Why it is difficult to be an entrepreneur in India?

by Ashvini on March 9, 2011 · 10 comments

in Entrepreneurship

Entrepreneurship is a difficult thing to do in India. Period. It is not easy to go out and start a venture, scale quickly and become a force to reckon with, when you are in India.

Difficulty of being an entreprneuer

India has a large population and a good number of talented workforce as well, exposed to the international practices when working for the multinational corporations. A number of people are engaged in high end developments of various products that run some of the top world aircraft machines, power satellites and software systems around the globe. India is almost now a second fastest growing economy of the world almost inching closer to China. Many Indians are highly educated , they have studied in various top universities of the world.

This growing market should generate more entrepreneurship than ever.

Unfortunately, there are a very few examples of entrepreneurial ventures or great products that have emerged from India. In fact most of the ventures that are existing or successful in some measure areĀ  a copy of international products and concepts. So we have companies that have copied western concepts of products/ services and rolled out the modified versions in India.

This is not to say that genuine entrepreneurs do not exist but that they are not as prominent as they should be. This lack of successful entrepreneurship is surprising given an open business climate that is growing in India. The government controls are less these days and the Indian economy is opening up to vast possibilities.

Following are some of the advantages of starting a venture in India .

  1. It is one of the fastest growing markets in the world
  2. It has an almost endless supply of young dynamic workforce
  3. It has a gradual but steady opening economy to the world

In spite of these feel good factors, entrepreneurs in India, find it extremely hard, for their ideas to take off . It is difficult to find a product that showcases Indian engineering, either in hardware or software. It is not that Indians are not capable of producing them but there are a multiple reasons why India is not successful . Let me list out some of them:

  1. Job oriented mentality and the high risk in ‘risk taking’
  2. For many years, the only way for an Indian to earn for living, was to have a safe job in a government or a corporate organization. Going alone was actively discouraged because the alternatives, when someone experienced a failure and wanted to go back to a job, were limited. The only options were government jobs and many people competed for them. It took a huge sweep of liberalization to ensure that jobs became in plenty. Still risk taking is not a very preferred option for many.

  3. Business used to be a dirty word
  4. India was a socialist economy for a very long time. Businesses are normally considered evil in a socialist economy. To beat the system and the severe restrictions imposed by the governments, a businessman had to do a lot of unscrupulous things. He had to pay bribes many times to get the work done. This made the whole “business” of being a business dirty. A ethical minded person from middle class and lower class( from where most of the entrepreneurs emerge) was naturally afraid to get into this murky world of business. Things have changed however and business does not remain as difficult as before. However the aversion to business still remain in the older generations.

  5. A lack of “in-family” and societal entrepreneurial environment
  6. Entrepreneurs need security and assurance. An entrepreneur takes considerable risk by leaving his job or deciding not to get one. Unfortunately, this act makes him a target of ridicule and surprise reactions. There are many times when an entrepreneur needs societal support. However the opposite reaction from those around him or her, makes him or her more vulnerable. The lack of support from family, relatives or friends who have never experienced any kind of entrepreneurship is devastating.

  7. Service oriented mentality
  8. Indian Industry has typically been weak in product development. Large Indian companies are mostly in the business of serving larger international companies. Rarely an emphasis is given to the development of a world class product. Most of the revenues generated by companies in India is either in service, maintenance or selling goods, manufactured outside India. The lack of emphasis on the product development has created a mentality where Indian companies treat the employees good only for providing services and not creating new products.

  9. Absence of suitable seed funding , venture capital environment
  10. It is simply not possible to start a service like twitter or facebook in India. Even if someone does , it is quite possible that he may not get the required venture capital or seed fund. In my experience, a VC or seed fund would not even discuss reasons for rejection of your venture even on an email.
    When an entrepreneur starts small, he has a capacity to grow at tremendous rate( much faster than any existing listed public limited company or its stock). That is the reason someone should take so much risk even risk of losing all of their money. Unfortunately, VCs and seed funds in India have not matured to accept risks at that level(evident by lack of any world class product). Also the level of interaction between funds and entrepreneurs has not reached that level of professionalism that is expected in such a deal.
    Investors here normally focus on similar deals that have worked well in other parts of the world, completely ignoring the fact that India is different kind of market.
    There are some ventures like twitter and facebook ,which do not make money for years but work on consolidating their market. Neither Indian market is so mature nor any investor is willing to risk money for so long.

  11. Lack of enforceability of agreements
  12. Unfortunately despite having such a strong judicial system, enforceability of agreement is a difficult task to achieve. It is not possible to enforce legal agreement as judicial systems take a long time to deliver a verdict. An entrepreneur, often strapped of cash and time has just to grin and bear it when it comes to cheating by suppliers or customers.

  13. Herd mentality
  14. Well, this is not exactly an Indian problem. Herd mentality is often the reason entrepreneurs will fail. In one of the conferences recently held in Bangalore, most of the talks were about “gaming application in mobile”. The reason that people were interested in it because it was the “in” thing in USA.
    India with its enormous population has so many other issues to resolve, let alone people get interested in gaming. But the herd mentality makes it impossible to bring out fresh perspective. Worldwide companies and people do copy each other’s products but many times they come up with fresh original idea. Unfortunately, here the entrepreneurs blindly ape what is “hot” in the western world without thinking on their own. For an entrepreneur to succeed in India, he will have to think in Indian way, which is not easy though original.

