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A RESEARCH STUDY ON THE MANAGEMENT OF
RISK IN THE GROWTH OF MICRO AND SMALL

ENTERPRISE IN INDIA
(With special reference to Mumbai and Pune)
Thesis Submitted to the D. Y. Patil University,

School of Management
In partial fulfilment of the requirements for the award of the Degree of
DOCTOR OF PHILOSOPHY
in
BUSINESS MANAGEMENT
Submitted by
Mrs. Maria Sonia Justin Raj
Enrollment No: DYP-PHD146100002
Research Guide
Prof. Dr. R. GOPAL
DIRECTOR,
FORMER DEAN & HEAD OF DEPARTMENT
D.Y. PATIL UNIVERSITY,

SCHOOL OF MANAGEMENT,
Sector 4, Plot No. 10,
CBD Belapur,
Navi Mumbai – 400 614
April 2017
i
A RESEARCH STUDY ON THE
MANAGEMENT OF RISK IN THE GROWTH
OF MICRO AND SMALL ENTERPRISE IN
INDIA
(With special reference to Mumbai and Pune)
ii
DECLARATION
I hereby declare that the thesis entitled “A RESEARCH STUDY ON
THE MANAGEMENT OF RISK IN THE GROWTH OF MICRO AND
SMALL ENTERPRISE IN INDIA, (with special reference to Mumbai
and Pune).” submitted for the Award of Doctor of Philosophy in Business
Management at the D.Y. Patil University, Navi Mumbai - School of
Management is my original work and the thesis has not formed the basis
for the award of any degree, associate ship, fellowship or any other
similar titles.
The material borrowed from other sources and incorporated in the
dissertation has been duly acknowledged.
I understand that I could be held responsible and accountable for
Plagiarism if any detected later on.
The research paper published based on the research conducted in the
course of the study are also based on the study and not borrowed from
other sources.
Place: Signature of the Candidate
Date:Navi Mumbai Mrs. MARIA SONIA JUSTIN RAJ
Enrollment No: DYP-PHD146100002
iii
CERTIFICATE
This is to certify that the thesis entitled “A Research Study on the
Management of Risk in the growth of Micro and Small Enterprise in
India, (with special reference to Mumbai and Pune).” submitted by
Mrs. Maria Sonia Justin Raj is a bonafide research work for the award of
the Doctor of Philosophy in Business Management at the D.Y.Patil
University School of Management in partial fulfilment of the
requirements for the award of the Degree of Doctor of Philosophy in
Business Management and that the thesis has not formed the basis for the
award previously of any degree, diploma, associate ship, fellowship or any
other similar title of any University or Institution.
Also certified that the thesis represents an independent work on the part
of the candidate.
Place:
Date:
Signature of the Signature of the Guide

Head of the department
iv
ACKNOWLEDGEMENT
I am greatly indebted to the D.Y. Patil University School of Management

which has accepted me for the Doctoral Program and provided me with an
excellent opportunity to carry out this research work.
I am grateful to my Teacher, Guide and Mentor, Professor Dr. R. Gopal for
having guided me continuously at all times. This report would have been
incomplete without the unparalleled support of such a dedicated teacher and
guide.
I am grateful for all the entrepreneurs who, during the time of research gave
their precious time in responding to all the questions and sharing with me their
times of hardships and pleasant experiences of their journey in businesses.
I am grateful to my Husband Mr. Nikhil S Shah, my Parents and In-laws for
being highly encouraging and continually supporting me throughout the time
while I have been pursuing this study.
My heart fills with gratitude towards my Lord and Saviour Jesus Christ, the
author of my life, my only source of strength at all times who has enabled me
to be what I am today and will be through this journey of life.
Place:
Date: Signature of the student
v
INDEX
PAGE
CHAPTER No. PARTICULARS
NO.
Preliminary Cover Page i.
Title ii.
Declaration iii.
Certificate iv.
Acknowledgement v.
Index of the report vi.
List of Tables vii.
List of Figures viii.
List of Abbreviations ix.
Executive Summary x.
Chapter 1 Introduction 1
Chapter 2 Literature Review 14
Objective, Hypothesis, Research

Chapter 3 Methodology and Limitations of the 33
study
History of Industrial Revolution in

Chapter 4 41
India
MSME’s After Globalization-

Chapter 5 56
Understanding The Current Scenario
Role Of Government Organizations For

Chapter 6 Entrepreneurship Development In 65
Maharashtra
vi
Role Of Non-Government
Chapter 7 78
Organisations
Chapter 8 TAX structure in India 84
India v/s Tax Free Heaven Countries for

Chapter 9 98
Business
Chapter 10 MAKE IN INDIA 115
Schemes Of The Government For The

Chapter 11 131
Development Of MSMEs.
Chapter 12 Risk Factors faced Entrepreneurs 175
Chapter 13 Strategies Adopted By Individuals 185
Chapter 14 Data Analysis 196
Chapter 15 Findings, Conclusion and Suggestions 222
Chapter 16 Recommendations 234
Chapter 17 Future Scope of the Study 237
ANNEXURE
Annexe I Bibliography 239
Annexe II Webliography 243
Annexe III Questionnaire 246
Annexe IV Statistical tables of SPSS 254
vii
LIST OF TABLES
Table No. Particulars Page No.
Table 12.1 Reimbursements-Credit Rating Scheme 152
Assistance against the security -Scheme of Bill

Table 12.2 158
Discounting
Categories of beneficiaries under PMEGP

Table 12.3 165
Scheme
Sample size structure as per Education of the

Table 15.01 197
entrepreneur
Sample size structure as per Age of the

Table 15.02 197
entrepreneur
Sample size structure as per Industry of the

Table 15.03 197
entrepreneur
Table 15.04 Reliability test 198
Table 15.05 Percentage of Respondents : Age 199
Percentage of Respondents : Education

Table 15.06 199
Qualification
Table 15.07 Percentage of Respondents : Type of Industry 200
Relation between Age and the Kind of Risk

Table 15.08 201
Faced
Table 15.09 Pearson Chi-Square Tests 203
Relation between Education Qualifications of

Table 15.10 203
the Entrepreneur by Factors of Risks
viii
Relation Between The Type Of Industry And

Table 15.12 206
Factors Of Risks
Awareness of the Government Policies by the

Table 15.14 208
Age of the Entrepreneurs
Awareness of The Government Policies With

Table 15.16 209
Respect To The Education Qualification
Awareness of the Government Policies with

Table 15.18 211
Respect To The Type of Industry
Level of Assistance received by Age of the

Table 15.20 212
Entrepreneur
Level of Assistance received by the

Table 15.22 214
qualification of the Entrepreneur
Level of Assistance received by the type of

Table 15.24 215
Industry of the Entrepreneur
Table 15.26 Expectation of Entrepreneurs by age 217
ix
Expectation of Entrepreneurs by Education

Table 15.28 218
Qualification
Expectation of Entrepreneurs by the type of

Table 15.30 220
Industry
x
LIST OF FIGURES
Table No. Particulars Page No.
Figure 1.1 Population map of India 2016 2
Figure 1.2 Product range of MSME‟s 4
Cost breakup of Manufacturing and

Figure 1.3 5
Service MSME
Figure 6.1 Registration of an MSME 67
Pre-commissioning stage-approval of
Figure 6.2 68
setting up a plant
Figure 6.3 Post production Approval 69
xi
LIST OF ABBREVIATONS
AMC Assistance for Marketing Centre
ATI Assistance to Training Institutions
AVP Adivasi Vikas Prakalp
CDP Cluster Development Programme
CENVAT Central Value Added Tax
CGT Capital Gains Tax
CIZ Central Intelligence Zone/Agency
CRM Customer Relationship Management
DYPUSM D. Y. Patil University School of Management
Division Schemes Development Commissioner

DC-MSME
Ministry of Micro, Small & Medium Enterprises
DDD Dairy Development Department
DPI Development of Production Infrastructure
EDPs Entrepreneurship Development Programmes
FBT Fringe Benefit Tax
GDP Gross Domestic Product
GOI Government of India
GST Goods and service tax
Overseas Human Resource and Industry

HIDA
Development Association
xii
HNWI High Net Worth Individuals
IBC International Business Companies
ICT Information & Communication Technology
IDBI Industrial Development Bank of India.
IFCI Industrial Financial Corporation of India
IGMTP Indo-German Manager Training Programme
IPR Intellectual Property Rights
IRAS Inland Revenue Authority of Singapore
IRDP Integrated Rural Development Programme.
JBY Janshree BimaYojana
KSY Krishi Saptak Yojana
KVIC Khadi and Village Industries Commission
LMC Lean Manufacturing Competitiveness
Maharashtra Agro Industries Development

MAIDC
Corporation Ltd
MAVIM Mahila AartikVikasMahamandal
Maharashtra Centre for Entrepreneurship

MCED
Development
MDA Market Development Assistance
MFDC Maharashtra Fisheries Development Corporation
MFI Microfinance Institution
xiii
MIDC Maharashtra Industrial Development Corporation
MII Make in India
MRCP Maharashtra Rural Credit Project
MSDE Ministry of Skill Development & Entrepreneurship
MSE Micro and small enterprises
MSFC Maharashtra State Finance Corporation
Maharashtra State Khadi & Village Industries

MSKVIB
Board
MSME Micro, Small And Medium Enterprises
MSNY Mahila Swavalambban NidhiYojana:
Maharashtra Small Scale Industries Development

MSSIDC
Corporation.
National Bank for Agricultural and Rural

NABARD
Development
NGO Non-Government Organization
NIMZ National Investment and Manufacturing Zone
National Manufacturing Competitiveness

NMCP
Programme
NSIC National Small Industries Corporation Limited
NSQF The National Skill Qualification Framework
Organisation for Economic Co-operation and

OECD
Development
xiv
PICS Productivity and Innovation Credit Scheme
Prime Minister Employment Generation

PMEGP
Programme
PMRY Prime Minister Rojgar Yojana
PPP Purchasing Power Parity
RBI Reserve Bank of India
Rejuvenation, Modernization and Technology

REMOT
Upgradation
RISC Rural Industry Service Centre
RMSY Ramai Mahila SakshamikaranYojana
RRB Regional Rural Banks
RRC Research and Resource Centre.
RSVY RashtriyaSwayamVikasYojana
SEWA Self Employed Women‟s‟ Association
SEZ Special Economic Zones (SEZs).
SGSY Swarnajayanti Gram Swarojgar Yojana
SHG Self Help Group
State Industrial and Investment Corporation of

SICOM
Maharashtra
SIDBI Small Industries Development Bank of India
Swayamsiddha- Integrated Women Empowerment

S-IWEP
Programme
xv
SME Small and medium-sized enterprises
SMME Small, Medium & Micro Enterprises
STT Securities Transaction Tax
SUTE Start Up tax Exemption Scheme
VAT Value Added Tax
VC Venture Capital
WMS Welfare Measures Scheme
WTC World Trade Centre
WVI World Vision India,
YPS Yerala Projects Society
xvi
EXECUTIVE SUMMARY
The MSME-Micro, Small and Medium Enterprises, a branch of the Government

of India, is the apex body for the formulation and administration of rules,
regulations and laws relating to micro, small and medium enterprises in India.
Shri Kalraj Mishra is the current Minister of Micro, Small and Medium
Enterprises. The MSMEs are the backbone of the Indian manufacturing sector and
have become very important for economic growth in the nation. It is valued that
the MSMEs accounts for almost 90 % of the industrial units and 40% of value
addition in the manufacturing sector. MSME‟s plays a vital role in the growth of
GDP in the economy as it makes employment opportunities at low capital cost.
As per the ministry of MSME, there are around 26.1 million enterprises and these
sector have a share of 45% in the manufacturing output and also hold 8% of inputs
in the Gross Domestic Product (GDP).These sectors contribute around 40% of all
exports and give employment to near 59.7% million people.
This report revolves around the concept of Risks faced by entrepreneurs, the
factors that enable the growth of MSME‟s and the strategies adopted by
entrepreneurs to mitigate risk. Risk is universal and is accepted universally in all
walks of life. It is more so in the business sectors, particularly in Small and
Medium Enterprises (SMEs). The meaning of the word “Risk” may be drawn to
the Latin word Rescum, which means Risk at Sea. Risk in broad terms can be
defined, “as any issue that can impact the objectives of a business unit, be it
financial, service or commercial.” Risk Management is a never ending process that
can help improve the operations, arrange resources, ensure regulatory agreement,
achieve performance target, increase financial stability and ultimately prevent
loss/damage to the unit. Risk Management plays a crucial role in protecting its
assets and resources and guaranteeing that risks are reduced to a greater level. The
principle of risk management is to reduce the risks to a reasonable and manageable
extent. Every business entity needs healthy risk management systems but the
SMEs need much more than that as they may not have the ability to manage and
control risks due to their size and several other limitations.
xvii
In-order to study in detail about the factors of growth in the Micro, Small and
medium enterprises, an in-depth study about the role of Government and non-
government organisations have been conducted along with a detailed secondary
research on the Make In India and its effects on the economy. A thorough study on
the Tax structure in India v/s the tax structure in Tax Haven countries have been
included in order to understand a comparative analysis of the kind of money/funds
outflow experienced by the entrepreneurs in the country. For long, entrepreneurs
have been the pioneers of models, systems, products and processes in their
respective fields. Taking risks to make decisions is a daily part of the toil an
entrepreneur goes through. Entrepreneurship can have a diverse impact on the
economy of a country, mainly through important innovations entering the
marketplace, leading to newer products or manufacturing processes which
eventually increase efficiency through attracting competition into the market. Such
is the value of entrepreneurs to a nation, they are considered national assets that
need to be refined, motivated and rewarded in order to boost the economic
activity, Hence the kinds of risks and the strategies adapted by the entrepreneurs in
order to mitigate the risks faced by them has been included in the study.
Through the Make In India initiative in India, there are several steps taken by the
government to systematically create the perfect stage for the setup. The
government has primarily targeted to boost the infrastructure facilities available in
India by increasing the economic growth at a tremendous rate and improving the
quality of life for the Indian citizens by enabling both an industrial and urban
infrastructure development.
This research study touches upon four major risks faced by an entrepreneur,
namely, Family support, Finance/Funds, Business/Location, Government (Rules
and policies).
This research identifies crucial factors influencing the risks faced by the
entrepreneurs and tries to link the Age, Demographics, Qualification and the
industry type of the entrepreneurs and its effect on the levels of risks faced by
them. The research also touches upon the strategies and ways adopted by the
xviii
entrepreneurs in order to fight the challenges faced by them in the growth of their
enterprise.
The objectives of this research report is to study the nature and dynamics of
MSME‟s in India, to analyze the impact of demographic factors on the level of
risks faced by the MSME‟s in India, to understand the levels of risks involved in
the formation of MSME‟s in India, to understand the steps/strategies adopted by
the firms to mitigate the risks, to analyse the factors of gaps in between the
government and the entrepreneurs, to give suggestions to entrepreneurs for the
improvement of relations between entrepreneurs and the government.
It aims at throwing light in the areas of issues and risks that the entrepreneurs feels
most while or before starting the enterprise. This research bring in-depth issues
that the entrepreneur faces and steps or approaches that can be taken by the
government in-order to make sure that the nation genuinely feels the support of the
government by ways of training modules, funds and subsidies that can be given to
the entrepreneur.
For the purpose of this research, data has been collected from specific cities in
Maharashtra namely, Mumbai and Pune. A detailed literature review was
conducted from all the available material as a basis for secondary data. The
collection of Primary Data was done by means of Questionnaire to each
entrepreneur in the Manufacturing, IT and Service Industry. The Secondary data
was collected from the vast number of past research papers, National and
international journals on entrepreneurship, books and the reports that are published
based on similar topic. Two major cities in India were chosen namely Mumbai and
Pune, being the commercial hubs of the nation. The city of Mumbai is chosen
since it is the trade capital city of the country and Pune as a representative of a fast
developing two tier cities in business in India.The study brought to light that there
are many business entities that are unregistered in the region on Mumbai and Pune
due to various reasons like Taxes, Government policies and tedious
Documentation procedures. In order to carry out the study effectively, a
questionnaire was designed so as to conduct the research and it was the instrument
xix
of the survey. There was one set of questionnaire that was used for collecting data
from the Entrepreneurs.
The statistical analysis was done on a majority of male entrepreneurs with 54% of
entrepreneurs in the age group of 25-35 years, 23% of entrepreneurs in the age
group of 36-45 years and 22% entrepreneurs in the age group of 46 and above,
with 13% of the entrepreneurs interviewed having completed school as their
qualification, 17% of entrepreneurs having completed junior college, 11% of
entrepreneurs having dropped out of degree/graduation and the rest 56% of
entrepreneurs being post graduates. 19% of entrepreneurs from the field of
manufacturing, 35% from service, 24% from information technology (IT) and
another 20% from other which include real estate, pharmaceuticals and health and
hospitals.
It is found from the analysis that most of the entrepreneurs have good support
from their families in terms of moving from a job to a self-owned business, it was
also known that some entrepreneurs have faced issues from families as reluctance
from the family in moving from a job to an enterprise, this is keeping in mind the
risks and issues faced by the entrepreneurs in terms of entrepreneurship. It was
also noticed that most entrepreneurs faced problems of difficult loan procedures
followed by the no availability of a capitalist or a funder. As a solution, most
entrepreneurs depended on family contributions and friends for their source of
funds. As expectations from the government, it was seen that the easy Licensing
was the highest followed by less number of documentations, followed by easy
document renewals, and the least being single window clearance. The analysis
revealed the ways they chose to overcome the problems related to government
policies, almost all the groups said that they were unregistered and some others
mentioned that they hit the wall everywhere and finally done the registration and
other formalities through agents. Almost all the entrepreneurs wanted all the four
factors on an approximate level namely, easy licensing, easy renewals, single
window clearances and less number of documentations. This shows there is a high
need for the government to realize the gaps in the registration and the
entrepreneurial structure of the country.
xx
The study recommends that there is a requirement of a „pro-active Non-
Government or Government institutions‟ wherein the existing entrepreneurial
divisions need to move out of the old ways of government offices and have
computerized and fast ways of brining solutions to the entrepreneurs personally.
The decisions made by the top level ministry needs to be clearly channelized and
the order of implementing the policies needs to be put across to them so as to
enable a hassle free execution plan for the entrepreneurs. The registration
processed needs to be simplified, with clear information on documentations that
are needed for starting an enterprise in every field, policies and rules have to be
simplified and taxes reduced. Another need of the hour is public friendly
„Financial Institutions‟, which are open to clear doubts and queries relating to
businesses of the public at large, the research clearly shows that the existing
bodies have unfriendly rules and policies and hence the entrepreneurs make their
own ways in finding funds, hence there has to be an increase in the financial
institutions and capital funding agencies and government bodies in the country.
There has to be more accessibility of entrepreneurs towards the same. Easy loan
availability and tax exemptions have to be incorporated in the working structure of
the country; these factors will surely help in building the entrepreneurial
development of the country. Yet another issue that stands as a threat on the nation
is the rate of unemployment and the fastest way to tab it is Skill Development and
Empowerment. There has to be creation of specific funds located for skill
development, the HRD ministry needs to oversee to make sure that the younger
minds in the country are challenged to think beyond their capacities in terms of
idea generation and enterprise development. The government has to see the
education sector as a powerful tool to push the spirit and passion of
entrepreneurship and this can be majorly done with tie-ups with corporate and
educational institutes, thus building a space and developmental workshops with
personalized handholding to those students who show a passion to begin an
enterprise.
The government needs to work towards simple policies, tax exemptions, easy
loans availability, easy licensing and skill development initiatives and thus will be
a rise of a new and vibrant India with skill, expertise and employment generation
xxi
everywhere all across the nation, only then will the nation see a new light towards
the equality in regional development of the country.
xxii
CHAPTER 1
INTRODUCTION
1.1 MSME in India
1.2 Objectives of MSME
1.3 Characteristics of MSME
1.4 Products under MSME sector
1.5 MSME contribution to nation building
1.6 About the ministry MSME
1.7 The organizational setup of the MSME
1
CHAPTER 1
INTRODUCTION
INDIA known as one of the oldest civilizations in the world and has the reputation of
being one of the most populated countries in the world. Rich in tradition, India is
knows as a conglomerate of a long history of being one of the oldest cultures on the
earth. Being one of the world‟s largest and the fasters economies, which in itself
means everything in India has to be large-scaled in order to accommodate the vastness
in the culture, diversity and also population. It is projected for India to be the world‟s
third largest economy by 2030 in terms of the Purchasing power (PPP).
(Not to Scale)
Fig 1.1 Source :www.indiaonlinepages.com/population/population-map-of-india.html
India is the 19th largest exporter and the 10th largest Importer in the world, in the year
2011-12, the foreign trade of the nation grew to be an impressive 30.6% to reach
$792.3 billion. According to the Central Intelligence Agency (CIZ) world fact book,
India is 11th in the world in terms of nominal factory output. Through it all, over the
last 5 decades, the macro and small scale segment has acquired a prominent place in
2
the socio economic development of the country. This segment plays a vital role in
spreading the benefits of economic growth among the masses by drawing surplus
work force from the primary sector to productive non-farm employment, including
manufacturing and service business activities. The small scale and medium enterprises
are an important component of the Indian economic system due to their employment
generating potential, healthy contribution to domestic market and also exports.But that
is not enough, the economy is in need of more entrepreneurs to move into enterprise
formulation which would also increase the employment opportunities for the large
unskilled mass that the nation has. The past decade has seen a sudden boom in the
formation of enterprises, start-ups new budding businesses have seen a new flight in
the nation. The young blood has taken up the task of changing the corporate look and
is moving into a much friendlier and free environment to work with and work for.
Moreover, a new fresh breath of air with the „Make in India‟ initiative by the
government of India has brought in new interests among the citizens as the
government takes keen interest in the building a stronger and much energetic
backbone of the nation with a new spirit of bussing entrepreneurial spirit in the young
and old alike. But there still lies a large gap between the people and the government.
This research project, ‘A RESEARCH STUDY ON THE MANAGEMENT OF RISK IN
THE GROWTH OF MICRO AND SMALL ENTERPRISE IN INDIA (with special
reference to Mumbai and Pune)’aims at throwing light in the areas of issues and risks
that the entrepreneurs feels most while or before starting the enterprise. This research
bring in-depth issues that the entrepreneur faces and steps or approaches that can be
taken by the government in-order to make sure that the nation genuinely feels the
support of the government by ways of training modules, funds and subsidies that can
be given to the entrepreneur.
The MSME‟s at a glance document by the MSME department of the Government of
India (MSME-GOI) stated that the MSME sector has emerged as a highly vibrant and
dynamic sector of the Indian Economy over the last five decades, this is the sector
responsible for the development and the growth of the economy by means of its
service, products and the trade. it not only gives employment opportunities to the vast
youth resource of the nation but also works towards the development for the backward
3
and rural areas of the Nation by means of business and logistical operations in the
interiors of the India, thereby reducing regional imbalances, and assuring more
balanced supply or resources and wealth throughout. The MSME works
complementary to large industries, thus contributing enormously to the development
and the growth of the nation. The sector consists of 36 million units which has a fast
growth rate annually, provides employment to nearly 80 million individuals. The
MSME sector through more than 6,000 products contributes about 8% of GDP,
through which this sector has a potential to create extensive growth in the country and
canbe a major partner in the process of the country‟s inclusive growth in the next 5
years.
MSME Share by Sectors:
Fig 1.2 :Source :Annual Report MSME, Year 2013-14
MSME‟s are small sized entities that are explained based on their investment size.
They mainly contribute to employment export, output in the economy. They perform a
role in the economy by providing employment opportunities to skilled and unskilled
people. As per the report of the ministry of MSME‟s this sector employs over 80
million people.
4
Micro, small and medium enterprises are defined based on their investment in
plant and machinery (for manufacturing enterprises) and on equipment for the
enterprises providing services as stated below:
Year 2015-16
Fig 1.3 :Source :http://aima-msme.in/msme-schemes/msme-ministry-scheme/
1. Micro enterprise is an enterprise wherein investment in assets does not go beyond Rs
25 lakh.
2. Small enterprise is an enterprise wherein the investment in assets is more than Rs 25
lakh but it does not go beyond Rs 5 cr.
3. Medium enterprise is an enterprise wherein the investment in assets is more than Rs 5
Cr but does not go beyond Rs 10 cr.
Enterprises engaged in providing or rendering service are as follows:
1. Micro enterprises are those wherein the investment in recruitment does not go beyond
Rs 10 lakh.
2. Small enterprises are those wherein the investment in recruitment is more than Rs 10
lakh but does not go beyond Rs 10 cr.
3. Medium enterprises are those wherein the investment in recruitment is more than Rs 2
Cr but does not go beyond Rs 5 cr.
5
1.1MSME IN INDIA –
Currently MSME‟s in India consist of SSI(Small Scale Industry),SSE(Small Scale

