Government Schemes for Entrepreneurial Development - Study Notes

Lesson summary

Job creation is a foremost challenge facing India, yet its demographic advantage gives it immense potential to innovate, raise entrepreneurs and create jobs. The Government of India has started programmes across sectors such as agriculture, finance, commerce and industry, information technology and food processing. Financial assistance, insurance, subsidy, training, help for early stage tech start-ups, business loans and special incentives are provided to set up new enterprises.

25.01 India's efforts at promoting entrepreneurship and innovations

• Startup India: launched in January 2016; mentors, nurtures and facilitates startups throughout their life cycle; a Fund of Funds helps startups gain access to funding.
• Make in India: launched in September 2014 to transform India into a global design and manufacturing hub; invites partners and investors worldwide; has helped procure investments, foster innovation, develop skills, protect intellectual property and build manufacturing infrastructure.
• Atal Innovation Mission (AIM): the Government's endeavour to promote a culture of innovation and entrepreneurship; a platform for innovation hubs, grand challenges and start-ups, particularly in technology driven areas.
• STEP (Support to Training and Employment Programme for Women): launched by the Ministry of Women and Child Development, especially for rural women; the guidelines of this 30-year-old initiative were redrafted with the Ministry of Skill Development and Entrepreneurship and NITI Aayog; skills in agriculture, horticulture, food processing, handlooms, traditional crafts, travel and tourism, hospitality, computer and IT services.
• JAM (Jan Dhan-Aadhaar-Mobile): a technological intervention for direct transfer of subsidies to intended beneficiaries, eliminating intermediaries and leakages.
• Digital India: modernizes the economy by making all government services available electronically; aims at a digitally empowered society and knowledge economy.
• Stand-Up India: leverages institutional credit for the underprivileged, with women, Scheduled Caste and Scheduled Tribe entrepreneurs in view; loans between Rs.10 lakh and Rs.1 crore for greenfield enterprises in manufacturing, services or trading.
• TREAD (Trade related Entrepreneurship Assistance and Development): credit for underprivileged women through registered NGOs, plus counselling and training for non-farm activities.
• PMKVY (Pradhan Mantri Kaushal Vikas Yojana): flagship initiative of the Ministry of Skill Development and Entrepreneurship (MSDE); trains youth in industry-relevant skills.
• National Skill Development Mission: unveiled in July 2015; vision of a 'Skilled India'; skills at scale without compromising quality or speed.
• SEED (Science for Equity Empowerment and Development): opportunities for motivated scientists and field level workers to undertake location-specific projects, especially in rural areas; benefits of technology for the disadvantaged.

25.02 Other specific entrepreneurship schemes

Reasons why women become entrepreneurs

• Innovative thinking, need for additional income, self identity and social status, self fulfilment.
• Support of family members, education and qualification, success stories of friends and relatives.
• Freedom to take own decisions, new challenges, employment generation, government policies.

25.03 Steps in promoting an entrepreneurial venture

1. Selection of the product: according to aspiration, capacity and motivation, after scrutiny of the micro and macro environment; a new product, an imitation, or an improved product; economic viability must be checked.
2. Selection of form of ownership: family ownership and partnership suit unified control; the company form helps pool more finance, skills and experience for medium to large ventures.
3. Selection of site: plots from SIDCO, SIPCOT, MMDA, TNHB or the Directorate of Industries; sheds built by the State Industrial Development Agency; land of private developers; or private land developed for industrial use. Consider nearness to native place and market, government incentives, labour and raw materials, and infrastructure.
4. Designing capital structure: own savings, loans from friends and relatives, term loans from banks and financial institutions.
5. Acquisition of manufacturing know-how: government research laboratories, R&D divisions of industries, individual consultants, main units, machinery suppliers and foreign technical collaboration.
6. Preparation of project report: in the format of term lending institutions; prepared by consultancy organisations, auditors, consultants or development agencies.

After the project report

• Provisional Registration Certificate: issued after certain conditions are met; no further extension if production does not start after the extension period.
• Permanent Registration Certificate: once production has commenced or is ready to commence.
• Statutory licence: Municipal licence; registration with the tax department; Inspector of Factories under the Factories Act, or the Shops and Establishment Act.
• Power connection: apply to the Assistant Divisional Engineer of the State Electricity Board after paying the security deposit.
• Arrangement of finance: long-term finance for fixed assets, short-term finance for working capital; promoters' contribution (seed capital) prescribed by financing agencies.

25.04 Government of Tamil Nadu and single window clearance

• The entrepreneur files a common application form with the District Industries Centre (DIC).
• The DIC forwards it to agencies such as Public Health, Inspector of Factories, Town and Country Planning, the Pollution Control Board, Fire Service and the local body.
• Clearances return to the DIC and are forwarded to the entrepreneur; uncleared applications go to the Single Window Committee. All clearances come under one roof.

Angel investors

• Also known as business angels or investment angels.
• Provide financial backing for small startups or entrepreneurs, often from among family and friends.
• Give a one-time injection of seed money or ongoing support, usually investing in the person rather than in the viability of the business.