July 19, 2014  
 
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Entrepreneurship in India

Written by Scott Scheper for Gaebler Ventures

Entrepreneurship in India is on the rise. Here's our take on Indian entrepreneurs and how the landscape is changing for India and entrepreneurship.

Indian entrepreneurship has been around for ages.
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Indian society has traditionally been divided into four castes of people: learned priests, warriors, traders, and people doing menial jobs.

The existence of a caste of traders is itself proof of many centuries worth of Indian entrepreneurship.

Although the Indian caste system dominated societal standards for ages, the trend has changed.

People are bridging the difference between castes to work in fields perhaps untraditional for their ancestors. The Internet and advances in telecommunications have made it possible for Indian citizens to sell their services internationally. With the rapid growth of India as an IT power and business process outsourcing giant, world views of India have also transformed to recognize the country's entrepreneurial talent and potential.

Classifying Entrepreneurship

Today, Indian society can best be classified into three categories. The first category of people is that of well-established business families, such as the Mittals, Tatas, Ambanis, Birlas and the like. These families have a very strong base, with most individuals following the family business tradition passed on from generation to generation. Most of these companies have a strong management team, and are now going global. World trust in the Indian corporate sector is increasing like never before.

The second category is dominated by young graduates who are an integral part of Indian business growth. In fact, India has graduated a huge number of individuals with management degrees over the past decade. With information technology and multinational corporations on the rise in India, young entrepreneurs serve as the backbone of many flourishing enterprises.

The third category of society would be product-based business entrepreneurs. You will find them in every big city, town, or village in India. Educational qualifications do not mean much to them; rather, they rely on sheer entrepreneurship ability that include training, experience, customer service skills, networking, hard work, and innovation.

Potential Pitfall

There is an overall shortage of start-up entrepreneurs in India compared to the rest of the world. One of the most significant deficiencies an Indian entrepreneur may face revolves around capital. Although there is ample willingness to invest capital in a well-established enterprise, there is little willingness to fund start-ups. The quality and quantity of venture capital or angel investors in India is low.

Role of the Government

The role of Indian government has changed over the years. Since India's independence in 1947, until the early 1990s, India had a planned economy that made the Indian market closed and directly controlled by the government. The situation is now different. Structural adjustments were made to simplify and create a rational tax system that removed of a number of controls and regulations.

India has witnessed a period of sustained growth the last three decades, with each decade being better than the latter.

The average GDP growth was nearly 3.2 percent in the 1970s, which increased to 5.4 and 5.6 percent, respectively, in the following two decades. The present average growth rate is close to eight percent. According to the Global Entrepreneurship Monitor Report 2007, 8.5 percent of India's working population is in the early stages of entrepreneurial activity, while its overall entrepreneurial activity is at 13.9 percent.

Owing to the vast talent in IT, management, and R&D, India has managed to make its place for outsourced services from all around the world; and investors get high quality work for lower costs.

Scott Scheper is a venture finance enthusiast and serial entrepreneur hailing from Orange County, CA. Scott recently graduated from Chapman University where he was a Cheverton Fellow and graduated with honors in Finance, Management and Marketing.

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