Enterprise), tiny enterprises, SSSBE(Small Scale Service Business Enterprises) and
medium size enterprises. The main focus is on manufacturing sectors like textile, auto
ancillary and engineering industries. Approximately 300 items are reserved for
production only in MSME sectors. Many countries around the world follow a mix of
many criteria to define MSME. They account for 99.7% of all enterprises.
1.2 OBJECTIVES OF MSME’S:
As per the Ministry of MSME, " Imparting greater vitality and growth impetus to the
small, tiny and village enterprises in terms of output, employment and exports and
instilling a competitive culture based on heightened technology awareness." is the
aim and motto of the MSME.
The Objectives of MSME‟s include:
 Huge emphasis on domestic production

 Operational flexibility
 Less intensive imports
 Technology- based industry
 Competitiveness in export market
 Low investment requirements
 Capacity to develop appropriate technology
1.3 CHARACTERISTICS OF MSME
 Heterogeneity of sectors: The MSME sectors are considered to be heterogeneous in

terms of their size, location, variety of products, people employed.
 Industry-wise distribution of enterprises: Out of the industries classified under
MSME sector the top positions were held by the industries engaged in
manufacturing of food products, wearing apparels and textiles sector.
6
 Ownership of enterprises- Social group-wise: Analysis in terms of social group
states that enterprises owned by OBC‟s shows high no of units as compared to
enterprises owned by SC and ST.
 Banks concerns in lending to MSME: Banks face certain concerns while lending to
smaller enterprise because credit information availability is not as easy as it is for
larger firms and moreover it is not cost effective on part of the lender to collect
information.
 Priority sector lending and MSME: If a bank does not make any lending under
MSME sector, it can still achieve all priority sector stipulations by lending to other
priority sector segments.
1.4 PRODUCTS UNDER MSME SECTOR
 Food and Allied Industries : pickles, bread, mustard oil and ground nut oil
 Wood and Wood Products : wooden furniture and fixtures
 Paper Products: books and registers
 Chemical Products: wax candles, safety matches, fireworks and agarbatties
 Glass and Ceramics: glass bangles
 Other Products: stainless steel utensils, domestic utensils-aluminum, rolling
shutters
1.5 MSME’S CONTRIBUTION TO NATION BUILDING
MSME sector plays a very important role in the Indian economy. This sector is critical
in meeting the objectives of reducing poverty, generate employment facilities. The
sector has got a very consistent growth since last five years but it has been resulted
into inefficient resource utilization due to constrained environment. The term MSME
is used to describe small businesses in the private sector. MSME not only acts as a
catalyst in the growth of the economy but also help feeding large local and
international chains as well as suppliers, manufacturers and retailers. Multinational
companies have also played an important role in the establishment ofMSMEs and it
has an essential role for the growth of the nation‟s GDP as it provides employment
opportunities.
7
Emergence of MSME was based on Gandhian model. Despite of various protection
and policy measures MSME has been always remained small and technologically
backward. MSME‟s in India manufacture more than 6000 products ranging from
traditional to high technology items.
It is a fact that Micro Small and Medium enterprises play a major role in the
development of most economies. This gets reflected in the form of increasing number
of employment opportunities and rising proportion in product manufacturing, exports,
technical innovation and promotion of entrepreneurial skills. After agriculture MSME
sector is the second largest manpower employer in India. In MSME the small scale
sectors nurtures the talent and helps to grow into medium and large size. They
provide maximum opportunities for self -employment and wage employment. They
also contribute in building the image in a society through innumerable ways like
creation of non-farm livelihood, low cost, balanced regional development, gender and
social balance.
The MSMEs have played a major role in ensuring socialistic goals like equality in
income and balanced regional development. However in comparison to large scale
public and private enterprises, MSMEs are considered to be more efficient and
provide employment opportunities at relatively lower cost. The employment
opportunities of MSMEs are four times greater than that of large enterprises. MSMEs
account for 80% of total industrial enterprises in India. One of the major contributions
of MSME is to promote balanced economic development. In large enterprises the
economic growths are more visible as that of small industries. While small enterprises
create variety of opportunities in the marine of poverty, it has also helped in
industrialization of rural and backward area which indirectly reduces the regional
imbalances, and assures more equitable distribution of national income. These small
industries also give a support to large industries by supplying supplementary products.
The ministry of micro, small and medium enterprises envisions a vibrant MSME
sector with the growth and development of the MSME sector in cooperation with the
various ministries, departments, state governments, various organizations and other
8
stake holders in providing support for the growth and development of the enterprises
and encouraging the birth of new enterprises.
1.6 ABOUT THE MINISTRY:

The commencement of the ministry was in the year 2007, subsequent to the
amendment of the Government of India rules 1961, during which the Ministry of Agro
and Rural industries and the ministry of small scale industries were formed as one to
form the Ministry of Micro, small and medium enterprises (MSME). The ministry
now designs policies, promoted programmes, facilitates training programmes, projects
and schemes and monitors their implementation with a view to assist MSME‟s thus
helping them to scale up. The primary responsibility of promotion and development of
MSME‟s is of the state governments through which the government of
Indiasupplements the initiatives of the state government by ways of promoting and
facilitating the working of the of the ministry in the development of the MSME‟s, in
doing this the major role of the ministry of MSME is to develop the initiatives taken
by the state governments in the development of the MSME‟s, encourage
entrepreneurship, livelihood and employment opportunities and thus enhance the
competitiveness of the MSME‟s in the changing economic scenario. The schemes
undertaken by the ministry and its organizations seek to provide:
a. Adequate flow of funds from banks and financial institutions;
b. Support of modernization and technical advancements;
c. Infrastructural facilities and developments;
d. Quality certifications and documentations;
e. Applications of modern management principles;
f. Development of entrepreneurship and skill through appropriate opportunities of
training;
g. Support for deigning, packaging and branding of the products and services;
h. Welfare of workers, artisans and labourers;
i. Assistance in trade with an aim to increase export and decrease imports;
j. Better access to domestic and international markets.
9
1.7 THE ORGANIZATIONAL SETUP:
The implementation of the policies and the schemes for providing support for the
MSME‟s is undertaken through the following organizations which function under the
ministry of MSME.
1. Office of the development commissioner (Micro, Small and Medium
enterprises)
2. Khadi and Village Industries Commission (KVIC)
3. Mahatma Gandhi Institute of Rural Industrialization.
4. Coir Board of India
5. National small industries corporation (NSIC)
6. National Entrepreneurship Development Institute (NEDI)
7. National board of Micro, Small and Medium Enterprises
8. National Small and Medium Enterprise Development (MSMED) Act
2006
1. Office of the development commissioner (Micro, Small and Medium

enterprises)
The Office of the development commissioner (Micro, Small and Medium enterprises)
headed by the development commissioner and the special secretary, being an apex
body for formulating and overseeing implementation of the policies of the MSME‟s in
the nation, plays a key role in strengthening this sector. It functions through a network
of regional testing centers, footwear training centers, field testing stations and
specialized institutes. Its role is to advice the government in constructive policy
formulation in the development and the promotion of MSME‟s in India, giving
technological, economic and managerial consultancy services as well as extension
services to the MSMEs in India, with facilities for technological upgradation,
modernization improvement in quality and infrastructure and providing training and
skill development thereby developing the strength of human resource.
10
2. Khadi and Village Industries Commission (KVIC)
The Khadi and Village Industries Commission (KVIC) is established under the Khadi
and village industries commission Act, 1956, is a statutory organization that is
working towards the growth and development of the Khadi and village industries
specifically in the rural areas of the nation thereby strengthening the Khadi and village
products by reducing the burden of competition by the larger giants and keeping the
sense of freedom struggle by helping in the promotion of goods from rural India thus
generating employment opportunities and bringing in a balanced regional
development in the nation. The KVIC is credited towards generating sustainable rural
non-farm employment opportunities at low per capita investment. This also helps in
keeping check over the rural population migrating towards the urban cities in search
of employment opportunities.
3. Mahatma Gandhi Institute of Rural Industrialization.

The national level institute namely „Mahatma Gandhi Institute of Rural
Industrialization‟ formerly known as Jamnalal Bajaj Central research institute has
been established under society act 1860, at Wardha, Maharashtra with a role to
strengthen the research and extension activities in the Khadi and Village industries
sector. The main function of this board is to improve the research and development
activities under the rural industrial sector by developing and encouraging the research
and extension activities in rural areas of the nation thereby introducing new and
improved production procedures and technological advancements for the continual
improvement and development of the industries in the sector.
4. Coir Board
The coir board is a statutory body established under the Coir Industry registered Act,
1953 for keeping a check and improving the working and living conditions of the
workers engaged in the industry also promoting the development of the coir industry
as a whole. The activities of the board include continuous research and development
activities in bringing in new and improved coir products, technological advancements
in the industry, and marketing the coir and coir products in India and Abroad. The coir
11
board also promotes the co-operative organizations that produce the raw materials of
coir like the producers of coir yarn, coir fiber coir yarn and the manufacturers of coir
products ensuring monetary returns to the producers and manufacturers of coir. The
board has actively promoted two research and development institutions in Kerala and
Bangalore namely; Central Coir research institute (CCRI), Alleppey and central
institute of coir technology (CICT) Bangalore for undertaking the research and
extension activities of the coir and the allied products which has grown to become one
of the largest rural industry in the nation.
5. National small industries corporation (NSIC)

The National small industries corporation (NSIC) was established by the Government
of India in 1955, with an objective to promote and nourish the growth of small scale
industries in India. The NSIC continues to remain at its very best in terms of industrial
development with its various programmes, initiatives and projects in-order to develop
the small scale industries in the country. It provides a variety of support services to
micro and small enterprises by catering to their different needs and requirements of
the MSME‟s in areas of technological developments, procurement of raw materials,
credit rating, marketing of the products, adoption of modern management practices,
etc. the NSIC runs its systems by means of its professional dedicated teams at all
levels of the nation and operates through 142 offices located all over India and one
office located internationally in Johannesburg (South Africa). The main objective of
the corporation is to generate, aid, promote and handhold various initiatives and foster
the growth of micro and small enterprises in the country on a commercial basis.
6. National Entrepreneurship Development Institutes (NEDI)

The entrepreneurship training and development is a very important factor in the
promotion of Micro, small and medium enterprises, especially amongst the first
generation entrepreneurs. In-order to create the entrepreneurial culture in the minds of
the first level entrepreneurs in the nation, the MSME Ministry has setup three
National Level Entrepreneurship Institutes viz; the National Institute of
Entrepreneurship and small business development (NIESBUD) located in Noida,
12
UttarPradesh. The national institute of Micro, small and medium enterprises (NI-
MSME) 1960, located in Hyderabad and the Indian Institute of Entrepreneurship (IIE)
1993, Guwahati as autonomous societies. These institutes are together termed as
National Entrepreneurship Development Institute (NEDI). They are committed to
develop training and development modules, providing consultancy support to the
upcoming entrepreneurs along with research support for the promotion and
development of MSME‟s in the nation by bringing in competitiveness in their
approach.
7. National board of Micro, Small and Medium Enterprises (NB-MSME)
The National board for MSME enterprises (NBMSME) was started on 15th May 2007
which consists of 47 members.
Functions of National Board:
 The factors are examined that are affecting the development of MSME enterprises and
also to review the policies & programmes of the central government.
 To provide economic information services.
 Providing facilities for infrastructure, up gradation of technology.
 Coordinating the policies and programmes for the developments of small scale
industries.
8. National Small and Medium Enterprise Development (MSMED) Act 2006

The Micro, Small and Medium Enterprises Development Act (MSMED) has started in
2006 to take care of the policy issues affecting the MSMEs. The act works to develop
these enterprises and also to build the enterprises in their competitiveness. It provides
the first ever legal framework in order to recognize the facts of enterprises which
include manufacturing and service entities. It was the first to define the medium
enterprise and works towards building businesses for the Micro, small and medium.
This act helps entrepreneurs at the national level of the micro small and medium
enterprise with a statutory consultative mechanism in coordination with the three
classes of enterprises and with a wide range of advisors.
13
CHAPTER 2
LITERATURE REVIEW
2.1 Entrepreneurship Introduction
2.2 Researches of entrepreneurship in India
Research on the development and the risk factors of

2.3
entrepreneurship in India
2.4 Gap analysis
14
Chapter – 2
LITERATURE REVIEW
The purpose of this research is to study the management of risk and its affects in the
growth of micro and small enterprise in India. In specific, this research determines the
factors like family background, government support, sources of funds and the
entrepreneur‟s instincts to take risks which contribute to the motivation of the
entrepreneur to take up the challenge of entrepreneurship. Thus, this review of
literature has been done with a focus to cover most of the above factors.In this chapter
few research papers, journals, articles and books pertaining to the current study of the
management of risk in the growth of micro and small enterprise in India (with special
reference to Mumbai and Pune) has been covered. During the course of this research
it has been found that this area has been extensively researched but the factors of
growth have not been identified in any of the researches, this literature review takes
into consideration many Indian as well as international researches. Articles have been
gathered from magazines and other research reports which helped in the collection of
the secondary data in the study. Internet was extensively used in order to gather
international data in researches conducted in the topics covering this research study.
Data mining was done using the software Proquest through the department library.
This chapter of literature review can be grouped in four different factors:
 The first focuses on the meaning and definition of the word „entrepreneur and the
evolution of entrepreneurship in developed countries.
 The Second category comprises of the study conducted by researches on
entrepreneurship in India.
 The Third section comprises of the studies dealing with the factors of risks faced by
the entrepreneurs in the Indian context
 Finally the last section comprises of the factors of risks in the growth of the
enterprises with ways and means to suppress the amount of risks faced by the
entrepreneurs.
15
2.1. ENTREPRENEURSHIP: INTRODUCTION
Factors of risks and uncertainty have been a subject of research amongst theorists and
researchers since the start of business on earth. Many researchers and theorists have
worked hard in trying to find the exact definition of entrepreneurship, yet there
remains no single clear distinct definition to entrepreneurship. Some researchers
define entrepreneurship from the economic point of view, some psychological, some
look at it from the management perspective while others give it a social side, which
makes entrepreneurship a multidimensional concept.
In the early time, the phenomenon of entrepreneurship was only of interest to the
economist. Early reference to the term „Entrepreneurship‟ was made by Sir Richard
Cantillon, an economist (Hébert and Link, 1988; Binks and Vale, 1990). His first
work on the term „entrepreneurship‟ namely „Essai Sur la Nature du Commerce en
Général’ was published in 1732. Cantillon introduced a model of economics wherein
individuals were divided into three classes, they were Land-owners, Hirelings and
Entrepreneurs, wherein the Landlords were financially stable and dominators,
Hirelings who earned continual fixed incomes, while Entrepreneurs were the ones
who would set up their enterprise with their self-accumulated capital or as individuals
regarded as living off Uncertainty. According to Cantillon, entrepreneurs are the
people who would buy an item at a specific price then use the item to make or produce
another item and thus sell the final product to the customer at an uncertain price.
According to Cantillon a successful entrepreneur is a person who would buy the basic
item and then sell the final product at a good price, keeping in mind the demand and
supply pull of the market, they are people who cope with risk much better than their
counterparts.
In continuation, other economists in line with Cantillon reconsidered and restructured

the role of an entrepreneur. Jean-Baptiste Say (1769-1832) who was a business person
and was the first professor of Economics in Europe, he wrote 2 books, enhanced and
built on Cantillon‟s ideas of entrepreneurship namely „A Catechism of Political
Economy‟ (1821) and „A Treatise on Political Economy‟ (1802) wherein he provided
a completely different interpretation of the entrepreneurial task. Sir Say‟ regarded the
16
entrepreneur as a manager in a firm. Rather than emphasizing on the risk bearing role
of the entrepreneur, Say stressed that the entrepreneur‟s principle quality is to have
good judgment.
Then came Joseph Schumpeter (1928) brought in a new dimension on the definition of
entrepreneurship, he introduced the concept of „creative destruction‟ wherein he
defined entrepreneur as an individual who introduced new factors of production.
Joseph Schumpeter rejected the views of entrepreneurs‟ being risk takers or a manager
of a firm. Instead he argued that an entrepreneur is termed as an innovator, as
someone who carries out any one of the five tasks stated below;
1. Creation of a new product or service
2. A new method of production
3. Creation of a new market
4. New source of raw material
5. Creation of a new organization or an industry.
Schumpeter elaborated that anyone who achieves one of these as a director of the
organization or as an individual is an entrepreneur. Creative destruction meant that the
innovation replaced the old and destroyed the equilibrium.
Ludwig von Mises(1949) defined the entrepreneur as an individual who acts.

According to Mises, the entrepreneur is termed as an agent who has an explanation to
the changes that occurs in the market, he reasons out the factors of change that affects
the market. Mises considered that the entrepreneurial action as the game of the mind
of the individual who holds talents and skills to turn a raw material in a usable form. It
is the power in the mind of the individual to see more in the world that he lives in and
created living for others easy by bringing in new ways and techniques in using the
same raw material in multiple ways. According to Mises the entrepreneur is driven by
his thoughts and his past experiences.
17
Friedrich Hayek 1937: Hayek was a follower of Mises, and he developed the price
theory by following the footprints of Mises. Hayek‟s study focused on the information
and knowledge rather than factor of entrepreneurial decision making. He tried to
understand the fact of how entrepreneurs successfully functioned entities by involving
complex manpower functioning and yet made business sail in a smooth flow of
power, responsibility and resources with knowledge only locally connected and
peculiar thinking.
Israel Kirzner1997:Krizner based his theory on the theories of Hayek and Mises. He
rejected the theory of equilibrium. He believed that the economy is in a constant state
of disequilibrium because to the constant economic shakes that it receives due to
various factors.
David C. McClelland 1969: McClelland‟s research in the area of entrepreneurship was

based on the psychology of the entrepreneur; he stated that individuals with high need
of achievement and strong personality traits are more likely to behave
entrepreneurially. He regarded the following description as distinctive characteristics
of high need achievement 1. A performance of higher risks and a propensity to work
harder in such situations. 2. A belief system that sheer hard work and determination
will alone reach to attain goals 3. A tendency to believe that the probability of success
in attaining a goal would be high. 4. A continuous mechanism of feedback in terms of
success or failure of one‟s efforts.
A research study by Collins and Moore (1964) containing discussions with 150
business entrepreneurs at Michigan stated that 1. Most entrepreneurs were either
orphans or half orphans 2. Entrepreneurs do not focus on social status or mobility.
They have very less focus towards the social status of authority or rewards associated
with power or authority. 3. Entrepreneurs often keep pushing themselves towards
excellence from one point to another; they like to achieve targets on a continual basis.
4. They differentiate or judge as either good or bold. 5. Entrepreneurs are generally
rebels, they strive within their families for the freedom out of the responsibilities in
the home and desire for free space within the family for more business oriented jobs
18
and goals 6. Entrepreneurs are mostly authoritative and clear single minded decision
makers and they dislike any authority over them.
Richard Gardner in the early days of research (1989) entitled “who is an

entrepreneur?” in which the author tried to determine the character or the personality
trait of the entrepreneur. There were different approaches for this research which can
be summarized as follows:
1. A trait affects the personality of the entrepreneur

2. Behavioral traits depend on the activities of the entrepreneur.
The research conducted by Roberts (1991) identifies a typical profile for technological
entrepreneurs in developed regions. The below given are the most significant findings
of Roberts.
1. Entrepreneurs are most likely to have businessmen fathers
2. The first born sons are least likely to become the entrepreneurs than their siblings.
3. No two entrepreneurs are alike; they display wide range of personalities, motivations
and goals for starting new enterprises.
4. Initial capital is small and from sources of personal savings and family funding.
5. Large-scale deficiencies in the making of a clear and crisp business plan reduce the
ability of the firm to get funding from a professional source.
6. Family background does not have any difference to the success status of the
entrepreneur or his business; entrepreneurs are made and not born!
7. Individuals with high need of achievement generally become successful
entrepreneurs.
8. Entrepreneurial teams generally perform much better than single handed owner
enterprises.
Some studies focusing on the personality traits of the entrepreneurs shows that the
younger entrepreneurs take more risks than the older entrepreneurs, the fear of failure
and retirement expenditures hinders them from taking risks. Honaday and bond (1987)
analyzed a number of characteristics such as need for achievement, aggression to
accomplish the task, independence and leadership skills were felt to be significantly
associated with entrepreneurs. The research found that out of these characteristics the
19
need for achievement and independence on oneself arose as prominent characteristics
and most significant for the individuals to take up entrepreneurship.
Johns and Cromie (1983) compared Psychological and entrepreneurial characteristics.
Their study indicated that the new aspiring entrepreneurs have vibrant and new
passions for entrepreneurship. They possess unique personal qualities but as time
passes they lose those passions and tend to lose entrepreneurial qualities thus begin to
resemble career executives. This study says that the new aspiring entrepreneurs
possess unique personal characteristics, but after some years of managing the
enterprise they possess the traits of an employee wanting to complete targets and
reach the financial deadlines. The study rightly concludes that the skills that are
required to start and launch an enterprise are different from the skills required to run
and function it.
Shawn Wang and PengChau (1990) discuss the details about the success of Baidu, the
internet based Entrepreneurship. China emerged as a global powerhouse with Baidu
being one of Asia‟s largest technology companies. Wang describes in simple words,
„to be an entrepreneur, a person needs sheer courage to fight all odds, be a risk taker
and have the strength to do things for the first time‟.
Entrepreneurship in the late 19th Century and early 20th Century

The entrepreneurs were viewed mostly from an economic viewpoint than as a
manager or a business owner. Richard T. Ely and Ralph H. Hes, briefly stated:
The entrepreneur organizes and operates an enterprise for personal gain. He pays
current prices for the materials consumed in the business, for the use of the land, for
the personal services he employs, and for the capital he requires. He contributes his
own initiative, skill, and ingenuity in planning, organizing, and administering the
enterprise. He also assumes the chance of loss and gain consequent to unforeseen and
uncontrollable circumstances. The net residue of the annual receipts of the enterprise
after all costs have been paid, he retains for himself.
(Richard T. Ely and Ralph H. Hes ,1937 )
20
By the mid of the 20th century, the definition of the entrepreneur as an Innovator had
evolved, Sir Joseph Schumpeter‟s opinion on the definition of the Entrepreneurs gave
new light to the entrepreneur as an innovator.
Joseph Schumpeter‟s vision on entrepreneurs is as follows:

The function of the entrepreneur is to reform or revolutionize the pattern of
production by exploiting an invention or, more generally, an untried technological
method of producing a new commodity or producing an old one in new way, opening
a new source of supply of materials or a new outlet for products, by organizing a new
industry.
(Joseph Schumpeter 1952, p 72)

The entrepreneur is not confined to any industry or country or group or class or race, it
exists in every person but depends on his/her desire to move further and explore the
environment around us.
Vosle, 1994: Vosle defined the entrepreneur as an individual with an ability to analyse
the environment, explore the possibilities, understand and grab the opportunities,
make a new untouched technology or method of production, streamline resources and
covert the ideas into credible steps of action.
Zimmer and Scarborough 2005: stated that the entrepreneurs are risk takers who bring
in new products and services and thus add new colors and meaning to the upliftment
of the society.
2.2 RESEARCH STUDY OF ENTREPRENEURSHIP IN INDIA
Nambiar 1977 – in the article names “financing of Priority Sector, speaks on the
responsibilities of commercial banks in the small and medium enterprise sector. The
MSME‟s are not confined to the provision of finance, the banks have to check the
feasibility of the businessplan and assist the entrepreneurs to move forward with the
feasible and strongest business plan. Nambiar emphasized the balance of Coordination
between the various government agencies and the public and private sector banks, for
the better functioning and the success of the priority sectors.
21
Murthy 1980, in the dissertation entitled “Financing of MSME‟s in Rayalaseema”
speaks that even though the MSME‟s face problems and challenges at a
multidimensional level, it still rules out the availability of the courseof finance with
the appropriate working capital, without the support of the banks the SSI cannot move
forward in solving a problem empathetically as a mentor for the development of the
MSME‟s thus enabling much talked about balanced regional development and rural
industrialization
Agarwal 1987, in the paper titled “Bank Financing of Small scale industries in India”
has stated that the Indian Financial system is unsuccessful in providing adequate
amount of Loans to MSME‟s. Agarwal is of the opinion that the Banks and financial
institutions have to be more open and flexible towards the MSME‟s in their attitude
rather than maintaining strictness in order to solve the challenges faced by the
MSME‟s in their everyday workability.
Jain 1990, in the paper entitles, Assistance of Small Industry, has appointed out that
the institutional assistance to MSME‟s should be to build the right kind of institutions
and to enable the small enterprises to enjoy the infrastructural facilities, there is a need
to simplify and make easy processes in working towards the administration of the
government schemes and policies towards entrepreneurs.
James Manalel 1994 in the paper entitles role of Incentives in the Development of
MSME unites in Kerala. The author reported that the assistance given by then banks
and financial institutions in working towards the support of the SSI units was less or
untouched. The effectiveness of any package or incentive created by the government
is completely depended upon the workability in the quality of delivery to the
MSME‟s. the state government provides lucrative incentives, but the quality of the
delivery is termed to be poor s perceived by the entrepreneurs.
VenkateshwaraRao 1995, in the paper entitled, Development of SSI stated that the
censes conducted by the reserve bank of India and the National state insurance
corporation NSIC also established that the small units used their monetary strength
more effectively and the profitability of the large scale sector is much smaller that the
22
profitability received by the small scale sector. The author emphasized that the role of
banks to help in the growth of the small scale industry is moving beyond just
providing funds but in handholding entrepreneurs in working towards making
entrepreneurs in helping bring maximum productivity.
Nirmal K Gupta 1995, this article entitled “Small Industry” advocated that a large
number of central government organizations has been established in the country to
provide organizational, financial, marketing, technical, raw material, training and
development and other allied forms of assistance required by the small scale, micro
enterprises, cottage industries and the village enterprises. Moreover IDBI-Industrial
Development Bank of India, Small Industrial Development of India SIDBI and
NABARD- National Bank for Agricultural and Rural Development are among them.
These institutions have played a major role in the development of micro, small and
medium enterprises in the country, in addition to the financial and consultancy
services provided by them to the entrepreneurs.
SaroshBana 2000 – in the research paper entitled “India‟s Small Scale Sector”,
according to then statistics state the Small Industries Development bank of India
SIDBI, MSME account to close to 96 percentage of India‟s industries, 40% of the
output in the manufacturing and 35% of the exporters apart from am employment base
of more than 17 million people in the country. The author stated that a new line of
entrepreneurs initiated a new line of production also provided rich ancillary inputs for
the MSME sector. In this paper he also stated that the responsibility that SIDBI has
achieved is much more than just providing funds to the budding MSME of the nation.
Sridhar Krishna 2001 – in the paper “ impact of small industries‟ stated that apart
from providing overall financial assistance to the upcoming entrepreneurs in building
the MSME‟s, the role of DIC district industrial center is also to provide permanent
registration to industrial units, not only as prepare the entrepreneurs with various legal
frameworks which allows the entrepreneurs to get various concessions, incentives,
benefits and schemes of the government related to the progress of the MSME‟s.
23
Nalsamma Anthony 2002 – in the paper titled the prospects and growth of Small Scale
industries in India-An Overview‟ states that the SSI units were brought up in the midst
of challenges because of the shortage of funds, lack of business knowhow, inadequate
marketing skills etc., most of the risks were due to inherited weaknesses. Inspite of
the various risks faced by them initially, the MSME‟s are developed and promoted
keeping in mind the socio economic benefits to the society. In addition, promotion of
MSME requires, institutional support from various sources and these sources of
support are not only depended for funds but also for granting smooth slow of finance
without unnecessary more formulation to allow the MSME‟s to function much better
and faster.
EdvinGyanadas 2003- in the paper titled, “Marketing performance of MSME‟s under

global environment-a difficult Task?” has researched on the marketing performance of
MSME‟s under global environmental conditions by taking a sample of 250
entrepreneurs. The study states that the government declared some incentive packages
aimed at making MSME‟s more competitive both domestically and on a global
platform, by providing easier support from the public sector banks for the strong
support of entrepreneurs. He also stated that an active involvement of public sector
banks in entrepreneurial lending which requires changes in the efficient management
of resources, the attitude of banking personnel, proper deployment of manpower and
improvement in work technology and ethics.
JayalakshmiSrikumar 206 in her research paper titled “SME‟s and Global

Competitiveness,. Strategies for growth and Survival in the WTO Era” stated that the
MSME entrepreneurs had an opinion that the government only frames the schemes
and policies but does not know to implement them in the right way. The author also
stated that the WTO regime and industrial liberalization has opened up a world of
competitiveness for the development of MSME‟s. in many nations, the strategies and
policies created by the government has been reframed keeping in the mind the
MSME‟s of the country. The policy framework in India has been in the midst of fast
growth in order to develop the MSME‟s to cope up with the changing economic
scenario like the other Asian countries around. She concluded that the MSME‟s
24
should be provided with infrastructure developments and an environment which is
conducive for the survival and growth of the MSME sector in the country.
Rakesh KR Singh 2007, in the paper “Comparative study on Strategies of Indian

Small medium large Scale organizations” suggests that the challenges faced by the
Micro and small firms and the reluctance to use support from external sources are
standing as obstacles that deter the MSME‟s in using the technology and
infrastructure that will work in the growth of the MSMEs.
Anil Kumar December 2008, in the paper titled, “Awareness of Supporting Agencies
among Women Entrepreneurs in Small Businesses” analyses that the awareness of
agencies that support women entrepreneurs in micro and small business by taking a
450 sample entrepreneurs in the research form 5 states from the North of India which
comprised of Rajasthan, Himachal Pradesh, Delhi, Punjab and Haryana. This study
highlights the challenges faced by the women entrepreneurs in these cities in starting
new small businesses. The author also emphasized that low awareness plays a major
reason in less utilization of the schemes and subsidies of the government.
Raju 2008, in the paper titled “small and medium enterprises (MSMEs) in India, past
present and future” conducted an analysis and concluded that the MSME‟s are the
backbone of India and the industrial sector of the country, they have become the
engine of the economic growth in India. It is estimated that almost 90% of
manufacturing Industrial units and 40% of value addition in the manufacturing sector
of India is run by the MSME‟s. This paper scrutinizes the development and growth of
the Indian small scale sector since the start of the economy in the year 1991. The
marketing, licensing and lending issues are closed studied in this paper. The micro,
small and medium enterprises Act 2006 is formed with an expectation to boost the
sector. Some future policies of the government and frameworks is being stated in
detail in the concluding of this sector.
DineshRai 2000 in the paper titled “MSME reviewed the performance of various
schemes of the KVIC” stated that the managers of the branches of some branches
were not aware of the guidelines, incentives and schemes. It is essential for the banks
25
to set up core centers and it is their responsibility to extend the core centers
throughout the country.
Poplia and Rao 2009, in the paper titled “Service quality Provided by PSBs(Public
Sector banks) to SME consumers” states that the customer Satisfaction plays an
important role, particularly in the context of the ever increasing competition and
sustained growth in business. The study focuses on the support given by PSB‟s to the
budding entrepreneurs. This study majorly finds that the modernization and
communication is the major factor that affects the services of the MSME‟s in a huge
way. There is also a need to train the staff and employees for the improvement in the
service provided to the consumers. A large number of the respondents revealed that
the institutional and government support to the MSME sector is not sufficient and the
government has to make sure of a stronger implementation plan so that the schemes
and subsidies reach the businesses in a much better efficient and a much impactful
way. Large number of respondents also felt that the procedures and policies of the
other countries is much better than the policies and procedures followed by India.
VijayaChitra and Poovanendran 2009, in the paper titled, “determining the business
success and failure of MSME units” in this paper they have suggested that small scale
entrepreneurs do not get good support from the government on time as required by the
entrepreneurs. The authors have also stated that the RBI should take necessary steps to
encourage the small scale entrepreneurs to receive bank loans with minimal
relaxation.
Popli and Rao 2009 in the study, “ an empirical study of MSME in Electronics
Industry in India: Retrospect and Prospects in post WTO Era”, in their study analyzed
that the Micro, small and medium enterprises have continually been a vital pillar of
support to the economy domestically all across the globe, regardless of the
competitions or the barriers that they face they still remain to run the nations with
their opportunities of employment generation capacities and skill development
trainings given to individuals working with these MSME‟s. In an emerging economy
like India MSME‟s have a strong Socio-economic role to play in the regional
development of the country. The Indian electronic industry is undergoing strong
26
transformations due to the emerging business policy and the new business
environment in the post WTO regime. This research paper analyses the challenges,
factors of technological upgradations, competency development, government policies,
strategies for implementation, quality of improvement and the overall improvement of
the sector in the post WTO regime. This study was conducted with the help of an
extensive research done involving India‟s MSME‟s in the textile sector and from the
experienced policy makers from various organizations at the government of India.
This research finds out lacks in growth conducive business environment, difficulties
in raising fund from the market, lack of quality consciousness and the inadequacy in
government support. Further the paper highlights the need to upgrade the technology
for faster and qualitative production and the creation of a strong and supportive
environment.
CII survey 2010 report titled, Infrastructure development key to MSME‟s growth and
development, it states that the high cost plays a major role in the development and
growth of the economy. He stated that the lack of availability of credit is a major
factor holding the growth and development of MSME‟s.
Azad 2010 in this research paper entitled “ Grooming MSME‟s in Blooming ASEAN”
states that there is a need for support organizations and extensions in the fast pace of
the growth of MSME‟s. Such support and extensions include, quality testing, market
intelligence, modernization, technology upgradation etc. he also mentioned that the
available institutional network in India has to be supported with extension services for
the smooth function of the MSME units.
JagapathyRao (2010) in the research paper titled, a study on socio-economic

background of entrepreneurs in s mall scale industries states that there is a need to
create awareness of financial sources and government policies and incentives to the
scheduled cast and scheduled tribes. The author further stated that the financial policy
should be able to uplift the underprivileged class of the society in the rural India from
a submerged existence to an abundant existence.
27
KrishnaveniMuthaiah and SudhaVenkatesh (2012) in the article titled „A study on
barriers affecting the growth of small scale industries in India, brought out an
interesting fact that the entrepreneurs who do not have the intention to run for long
have not registered their businesses. This bring out a gap that the entrepreneurs need
to be brought into awareness of the advantages of registering a firm to avail facilities
such as external credit, government incentives, government orders, ease of tax and
other such advantages brought in by the SME‟s supporting institutions. Firms can
register themselves as public limited or partnership firms which will enable more
hands to work and more minds to think towards a brighter future of the company.
Initially financial support can be availed with the help of family or friends and once
the businesses moves further banks loans can be acquired.
2.3 RESEARCHES ON THE DEVEOPMENT AND THE RISK FACTORS OF

ENTREPRENEURSHIP IN INDIA
Upadhye in thedissertation “A study in the development of Entrepreneurship in Small

Scale Sector in Pune city”, researched with a sample strength of 90 small scale units
out f which 10 were successful entities, 65 was on a breakeven or a marginally
successful scale and rest of the 15 were unsuccessful. The study proved an interesting
fact that some of the successful units in the small scale sector were well developed
due to the incentives taken up by the entrepreneurs from the various departments and
institutions of the government of India and the Maharashtra state agencies for
entrepreneurship development. The report also stated that the average age of the
entrepreneurs who were successful in their business was 32 to 35 years of age, with
most of the units being partnership firms having good family support and individuals
belonging to good family backgrounds. The author observed that the educational
qualification also played a major role in the success of the business; entrepreneurs
with good formal education were seen to be more successful in the promotion of the
business. Some units were found to be less in funding or with lesser financial strength.
The author suggested that the financial funding institutions should hold better
knowledge of the MSME units and also get closer to know of the kinds of problems
they face.
28
Bhanushali (1987) in this research study 125 entrepreneurs from small engineering
units were chosen from the district of Kolhapur in Maharashtra. Through the research
it was found that individuals hailing from minority communities with sound
knowledge of engineering have higher probabilities to achieve greater success rate.
These findings suggest improvements in the knowledge will not only bring in a fresh
supply of entrepreneurial talent but also improve on the chances of their success. He
also found that the entrepreneurs who have received higher education also had higher
chances of winning in their business entities. Hence education and knowledge
attaining plays an important role in the success of entrepreneurial ventures. The author
is of a clear opinion that physical and environmental faculties bring in more chances
of success.
Anwar (2002) in the research, the author has the opinion that the socio-economic
factors of the economy are the main reason of unemployment. Unemployment brings
in frustration which outlets anger and even violence. Unemployment as a major
problem in India‟s youth is turning out to be an alarming issue, even though the
government is working towards skill development and other ways of employment
generation, still it remains as a major factor that the government looks at. Therefore
efforts should be made to bring in more employment opportunities by creating
awareness of subsidies that generate income, development of the cottage and small
scale industries and modern technological improvements in agriculture. The author
also emphasized the importance and the role of entrepreneurship in the era of
economic globalization. He states that it‟s the need of the hour to identify and nurture
entrepreneurs who are capable to adapt to innovative technologies and modern
methods of production and thus coping with competition with the foreign markets.
KshetriNir (2011) examines various indicators related to entrepreneurship in India and

analyzes factors affecting India‟s entrepreneurial performance and it does a
comparative study between India and China. The paper points out Indian and Chinese
differences in entrepreneurial culture, regulatory framework, access to finance and
market environment Kshetri makes a conclusion that the structural inertia of Indian
economy has acted as a barrier to foster modern entrepreneurship.
29
In a study conducted on the youth of Orissa, Manjusmita Dash and KulveenKaur
(2012), discuss the challenges that young entrepreneurs face. The entrepreneurs have
stated their opinions on stigmas of the society, cultural problems and regulative
barriers.
A research conducted by IIM-A (AbhisekGoel,et al, 2006) studies entrepreneurs in
different parts of India. The researchers do an in-depth study on various perceptions of
Indian entrepreneurs. The perceptions range from attitude towards entrepreneurs as
life partners to family life. They conclude that the Indian youth have a more negative
approach to entrepreneurship than the Chinese. These stem from deep rooted social
perceptions and norms as entrepreneurship suffered cultural problems and was not
supported to take it up as career.
Sujoy Kumar (2011) discusses on the scopes and challenges of the MSME‟s. The
paper focuses on the alternative economic model of entrepreneurship where focus has
been placed on the small scale entrepreneurs. The paper speaks about a concept of
distributive justice in which the researcher states that the resources have to be
distributed evenly to the small ad micro scale entrepreneurs.
Kalyan Kumar &Gugloth (2012) in their research study namely small and micro
enterprises in the 21st century states that the prime intent of the study is to check on
the sustenance and competitive growth of MSMEs in India. The article focuses on the
ongoing changes in the business environment and the analysis of their suggestion for
MSMEs. It further focuses on the implication of globalization and domestic economic
liberalization for MSMEs and analyses its intensification performance. The MSMEs
has emerged as the most dynamic sector of Indian industrial economy.
In the research paper, „problems faced by entrepreneurs‟ by AhayNayar,
VasanthKiran(2014) have touched on three major factors that affect entrepreneurship
entities and also entrepreneurial intentions among people, the three major factors
namely, cultural bottlenecks, bureaucratic procedures in setting up and lack of
distribution.
Dr.Anuradha (2014) in the research paper titled, problems and prospects of micros,
small and medium enterprises in India in the era of globalization compares the
performances of MSME‟s during the re and post liberalization period in India with the
30
help of four economic diameters namely No. of units, production, employment and
export. The study results show that except marginal increase in growth rate in
employment generation, the growth rate in other parameters is not encouraging during
the liberalization period.
Mohandass, Subramaniyan (2014) in the research study focuses on the implication of
globalization; analyze the performance of small scale industries based on number of
units, employment, production, investment and exports on post liberalization.
In the research study Challenges and Opportunities in Micro, Small andMedium
Enterprises in India Abhinav Sharma1, Dr. D.C. Gupta (2015) analyses the various
challenges and opportunities associated with MSMEs in India. The suggestions
through the study were 1. Arrangements may be made by the government to ensure
the supply of trained and professional managers for the small scale sector. 2. It would
be necessary to consider policy initiatives to incentivize MSMEs to achieve
economies of scale by expanding production 3. To facilitate the MSME sector to
garner resources, it is imperative that a separate trading exchange be set up
exclusively for the MSMEs. 4. Provide special incentives for encouraging larger flow
of Venture Capital & Private Equity funds into the sector.
2.4 GAP ANALYSIS

Through this literature review it was found that there has been innumerable amounts
of studies, theories and literature found on the topic of entrepreneurs, their evolution,
what makes an entrepreneur and also the risks and challenges faced by entrepreneurs
all across the globe and in specific to India.
This detailed study of the literature review indicates that firstly, there is no research
which studies on the management of risk in the growth of enterprises in specific to
Micro and Small enterprise in India, most researches have been on SSI and MSME‟s
in general hence studies in specific to Micro and small enterprises have not been
found.
Secondly; there has been no study in the areas specific to the regions of Mumbai and
Pune.
31
Additionally there has been no study found on the correlation between the
demographics like the age, education qualification, type of industry and demographics
factors of an entrepreneur in relation to the risk factors of entrepreneurship faced by
the entrepreneurs.
Hence, this research stands in the gap and fulfils in specific areas of Micro and Small
Scale industries and also researches in specific areas of Mumbai and Pune.
32
CHAPTER 3
OBJECTIVE OF THE STUDY
3.1 Statement of Research Problem
3.2 Research Objectives
3.3 Hypothesis
3.4 Research Methodology
3.4.1 Primary and Secondary Data
3.4.2 Sampling Design
3.4.3 Population
3.4.4 Sampling Method
3.4.5 Sample Size
3.4.6 Research Instrument
3.4.7 Pilot Testing Phase
33
CHAPTER 3
OBJECTIVE OF THE STUDY, HYPOTHESIS AND
RESEARCH METHODOLOGY
3.1 STATEMENT OF RESEARCH PROBLEM
This research study touches upon four major risks faced by an entrepreneur
1. Family support
2. Finance/Funds
3. Business/Location
4. Government (Rules and policies)
This research identifies crucial factors influencing the risks faced by the
entrepreneurs and tries to link the Age, Demographics, Qualification and the
industry type of the entrepreneurs and its effect on the levels of risks faced by
them. The research also touches upon the strategies and ways adopted by the
entrepreneurs in order to fight the challenges faced by them in the growth of their
enterprise.
3.2RESEARCH OBJECTIVES:
1. To study the nature and dynamics of MSME‟s in India.