  15. Over price sensitiveness of market
  16. Some years back you could only see two wheelers on the road. Later on cars arrived and they were really cheap cars. Till now India is a hot market for low cost small cars. Not that it is wrong but it shows the price sensitivity of the market. Luxury market is still not very developed. You would hardly find stores selling high end brands because a) they are still very costly for an Indian b) Indians still prefer cheaper brands because of egalitarian nature of luxury brand chains.
    In such a price sensitive market, it is not possible for an entrepreneur to start his services and charge extra for convenience. People would not simply buy those services. Sometimes, it is not about just the money to be paid but also about how much you can extract from seller.

  17. Lack of mentor ships, training programs
  18. Indian education system is mired in job or vocation oriented courses. Even in the best of engineering colleges, hardly there is a course on developing entrepreneurship. The idea is simple: study and get job. Indian education system delivers a large number of non-dynamic, non-enterprising, job oriented individuals who are least likely to take the risk. Apart from a few, most the management colleges too have failed to deliver on entrepreneurship. The most important news in newspaper is how much money has been offered to a student of a college in the placement, while the entrepreneur almost gets a sorry bottom page note if he is not well known.

    No matter how much things have changed, entrepreneurship is still a difficult concept in India. However, there have been plenty of entrepreneurs who have succeeded despite all the difficulties that are listed above. Notable examples of Narayan Murthy of Infosys, Capt. Gopinath, Chetan Maini have proved that entrepreneurs can find a way where there is a will. Its just difficult but never impossible.

About The Author

{ 9 comments }

Karthik October 3, 2012 at 12:55 am

Very useful post bro! u are doing a great societal work that many of us cant and wont do! Write more and let us all join together and make sure that he economy rises by huge margin in the upcoming days! Please write abt FDI in retail, Commodities future market if u find them wud b useful! Thankyou! Karthik!

Alka March 10, 2011 at 5:21 pm

Exhaustive post with great tips for start ups…. Service oriented mentality and following fathers footsteps are the reasons many shy away from it in our family. “We are not the business types,” they say.

Ashvini Kumar Saxena March 10, 2011 at 5:33 pm

Hi Alka,
“Business types” . Made me laugh out loud. Where did I hear that before ? Risk taking is easy if your family supports you. My parents too have supported me after a long time but now they are rock solid.

Glad you liked the post.
Ashvini

Aswani March 10, 2011 at 12:47 pm

Wow…brilliant as ever! You know Ashvini, I had told you this earlier also. I have never ever thought of being an entrepreneur. Two of the most important reasons for the same are – job oriented mindset and lack of family support. Often and again, the same question has been raised to me – Why don’t I go for entrepreneurship after all I have a MBA degree? Of course, it is a food for thought for me but again I’ve never ever been serious with the same. You maybe amused at reading this – I don’t want to make people work under me. I have never thought of ruling anyone for any reason whatsoever. Sounds foolish…Isn’t it ? But this is what is actually me. For me, it is all about doing and enjoying what I like! I firmly believe that I don’t need to be an entrepreneur to make it all happen. I can still do it by being what I am and where I am at present. Certainly, I am having all those skills required for being an entrepreneur but anyways, there hasn’t been that strong urge for the same from my side. Strange but true ! Honestly, I am very much aware of my limitations but I am not limiting myself. I am still in the learning process and I am really enjoying it. Time will tell, if I am really suited for the so called entrepreneurship. Still, a long way to go…

Ashvini Kumar Saxena March 10, 2011 at 5:14 pm

Hi Aswani,

First of all thanks for coming to my blog and commenting. Your comments inspire me to write better and better.

As for being entrepreneur, you are already one with your blogging. So even if you don’t call yourself an entrepreneur, its just semantics.
Being an entrepreneur does not mean ruling over someone. Infact if you can lead a team the right way, people would love to work under you. Think about that as well.

Great comment, I appreciate.
Ashvini

Dev @ Social Blogging Community March 10, 2011 at 12:32 am

Hey Ashvini,

Great Post man. You’ve made some great points.

I think India is a country where people want to live a very simple life, completing the education and getting job, that’s it. Actually, Indians has the mentally, that education is only thing to be successful in life.

I really like the #3, my family & friends never supported me until i started making some good money.

Anyways, Thanks for sharing this great post. Keep up the good work.

~Dev

Ashvini Kumar Saxena March 10, 2011 at 5:20 pm

Hello Dev,

Welcome to my blog and thanks for commenting. There are a lot of things that need to change if entrepreneurship needs to develop in India. I think the family and friends problem is always there for most of us . We got to make ourselves tougher to ride all these things.

Thanks and have a great day.
Ashvini

software buzzer March 9, 2011 at 11:51 pm

wow bro, its a awesome article, hope you heard of NEN, they help in funding in all

Ashvini Kumar Saxena March 10, 2011 at 12:26 am

Hey Suresh,
I have heard of NEN and soon plan to join them as well . Infact I put an article about my last venture on their site. Funding however is a different ball game in my experience.

Thanks and regards,
Ashvini

Comments on this entry are closed.

{ 1 trackback }

Previous post:

Next post: