakings) source their procurement. The platform has recorded transactions worth INR. 55,048 crore (US$ 7.5 billion) until September 2020.
Domestic business requires a strong financial stimulus with concessional working capital loans to ensure adequate liquidity is maintained in business operations from the government and financial institutes
Key Points of Innovation
- Switzerland, Sweden, the USA, the UK and Netherlands are the top five countries.
- With a group of Asian economies advancing up the rankings, the index indicates that “a gradual eastward shift in the locus of innovation” is underway.
- In Asian economies, China, India, the Philippines and Vietnam have made the most progress on the index in recent years, with all four now among the top 50.
- India is one of the leading innovation achievers in the central and southern Asian region, as it has shown a consistent improvement in its innovation ranking for the last 5 years.
- China, which is the only middle-income economy among the top 30, now holds the 14th position.
India Specific Highlights:
- India has become the third most innovative lower-middle-income economy in the world.
- India ranks in the top 15 in indicators such as the Information and Communication Technology (ICT) services exports, government online services, graduates in science and engineering, and Research and Development-intensive global companies.
- India improved the most in three pillars: Institutions (61st), business sophistication (55th), and creative outputs (64th).
- The consistent improvement in the index rankings is owing to the immense knowledge capital, the vibrant startup ecosystem, and the amazing work done by the public and private research organisations.
- The India Innovation Index 2019 which was released by the NITI Aayog, has been widely accepted as the major step in the direction of decentralisation of innovation across all the states of India.
Global Innovation Index
It provides detailed metrics about the innovation performance of 131 countries and economies around the world.Its 80 indicators explore a broad vision of innovation, including political environment, education, and infrastructure and business sophistication.
Role of Entrepreneurs in Economic Development
Entrepreneur plays a vital role in economic development. Entrepreneurs serve as the catalysts in the process of industrialization and economic growth.Technical progress alone cannot lead to economic development, unless technological breakthroughs are put to economic use by entrepreneurs.Some of the roles of entrepreneurs are:-
- Capital Formation;
- Improvement in Per Capita Income;
- Generation of Employment;
- Balanced Regional Development;
- Improvement in Living Standards;
- Economic Independence;
- Backward and Forward Linkages;
- Inspire Others towards Entrepreneurship;
- Create Knowledge Spillovers;
- Augment the Number of Enterprises;
- Provide Diversity in Firms;
- Organising of Society’s Productive Resources;
- Production of New Articles;
- Development of New Production Technique and a Few Others.
Economic development essentially means a process of upward change whereby the real per capita income of a country increases over a period of time. Entrepreneur plays a vital role in economic development. Entrepreneurs serve as the catalysts in the process of industrialization and economic growth. Technical progress alone cannot lead to economic development, unless technological breakthroughs are put to economic use by entrepreneurs.
It is the entrepreneur who organizes and puts to use capital, labour and technology. Accordingly, “development does not occur spontaneously as a natural consequence when economic conditions in some sense are right. A catalyst is needed and this requires entrepreneurial activity to a considerable extent, the diversity of activities that characterizes rich countries can be attributed to the supply of entrepreneurs.
The entrepreneur is the key to the creation of new enterprises that energize the economy and rejuvenate the established enterprises that make up the economic structure.
Entrepreneurs Facilitating Factors
- Technical knowledge;
- Entrepreneurial training;
- Market contacts;
- Family business;
- Availability of capital;
- Successful role models;
- Local manpower;
- Government and institutional support.
Entrepreneurs Pyramid in India
Economic environment exercises the most direct and immediate influence on entrepreneurship. Capital, labour, raw materials and markets are the main economic factors.
- Capital: It is one of the most important prerequisites to establish an enterprise. Availability of capital facilitates the entrepreneur to bring together the land of one, machine of another and raw material of yet another to combine them to produce goods. With an increase in capital investment, capital-output ratio also increases.
This results in increase in profit which ultimately goes to capital formation. This suggests that as capital supply increases, entrepreneurship also.
- Labour:The quality rather than quantity of labour is another factor which influence the emergence of enterprise. Adam Smith considered division of labour as an important element in economic development. According to him, division of labour, which itself depends upon the sizes of the market leads to improvement in the productive capacities of labour due to an increase in the dexterity of labour.
- Raw Materials:The accessibility of raw material for establishing any industrial activity, is indisputable. In the absence of raw materials, no enterprise can be established. Of course in some cases technological innovation can compensate for raw material inadequacy.
- Market:The fact remains that the potential of the market constitutes the major determinant of probable rewards for entrepreneurial function. The size and composition of market both influence entrepreneurship in their own ways. Practically, monopoly in a particular product in the market become more influential for entrepreneurship than a competitive market.
Social environment in a country exercises a significant impact on the emergence of entrepreneurship.The various sub factors are:
- Legitimacy of Entrepreneurship:The social factors give emphasis to the relevance of a system of norms and value, within a sociocultural setting for the emergence of entrepreneurship. This system is referred to as “legitimacy of entrepreneurship” in which the degree of approval or disapproval granted entrepreneurial behavior influences its emergence and characteristics if it does not emerge. Some scientists call it appropriate social climate for entrepreneurship and some call it cultural sanctions.
- Social Mobility:It involves the degree of mobility, both social and geographical and the nature of mobility channels within a system. Some are of the view that a high degree of mobility is conducive to entrepreneurship (e.g., openness of a system and need for flexibility in role relations imply the need for the possibility of mobility within a system for entrepreneurship development).
In contrast, there is another group of scholars who express the view that a lack of mobility possibilities promotes entrepreneurship. The third opinion is a combination of first two, i.e., the need for both flexibility, the denial of social mobility. Thus a system should not be too rigid nor too flexible. (If too flexible individual will move towards other roles, if too rigid, entrepreneurship will be restricted along with other activities).
- Marginality:A group of scholars hold a strong view that social marginality also promotes entrepreneurship. They believe that individuals or groups on the perimeter of a given social system or between two social systems provide the personnel to assume the entrepreneurial role.
They may be drawn from religious, cultural, ethnic or migrant minority groups and their marginal, social position is generally believed to have psychological effects which make entrepreneurship particularly attractive for them.
- Need Achievement:
- Withdrawal of Status Respect:
Start – up in India
Start – ups play a key role in supporting the growth and development of a country’s economy as well as in improving the quality of life for citizens.“…Economic development preserves and raises the community’s standard of living through a process of human and physical infrastructure development…” Foster cooperative international tie – up and technological support through Start – up programmes of bilateral and multilateral interest.Make cities and human settlements inclusive, safe, resilient and sustainable.
Start – up Ecosystem
India has the 3rd largest startup ecosystem in the world; expected to witness YoY growth of a consistent annual growth of 12-15%. India has about 50,000 startups in India in 2018; around 8,900 – 9,300 of these are technology led startups 1300 new tech startups were born in 2019 alone implying there are 2-3 tech startups born every day.
- The pace of growth in the startup ecosystem has increased to 15% year-on-year in 2018, while the growth of the number of incubators and accelerators has grown to 11%
- Significantly, the number of women entrepreneurs stood at 14%, up from 10% and 11% in the previous two years.
- Startups in the country have been able to create an estimated 40,000 new jobs over the year, taking the total jobs in the start-up ecosystem to 1.6-1.7 lakh
- Bangalore has been listed within the world’s 20 leading startup cities in the 2019 Startup Genome Project ranking. It is also ranked as one of the world’s five fastest growing startup cities.
The Indian startups have gone on to raise sizeable ticket sizes from various global and domestic funds. The top 15 deals constituted about 40% of total deal value, demonstrating that most funds are valuing deal quality more than quantity.
Private equity deal volume in India rose for the second straight year, and while the average deal size declined slightly from the prior year, the total value of US$26.3 billion in 2018 was the second-highest of the last decade.The number of deals greater than US$50 million increased from the previous year.
Drivers of Start – up Ecosystem
Enterprises are realizing the disruptive potential of start-ups and are thus, partnering/investing in them. Examples of corporate support:
- Facebook in partnership with Startup India disbursed cash grants of US$50,000 each to the top 5 selected startups
- 10000 Women program by Goldman Sachs is providing women entrepreneurs all around the world with a business and management education, mentoring and networking and access to capital.
- Microsoft Ventures Accelerator Program in India has recently picked up 16 startup
Government of India is understanding the value of working with disruptive innovators across the value chain and using their innovations to improve public service delivery.
- Department of Animal Husbandary and Dairying has conducted a grand challenge in association with Startup India to award top startups in 5 categories INR. 10 lakhs.
- Small Industries Development Bank of India has launched a scheme to provide assistance to existing Small and Medium Businesses in need of capital for growth
- Over 26 states in the country have Startup policies.
Self – Sustained Economic growth through Secured Governance
“Secured Governance offers a strategy for the government to get all the basic infrastructure development with a negligible investment by the Government. It is a concept of developing Techno Economic Corridors connecting HUBs which will act as growth centre for individual sectors. The very concept of “Secured’’ here implies a secured convergence or knitting with various sectors defining a growth for an economy.”
Secured Governance – A Holistic Approach to Infrastructure Development
Secured Governance is a concept that is catching the attention of many as a holistic approach to infrastructure needs, promising a great deal. It professes taking advantage of valuation of assets created, and delivering at negligible cost to the government. It aims at balanced growth in all sectors in need of better facilities, in a more holistic manner, rather than focusing only on say expressways, or power or any one of numerous other sectors. While addressing any one of them, the others also get due attention ensuring all round development. It promises more societal participation and benefit sharing with transparency. Underlying this is a strategy of developing techno-economic corridors connecting urban areas across the country.
Secured Governance advocates a pragmatic approach of taking Advantage of Valuation of Assets Created
This is not new. We all know when development takes place there is valuation in property. Who benefits from this? More often than not it is incidental and taken advantage off by land and property sharks. Imagine a model where this valuation can be ploughed back into the project and also benefit the people around. First the cost of the project is reduced, and can actually be at negligible cost to the government if carefully planned. Next the population sees it as benefitting them and so they participate more enthusiastically, helping with early completion of the project rather than being an impediment.
Secured governance compliments the present PPP developmental model by ensuring balanced participation of the private and public sector taking advantage of value and valuation of infrastructure thereby yielding higher returns. This valuation of infrastructure, which grows many folds need to be shared by the society and by the private investors to support other infrastructure development, ensuring balanced growth.This will have a spiraling effect on Global Economy with a defined regions being developed as “HUBs” and multiple HUBs connecting each other creating a Techno- Economic Corridor. The Mini HUBs and Nano HUBs will be spread over Semi Urban and remote rural regions promoting Industrial development and adoption of modern amenities and technologies to generate additional employment in those areas with minimal rural urban migration and pay rich dividend to elite and rich investors.
The imperative of rapid scaling up of the entrepreneurs – in the private sector (developers, contractors, consultants, financial intermediaries and investors) – entails developing and implementing business centre of the required scale and within the tight time frames envisaged.
Lastly, to implement an ambitious roadmap for this enterprises, improved standards of secured governance and concerted action would be required to take these targets and goals from inspirational statements to actual development. We need a system to integrate economic interdependence in today’s modern societies which not only decreases uncertainty regarding where risks begin and end, but also help in judicious planning and development of new empowered, transparent and interdependent Governance systems with higher degree of society participation in nation building Process. Secured Governance is an ideal strategy which equips to create adequate and coordinated measures to ensure the provision of financial, human, technical, information and other capacity building resources.
Dr P. Sekhar,
Global Smart City Panel,