2. To analyze the impact of demographic factors on the level of risks faced by the
MSME‟s in India.
3. To understand the levels of risks involved in the formation of MSME‟s in
India.
4. To understand the steps/strategies adopted by the firms to mitigate the risks.
5. To analyze the factors of gaps in between the government and the
entrepreneurs.
6. To give suggestions to entrepreneurs for the improvement of relations between
entrepreneurs and the government
34
3.3 HYPOTHESIS
On the basis of the objectives the following hypothesis has been designed.
H01 – There is no effect of age of the entrepreneur on the factors of risk faced by
him
H11 – The impact of risks differs with varied ages
H02 – The education Qualification of the entrepreneur has no effect on level of risk
faced by the entrepreneur
H12 - The education Qualification of the entrepreneur determines the level of risk
H03 – The type of Industry of the entrepreneur has no effect on the level of risk
H13 - The type of Industry of the entrepreneur has a direct effect on the level of risk
H04 - The entrepreneurs are not aware of the government policies

H14 - The government policies are well published and aware to the entrepreneurs
H05 - The government is not a source of support to the entrepreneurs.

H15 - The government is standing strong in support of the entrepreneurs.
H06 - The entrepreneurs have very limited or no expectation from the government
in terms of enterprise formulation.
H16 - The entrepreneurs have high expectation from the government in terms of
enterprise formulation.
3.4 RESEARCH METHODOLOGY
For the purpose of this research, data has been collected from specific cities in
Maharashtra namely, Mumbai and Pune. A detailed literature review was
conducted from all the available material as a basis for secondary data. This
35
chapter of research methodology gives a clear idea of the research conducted,
which includes the steps followed in the research such as primary and secondary
data sources, sampling, the type of data collecting instrument used and finally data
analysis.
3. 4.1 PRIMARY AND SECONDARY DATA
The collection of Primary Data was done by means of Questionnaire to each

entrepreneur in the Manufacturing, IT and Service Industry. The Secondary data
was collected from the vast number of past research papers, National and
international journals on entrepreneurship, books and the reports that are published
on the said topic.
3.4.2 SAMPLE DESIGN
Two major cities in India were chosen namely Mumbai and Pune, being the
commercial hubs of the nation. The city of Mumbai is chosen since it is the trade
capital city of the country and Pune as a representative of a fast developing two tier
cities in business in India.
3.4.3 POPULATION
 Sampling Units - Entrepreneurs from the fields of Manufacturing, IT and

Service.
 Extent – Maharashtra State in specific to Mumbai and Pune
3.4.4 SAMPLING METHOD

This research required a probability random sampling method wherein the method
of sampling used for this research has been Convenience Random Sampling
method, thus the samples were randomly chosen for this research project from the
fields of Manufacture, IT and Service.
3.4.5 SAMPLE SIZE

The study brought to light that there are many business entities that are
36
unregistered in the region on Mumbai and Pune due to various reasons like Taxes,
Government policies and tedious documentation procedures because of which the
total universe remains unknown. Hence, there are „N‟ number of entrepreneurs in
Mumbai and Pune in the fields of Manufacture, IT and Service who are registered
and also many being unregistered. The formulae to determine the sample size
whose total universe count is unknown is as below;
n = Z2 × (P) × (1-P)
C2
Where,
Z = Z value (1.96 for 95% Confidence level)
P = Percentage picking a choice, expressed as a decimal=60%
C = Errors acceptable in the estimate P = 10%
Sampling Formulae :
n = (1.96)2 × (60) × (40)
(6)2
= 256 Samples
A total of 293 entrepreneurs were interviewed through the questionnaire and a total
of 263 reliable and valid filled data instruments were used for the analysis.
3.4.6 RESEARCH INSTRUMENT
In order to carry out the study effectively, a questionnaire was designed so as to

conduct the research and it was the instrument of the survey. Below stated is the
outline of the data collected and the type and contents of the questionnaire. There
was one set of questionnaire that was used for collecting data from the
Entrepreneurs.
Section I of the questionnaire was to understand the demographics of the

entrepreneur and also his/her entity, which included the age, gender, education
qualification, industry type, annual turnover, year of establishment, the number of
employees and the location of the enterprise.
37
Section II is divided into 4 factors of risk namely,
1. Family Support
2. Finance/Funds
3. Business/Location
4. Government interventions and policies
Each section is subdivided in-order to check the depth of the risks faced by the
entrepreneurs, the awareness of the risk faced and the ways undertaken to
overcome and mitigate the risks based on a Likert scale.
1. FINANCE/FUNDS
 Funds
 Knowledge about loans
 Government subsidy
 Family borrowings
 High interest rates
 Money lenders
 Property mortgage by banks
 Gold loans
2. LOCATION
 Inaccessible to the city
 Away from the market
 Unavailability of water
 Unavailability of electricity
 Accommodation of labour
3. BUSINESS
 Competition
 Unavailability of raw materials
 Unavailability of skilled labour
 No proper machinery
38
4. GOVERNMENT INTERVENTIONS AND POLICIES
 Multiple window policy
 Taxes
Q1 is to check the kinds of risks faced by the entrepreneurs.

Q3 to Q5 described about the family related risks/problems faced by the
entrepreneurs.
Q6 to Q8 eight described about the risks of funds and finances.
Q9 to Q11 described about the risks in business or competition.
Q12 toQ21 elaborated upon the risks with respect to government policies and
documentations. It is an elaborate detail of hiccups faced by the entrepreneurs
while dealing with governmental and legal procedures.
The questionnaire ends with questions about the Make in India and to check if the
people have any hopes from the MII project.
The research was conducted using a coded questionnaire for entrepreneurs. It
comprised of quantitative and qualitative statements. The quantitative section was
tested using SPSS 20.
3.4.7 PRE-TESTING PHASE (PILOT STUDY)

Pilot Study was conducted in Mumbai on Entrepreneurs to test the reliability of the
instrument used. The study was conducted with a sample of 50 entrepreneurs in
and around Mumbai city.
A: FACTOR ANALYSIS TEST

On the basis of the Factor Analysis Test conducted, the variables of the research
have been found. The research is Descriptive in nature.
The Independent variables in this study have been chosen as:
1. Age of the Entrepreneur
2. Education qualification of the entrepreneur
3. Type of Industry
Dependant Variable:
1. Risks with Funds
39
2. Risks with Government
3. Risks with Family
4. Risks in Business
Controlled Variables
1. Risks
B: DATA COLLECTION AND STATISTICAL ANALYSIS.

The research was conducted using a coded questionnaire for entrepreneurs. It
comprised of quantitative and qualitative statements with the use of Likert Scale to
maintain the accuracy of the response. The responses were then received and were
then recorded in a tabular chart. The statistical tools used were Chi Square test and
Anova Test. The analysis of the same was done through the software SPSS 20.
C: LIMITATIONS OF THE STUDY

 This research study has been conducted specifically in the area of Mumbai and
Pune and hence it does not give in-depth analysis of the factors risks faced by
entrepreneurs across the nation of India.
 This research includes only 4 major risks faced by entrepreneurs namely Risk of
funds, government (policies and regulations), Family and Business risks, whereas
there can be possibilities of several other kinds of risks faced by entrepreneurs
which has not been considered in this research.
40
CHAPTER 4
HISTORY OF INDUSTRIAL REVOLUTION IN INDIA
4.1 The first Industrial Revolution

4.2 The secondary industrial revolution
4.3 Industrial policies
4.4 Instruments used by Industrial Policies
41
CHAPTER 4
HISTORY OF INDUSTRIAL REVOLUTION IN INDIA
Industrial revolution was started in period from about 1760 to 1840. It was that
period of time when the transformation was being made.
4.1 FIRST INDUSTRIAL REVOLUTION:
Industrial revolution in India can be divided into 2 broad categories:
1) Before British came to India.

2) Modern industry development after independence or during independence
freedom rights.
Before British invasion: India once was very famous for its handicrafts and cotton
industry and Indians were the only exporters of these things throughout the world,
thus Indians were on a path of development. New small machines and tools were
made for use, but when British came to India, this industry collapsed because
Indians were only allowed to send the cotton and handicraft to England. Indians
were exploited and their living conditions were badly affected.
Modern industry development after independence:On 23 June 1757, the Britain‟s

East India Company defeated Siraj-ud-Daula, the Nawab of Bengal, in the Battle of
Plassey. The British thus became masters of Eastern India which was rich in
agriculture, industry and trade. Revenue was collected by the East India Company
from these regions and was sent to Britain, this provided them with the capital.
Seizing of raw cotton from the Indian cotton farmers and then exporting it to
Britain. Finally, they brought the manufactured textiles from Britain to India, and
India became a free market for goods made in Britain.
The major reason for Britain's Industrial Revolution was its textiles. Before the
Revolution, India was the world's number one textile manufacturer and exporter.
Thus the Industrial Revolution was made in Britain, but it was funded by
India (against her will).In 1750, India produced nearly 25 % of the world's
manufacturing output and was only outdone by China, which constituted 32.8 %.
42
However by 1880, India only took up 2.8 % of world exports and after its
independence from British colonization in 1947 India was one of the most poverty-
stricken regions in the world. However, from 1750 to1947, India experienced
improvements in its economy in various areas including agriculture, factory
production, finance, and even film production.
When the British came to India they brought new techniques and innovations along
with them. Soon the Great Britain became hub for industrial revolution and was the
first country to come up with this modern industrial revolution technique.
Development of new machines and tools had started. Due to Industrialization after
independence, the lifestyle of people changed in India. The lower class started
working at lower wages; this created a gap between the rich and poor.Soon
industrial revolution though first started in Britain spread throughout the globe and
proved to be the turning point in the history of the world. It affected the daily life
of people throughout the globe.
Industrial revolution involves that period of time when the transformation was
being made throughout the world from hand work to machine work. There was
increase in iron production and more use of chemicals which led to innovation.
More tools were developing so that machines could run more efficiently; however,
the industrial revolution had an effect on other countries of the world both
positively and negatively.
As Britain‟s East India Company collected money and product required for
manufacturing variousgoods from various parts of the country and sent them to
Britain and in turn the goods manufactured in Britain was imported to India and
sold here at much higher price, thus India became a large market for British goods.
4.2 SECONDARY INDUSTRIAL REVOLUTION:

After independence new policies came up which led to modernization and
innovations, therefore the standard of living of Indians improved. Thus industrial
revolution brought new world of advanced technology into light.
What new developments took place during industrial revolution in India?
43
 New machines were developed which reduced manual labour.
 New sources of energy came into existence for running advanced machines like
kerosene
 Advancement in transportation technology
 Communication facilities also increased, introduction of telephone, radio etc.
 Development of socio economic class, modernization gradually came in.
 Western culture started showing dominance in India.
 People migrated from rural areas to urban for better living conditions.
 Introduction through Research, development and consultancy.
Based on modernization, Industrialization in India is divided into four major

sectors of the economy
 The Primary Sector: Extraction and production of raw materials, farming,

mining, etc.
 The secondary Sector: The secondary sector considers the materials that are
gained from the primary sector and transforms the raw materials into final
goods such as textiles and automobiles
 The Tertiary Sector: The tertiary sector includes the services such as banking,
finance, and cinema to consumers and businesses
 The Quaternary Sector: The quaternary sector usually appears the latest in a
country's modernization process
 THE PRIMARY SECTOR:
 Agriculture/ Farming: Production of Food Crops –
As compared to other countries, India had much more agricultural land reserved for
food crops, such as wheat, barley, maize, millet, rice, etc. In 1892, 10,900 thousand
hectares were available for wheat growth, and this increased by 13,910 in 1947.
India also had 26,556 thousand hectares of rice fields in 1890 which increased to
34,625 by 1947. The increase in the available agricultural land reserve was
primarily due to the development of irrigation and canal networks in Punjab,
Narmada Valley, and Andhra Pradesh.
 Production of Cotton-
44
As years passed by, the production of cotton is increasing as there was more and
more usage of machinery. In 1865, India only produced 12 thousand metric tons of
cotton. By 1889, the number had risen to 533, and in 1919 doubled to 1052
thousand metric tons. India exported 102 thousand metric tons of cotton in 1850;
250 in 1863; 326 in 1905; 456 in 1915; and 738 in 1930. However in 1947, after
independence, cotton exports were down to 211 thousand metric tons. These
numbers shows the British exploitation of Indian raw materials, as the exports of
cotton were increased drastically during the 1930s. It was the time when the British
economy was suffering from the Great Depression. Like many other colonized
countries, India's cheap cotton and other raw materials were exported to Britain to
help produce final goods in British factories.
 Mining-
India has been rich in minerals since ages. The most profitable business during the
British colonial times was coal mining. The British supported coal, gold, silver,
iron ore and steel mining; but they did not look favorably upon mining of other
metals such as lead. They believed that India's development of metallurgy would
lead to production of weapons for the "natives," a potential threat to British rule.
 THE SECONDARY SECTOR

 Textile Industry: Problems then and now
The textile industry is one of the biggest industries of the Indian economy today,
and accounts for 21 per cent of employed workers in India. There are many
advantages of India's textile industry that helped it sustain in the market. The
strength is that India has the ability of huge production capacity, and has a large
pool of skilled and low-wage workers available for cheap labour. At the same time,
there are many weaknesses of the Indian textile industry which are the same ones
that were since the British rule. Some problems include the import of cheap textiles
from other neighbours, disorganization and the use of out-dated manufacturing
technology. The one aspect that has changed is the shift in competition. First India
had to struggle against cheap British textiles before independence, but now it only
45
has to deal with cheap Chinese textiles. The textile industry is yet to undergo a
dramatic modernization process.
 Automobile Industry-
The automobile industry of India is the tenth largest in the world, producing 2
million units annually. Though India's automobile industry did not flourish until
after independence, the foundations of domestic carmakers such as Tata Motors
and Hindustan Motors were set up prior to 1947.
 Iron and Steel Industry-
First step: Bengal Iron Works
James Erskine in 1870 founded the Bengal Iron Works, the first step towards an
iron/steel smelting industry ever taken in India. Raw coal was used to fire open top
furnaces, using the locally available poor-grade iron ore. Bengal Iron Works was
the first plant to produce iron and steel, but later more credit is given to TISCO,
which was able to produce steel and make profit. The two important and historic
iron and steel industries of Indian colonial history that still exist today are Tata Iron
and Steel Company, Ltd (TISCO) and The Indian Iron and Steel Company, Ltd.
(IISCO)
 THE TERTIARY SECTOR:

 Cinema
India is famous for its cinema industry, collectively known as "Bollywood" by the
world. The first motion picture received by Indians was the Lumiere Brothers'
Cinematographe's six soundless short films, which were shown at the Watson
Hotel, Bombay in 1896. The turning point in the Indian cinema came in 1913,
when DadaPhalke produced India's first silent film „Raja Harishchandra‟. This film
had titles in both Hindi and English and was released in Bombay.
During the 1920s, the Indian cinema came under business laws, many new film
makers gained fame during the 1920s, such as DhirenGanguly for „England
Returned‟ etc. The Indian sound films hadquietly but quickly replaced the silent
films during the 1930s, when the first Indian sound film AlamAra, directed by
46
ArdershirIrani, was released in 1903 in Bombay. This showed how India was
moving towards modernization.
 Banking and Finance:Emergence of Modern Banks in India.
It was in the late 18th century that Modern banking systems and institutions
emerged in India. The first banks among them were „The General Bank of India‟
established in 1786, and „the Bank of Hindustan‟, both are no longer in operation.
The State Bank of India is the oldest bank in existence, which was first founded as
the Bank of Calcutta in 1806.The Allahabad Bank, established in 1865, was the
first fully Indian owned bank. This bank in many other banks helped the Indians to
finance the profitable Indian cotton trade.However, some ventures resulted in mass
bankruptcies and banking in India remained under European dominance for many
years until the early 1900s. Even during World War I, II, and even until
independence, the banking sector in India faced many challenges. More than 94
banks in India collapsed between 1913 and 1918 from insufficient
investments. However, during the early 20th century, the banking market had
expanded to include the Punjab National Bank in Lahore and the Bank of India in
Mumbai which led the banking sector to a new level.
 The Quaternary Sector:
 Education
The education policies of the British were short lived, unjust, prejudiced and only
available for the rick and elite class, hence the quaternary sector failed under the
British administration. Though the British did establish many institutes for higher
education, the Indian public was neglected. Literacy was extremely low among the
Indians under British colonization. In 1911, only 6% of the adult population could
read; in 1931it had only slightly increased to 8%; in 1947 the literacy rate was only
11% of the total adult population.
The British did introduced a lot of regulation, standardization, and new

technologies to India, but at the same time de-industrialized India through
exploitative tactics, could not reach a black-or-white judgment as to whether
British rule benefited or deterred modernization of India's economy.
47
4.3 INDUSTRIAL POLICIES
At the time of independence Indian industries were either non-existent or infant

and had low capacities thus government intervention was needed. Without the
protection and support of government many modern and developed industries
would not have grown.
Secondly, Industries have a certain impact on the economy. This impact varies
from sector to sector. A new industry will attract skill, talent, labor and over time
grow into a fully developed industry.
Industries don't survive in isolation. One industry serves as a raw material provider
to one and the other industry may act as ancillary unit, for example: the iron and
steel industry is a raw material provider to automobile industry and automobile
industry is dependent on proper roads and infrastructural facilities.
4.4 INSTRUMENTS USED BY INDUSTRIAL POLICY:
 Use of subsidies and tariff/non-tariff barriers: used to protect domestic industries

from external competition.
 Import substitution: that is products are produced domestically and imports are
avoided.
 Licensing requirements before commencement of business.
 Industries reserved for the government with no private sector intervention.
Journey of Indian Policies from 1948-1991
Indian Policy Resolution, 1948

On 6th April, 1948 Government of India adopted Indian resolution for the welfare
of industrial development of the country. In this, Indian industries were divided
into four categories:
1. The first category included the manufacture of arms and ammunition,
production of atomic energy and management of railways
2. Second category included coal, iron and steel, aircraft, manufacturing of
telephone, telegraphs & mineral oil industries. All factories that were new were to
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be owned by public sector. The existing industries would be continued to be run by
private sector.
3. The third category included 20 large scale & basic industries wherein the
private sector had all the rights reserved to manage them although the state could
interfere as and when required. This included industries like automobiles, prime
movers, salt and sugar, machine tools, industrial alcohol, tractors, paper, heavy
chemical, rubber, cement, fertilizers, electric engineering, electro-chemical,
newsprint, cotton and woollen textiles, air and sea transport, power, non-metals,
minerals and industries related to defence were included.
4. The fourth category included remaining of the industries under private
sector that included both individual and cooperative .Special attention was given to
the development of cottage and small scale industries. Tariff policy, taxation policy
were also designed in this category along with maintaining sound industrial
relations between management and labour.
Indian Policy Resolution, 1956
India underwent lot of economic and political changes which required for a new
policy formulation. On April 30, 1956 second industrial policy was adopted. In
this, the industries were classified into schedules
1. Schedule A: In this schedule, 17 industries were included & the

responsibility of managing them was given to the state, industries included iron and
steel, atomic energy, heavy machinery, mineral oil, lead and zinc, railways,
wireless equipment, generation and distribution of electricity, heavy castings,
mineral oil, iron ore, and arms and ammunition.
2. Schedule B: 12 industries included were owned by the state. These
industries included aluminum, other mining industries and other non-ferrous metals
not included in the schedule A, machine tools, Ferro alloys and tool, steels,
fertilizers, the chemical industry, antibiotics synthetic rubber, carbonization of
coal, sea transport, chemical pulp and other essential drugs.
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3. Schedule C: In this, all the remaining industries were included whose
responsibility of development was left to the private sector. The industries were
controlled by state under Industries Development & Regulation Act of 1951.
Industrial Licensing Policy, 1970:
As per the recommendations of the Dutt Committee, the Government of India

announced a new Industrial Licensing Policy in February 1970.
 A „core sector‟ was introduced which consisted of 9 basic industries and

industries related to defence needs. This included industries of agricultural inputs,
iron and steel, non-ferrous metals, petroleum, cooking coal, heavy industry
machinery, ship building and building of dredgers, newsprint and electronics.
 It mentioned about „heavy investment sector‟ which included all those
industries having investment more than Rs. 5 crore.
 The „middle sector‟ included all industries which had investment between
Rs. 1 crore and Rs. 5 crore.
 Industries that had investment of less than Rs. 1 crore were placed in the
„Unlicensed sector‟.
 The concept of joint venture came into existence
Industrial Licensing Policy,1973
 In February, 1973, industrial Licensing Policy statement was adopted. A

new definition of „large industrial houses‟ was formulated which said that any
industry that has assets of more than Rs. 20 crore would be called large houses.
Thus, the earlier limit of Rs. 35 crore was redesigned.
 In this policy, two previous recommendations, of 1970 policy i.e.,
exemption limit from licensing (raised from Rs. 25 lakh to Rs. 1 crore in 1970) and
the joint sector were maintained. This policy also expanded the area of core sector
which included 19 industry groups as compared to 9 industries permitted in 1970
policy.
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Industrial Policy – 1977
It was announced by Janata Government, which was led by Morarji Desai on 23th
December, 1977. This industrial policy statement 1977 was later replaced by
incumbent Congress Government in the year 1980. A non- congress government
was ruling dispensation at centre for the very first time. The Janata Government
had a different approach and philosophies regarding g planning from congress,
which also reflected in its industrial policy also.
Salient features:
 The policy gave highest priority to the small scale and tiny industries. It
declared to establish one district industries centre in each district. This was done to
meet the requirement of industries within that district. It had also announced to
have a separate cell in the industrial developmental Bank of India; this was done to
cater the need of the small industries. This policy emphasized more on the
marketing, standardization, quality control etc. in small industries.
 More attention was drawn on labour intensive technology, for which they
came up with small and ordinary machines and their optimal use to enhance
productivity and income of the workers engaged in small and cottage industries.
Sectors such as capital goods, iron and steel, petroleum, fertilizers, and other large
scale industries, were given limited role. It was made sure that the large scale
industries were not allowed to expand their production and instead small scale
industries were encouraged to expand. Thus role of large scale industries was
redefined to compliment the role of small industries. In small scale industries the
list of items reserved for exclusive production was expanded from 180 to more
than 500.
 The policy also emphasized on public sector units in regards to the viability,
efficiency and profitability. It was declared by the government that minimum loss
would be taken over for selectively sick industries, help those bear losses, followed
by immediate measures to rehabilitate and manage the units taken over.
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 The use of indigenous technology was brought in for future development of
industries. As for sophisticated sectors, the government will help buy best available
technology from abroad. Hence called for a restrictive use of foreign technology.
 Maximum possible self-sufficiency and minimum export was introduced.
Those imports which was needed for development of priority industries were
allowed, which were restricted before.
 The government decided in the interest of balanced regional development,
no more licenses will be issued for the establishment of industries within certain
limits of metropolitan cities.
 The policy brought in increased participation of workers in management.
Also in the unnecessary areas, that are those which had no role to play in the
development of the country, the foreign investment was prohibited.
 Lastly, this policy is remembered for a very important provision, which
states that foreign companies that diluted their foreign equity up to 40 % under
FERA (FORIEGN EXCHANGE REGULATION ACT) 1973 were to be treated at
par with the India companies, e.g. Coca cola and IBM.
Industrial Policy Resolution – 1980
IPR was adopted by government of India on 23th July 1980. Its main aim was to
facilitate an increase in industrial production.
For small sectors:
1. Increase in the investment ceiling was made.

