How can India boost entrepreneurship?

Creating jobs is one of the biggest challenges facing every country- both developed and developing.

India’s job challenge is particularly massive because of her numbers. Nearly 700 million Indians live without dignity; creating enough jobs to pull them out of poverty is challenge enough. On top of this, India’s demographic dividend also requires her to create opportunities for about 13 million young people every year. To put this in perspective, even at the peak of her economic growth between 2005-2010, India created 5.5 million jobs a year. The circumstances today are far tougher. The global economy is a mess and India is only gradually emerging from economic ruin. Prime Minister Modi is betting on three engines of job creation- manufacturing, IT and infrastructure. These are vital engines but each has major risks. Making for India is an imperative but it isn’t clear that India can replicate China’s export driven model. Furthermore, modern manufacturing is increasingly automated and may create fewer jobs than we might hope for. India’s crucial IT Services sector is also facing significant headwinds. Technologies like the ‘cloud”, automation and machine learning will destroy many jobs even as new areas such as mobile applications and digitization will create new jobs. But India’s IT sector may not be the job engine that it has been. Finally even in the formal sector, companies are increasingly turning to temporary and part-time workers making job creation even more challenging. (See “Workers on Tap”, Economist, Jan 3, 2015)

So what’s missing? One is an understanding of how big a role entrepreneurship and self-employment has to play going forward. India must become a nation of job creators not just job seekers. Becoming an entrepreneur rather than finding a job, must be the aspiration of young people. Not all ventures need be the size of Flipkart or Olacabs; many could be microenterprises employing just a small handful of people. But the collective impact of hundreds of thousands of such entrepreneurs will be huge. Fortunately there is a rising tide of entrepreneurship in urban India; the best and brightest young minds prefer to join a startup rather than Google or Microsoft. Interest in social enterprises that sustainably address urgent societal needs is especially strong. India’s entrepreneurial ecosystem is rapidly coalescing in cities like Bangalore, Mumbai and Delhi. However the tide must reach smaller towns and villages where the people, the challenges and opportunities are. Several Organizations such as Deshpande Foundation, Head Held High, LabourNet and Social Venture Partners are beginning to focus on creating such micro entrepreneurs but these efforts have to be scaled by up several orders of magnitude. England was once called a nation of shopkeepers; India must become a nation of entrepreneurs.

A second major opportunity lies in enabling India’s traditional artisans. Nearly 250 million of them are organized into 600,000 cooperatives. Sadly these incredibly skilled artisans are often amongst the poorest of the poor because they are trapped in inefficient markets and exploitative supply chains without access to capital, design inputs or markets. As a result they are losing out to cheap mass produced goods and their children abandon millennia-old traditions and migrate to over-burdended cities. However India has prematurely given up on her artisans just as the demand for sustainably produced goods, unique designs and contemporary but handcrafted items that come with an emotional story is growing rapidly globally. What this suggests then is an urgent need to revive the cooperative movement. India has extraordinarily successful models for instance Amul in dairy and Suguna in poultry; they need to be emulated. Fortunately social entrepreneurs such as CaravanCraft, GoCoop, CraftsVilla and impact investors like Unitus are demonstrating that they can dramatically boost livelihoods by providing design inputs, managerial know-how and using technology for market access and supply chain efficiencies. They are also defying the assumption that India must inevitably follow the path of getting people off farms to jobs in factories in cities. There IS a way to take opportunities to rural India. It’s not either-or; it’s both.

The challenge in scaling-up entrepreneurship or reviving cooperatives and producer organizations is not the lack of ideas or good models. It is that they require “ecosystems” in which multiple stakeholders have to come out of their silos and collaborate. Government and governmental agencies have a profound role to play in creating an enabling environment- for instance by ensuring ubiquitous low-cost internet connectivity, favourable policies, ease of doing business, affordable education and skilling services, low-cost debt for priority sectors. Wealthy individuals, investors and foundations must be willing to take risks and invest in the right entrepreneurs and NGOs. NGOs and social enterprises must be willing to partner with business and government and seek sustainability and scale. And so on. Such convergence and collaboration is unnatural and success therefore depends on a few extraordinary and committed leaders from each sector and perhaps a set of mission mode projects.

India’s future depends on this.

This article is published in collaboration with LinkedIn. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Ravi Venkatesan is Chairman, Social Venture Partners India.

Image: A worker stands in front of a ship at the port in Mumbai. REUTERS/Arko DattaFiles