2. The concept of nucleus plants was introduced to replace the earlier concept
of district industry centers.
3. In the villages, which are well compatible with the environment, the
promotion of village and rural industries was done to generate economic viability.
IPR 1980 reemphasized the spirit of the IPR 1956. Still the small scale sectors
remained the best sectors for generating wage and self-employment based
opportunities in the country.
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Industrial Policy- 1991
 The government of India announced a new policy on 24th July, 1991. It had
an aim to correct the distortion and weakness of the industrial structure of the
country that had developed in 4 decades, with raising efficiency of the industries to
the internal tonal level and also accelerate the industrial growth.
 The number of industries reserved for public sectors was reduced from 17
to 8. Except for a short list of 18 industries this policy abolished the industrial
licensing, this list further reduced to 6 in the year 1999, which included drugs and
pharmaceuticals, hazardous chemicals, explosives like gun powder and detonating
fuses, tobacco products, alcoholic drinks and defenseequipments. In metro cities
the compulsion for obtaining prior approval for setting units was removed.
 The industries reserved for small scale sectors were continued to be so
reserved. This was the first industrial policy in which foreign companies were
allowed to have majority stake in India. In 47 high priority industries up to 51%
FDI was allowed. For export trading houses, 74% was allowed. It was promised
that foreign equity covers the foreign exchange requirement for the capital goods
that are exported. Some amendments in Foreign exchange regulation act (1973)
were also promised.
Major changes were as follows:

 Industrial licensing policy: New Licensing Policy put an end to the
licensing, irrespective of the investment made, except for a list of 18 industries.
However out of these 18 industries, licenses on 13 industries have been removed
and now only 5 industries requires license.
 Policy of public sector: In 1956, 17 industries were reserved for the public
sector in 1991 it was reduced to 8 industries and currently only 3 industries are
reserved for the public sector.
 Privatization and disinvestment: Government decided to give a part of
government shareholdings in public sector to mutual funds and financial Institution
etc.
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 Abolition of phased manufacturing programs‟ for new projects: the aim was
to indigenize technology. This was seen in electronic and engineering industries.
This was later abolished.
 Removal of mandatory convertible clause: Pre-liberalization banks could
convert them from lenders to owners in long run this was done to nationalize
private firms and thus was abolished post liberalization.
FIVE YEAR PLANS:
First Five Year Plan: In the first five year plan, the industrial schemes were
implemented in areas of small scale industries like co-operative schemes, coir,
survey of small scale industries. Very little importance was given to large
industries in this plan. Here, the outlay for industries was around 112 lakhs, 3.7%
of the total plan outlay. Even though the first five year plan was a disorganized
effort of development, it gave considerable experience of planning to the state.
Second Five Year Plan: Kerala was recognized as a state when the second five year
plan was already formulated. In the second year plan more importance was given
to industry as compared to the first five year plan. During this plan more attention
was given to the promotion of cottage Industries, small and traditional Industries.
Third Five Year Plan: In this plan, slightly more importance was given to the
Industries. The outlay for the Industries was around 17.9 crores. Just like the
second five year plan, in this plan also a major part of the outlay was given to small
and cottage industries i.e. 8 crores.
Fourth Five Year Plan: In this plan, the allotment for Industries and mining was
Rs.2208 lakhs. After the third five year plan and before the fourth five year plan,
there were some gaps which were filled by Annual plans. During this time,
Industrial policy of 1967 was issued. According to this policy, the state was
supposed to function within the limits of the policy laid by the government of
India.
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Fifth Five Year Plan: In this Plan, outlay for Industrial development was around
6145 lakhs. The aim of this plan was to achieve more Industrialization by
modernizing the traditional sector and establishing new units. During this plan the
total expenditure was around 5478 lakhs which was 87.8% as per the total outlay.
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CHAPTER 5
MSME’S AFTER GLOBALIZATION
5.1 Impact of globalization
5.2 Globalization and entrepreneurship challenges for MSME
5.3 Current scenario of MSME

5.4 Effects of demonetization on MSME
5.5 Make in India
5.1 Budget 2017
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CHAPTER 5
MSME’S AFTER GLOBALIZATION
Globalization has had a major impact on enterprises, hence it is important to

examine the effect on globalization on businesses. Two effects of globalization are
global market opportunities and global market threats. Global market opportunities
include the inherent increase in the market, potentials for related businesses due to
the openness of the market and consumers, opportunity in trade and investments.
The opportunities also include the easy of availability of required resources. Thus,
it also gains access to cheaper resources and greater sources of materials as
required. However, the threats can affect the businesses seriously. Global market
threats are many but the biggest and most dangerous threat is increase in the
number of competitors in the market at national as well as international level.
Other threats include the uncertainty, economic changes, change in firms, etc.
These global market threats, such as increase in the market shares in either
domestic or international trade which affects the enterprise and forces businesses to
struggle to gain and sustain competitiveness. Competitive advantage means that a
firm has an additional edge over other rivals who can be in any terms such as cost,
knowledge, experience, products, research and development (R&D), services and
other factors that can contribute to success in the market. It might be relatively easy
for large firms to go global that is to enter in foreign market but it is difficult for
the micro, small and medium-sized enterprises.
5.1 IMPACT OF GLOBALIZATION
There are three types of globalization
1) Trade in Goods And Services

2) Movement of Capitals
3) Flow Of Finance
Due to globalization, the world leaves its boundaries for trade and businesses and
transforms the world into one huge market. In 1991 at the command of IMF and
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World Bank .Globalization led to an unequal competition between dwarf Indian
MNC and giant MNC. Going global in business terms can be stated as a
worldwide movement towards economic, financial, trade and communications
integration. Globalization indicates the opening of the local and national view to
an extensive outlook of an interconnected and interdependent world with transfer
of capital, goods and services at free of cost across national border. MSME‟s are
the most booming and easily offended sectors in Indian Economy. The
significance of this is it ensures the capacity of employment generation,
technological requirement, low capital and use of traditional skills, mobilization of
resources, use of local resources and exportability of products.
MSME‟s contribute about 8% of the country‟s GDP, and even 45% of the
manufacturing output and 40% of the exports. It provides the largest employment
share after agriculture. The impact of globalization was such that it came up with
vast variety of opportunities but along with came large challenges. The worst part
of this was that most of the small units were unaware of these changes happening
around them and had no idea of how it would affect them.
Due to globalization, India changed its meaning in trade and business; such a
change affected its social, cultural and also economic aspects of life. Globalization
had its impact on nearly every business. The internationalization of markets for
activities such as import, export, sales and purchasing has direct or indirect
influence on all of the factors and business related to it.
Advantages-
1. Long-term thinking, perspectives

2. No pressure for short-term success
3. High identification with the business
4. Ability to cooperate successfully for mutual advantage
5. Ability and willingness to enter partnerships
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Disadvantages-
1. Difficulties to adapt corporate culture to new situations and challenges

2. Potential conflicts between corporate objectives and personal objectives of
the owner
3. Risk to focus too many factors
4. In many cases not suitable for the complex planning and implementing of
international activities
5. Low willingness to introduce more sophisticated structures
6. Spending for market research and market entry take a much higher
proportion of total spending
7. Lack of internationally experienced employees
5.2 GLOBALISATION AND ENTREPRENEURSHIP CHALLENGES FOR

MSMES
New start-ups, with the existing enterprises that are innovative are beneficial in
many ways such as to create job and to have economic growth.
However, many and major challenges are faced in adapting new forms of
innovation as it nearly changes scenario. The survival and growth of existing
enterprises gets affected adversely by conditions such as the global financial melt-
down, demonetization, major economic announcements, etc and the economic
crisis that followed. The roles of innovative and entrepreneurial enterprises include
many tasks to be achieved.
a) Poor macroeconomic framework conditions
Due to the macroeconomic framework adoption by majority of the countries and

due to globalization, the entry, growth and exit are influenced, to a very large
extent. Inappropriate regulatory, tax policies, instability in macroeconomic
behavior prevents enterprises from growing at their maximum potential.
Macroeconomic instability, it is in the form of fluctuating values such as interest
59
rates and exchange rates, investments and change in policies. Different factors such
as Application of rules and regulations, bankruptcy laws and procedures, unfair or
non-transparent policies and ineffective anti-corruption measures these factors
prevent from being innovative, restricting growth of the enterprises.
b) Obstacles in accessing international markets and knowledge
Operating in international markets gives an exposure to foreign competition as

much as it provides them with new opportunities. Globalization increases incoming
and outgoing of technologies, suppliers, markets, knowledge and many enterprises
make use of this exchanges to grow and diversify, on the other hand there are
others who do not make use of it. One of the reason for enterprises non-
participation in the global markets is, difficulty to find a suitable business partner.
Enterprise at global level requires trusted foreign partners. Policy makers may find
a model or framework which is helpful in developing strategies for survival and
growth. Findings indicate that an exploratory investigation of this nature is one of
first and it has practical implications for enterprises.
The impact of Foreign Direct Investment (FDI) on the survival of SBEs
Foreign direct investment (FDI) is one of the crucial factors of

globalization. It can be said that FDI is one of the most important aspect of
globalization. It creates stable and long-lasting links for enterprises for survival and
growth. According to World Investment Report 2012, despite of the disturbance in
the global economy of 2008 crisis, global FDI reached $1.5 trillion in 2011 and this
exceeded the pre-crisis average.
Impact of business networking on SBEs and SMEs
The business networking has a direct effect on daily performance and

survival of enterprises. Managing the new challenges and also to explore new
opportunities in domestic and global markets enterprises make use of networking.
The business networking shows direct impact in improving the efficiency and
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effectiveness of the enterprises, at local and in the foreign markets as
well.Networking is a context which can be used by enterprises to build and manage
relationships.
Why Supply Chain Management Is Important For MSMEs?
A good supply chain management provides great value to ultimate customer. SCM
is important for MSMEs in several ways. In the pre-internet era, sharing
information between supply chain partners was highly expensive. The alternative
available was private communication network whichwas beyond the limit of
MSMEs; therefore they chose not to communicate due to huge cost of
communication. Today with internet connectivity MSMEs can set up cost effective
communication networks with supply chain partners. Supply Chain Management is
of great interest in current years for manufacturing service sectors of the economy.
SCM helps various organizations in securing high quality materials and goods at
competitive price. It allows faster response to customer orders. This has benefitted
the organization from reducing the cost throughout the supply chain. MSMEs used
to suffer from incapability of reaching huge set of customers. This can be increased
by improving manpower and better skill requirements. MSMEs having better SCM
practices are in a good position to potentially tap the large market. New enterprises
providing good SCM capabilities will be discovered constantly. This is the
appropriate time for MSMEs who grab the opportunities and make huge business
gains.
Role of Human Resources in MSMEs:
Human Resource Management plays an important role in MSMEs to implement a

successful business strategy to face the challenges, organizations are facing an also
to ensure that they have the right people capable of delivering this strategy. While
the organization plans for a successful trajectory, there is a need for HR and
promoters to agree the change management agenda for the change in organization
culture. This sector has an engine of growth, especially in a developing country like
India due to their contribution for income generation, employment and the increase
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in GDP. In the last two decades, there have certain spaces where many MSMEs
have not grown either by choice or by challenges to transform their business. When
the organization grows, it becomes difficult to involve all employees in operational
decisions. HR can afford to give attention to individuals needs in terms of rewards
or/and career goals. HR functions can come as a weakness when all the efforts
involved in forming a team becomes fruitless. There can several reasons such as
dissatisfaction with pay, HR policies and practices, lack of hygiene factors etc.
5.3 THE CURRENT SCENARIO OF MICRO, SMALL AND MEDIUM

ENTERPRISES
The progress of the MSMEs (micro, small and medium enterprises) is being
booming day by day. Anyone can open their own business at some point of time in
life. The growth of the MSME sector is contributing towards the growth of India‟s
GDP and also providing increasing employment opportunities to the people. The
growth of MSMEs does not only provide increase in industrialization in the rural
areas but also helps in the reducing the imbalances and trying to distribute the
nation‟s wealth for India‟s growth.
5.4 EFFECT OF DEMONITIZATION ON MSMSEs
The MSMEs faced a crisis during the demonetization period as these enterprises
depend on daily and weekly wages to their workers and also for the future
investment. As there was a shortage of currency it reduced the profitability to the
MSMEs involved in the agricultural products, textiles, construction of automobiles,
steel, consumer durables. Also some companies had a shut down due to low cash
liquidity for a few weeks.
There has been an increase in digital transactions and use of cheques of around
41% in the registered MSMEs making the flow of cash more transparent. Digital
India will lead to more job opportunities in the marketing sector of such
enterprises; it will open a gate for new opportunities for the MSMEs. Conversion
of economy from informal to formal will not leak cash out of the system and more
profits can be earned. Also the banks will acquire more cash after the
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demonetization period which could decline the rate at which the investment is lent
to an enterprise; this could act as a gain for the growth of the MSMEs.
EXAMPLE: GOOGLE CEO SUNDAR PICHAI LAUNCHES DIGITAL

UNLOCKED INITIATIVE FOR STARTUPS, SMES IN INDIA:
SundarPichai, The CEO of Google.co has announced a new initiative which is

called DIGITAL UNLOCKED with the support of the IT MINISTRY OF INDIA.
This initiative is all about bringing the small size enterprises and startups to grow
their business on a digital platform which will help to connect to more number of
customers who can buy the product in India as well as in the foreign countries. The
main objective of this initiative is to provide courses which are certified by Google
and the Indian school of business, Hyderabad certification offered by FICCI
(Federation of Indian Chambers of Commerce & Industry). This programs will be
customized as well as offered online and offline.
5.5 MAKE IN INDIA CREATING A NEW PLATFORM FOR MSMEs:
The MAKE IN INDIA campaign which was initiated by our Prime Minister
Mr.NarnedraModi has been initiated for the growth of the manufacturing sector in
India and also investment in the innovation sector of the MSMEs that will
eventually lead to increase in GDP and prosperity of the country. The registration
and the funding process have become easier now than it has been in the past. The
government has realized that the increase in this sector will directly have a positive
impact on the economy. The Micro and Small Enterprises-Cluster Development
Programme is an initiative undertaken by the government so as to enhance the
productivity of MSMEs. Some of initiatives taken by the government to increase
productivity and reach globally are Indo-German Manager Training Programme
(IGMTP), Overseas Human Resources Development Association (HIDA), and
Japan etc. The detailed steps in the „Make In India initiative‟ will be explained in
the next chapter.
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5.6 BUDGET 2017 AND ITS IMPACT ON MSMEs:
Union budget of 2017 in favor of MSMEs presented by Finance

ministerShriArunJaitely focused on Reduction in Corporate Income Tax, Time
Limit Extension, Family Sector, Rural Population and the Youth. Asserting that the
budget provides a big relief to the MSMEs sector, ShriKalraj Mishra, the Union
Minister for Micro Small and Medium Enterprises, said that “lowering of income
tax of smaller firms and doubling the target under MUDRA Yojana will benefit
small enterprises”. Mishra stated that doubling the lending target to Rs.2.44 lakh
crore under the PradhanMantri Mudra Yojana for 2017-18 will also benefit the
small entrepreneurs. Bringing reduction in taxes for smaller companies to 25% will
make MSMEs more viable. As per the data of assessment year 2015-16 there were
6.67 lakh companies falling into this category. Therefore percentage wise the 96%
companies will get the benefit of this lower taxation.
Highlights of union budget:
 Reduction in corporate tax

 Time limit for availing benefits of income tax has been extended
 Relief for MSME‟s that have non-cash receipts and have opted for presumptive
taxation
 Carry forwarding of losses
 Exemption of conversion of shares
 Hundred percent penalty on cash receipts of 3000 INR or more
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CHAPTER 6:
ROLE OF GOVERNMENT ORGANIZATIONS FOR

ENTREPRENEURSHIP DEVELOPMENT
6.1 Doing business in Maharashtra
6.2 Institutions under the Government of India
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CHAPTER 6:
ROLE OF GOVERNMENT ORGANIZATIONS FOR

Maharashtra has been the first choice of domestic and foreign investors. It
welcomes investors across the globe. A land of immense opportunities, also the
third largest state in the country in terms of land and wealth. Maharashtra has the
largest network of roadways in India which helps cities like Mumbai and Pune for
faster development in terms of infrastructure and industrial growth. A vibrant
industrial sector and a rapidly growing service sector is what the state boasts itself
as. Both contribute to about 86% of the domestic products, whereas agriculture
sector only contributes 14% of the income thought 55% of population is dependent
on it. Mumbai being the financial capital of the country consist large number of
headquarters of major financial institutions, insurance companies etc. Maharashtra
has been viewed as an industrial powerhouse of India.
The state strives to get investments from other countries as well as domestic
institutions. Maharashtra has many developed industries, not to forget IT
(Information technology) for which the government has set up many IT parks
around the cities.
6.1 DOING BUSINESS IN MAHARASHTRA
A recent study showed that Maharashtra received the highest investment share in
December 2014. The government has taken steps towards motivating the industry
in different ways, providing better infrastructure etc., due to which number of
investors started building up in the state consistently. This lead the government
launch a guide known as “DOING BUISNESS IN MAHARASHTRA” with an
intension to provide the required facilities to the investors and helping them out
with approvals required and guidelines towards starting up a business in
Maharashtra.
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The guide “Doing Business in Maharashtra” contains steps and procedures in
practical action taken towards starting up a business/enterprise in Maharashtra.
The major feature of the guide is the flowchart whichgives „easy to recognize‟
approvals to start up a business in Maharashtra.
The guide has categorized it into three stages,
1. Registration of an MSME or a large project

2. Pre commissioning stage- Approval for setting up a plant
3. Post-Production Approval
Figure 6.1 :Adapted from-Source : www.doingbusinessinmaharashtra.com-2016/17
67
68
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6.2 INSTITUTIONS UNDER THE GOVERNMENT OF INDIA
In order to encourage the business activities the government gives various benefits
in the form of schemes and subsidies to the companies. There are various
organizations which work to promote and assist the entrepreneurs in setting up of
business, providing them with capital, task force as well as training required to
efficiently run the business. These organizations are either autonomous (non-
government) or Government Controlled. There are certain organizations which are
directly under the control of the state government which help to promote and
develop business in Maharashtra.
The institutes of organizations that run with the help of the Government are stated
below:
1. Maharashtra Industrial Development Corporation (MIDC).

2. Maharashtra State Khadi & Village Industries Board (MSKVIB).
3. Directorate of Skill Development, Employment and Entrepreneurship
Government of Maharashtra (MAHAROJGAR).
4. Dairy Development Department. Maharashtra State (DDD)
5. Maharashtra Fisheries Development Corporation (MFDC).
6. Maharashtra Agro Industries Development Corporation Ltd (MAIDC).
7. Maharashtra Centre for Entrepreneurship Development (MCED).
1. Maharashtra Industrial Development Corporation (MIDC)
After the establishment of Maharashtra State on May 1, 1960, the Administration

of Maharashtra founded a "Board of Industrial Development" (BID) on October 1,
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1960, under the Chairmanship of Shri. S. G. Barve, I.C.S. The several board
suggestions were obtained of the manufacturing sector were used up for
accomplishment and as per the Borkar Committees recommendation, expansion of
UVWS was trusted to the (BID).
The BID outlined the approvals and it was presented before the state legislation
and approved in the form of "Maharashtra Industrial Act" which contributed to
MIDC, as a detached organization on August 1, 1962. The BID were the first
personnel strength of MIDC
Roles and Objectives of MIDC
 Acquisition and disposal of land : The Government of Maharashtra has handed

over the industrial land to the cooperates. Compensation for the private land in
paid up from the government funds. In turn cooperates plan the area and disposes
the land in suitable plots and recovers premium lease money at different rates for
different areas.
 Provision of infrastructure facilities: Accordance with the MIC Act 1961
cooperates is required to provide infrastructural facilities like roads water supply
schemes, proper drainage, etc. It is stated that after full development of the
industrial area, it should be returned back to the government after striking out the
account of the industrial area concerned. In this the power to fix the rates for
premium of the lands lies with the cooperates. Both their aim is to achieve a
balance development of the entire state.
 Providing services : Cooperates provides following services to the units,
 Assured water supply: Pure water supply can be considered as an special service
of the MIDC. An investment of Rs 5 crores was initiated for the water supply
scheme as on 31st March 2002.
 Maintenance of Industrial area : The cooperates requires to maintain the roads,
street lights, etc during the transitory period before handing over to the
government. In other areas the cooperates functions as committed obligation, for
which it recovers services charges to meet up to the expenditure of the services
provided.
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2. Maharashtra State Khadi & Village Industries Board (MSKVIB).
The MSKVIB is trusted with the job of providing monetary help to organizations
and persons for growth and operation of Khadi and village businesses and
managing them through supply of plans, prototypes and other practical
information. In executing activities, it may take such steps as to confirm
authenticity of the products and to set standards of quality and ensure that the
goods of Khadi and village industries follow the set standards.
The MSKVIB, directly or indirectly studies regarding the complications of Khadi

and village businesses besides studying or starting pilot projects for the
improvement of Khadi and village industries. The KVIC is certified to start and
sustain separate bodies for the purpose of dealing with matters incidental to its
activities.
Roles and Objectives of MSKVIB
 To setup, inspire, help and carry on Khadi & Village Industries.

 To help individuals by providing them with labour in their households and to give
finances and other form of financial help.
 To conduct Training for growing technical abilities of the Craftsperson.
 To produce tools and implements necessary for carrying Khadi & Village
Industries.
 To organize for sale of finished goods by opening stores, shops or organize fairs.
 To Conduct Training & Workshops to boost technical Abilities
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3. Directorate of Skill Development, Employment and Entrepreneurship
Government of Maharashtra (MAHAROJGAR)
Its vision is to enable employment and offer self-employment assistance for the
youth to increase their earnings, thus promoting wide-ranging progress. Deliver
responsive, clear and decentralized employment facilities and encourage Self-
Employment, e-governance, employability of work seekers, inspiring employers to
seek applicants from DSDE&E and attain reasonable socio-economic growth.
Roles and Objectives of MAHAROJGAR
 Superior Skill Growth, Occupation and Entrepreneurship assistance centers for
differently-able people.
 Registration and Placement of Job Seekers
 SMS Alerts for eligible job seekers
 Listing of Job Providers
 Career Assistance &Counseling
 Work Promotion Programme
 Proficiency Expansion
 Job Fair
 Teaching for Tribal Youth
 CNV Act, 1959 execution
 To provide maintenance & help to service provider & service hunter from
unorganized sector.
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4. Dairy Development Department. Maharashtra State (DDD).
Distinct Dairy Development Department started in year 1958 to offer essential
organization for improvement of Dairy productions in entire state of Maharashtra.
The head of this dept. is denoted as “Milk Commissioner” Dairy Development
Dept. then started 38 milk treating dairies and 81 chilling center as per necessity.
To resolve problem of surplus milk Govt. started market in other towns. As a
consequence brand like Gokul, Warna started retailing their goods. This also
decreased part of Govt. Milk in marketplace. The DDD inspires farmers to start
dairy business as a secondary business.
Roles and Objectives of DDD

 To improve the abilities of dairying in countryside persons and make them to agree
to take this activity as a joint occupation along with agriculture.
 To develop Co-operative societies at village, taluka and district level.
 To inspire dairying in Co-operative segment and to reinforce the Co-operative
dairies and unions to be financially strong.
 To plan various programmes for effective working of dairies in Govt. sector.
 To safeguard even production of milk in flush and lean season
 To supply unadulterated and wholesome milk regularly to the persons of
metropolitan area at low rates.
5. Maharashtra Fisheries Development Corporation (MFDC).
Maharashtra Fisheries Development Corporation (MFDC) has been registered

under the Companies Act, 1956, (A Govt. of Maharashtra Undertaking) for
organized growth of Fisheries on marketable basis, with a sanctioned share capital
of Rs. 4 crore. The share capital of the Corporation as on 31st March 2010 is
Rs.2.75 crore. The Corporation obtains from the State Government, monetary help
in the form of share principal and grants. The State Government has hand over all
marketable and advertising Fisheries activities to this Corporation.
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MFDC has, since its start, been involved in the improvement and upkeep of the
various Fisheries places of Maharashtra. MFDC owns and preserves Ice Factories
at Sassoon Dock and Aurangabad respectively and having more Ice Factories,
Fisheries Industrial Estate Development is on the plan.
Roles and Objectives of MFDC
 To Endorse any company or companies, for the purpose of obtaining all or any of
the possessions, privileges and accountabilities of the Company or for any other
purpose intended to advantage the Company
 To launch or fund or aid information or support of associations, organizations,
funds, trusts and accessibilities accounted to help the employees or the
responsibilities of such persons.
 To grant allowances and to subscribe or guarantee money for charitable or for
public, general or useful objects.
 To train or to pay for the training in India or abroad of any member of the staff of
the Company or any other employee of the Company whichever in the current or
probable to be in the service of the Corporation in future.
6. Maharashtra Agro Industries Development Corporation Ltd

(MAIDC).
Maharashtra Agro Industries Development Corporation Ltd (MAIDC) was

established in 1965 to encourage transformation of the Agro segment through
automation and is a obvious sample of the progressive guidelines of the state. The
objective of the corporation is to make obtainable to the agrarians of Maharashtra
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standard feature Composts, Insecticides, Agro Industrial Implements & Animal
feed at reasonable rates.
Maharashtra Agro Industries Development Corporation Limited (MAIDC)has also

been designated as State Nodal Agency by Ministry of Food Processing Industries,
Govt. of India. In its role as State Nodal Agency it inspects & forwards several
applications of entrepreneurs under different schemes of aid from Govt. of India. It
also assists entrepreneurs in making plans, choosing the area, etc. MAIDC has also
established a Food Park at Butibori near Nagpur with an idea to offer shared
infrastructure amenities for small to medium food handling units. MAIDC is also
in the course of setting up a Flower Auction Centre in Mumbai.
Roles and Objectives of MAIDC
 To manufacture and distribute Agricultural Farm Machinery.

 To produce and dispense other farming inputs such as Manures, Insecticides, Seeds
etc.
 To make and allocate yields relating to Dairy, Poultry and Allied Trade.
 To improve agro based businesses for booming out handling of agricultural foods
and to assist such activities.
 To render aid to persons, who are in the area of cultivation and associated
productions in revolutionizing their farms and businesses.
7. Maharashtra Centre For Entrepreneurship Development
MCED has been a innovator in adopting shared and financial entrepreneurship

since 1988. It is a teaching establishment in the primary area of entrepreneurship
improvement. It works as a organizer and director for the building and refinement
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of the entrepreneurial essence and the idea of „self-employment‟ in a country that is
mainly motivated by third party occupation.
At MCED, there is continuously the hummable ring of individuals conversing,

thinking, creating plans and refurbishing abandoned ideas. The thrum of effort and
the thrilling buzz of action is a permanent part of the work principles. MCED is
also an extremely expertise savvy organization which, not surprisingly, is one of
the few workplaces to impose the paperless office concept. This peaceful and
productive office atmosphere has been cherished by the absence of a official
supervisor as is the case in other admins. The Governing Council is the rule
making authority of this premier organization and Executive Committee is
observing after day-to-day running of the Centre.
Roles and Objectives of MCED
 To spread entrepreneurial values.

 To grow entrepreneurs through organized training.
 To distribute information and data concerning entrepreneurship.
 To aid businesses and organizations in assembling human resources with an
entrepreneurial method.
 To generate awareness about developing & upcoming entrepreneurial chances and
encounters.
 To improve competencies in business internationalization.
 To conduct Organizational Development Programs.
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CHAPTER 7:
ROLE OF NON-GOVERNMENT ORGANIZATIONS FOR

Impact of Non-Government Organisations in Entrepreneurship

7.1
Development
Non-Government Organisations of Maharashtra in

7.2
Entrepreneurship Development
7.3 Some active Non-Government Organisations in Maharashtra
Role of Non-Government Organisations in development in

7.4
Women Entrepreneurship
Entrepreneurship Development among Women in

7.5
Maharashtra
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CHAPTER 7:
ROLE OF NON-GOVERNMENT ORGANIZATIONS FOR

NGOs, being a social developmental objective, have been playing important roles
as facilitator or intermediary in microfinance movement in India. Such kind of
NGOs, perform excellence in the efforts of development in different capacities.
7.1IMPACT OF NGOs IN ENTREPRENEURSHIP DEVELOPMENT
While the role of NGOs in entrepreneurship development assessed what they do,
the impact needs to assess what they have done. National Knowledge commission
states that a successful entrepreneur ecosystem is the function of a number of
factors working in tandem. „Entrepreneurial triggers‟ are Individual Motivations,
Socio-cultural Factors, Access to Early-Stage Finance Education and Business
Entrepreneurship involves the community, family academia, financial player‟s
government, industry, and potential entrepreneurs themselves. Promoting
Entrepreneurship involves development that is reflected in following dimensions.
Developing Entrepreneurial Culture: NGOs through their awareness have been

successful in developing an entrepreneurial culture among the beneficiaries.
Improved Standard Of Living: Improvement in standard of living of

beneficiaries could be a meaningful indicator of the economic impact of
development initiatives.
Savings Creation: Beneficiaries of the NGOs shall appreciate a positive growth in

their savings and household assets as a result of the developmental initiatives.
Recognition in the Society: It is important impact that adds to the motivation of

beneficiaries to be part of the development initiatives. Improved morale would in
turn lead to high achievement orientation
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Capacity to Deal with Official Formalities: When routed through the NGO-SHG
window, they are better molded with confidence to approach the authorities for
their requirements. Building awareness of the official requirement acts as strong
morale builder in this aspect.
Skill Development: Training is the main part of the entrepreneurship development

to develop the technical skills.
Capacity to undertake responsibilities: As linked with entrepreneurship

development, efforts of NGOs in this line contribute to build ability to undertake
responsibilities.
Effective Utilization of Man Hours: Development initiatives of NGOs attempt to

facilitate an effective utilization of man hours in income generating activities.
Improved earnings: Income is a key variable to determine effect of any project

under evaluation. The financial requirement is one of the most basic needs hence
the beneficiaries are expected to have an impact on their earnings by the
development initiatives and NGO intervention.
7.2NGO`S OF MAHARASHTRA IN ENTREPRENEURSHIP

DEVELOPMENT
In Maharashtra Non Profit Organizations/ Non-Governmental Organizations are

part of social development and welfare of the state people. Maharashtra NGOs are
participating in Social development and charitable issues organized by Government
and welfare groups. NGOs have been implementing the programmes related to
Women Employment, Rural and Urban Development forming and supporting Self
Help Groups. Research and Development are major part of many active NGOs in
Maharashtra. Many NGOs in Maharashtra have taken up the programme of
entrepreneurship development in rural areas of Maharashtra as 29.6% of state lives
in abject poverty out of total Indian Population.
Objectives of NGOs in Maharashtra are:

• To serve as an instrument of rural development
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• To develop, standardize, popularize and commercialize innovative rural
technologies
• Making traditional rural business more profitable
• Generating new business and employment opportunities
7.3 SOME ACTIVE NGOS IN MAHARASHTRA

World Vision India, (Pune): It is a Christian humanitarian organization working
to create lasting change in the lives of small children, families and societies living
in poverty and injustice. It serves people of all religion, caste, race, ethnicity or
gender. Spread across 174 districts in India, works through long-term sustainable
community development programmes and immediate disaster relief assistance.
Yerala Projects Society, (Sangli): Yerala Projects Society is a registered NGO,

working for the poor and needy people in underdeveloped areas of Sangli district.
Mission-To Support deprived families to satisfy their basic needs, build self-
sustaining community, and bring all underdeveloped elements of the community in
the stream of development.
Vision- YPS envisioned the development of under privileged sections of society by

keeping their culture, wisdom, self-esteem and self-respect intact.
7.4 ROLE OF NGOS IN DEVELOPMENT IN WOMEN

ENTREPRENEURSHIP
Entrepreneurship is emerging as an important avenue in gaining economic

independence for women. According to current status many of emerging women
entrepreneurship is in small enterprises. there are many challenges faced by them,
these challenges can be classified as; lack of managerial skills, difficulty in
accessibility of finance ,lack of Self Confidence, lack of easy access of
entrepreneurial training and post training support, lack of awareness , lack of
education etc. in recent times, the importance of entrepreneurship have been
realized by government as a prominent alternative to traditional wage employ in
new its role in increasing the pace of economic growth. Therefore Indian
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government has given various especial policies to help the women entrepreneurial.
However there are many limitations among the women entrepreneurs in accessing
these facilities. These Limitations to come due to various factor, such as, location
of government training Centre are in far from that, lack of transportation in remote
area.
There number of NGOs in India are trying to help women entrepreneurs at various
level, these are (ICECD) international Centre for entrepreneurship and careers
development, (FIWE) Federation of Indian women entrepreneurship these are
prominent NGOs providing Services to women entrepreneurs in this field for more
then15 year. It is very important to highlight that limited number of literature are
available on the NGOs and NGOs dose contribution to the promotion of women
entrepreneurship in India.
Present study NGOs are working very gently and contributes significantly to the
knowledge about the appropriate and effective approach of the NGOs to support
women entrepreneurship in Maharashtra.
7.5 ENTREPRENEURSHIP DEVELOPMENT AMONG WOMEN IN

MAHARASHTRA
MahilaArthikVikasMahaMandal: It is registered under companies act, 1956 having

district officers in 34 districts of Maharashtra and head office in Mumbai. Main
objective is build organization, capacities, confidence among women.MAVIM
through the SHGs self help groups implement several group projects:
 Maharashtra Rural Credit Project: The MRCP gave direction to functioning

and working of MAVIM and influences its policies for empowerment of
women.
 Swarnajayanti Gram SwarojgarYojana: sponsors scheme for poverty
alleviation and being implemented by rural development department and district
rural development agencies.
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 Swayamsiddha- Integrated Women Empowerment Programme: central
government sponsored India Mahilayojana and Mahilasamrudhiyojana merged
in to new scheme to form Swayamsiddha.
 RamaiMahilaSakshamikaranYojana: Formed for scheduled caste women.
 AdivasiVikasPrakalp: for empowerment of tribal women for 8 districts of
Maharashtra.
 RashtriyaSwayamVikasYojana: sponsored scheme being implemented in each
district for women.
 KrishiSaptakYojana: training for rural women to make their participation more
effective in agriculture.
 NABARD add-on: formation of 1000 SHGs in 10 districts.
 MahilaSwavalambbanNidhiYojana: the scheme in order to bring in women
already organized in SHGs in development mode by imparting them
entrepreneurship training and making available to them hustle free development.
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CHAPTER 8
TAX STRUCTURE IN INDIA
8.1 Types of taxes in India
8.2 Details of types of taxes in India
8.3 5 tax benefits for every entrepreneur in India
8.4 5 signs for entrepreneurial mind-set
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CHAPTER 8
TAX STRUCTURE IN INDIA
India has a well-structured system according to the population in India. In India,

taxes are the largest source of income for the government. This income is invested
in various projects for the development of the country. Taxes are determined by
state and central government also local authorities like Municipal Corporation.
Taxes cannot be imposed unless it is passed by law.
Some minor taxes are also imposed by the local decision makers such as the
Municipality. The authority to impose a tax is derived from the Constitution of
India which assigns the power to impose various taxes between the Central and the
State. An important, limitation, on this power is Article 265 of the Constitution
which states that "No tax shall be levied or collected except by the authority of
law". Therefore, each tax impose or collected has to be backed by
the StateLegislature or the Parliament.
8.1 TYPES OF TAXES IN INDIA
Taxes are of two distinct types, direct and indirect taxes. The difference comes in
the way these taxes are implemented. Some are paid directly by the people, for
example income tax, wealth tax, corporate tax etc. while others are indirect taxes,
such as value added tax, service tax, sales tax, etc.
1. Direct Taxes
2. Indirect Taxes
Direct Tax:
They are tax which is paid directly. These taxes are charged directly on entity or
individual and cannot be transferred to anyone else.
 Income tax Act
 Wealth Tax Act
 Gift Tax Act
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 Expenditure Tax Act
 Interest Tax Act
Indirect Tax:
These are those taxes that are charged on goods or services. In this the tax are not
directly paid by person to government but they are charged on products and are
collected by the person selling the product. Best example can be VAT (Value
Added Tax), Taxes on Imported Goods, Sales Tax, etc. These taxes are charged so
as to push the price of the product.
 Value Added Tax

 Service Tax
 Sales Tax
 Custom duty &Octroi
 Excise Duty
 Merits of direct tax
Economical: Direct taxes are very cheap in the sense that the cost of collecting
these taxes are comparatively less because they are collected by source and are
paid to the government directly.
Certainty: they satisfy the canon of certainty. It is known by the Tax payers that
how much they have to pay and on what basis they have to pay. It is also known by
government that amount to be collected.
Equity: Direct taxes can be made to follow to the principle of ability to pay by
choosing the correct rate schedules. By making the rate structure workable and
continuous their burden can be put more on rich than poor.
Reducing imbalance: Direct taxes are continuous in nature. Rich people pay higher
taxes because of their higher income and hence this reduces imbalance of income
and wealth.
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Civic awareness: person should know his will be well utilized for the benefit of the
public such as the developmental and defense projects, infrastructural
development, establishment of schools, hospitals, homes etc.
 Demerits of direct tax
Unpopular: Direct taxes are directly imposed on the person. They cannot be
shifted. Tax payers feel their pain directly.
Probability of tax avoidance: Direct taxes encourage tax evasion. People hide their
income from the tax official to avoid taxes. In (India, there is a large scale of tax
avoidance especially by businessman.
Inconvenience: The main demerit of direct taxes is that they cause a lot of
inconvenience to the tax payers. Sometimes, the taxes payers have to pay the entire
tax in one go. Besides, the tax payers have to complicated documents of their
income and outlay.
Unfavourable effects on will to work and save: Direct taxes may have an
unfavourable impact on will to work and save. Higher rates of income tax may
disappoint people to work hard or work overtime. Similarly, the direct taxes may
lessen their wish to save.
 Merits of indirect tax
Benefits: they have the great benefits if being convenient. They are paid in portion
and in parts instead of lump sum payment. Moreover, amount of taxis included in
the price of commodity and hence load of these is not felt much by tax payers.
Flexible: Indirect taxes can be made flexible and fertile, especially when they are
forced on important goods and services like edible oils, flour etc. whose demand is
not flexible. The government can get enough income by increasing the tax rate of
these commodities.
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Less chances of tax avoidance: Another merit of indirect taxes is that with proper
administration, the chance of tax avoidance in these is very less. They are difficult
to be evaded as they are included in the price of the commodity.
Wide coverage: Indirect taxes can charge on large diversity of goods so that most
of the persons give something to the income of the government.
Equity: Indirect taxes can be made equitable to the people by charging high taxes
on costly items and low taxes in the necessary goods.
Encourage production and investment: Indirect taxes can be used to assign

resources in according with the requirements of the economy. The government can
move the production and investment from less important industries to high
important industries. There have been many provisions for this in the budgets
passed by the government of India.
 Demerits of indirect tax

Regressive and unjust: The main demerits of indirect taxes are that they feed
inflationary forces. Indirect taxes are usually charged on the consumption of the
product. They are unfair in sense that middle class people have to pay same amount
as rich people. They reject the principle of skill to pay and therefore their load is
more on poor people.
Inflationary effect: Another fault of indirect taxes is that they feed inflationary
forces. Force of indirect taxes on a commodity increases its price. This may lead to
rise in cost of production as a result of which workers union demands more of
wages that again increases price of product and this coil go on.
Uneconomical: Management cost of collecting indirect taxes is usually high as they

have to be collected from large number of individuals. Moreover, traders more than
the exact amount of product tax charged by increasing the prices of taxed goods
and services.
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Uncertain: The revenue from indirect taxes cannot be estimated accurately. An
indirect tax leads to the rise in the price of the commodity. Consequently, its
demand drop and it is difficult to know the extent to which demand of product has
dropped.
8.2 DETALS OF THE TYPES OF TAXES IN INDIA:

Direct Taxes:-
These types of taxes are directly forced& paid to the Government of India. There
has been a steady increasing in the net Direct Tax collections in India over the
years, which is very good signal. Direct taxes, which are imposed by the
Government of India, are
(1) Income Tax:

Income tax, this tax is the most common type of tax known to everyone. Every
individual whose total income exceeds the taxable limit has to pay an income tax
based on the rates relevant from time to time.
(2) Capital Gains Tax:

Capital Gain tax is a tax on gain in capital. If the individual sells property, shares,
bonds &expensive material etc and earns profit on it within alimited time frame
then the individual is expected to pay capital gain tax. The capital gain is the
difference between the money received from selling the asset and the price paid for
it.
Capital gain tax is divided into short-term gains and long-term gains.
(3) Securities Transaction Tax:-

A huge amount of the people do not expose their profits and avoid paying capital
gain tax, since the government can only tax those profit amounts that have been
declared by the people. To fight with this situation the government has introduced
STT (Securities Transaction Tax) which is applying on every transaction done at
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stock exchange. That means if you buy or sell equity shares, derivative
instruments, this tax becomes applicable.
This tax is added to the price of security during the transaction itself; hence this tax
cannot be avoided.
(4) Perquisite Tax:-

Previously Perquisite Tax was known as FBT (Fringe Benefit Tax) which was
ended in 2009; this tax is on the benefit given by the employer to the employee.
E.g. If the company gives an individual non-monetary benefits like car with driver,
club membership, ESOP etc then all such benefits is taxable under the perquisite
Tax.
(5) Corporate Tax:-

Corporate Taxes are yearly taxes payable on the income of a corporate company
operating in India. In India, for the purpose of taxation the companies are broadly
classified into India domestic companies and foreign companies.
(6) Sales Tax:-

Sales tax can be charged on the sales of movable goods. Sale tax on the Inter State
sale is charged by the Union Government, while sales tax on intra-State sale (sale
within State) (now termed as VAT) is charged by the State Government. Sales can
be broadly studied in three categories. (a) Inter-State Sale (b) Sale during
import/export (c) Intra-State. State Government can impose sales tax only on sale
within the State.
(7) Service Tax:

Most of the paid services are inclusive of a tax; this tax is called service tax. Over
the past few years, service tax has been expanded to cover new services.
Few of the major services which comes under a particular place of service tax are
telephone, tour operator, architect, interior decorator, advertising, beauty parlor,
health center, banking and financial service, event management, maintenance
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service, consultancy service. Current rate of interest on service tax is 14.5%
(February 2017). This tax is proceeding on to the public by the service provider.
(8) Value Added Tax:-

The Sales Tax is the most significant source of revenue of the state governments;
every state has their respective Sales Tax Act. Tax imposed by the Central
government on sale of goods is called as Sales tax; same is called as Value added
tax by the State government. VAT is additional to the price of goods and is passed
on to us as buyer (end user). The government has approved to merge service tax
and sales tax in the form of Goods and service tax (GST).
(9) Custom duty &Octroi (On Goods):-

Custom Duty is a type of indirect tax charged on goods brought into India. This
duty is normally payable at the port of entry like the airport. This duty rate is based
on the nature of items.
(10) Excise Duty:-

An excise duty is a type of tax charged on goods produced within the country. This
is the opposite of custom duty which is charged on importing goods from outside
of country. Another name of this tax is CENVAT (Central Value Added Tax).
(11) Anti Dumping Duty:-

Anti Dumping Duty is when the goods are exported by a country to another
country at a lesser price than its normal value. This is an unfair trade practice
which can give a falseeffect on international trade
Other Taxes:-
(12) Professional Tax :-
If an individual is an earning professional he/she will have to pay professional tax,
it is forced by respective Municipal Corporations on the public. Many of the states
in India charge this tax; the rate on which this tax is levied is not applicable in all
the states.
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(13) Dividend distribution Tax:-
Dividend distribution tax is the tax forced by the Indian Government on companies
according to the dividend paid to a company‟s investors. Dividend amount to
investor is free of tax; at present dividend distribution tax is 15% (as of February
2017).
(14) Municipal Tax:-

The Municipal Corporation in each city levies a tax in terms of property. Every
property owner has to pay this tax. The tax rate for the municipal tax is not the
same in every city.
(15) Entertainment Tax:-

This tax is enforced by the state government on every financial transaction that is
related to entertainment such as movie tickets, major commercial shows exhibition,
broadcasting service, and cable service.
(16) Stamp Duty, Registration Fees, Transfer Tax:-

If an individual decides to purchase any property than in addition to cost paid to
seller, the individual must consider additional cost to transfer that property on
his/her name. This includes the cost for registration fees, stamp duty and transfer
tax. This is officially compulsory for preparing legal document of the property. In a
simple context, this tax is enforced on the handing over of the title of property
ownership from one person to another person. It is a legal transaction fee & stamp
duty. This amount of the tax differs in terms of property to property, based on the
cost of the property.
(17) Education Cess, Surcharge:-

Education Cess is removed and used for Education of poor people in INDIA. All
taxes are subject to an education cess in India. The tax amount is 3% of the total
tax payable. The education cess is mainly applied on Income tax, excise duty and
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service tax. Surcharge is an extra tax that is added to an individual‟s existing tax
calculation. This tax is applied on the amount of tax.
(18) Gift Tax:-

If an individual receives gift from someone, it is included with his/her income then
the individual needs to pay tax on it. This tax is called as gift tax.
This tax is applicable if the amount of gift or value is more than 50K in a year.
(19) Wealth Tax:-

Wealth tax is a direct tax. This tax is charged on the net wealth of the assessed.
Wealth tax is chargeable in respect of Net wealth corresponding to Valuation date.
Net wealth means all assets less loans taken to acquire those assets. Wealth tax is
1% on net wealth more than 30 Lakh. So if an individual has more money in terms
of assets, then he/she has to pay this tax.
Note: - Wealth tax is terminated by government in budget 2015. Henceforth the
surcharge of 12% is applicable on per person earning more than 1 crore (as on
February 2017).
(20) Toll Tax:-

At some of places it is mandatory to pay tax in order to use infrastructure (road,
bridge etc.) build from the public tax fund money given to government as Tax.
This tax is known as toll tax. This tax amount is very small amount but, to be paid
for the continuous maintenance work.
(21) Swatch Bharat Cess:-

Swatch Bharat Cess is recently being enforced by the government of India. This
tax is applied on all taxable services from 15th November, 2015. The tax rate of
Swatch Bharat Cess is 0.5%.
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(22) Kristi Kalian Cess:-
In budget 2016 the Finance Minister has introduced new tax namely Kristi Kalian
Cess. This cess is introduced in order to extend welfare to the farmers. 0.5% is the
tax rate of Kristi Kalian Cess. This tax will be enforcing on all taxable services.
This tax is inclusive in the service tax. Once this cess is applied, individuals are
expected to pay service tax @ 15%.
(23) Dividend Tax:-

This new tax is introduced in 2016 by the finance minister. It is proposed that 10%
additional tax will be enforce on dividend income of more than 10 Lacs from 1st
April 2016 onwards.
(24) Infrastructure Cess:-

New Infrastructure cess is imposed recently in budget 2016 on car and utility
vehicle. 1% infrastructure cess is applicable on petrol/LPG/CNG-driven motor
vehicles of length not exceeding 4 meters and engine capacity not exceeding
1200cc. On diesel motor vehicles is 2.5% of length not exceeding 4 meters and
engine capacity not exceeding 1500cc and 4% cess is applicable on big sedans and
SUVs.
(25) Entry Tax:-

This entry tax is imposed by Gujarat, Madhya Pradesh, Assam, Delhi and
Uttarakhand state government recently. The tax rate is variable 5.5-10% depending
upon the state. All items entering in the state boundaries ordered via E-commerce
are under this tax boundary.
So in total an individual has to pay twenty five different taxes in direct or indirect
way.
8.3 :TAX BENEFITS FOR EVERY ENTREPRENEUR IN INDIA

In order to move to boost startups in the country, the government has introduced
various exemptions and benefits for entrepreneurs.
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These changes came into existence at the commencement of „Startup India‟ Policy,
this has resulted in large number of exemptions and concessions.
1. 100% Tax Exemption for First Three Years

“This exemption is proposed to provide a deduction of 100% of the profits and
gains derived by a qualified startup involving innovation, development,
deployment or commercialization of new products, processes or services driven by
technology or intellectual property,” Finance Minister Mr.ArunJeitley while
announcing the 2016-17 Union Budget in the Parliament. This has come to power
inorder to give a boost to the budding entrepreneurial ventures; the government has
decided to not impose tax for three years.
2. Abolition of ‘Angel Investment Tax’.

As a form of further relief, the government has stopped the „Angel Investment Tax.
Under this exemption the angel investors, i.e., family and friends and domestic
funds not registered as Venture Capitalists, will be barred from taxation on these
investments.
3. Setting up of a ‘Fund of Funds’ for Startups.

In order to help startups in their first stage by providing them with the necessary
financial increase, the government has decided to set up a fund with an initial
startup of Rs. 2,500 crore and a total corpus of Rs. 10,000 crore over a four year
period.
Life Insurance Corporation of India will be an investor in this fund which will
support a whole range of sectors like manufacturing, agriculture, health, etc.
4. Exemptions in Capital Gains Tax

There is 20% of capital gains tax being exempted by the government recently. In
sale of capital assets, such as stocks, bonds, etc Capital gains tax is charged. This
was a long-pending demand and is deemed to prove highly lucrative for startups.
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5. Other Tax Adjustments and Fund Allocations to Boost Startups
Setting up of provisions to support entrepreneurs belonging to SC and ST, an
allocation of Rs. 500 crore for SC/ST and women entrepreneurs under Startup
India has been initiated.
Also for lowering the long-term capital gains for unlisted firms from 2yrs to 3yrs
an amendment in the Motor Vehicles Act to enable entrepreneurship in the road
transport sector has been enabled.
Rising the eligibility of the scheme of presumptive tax for small businesses, is done
by permit businesses with a turnover of up to Rs. 2 crore from the earlier Rs. 1
crore to enjoy coverage under it.
Provision for „Employee Provident Fund‟ for the first three years, this is brought to
save 12 % of the costs for the startups and provide security benefits for the
employees.
Relief to entrepreneurs living in rented houses away from their homes by raising
the 80 GG deductions from Rs. 24,000 to Rs. 60,000.
8.4 :AN ENTREPRENEURIAL MINDSET
1. The Individual take action.
Barbara Corcoran, founder of The Corcoran Group and co-star of TV‟s Shark
Tank, says people who have a concept but not necessarily a detailed game plan is
more likely to have that entrepreneurial je ne sais quoi. “I hate entrepreneurs with
beautiful business plans,” she says.
2. Being Fearful.
“Many entrepreneurs are judged as ambitious are really insecure underneath,”

Corcoran says. When assess potential investments, she adds, “I want someone who
is scared to death.” Those who are nervous about failing can become highly
focused and willing to do whatever it takes to succeed. If you feel unconfident, use
that emotion to drive you to attain your business goals.
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3. Being resourceful.
Tony Hsieh, lifelong entrepreneur and CEO of Las Vegas-based Zappos, “because
he never had precisely the resources he needed but would somehow figure out how
to make everything work out. Ultimately, I think that‟s what being an entrepreneur
is all about.” It‟s not about having sufficient resources, he explains, but being
resourceful with what you do have.
4. Obsession over cash flow.
Prior to founding Brain shark, a Waltham, Mass.-based provider of sales

productivity software, Joe Gustafson bootstrapped a venture called Relational
Courseware. “All I ever thought about was cash flow and liquidity,” he admits.
“There were 7 times in [the company‟s] 8 year history when I was days or hours
away from payroll and didn‟t have enough cash to make it.”
5. Risk Taking
Stephane Bourque, founder and CEO of Vancouver, British Columbia-based

Incognito Software, says true entrepreneurial types are more likely to ask for
forgiveness than authorization, forging ahead to address the opportunities or issues
they recognize.
“Entrepreneurs are never satisfied with the status quo,” says Bourque, who
discovered he was not destined for the corporate world when his new and superior
ways of doing things were interpreted as unwanted criticism by his bosses. Now,
he says, “I wish my employees would get into more trouble,” because it shows they
are on the lookout for chance to improve themselves or company operations.
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CHAPTER 9:
INDIA V/S TAX FREE HAVEN COUNTRIES
9.1 Tax haven economy
9.2 Description of tax havens
9.3 Tax exemptions in India
9.4 Tax evasion in India
9.5 Common methods of Tax evasion
9.6 Penalties for Tax evasion
9.7 Consequences of Tax haven verses developing countries
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CHAPTER 9:
INDIA V/S TAX FREE HAVEN COUNTRIES
This chapter discusses about the benefits given by India and Tax Haven Countries
for the upliftment and smooth functioning of the micro, small and medium
enterprises. So to understand the topic of Tax Havens, it is first essential to
understand which the tax haven counties in the globe are and how the business
develops in these countries.
9.1 TAX HAVEN ECONOMY
Tax havens are those jurisdictions in which the tax payers of that area have to pay a
very minimal or no tax at all. As such there is no such term as tax haven countries
but those countries which are very generous towards tax incentives are known as
tax haven countries. Some definitions refer to a state, country or territory which
maintains a system of financial secrecy which enables foreign individuals to hide
assets or income to avoid or reduce taxes in the home jurisdiction.
Many companies tend to invest or shift their office to such countries to get the tax
benefits which are offered. Tax haven benefits the countries as well as the
companies and also the individualsfunctioning in the company. It benefits by
drawing capital to their banks and financial institutions, which can form a huge
difference in the financial stability of the company, individuals get benefits through
tax and get a citizenship or domicile.
Tax havens have grabbed attention from policymakers in the past years. This
provides an overview of an emerging body of research and development that
analyzes the consequences of the existence of tax haven countries. For example,
recent theory suggests that tax havens tend to have stronger governance
background than comparable to the other non-haven countries. Especially tax
havens countries provide opportunities for tax planning by huge corporations. It is
always been a dispute that the tax of high-tax countries attract the countries much
more than what we imagine.
Although tax havens have get an attention of spreading worldwide interest in each
minds in recent years, there is no as such definition of what it is mean. But, the
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term is meant to countries and territories that offer favourable tax benefits for
foreign investors. The parts of these tax benefits include, first and foremost, low
corporate tax rates. There are a bunch of other constituents common to tax havens,
such as low withholding tax rates on foreign investors. Tax haven countries always
have a better communications and infrastructure, as quantify by the numerical
value of telephonic lines per capita. They are also badly endowed with natural
resources.
A tax havens country declares that there is smooth the flow of capital around the
world, by removing barriers which includes Taxes, regulation and democratic laws.
Havens are territories where you can deposit/invest your wealth to develop your
home land. Those legislations are all over the tax, or criminal laws, or rules about
transparency and disclosure, or financial regulations.
In the Indian context, a tax haven is often associated with Switzerland and its
numbered bank accounts. But the tax havens are in large numbers and their
importance has grown tremendously over the years. It is astonishing that around
half of the international trade takes place through these tax havens.
These tax havens has some similar features such as ease of setting up companies,
trust, foundations, minimal disclosure requirement and NO or LOW taxation
policies on income and wealth.
The Tax Haven countries in the world as of 2016 are as given in the chart below:
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Cayman
Luxembourg Isle of Man Jersey
Islands
Ireland Mauritius Bermuda Monaco
Switzerland Bahamas Guernsey Bahrain
Malaysia Panama Japan Germany
USA Singapore Hong Kong
Source : https://www.gobankingrates.com
On February 2008, the Organization for Economic Co-operation and Development
(OECD) has identified three key factors which identifies whether the jurisdiction is
a tax havens or not,
I. No or Nominal Taxes: The tax havens which imposes no or nominal taxes
or are perceived to offer themselves as a place to be used by non-resident to escape
high taxes from their resident country.
II. Protection of Personal Financial Information: Tax heavens have strict
secrecy laws for their client under which it does not discloses any information of
their clients to foreign tax authorities. This prevents transfer of information and
helps their clients to avoid any scrutiny by foreign tax authorities.
III. Lack of Transparency: A lack of transparency is another factor used to
identify tax havens. The OECD is concerned that all the laws should be applied
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openly and consistently, and all the information needed by foreign tax authorities
should be provided as of when the situation occurs. Lack of transparency in one
country makes it difficult and often impossible for other tax authorities to apply
their laws effectively. Secret ruling, negotiated tax rate, or other factors that fail to
apply the law openly or consistently are examples of lack of transparency. Limited
regulatory factor supervision or a government‟s lack of legal access to financial
records are other contributing factors.
9.2 Description The Tax Haven Structure Of Some Countries.

SINGAPORE
Tax savings for companies
In order to enhance new business setup, the Inland Profit/ Revenue Authority of
Singapore (IRAS) introduced the start-up tax exemption scheme (SUTE) in 2004
which is providing newly incorporated qualifying industries exemption from
taxable revenues in the first three years of operations.
Under SUTE tax exemption is taken and a normal chargeable income of upto
S$300,000 for each of the first three years of operations as follows
 For 1st S$100,000 after 100% exemption , the exempt amount is S$ 100,000
 For next S$ 200,000, after 50% exemption the amount is S$ 100,000.
 Hence, the total exempt amount for income up to S$300,000 is S$ 200,000.
Productivity and Innovation Credit Scheme (PISC)
Singapore Govt. has always looked for innovation and automation. IRAS
introduced the productivity, innovations and skills credit (PIC) scheme in budget
2010.
Under the PISC scheme from 2011-18, companies will get 400% tax deduction and
60% cash payouts for investment and productivity improvements. Even though the
PISC bonus factor has already been closed, there are still sustainable amount
savings that can benefit.
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Micro loan program
Under this program banks and financial institutions will lend eligible Singapore
industries loans upto S$ 100,000 for their daily work or for upgrading in
technology and factory equipment. The SMEs will have to pay 5.75% interest for
less than 4 years on their loan. The scheme for women is available at 4.75%.
Superior Geographical Location for SMEs
Singapore is situated in the golden part of South-East Asia; it is easily accessible
from any other country within Asia. Singapore is known to be the centre in the
start-up ecosystem in Asia. In short, Singapore based SMEs businesses have a
geographical advantage when it comes to growing and developing the businesses.
TAX LAWS IN CAYMAN ISLANDS

The Cayman Islands are one of the tax havens amongst America‟s elite. There is
no corporate or income tax on money earned outside its nation, this includes
dividends earned on investment making Cayman Islands popular among fund
managers.
Instead of taxes, offshore corporations pay the annual licensing fee directly to the
government of Cayman Islands. The Cayman Islands makes it easy for individual
and entrepreneurs to shield their business and identities from prying eyes.
Tax Haven Cayman Islands for MSEs
Cayman Islands is one of the five largest offshore financial business and small
start-upcentres worldwide, the government of Cayman Islands providing efficient
tax benefits to MSMEs for their businesses. There is no income tax and revenue
tax for small businesses in Cayman Islands. Here are some of the key benefits are
listed below:
 All documents and regulation are in the authorized dialectal of English.
 There is no yearly reporting, accounting or auditing necessities for an Offshore
Cayman Islands Corporation.
 Only one shareholder and one director are essential. These can be the same
person or a corporate body and do not necessity to include a resident.
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 There is a whole absence of direct tax system; no corporation, assets, capital
gains or cover-up taxes. This lawmaking is supported by a 20 year government
assurance (rising to 30 years on request) permitting long term business
forecasting.
 There is no least capital obligation for a Cayman Island Business creation.
 The business does not need to be run from the Cayman Islands. It can be run
from anyplace in the world
 Through Corporate bank accounts.
SWITZERLAND
Tax Haven Switzerland for SMEs
SMEs consider Switzerland as a location to enhance businesses because of low
production cost. The Switzerland Government primarily focuses on new
technologies and digitalization. There are over half a million SMEs operating in
Switzerland and they are providing huge employment for more than two-thirds
country‟s total working population. An important reason for this overall success
comprises workers and their skills. It strongly effects on corporate success of
SMEs.
Micro Firms and SMEs in Switzerland are more sceptical on Transport and
Transportation.
Small firms (lesser than 10 employees) assess to Switzerland as a location more
cautiously than other SMEs. SMEs from transport and transportation also access
him Switzerland more sceptically particularly in terms of infrastructure,
digitalization and tax benefits given from government and this result into growth
of domestic economies.
HONG KONG
Tax Haven Hong Kong for SMEs:
As a small business in Hong Kong there is various benefits made available by the
government to the entrepreneurs, with these benefits the business is able to make
huge amounts ofsaving during tax season.
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In order to promote new SMEs, the IRD (In Land Revenue Department) has
adopted a low profits tax rate for small scale industries. For the fiscal year 2014-15
the profit tax rate is 16.5% for industries and 15% for entrepreneurs.
Profit tax related savings:
For the year 2014-15, businessmen can get a 75% onetime reduction on revenue
tax, tax on salaries and tax on personal assessment, subject to maximum HK $
20,000 per case.
For profit tax, the maximum of the tax reduction is applied to each SMEs, while
for salaries tax, the maximum is applied to each business men. A tax payer who is
individually chargeable and whose salaries and revenue tax can relax tax reduction
under each of the tax types, resulting in more tax savings.
PANAMA
The Republic of Panama is one of the most protected whole-some tax haven. One
of the best characteristic of Panama offshore authority law is that offshore
corporations are permitted to conduct business operations within and external of
the offshore authority.
Here are some of the aids as listed below:
 Panama has a regional tax scheme which means that revenue is only taxed if it
originates from Panama so no tax is payable when revenue is gained from a
source outside Panama.
 The formation of a new firm procedure is rapid and the continuing maintenance
costs are negligible.
 Least reporting to authority requirements, no audit is essential.
 Corporate assets of a Panama business can be kept outside Panama.
 There are no citizenship necessities or limits with regards to Proprietors,
Managements or Stockholders.
 Stockholders and Managements meetings is not required and the Managements
may attend personally or through by proxy.
 No limits on shares, shares may be held in recorded or deliverer form.
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 No paid up capital required.
 No currency exchange controls.
 There is complete secrecy maintained with aspects to legal safeguarding, there
is high privacy of business and banking transactions.
 They also provide excellent infrastructure and public service facilities.
THE BAHAMAS
The Bahamas became extensively popular as a tax haven in the 1990s after passing
legislation that enabled the formation of offshore companies. It remains one of the
most favorite tax havens for inhabitants of the United States and European nations.
It is possible only to register a company in Bahamas with merely.
I) Single stockholder
II) Single director, who can be both immigrants and reside outside of the
Bahamas.
There is no least paid-up capital to complete Bahamas business formation and the
Clients are not compulsory to travel to Bahamas for the business incorporation
procedures;
Forming a company in the Bahamas is also fast, easy and can be incorporated
within single week, after acknowledgement of all essential documents. An
individual can open the business bank account in the Bahamas or anywhere in the
world;
It is very easy to open common corporate bank accounts to enable Bahamas
progress business. Experts‟ work with globally recognized banks such as HSBC,
Standard Chartered and Citibank to deal corporate bank account facilities in
Bahamas or elsewhere in the world.
DOMINICA
It is often chaotic with the Dominican Republic; the Commonwealth of Dominica
has started lawmaking that will help the formation of offshore corporations, faiths
and foundations, providing tax-friendly and privacy-protected offshore banking
services and the formation of start-ups and operation of Dominica.
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 Lifetime tax-exempt prestige of an IBC (International Business Companies).
The Government of Dominica assurances 20 years of tax release for an
International Business Company (IBC).
 No annual recording:There are noobligations to file annual reports, financial
reports. Firms are to keep books and records of the company in order for a case
of requirement.
 There is a fixed annual renewal due: To keep in good legal status the company
is to pay uniform rate each year.
 Various types of events: The Corporation may accept any officially permitted
business action in any part of the world, except for in Dominica or with its
residents. There is no currency control.
 There is no registering of Directors and stockholders names thus they are able
to maintain a seal to public. Least 2 persons can setup a business. Same persons
can be the directors. Minimum number of directors is one. Directors and
stockholders can be persons and/or corporate bodies of any nationality and
residence, including Dominica. Secretary is not necessary by law.
 Meeting of stockholders and directors can be directed anywhere from the
world, plus in Dominica, both by physical presence or by any accessible
electronic means of communication.
 No limits to its share capital value and no requirements to the paid up capital to
start commercialization. Share capital can be secure in any identifiable
currency. Incorporation and yearly fees do not depend on the value of the
authorized share capital.
 Time of incorporation is merely 24 hours. Shelf corporations are accessible.
 Costs of establishment will seem to be good-looking, with associating the class
of service and prices for same facilities offered by former authorities.
OSLO
Oslo is rated as one of the supreme business welcoming cities in the world. It is the
speedy rising city in Europe with a diversified and robust economy. Norwegians
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are known as technology geeks and initial adopters, keen and able to pay anything
for upcoming technology. This makes Oslo city a distinctive test market. Here we
will discovery trustworthy, extremely capable expertise within IT, design finance,
energy, music tech and life science. For the start-up, incorporation is full of
occasions, linking entrepreneurs with industrial expertise, talent and stockholders.
And, Oslo is rated number 1 city in the world in terms of Standard of living.
Economic, prosperity, and governmental stability, with the well-developed
communication and transport foundations and its long standing trade links with the
European Union create Norway an eye-catching, safe and easy nation in which to
conduct business. Oslo is also rated 19thamong 189 countries, in the convenience
of doing business. Form the 2014 report printed by the International Financial
Corporation and World Bank, demonstrating just how easy it is to conduct
business in the country. Norway is also a nation of tech geeks of new upcoming
technology. Oslo is also financially stable which leads this trend in early adoption
of new technology. Majority of the population has high purchasing capability
which works out as a great opportunity for start-ups working within traditional Tec
and ICT fields.
It‟s easy to startup a business in Norway, the costs are less and functioning a
business is direct. The overall skills and productivity is high, employees trend to be
devoted, there is also difference in wages as people are low liable on the education.
This makes IT businesses low cost to run, and the cost for setting up of R&D
activities is internationally inexpensive.
Education is open, and every worker gets free health insurance. The government
also covers parental vacation for the mother as well as the father.
Five years ago the charges were made compulsory by the Norwegian government
to create a limited company which is equal of £10,000. This perhaps demonstrates
the readiness by the Norwegian government to reduce the high entry to barrier &
limit for start-ups in order to progress and enable a philosophy of entrepreneurship,
creativity and modernization outside apart from the old-style segments like oil,
gas, clean energy and fisheries.
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9.3 TAX EXEMPTIONS IN INDIA
Budget by the Finance Ministry - MSME’s (1st February 2017)
Reeling under the pressure of demonetization, which eradicated 86% of country‟s

bank notes ArunJaitley (Finance Minister, Government of India) while presenting
the budget on 1st Feb. 2017 focused on start-up and the small medium enterprises.
Here are the following announcements made for start-ups and the Micro, Small
and Medium Enterprises (MSME‟s) by the Finance Minister ArunJaitleyIn Budget
2017:
I. TAX BREAK : Through the demand of start-ups finance minister

ArunJaitley has increased the period of profit –linked deduction available to the
start-up to seven years from the current five years .these tax break is only
available on the profit made by start-up for three years and these tax special
operating procedures (SOP) is only available to the start-up which is recognised
by the DIPP( department of industrial policy and promotion )
II. MINIMUM ALTERNATIVE TAX: The demand from start-up to remove
minimum alternative tax(MAT) was rejected by FM arunjaitley. Instead of
removing MAT, the government has allowed companies to carry forward their
MAT to 15 years from the present period of five years. This provides the
companies an additional five years before they become liable to pay their MAT.
III. INCOME TAX BENEFITS TO MSME‟s: In order to give some
relaxationto MSME‟s the finance minister proposed to reduce the income tax for
those companies with an annual turnover of up to Rs 50 crore to 25% . This
gives the MSME‟s a relaxation of 5% from the current applicable rate of 30%.
This will benefit around 96% i.e. 6.67 lakh of companies in India and the
government will forgo around 7200 crore of revenue. This will help MSME‟s to
be more competitive.
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IV. PRESUMPTIVE TAX: The MSME‟s who have a turnover up to Rs 2
crore. The presumptive tax will be lowered from 8% to 6% lowering the financial
burden and boosting small merchant.
9.4 TAX EVASION IN INDIA
To collect taxes from people is never an easy task for our government because
most of the people question the part of giving hard earned money to the
government but the fact is far more different from just giving taxes itself. The
government requires revenue to invest in infrastructural facilities and development
programs which in turn helps in better standard of living and fast development of
the state as well as country.
But the country has been facing many glitches in order to collect taxes from tax
invaders. In actual sense the people who is liable to pay taxes has found many
ways of not paying it which creates additional pressure on the government as well
as people paying it as a result it can be said that the country‟s income is suffering.
The below given are the ways in which tax payers avoid paying taxes and how
they are penalized for such practices.
9.5 COMMON METHODS OF TAX EVASION:
There are two ways that a tax payer avoids paying tax, the first is tax avoidance
and other is tax evasion ie; when they are due. There is a splitting difference
between the two ways, tax avoidance is finding a loophole that exempts you from
paying taxes, but this isn‟t a illegal while other is not paying taxes when they are
actually due, which makes it strictly illegal. These are two ways in which people
evade taxes.
1. NOT PAYING TAXES WHEN THEY ARE DUE: This is the most common
and simplest way in which people try to evade taxes.
2. SMUGGLING: When certain goods moves across the political boundaries of a
country a tax is charged on these good which is payable but some individuals have
found out the secret route to avoids these taxes hence the evasion.
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3. SUBMITTING FALSE TAX RETURNS: With good support of legal and
financial advisor the taxpayer‟s submit false tax returns or provide incorrect tax
return which in turn help them to evade taxes or lessen these taxes.
4. INACCURATE FINACIAL STATEMENTS: The taxes which are to be paid by
the firm can be assumed with the help of the financial statement of the assessment
year. Hence by projecting false financial statements this declares less income as
compared to what they are entitled to pay, which results in tax avoidance.
5. CLAIMING EXEMPTION THROUGH FAKE DOCUMENTS: Government
does provide many tax exemptions to certain members of the society which helps
them to grow and increase their competitiveness. But is some cases the individual
does not qualify these exemption but due to their fake documents it helps them to
avail these tax exemption.
6. NOT REPORTING INCOME: Many organizations are not registered in India
and some of them who are registered do not provide any information related to
their income that they earn during the financial year. Having not reported the
income they do not have to pay taxes.
7. BRIBERY: Bribery and corruption are also the major factor that helps the tax
evaders to set them free from any taxes with paying a minimal amount.
8. STORING WEALTH OUTSIDE THE COUNTRY: Many organizations and
individuals store their wealth in tax havens commonly in Swiss bank and offshore
accounts and does not declare this income to their total wealth (also known as
„Black Money‟) which helps them to avoid taxes.
9.6 PENALTIES FOR TAX EVASION
There are many ways in which the income tax department penalizes the person or
organization that is found guilty of tax evasion.
Some of which are stated as below:
 Collection of 100% to 300% of the tax penalty when the correct income is not
disclosed.
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 On account of delay of payment, the assessing officer may impose tax penalties
but it should not exceeds the amount due in taxes
 If the individual doesn‟t pay taxes within the stipulated time period he may be
charged with 200rs per day as an tax penalty
 On account of fraudulent balance statement of the person can be penalized
within the range of 100% to 300% of the tax amount due.
 In case the person fails to maintain proper accounts as directed by section 44AA
, he is entitled to pay a penalty of 25000Rs
 If a company fails to provide a report or get itself properly audited then the
penalty of 0.5% or fine of Rs 1 lakh of the sales turnover whichever is less is
charged.
These are some of the tax penalties which is levied by the income tax department
and in some cases the individual has to pay a huge amount.
9.7 CONSEQUENCES OF TAX HAVEN OVER DEVELOPING

COUNTRIES:
Tax haven allow the individuals to hide money which could have been spent on
hospital, roads, schools and other public services.
Switzerland is one of the biggest financial centre‟s in the world and also known as
the largest tax haven. Switzerland accounts to a whopping US $ 2 trillion or so of a
world‟s offshore private wealth. In 1934 Switzerland made it a criminal offence to
violate bank secrecy, and if done so it was punishable in the form of monetary
fines or prison. Due to such a stringent law Swiss bank has, became a safest place
to hide money.
1. Due to strict laws, the Tax havens protect unethical sources of income.
For E.g.: The Madoff scandal, a multibillion dollar scheme organized by the
famous Wall Street financier Bernie Madoff.
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(the famous scandal in which dubbed many investors and the fraud accounted
around US $65 billion. It wouldn‟t have been possible without a strong network of
tax havens.
2. Tax havens corrupts markets, conceals insider dealings and supports
aggressive tax dodging by multinational companies:
For E.g.: Enron, the Houston based energy trading company declared itself as an
bankrupt, the company had good political relations and network in the country.
Later on the truth emerged as Enron had around 881 offshore subsidiaries and out
of which 692 alone was in Cayman Island (tax havens) for doing this fraud Enron
spent around US$3.5 billion in 1999-2000 to get tax exemption and to get his
company over sighted form tax authorities. Likewise the company paid around
US$88 million to its financial and legal advisor to avoid paying US$2 billion in
taxes. A US senate committee submitted a report of 2,700 pages and estimated that
it would tax around Ten years to unravel Enron‟s tax dodging schemes in detail.
3. Tax havens create a private world of secrecy and power for rich elites:
The scandal of Liechtenstein is one of them. Liechtenstein was already in the
blacklist of OECD for being the three most offending tax havens. To obtain the
details of tax invaders German secret service paid for CD which had all the
information of the tax invaders, wherein a IT worker turned out to be a whistle
blower and leaked all the information to German secret service and by the Mid-
February, homes of rich and famous were being raided, high profile CEOs were
being fired. The investigators brought out over 15000 clients with funds
approximately US$155-175 billion.
The cross border flow is estimated around US$1-1.6 trillion per year form tax
evasion, corruption and criminal activities.
4. TAX HAVENS WIDENS THE GAP BETWEEN RICH AND POOR
PEOPLE: The multinational company‟s owner and the global renowned brand
with proper pool of financial and legal advisor and with the help of tax havens they
reduce their tax bill to great extent which in turns creates burden on government to
generate tax revenue to run the state. It leads to increase in tax rates which creates
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an additional burden on common people to pay taxes hence it leads to
discrimination between poor and rich people
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CHAPTER 10:
MAKE IN INDIA
10.1 Key Policy Suggestions
10.2 The 25 key sectors of Make in India
10.3 Workability of Make in India initiative
10.4 Contribution to Indian economy by sector
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CHAPTER 10:
MAKE IN INDIA
The concept was first coined by the Hon‟ Prime Minister of India,
ShriNarendraModi on 25th of September 2014. Its workshop was organized on 29th
of December in the same year which was attended by the Hon‟ Prime Minister, the
Cabinet Ministers, Chief Secretaries of all the states and various corporate as well
as industrial leaders. The Make in India programme has its origin from the PM‟s
speech where he stated the “zero defect, zero effect” system by giving its simple
logical reasoning that if the nation manufactures any product of superior quality
then there will not be any loss or negative effect on company‟s sales creating huge
effect on its goodwill whereby increasing the strength and goodwill of the nation.
The prime objective of the concept of „Make in India‟ is job creation thereby
generating large scale employment opportunities. The skill enhancement of the 25
sectors which work in the development of the nation and is thus termed as the
backbone of the economy, to be focused majorly in the initiative and thus inviting
more and more FDI into these sectors. Under this initiative, several brochures of
the 25 sectors and their web portal was released, foreign equity of these sectors
were relaxed, the application for obtaining licenses was made available online for
ease and also the validity for renewable license was extended to 3 more years.
In August 2014, the cabinet also decided that these 25sectors to be focused on the
initiative and what share of FDI (Foreign Direct Investment) to be allowed on
these sectors which also included India‟s defense sector, which opened doors for
more and more advanced technologies into the Indian defense system.
10.1 THE KEY POLICIES SUGGESTED IN ‘MAKE IN INDIA’

INITIATIVE:-
1. Making Ease in business: India being numbered 142nd country among 190
countries in the ease in business with an index which is unfortunately below than
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the African countries. Make in India focuses on making India such a country
which will have a friendly environment for doing business for any international
company or business entity.
2. Skill and jobs for the Youth: Major objective is giving technical assistance
to Indian youth, making them skilled enough to perform any job skilfully and
giving these skilled youth more jobs as much as possible.
3. Making India „A Manufacturer‟: This policy initiates to invite more
international entities to India in-order to promote production in the country,
thereby promoting industrialization, this will make India a safe option for investing
and production of goods.
4. Getting away with archaic laws: Raising FDI‟S share and reducing the red
tape procedure as much as possible eliminating rigid and less important laws
which make India a difficult place to trade in.
5. 100 Smart cities : This step of make in India is targeting 100 cities to make
them smart cities in terms of affordable housing schemes, having more advanced
technologies in the colleges, school, hospitals etc.
6. Another main reason India opted for Make In India initiative is that India is
majorly depended for its FDI on the service sector and there is need to expand
itself more into manufacturing sector.
7. Four pillars of make in India concept are:-
 New processes.
 New infrastructure.
 New Sectors.
 New Mind Set
Some facts about „Make in India‟:
Logo : The Logo consist of a lion, made of steel ingots, symbolizes the pride of the
nation, its strength and wisdom. It is designed by US based design agency
“weident +kennedy” from Portland oregan.
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The Foregin direct investment has been raised to 49% after the „Make In India‟
Concept. Currently the biggest project in Make In India is the Delhi-Mumbai
Industrial corridor (DMIC) and the major drivers of this project are Japan Bank for
International Cooperation (JBIC), HUDCO, IIFCL, LIC and Department of public
policy (DIPP).
There are a number of companies that are attracted to India post the launch of
„Make in India‟ are Foxconn technology co.ltd, Sony, Lenovo, Karbonn, Airbus
SAS, apart from these the world‟s largest firms are planning to get into India‟s
defense business industry.
10.2 THE 25 KEY SECTORS IN WHICH THE ‘MAKE IN INDIA’

PRIMARILY FOCUSING:
 Automobiles -100% FDI

 Automobile component -100% FDI
 Aviation:
- 100% FDI Greenfield airport projects
-49% FDI in domestic airlines
-49% FDI in non-scheduled air transport service
-79% FDI government approval route
-100% FDI ground handling services
-100% FDI maintenance and repair organization,flying trainingInstitution and

technical training institution.
 Biotechnology – 100% FDI

 Chemical-100% FDI
 Construction-100% FDI
 Defense Manufacturing – 49% FDI
 Electrical Machinery -100% FDI
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 Electronic System – 100% FDI
 Food Processing -100% FDI
 IT & BPM – 100% FDI
 Leather- 100% FDI
 Media and Entertainment- 74% FDI in Government route
 Mining -100% FDI
 Oil and Gases-100% FDI
 Pharmaceutical- 100% FDI
 Ports-100% FDI
 Railways- 100% FDI
 Renewable Energy- 100% FDI
 Road and Highways-100% FDI
 Space-74% in establishment and operation of satellite to ISRO & Department
of space and Research under government route
 Textile and Garment-100% FDI
 Thermal Power-100% FDI
 Tourism and Hospitality-100% FDI
 Wellness-100% FDI
By the end of 2015 Government of India received 1.20 lakhs crore Rupees
proposals from various big companies who were keenly interested in
manufacturing electronics in India. Smart phones export percentage has increased
from 19.9% to 24.8% by the end of year 2015. Ease of doing business‟ an index
organized by world bank in 2016 India managed to acquire 130th rank as the
previous of 134thbefore the „Make In India‟ project. Another survey done by
World Bank post „Make in India‟ among 17 cities of the world Ludhiana,
Hyderabad, Bhuwaneshwar, Gurgaon &Ahemdabad came up as top 5 cities to do
business. According to a report by Economic Times by the end of 2015 India
replaced China as top destination preferred by world‟s top most countries, by
attracting $63 million worth project FDI, companies like Foxconn&Sunedisonhave
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invested $5 million & $4 million respectively in India in 2015. The Make in India
project was also included in KPMG‟S 100 most innovative projects on the globe.
Make in India campaign is aiming to transform Indian economy from service-
driven growth model to labor intensive manufacturing driven growth model,
creating job for over 10 million people who join workforce every year.
10.3 WORKABILITY OF ‘MAKE IN INDIA’ INITIATIVE:
The revolutionary concept of Make in India has policies and schemes to be

launched in path of making India one of the leading nations of the world. The 4
policies of Make In India are:-
1. National manufacturing policy.

2. National intellectual policy.
3. Foreign direct investment policy.
4. New initiative policy.
1. National manufacturing policy.
This policy focuses on every activity that helps India to improve its manufacturing
sector; it works on infrastructure, availability of finance, skill development,
technology and exit mechanism etc.
The various objectives of the National manufacturing policy is:
a) To have an increased GDP up to 16-25 % till 2022.

b) Create nearly 100 million jobs till 2022.
c) Making sure that there is proper growth in manufacturing sector.
d) Giving equal opportunity to poor urban migrants to get skilled and have a
better life.
e) To increase technology and domestic value addition in our manufacturing
sector.
f) Increasing competitiveness to Indian manufacturing sector in Global market.
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2. National intellectual property:
As the name suggests this policy deals with the activity that creates, facilitates,
promotes and commercializes intellectual property and assets of the country.
The various objectives of the National intellectual property is:
a) Improving and strengthening the institutions and its employees, helps in

research and skill building which will boost the human resource.
b) Making the society aware about the economic, cultural and social advantages
of IPR (Intellectual property rights).
c) Making effective and efficient IPRs law.
d) Improve environmental protection, health care and food security.
e) Manipulate the generation of IPRs.
3. Foreign Direct Investment policy:
Apart from previous concept of FDI there have been quite few changes made by
present government of our country. This policy is the most vital of all as it is the
source of foreign income and helps the economy of India in many ways.
Changes occurred due to foreign direct investment policy:-
a) Tax policies are changed.

b) Insurance sector witnessed the change of FDI inflows from 26% to 49%.
c) Entries have been made easier for people to start their ventures.
d) FDI received for the defense sector will be used to manufacture small arms and
ammunitions for the army.
4. New Initiative Policy:-
This policy is designed to facilitate and focus on investment, protect intellectual

property and also foster, adapt and coming up with innovations.
New infrastructure in new initiative policy:
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a) Smart city mission for about 100 cities.
b) DMIC corridor
c) 14 new manufacturing and national Investment.
10.4 CONTRIBUTION TO INDIAN ECONOMY BY SECTOR:-
Make in India has boosted the Indian economy by attracting more FDI resulting
into highly increased GDP of India. The following are the sectors and their success
stories as a result of the Make in India campaign:-
1. AUTOMOBILES:
(A) Investors in India: Suzuki ,Nissan, Toyota and Honda [Japan], Piaggio and
FIAT [Italy], Volkswagen, BMW, Mercedes and Daimler [Germany], Renault
[France], Hyundai [south korea],Ford and General motors‟ [USA]
(B) The emergence of automotive in the countries are as follow: Kolkata-

Jamshedpur (East), Mumbai-Pune-Nashik-Aurangabad (west), Faridabad-Delhi-
Gurgaon [North], Chennai-Bengluru [South]
2. AVIATION
(A) Investors in India: Airbus [France], Air Asia, Malaysia Airports Holdings
Berhad [Malaysia], Honeywell Aerospace, GE Aviation, Alco fastening systems
Aerospace [USA], Fairfax [LONDON]
(B)Reasons to Invest: India will be 3rd largest aviation in market by 2020, The
traffic of the passenger is at 224 million in 2016.India has put effort in air markets
in the world with 0.04 trip per capital, India has planned to reach 800 aircraft by
2020.
(C)Investment opportunities: In 5 years India is going to add 300 business jets,300

small aircrafts and 250 helicopters, Around USD 3 billion is required to build
airports in new Mumbai and Mopa (Goa)
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3. BIO-TECHNOLOGY
(A) Investors in India: BPI, Limagrain, Sanofi Aventis(France), Endo

Pharmaceuticals, MylanInc, GE healthcare (USA), Bostch (Germany), Fresenius
(Singapore)
(B) Investment opportunities: The biotech parks are situated at Lucknow in Uttar
Pradesh, Karnataka, Kerala, Assam and Madhya Pradesh, There is very huge
volume that is not tapped yet so there is an opportunities for investors.
(C) Investment opportunities: Drug discovery and clinical trails, Medical devices
manufacturing, Bio-similars
Secondary agriculture, BIRAC has set a fund to boost the entrepreneurs in biotech
sectors by giving or supporting a fund of USD 150,000.
(4) CHEMICALS AND PETRO-CHEMICALS
(A) Investors in India: BASF, DYstar, Henkel and WackerMetroark (Germany),

ADEKA (Japan), AKZO NOBEL (Nertherlands), Syngemta (Switzerland)
(B) Investment opportunities: Agro chemicals are about 50% of production in

India is exported, In last 5 years the market of chemicals is reached till 14% and
the size of the market in future will reach USD 70 billion till 2020, the valuation of
Indian colorant industry is USD 6.8 billion and exports around 75%, There are
other segments like petro-chemicals, bio-pharm and bio-agricultural..
(5) CONSTRUCTION:
(A) Investors in India: veolia and Alstom [France], The trump organization and
Tishman Speyer [USA], GIZ [Germany], Ascendas [Singapore]
(B)Investment opportunities: construction development in retail, hospitality,

commercial and residential, There are solutions for smart cities and infrastructure
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backbone of road, water and drainage, skilled labors/workers, Green building
solutions.
(6) DEFENSE MANUFACTURING:
(A) Investors in India: Airbus, assault Aviation SA [France], Locked Martin,

Boeing India [USA], Pilatus [Switzerland], BAE India systems [UK]
(B)Financial support: In 2016-17 union budget the defense services provide USD
34.53 billons USD 12.09 billons for capital outlay for defense and USD 10.75
billons for capital acquisition for defense services. USD 1.33 billons is providing
to other segment like Army,Navy,joint staff and Air force.
(7) ELECTRICAL MACHINERY
(A) Investors in India: Hitachi, MHI and Toshiba [Japan], GE (USA), Legrand,
Alstom and Schneider Electric [France], Babcock [UK]
(B)Reasons to invest: A large human resources and workforce are available;there

will be increase in exports to neighbor countries, nowadays manufacturers are
coming up with new product designs.
(8) ELECTRONIC SYSTEM:
(A) Investors in India: GE, Flextronics, jabil, Delphi and Harman (USA), Bostch,
continental and liebherhavsgerate (Germany), M2I (Taivan), Huavei (China),
Panasonic, HMC MM (Japan)
(B) Reasons to invest: The Indian market is said to attract nearly USD 400 billion
till 2020, Indians have skilled manpower and they stand 3rd in scientists and
technicians in the world, Around 65% of the current demand is for electronic
products which complete by imports.
(9 FOOD PROCESSING :-
(A) Investors in India: Kraft, Mars, Kelloggs, Pepsi, Coca Cola and Amazon
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(USA), Mc Cain (Canada), Kagome and Yakult (Japana), Nestle (Switzerland)
(B)Reasons to invest: In agriculture resources India was at no.1 in the world. The
production are Millet,Ginger,Lemons and mangoes etc., In tea,sugar
cane,tomatoes,wheat and milk product India stand at second rank, In 3rd rank
India‟s production of cashew nuts,lettue,coconuts pepper, In other countries the
manpower is high compare to India.
(10)IT AND BPM
(A) Investors in India: Congnizant, IBM, Microsoft, Intel and TIBCO (USA),
Atos,Steria (France), Ricoh(Japan), Accenture (Ireland)
(B)Reasons to invest: The outsourcing market in global is 56% in BPM and IT,
There are various government policies has been introduce in the I.T sectors to
invest. There are big amount of skilled manpower in India in I.T sectors.
(11) LEATHER
(A) Investors in India: Feng tag hoes, Apache group (Taiwan), Itares (Italy)
(B) Reason to invest: Opportunity to capture the domestic market of India The
market of domestic will be huge in next 5 year from now and will capture USD18
billion by 2020
Law labor with trained manpower and with instate production unit
India has good relation and agreement of trade with Korea, Japan, Chile etc. and
also free trade agreement with some country like Australia, European Union etc.
(12)MEDIA AND ENTERTAINMENT:-
(A) Investors in India: News Corp,NBC universal,Blackstone (USA), Sony

(Japan), BBC (UK)
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(B)Reasons to invest: In 2014 in India the entertainment industry earn INR1026
billion, Till 2019 the entertainment industry is going to achieve INR 1964 billons,
India rank second in tv market and the turnover of tv households are 168 billons,
There are 7800 satellite tv channels,60000 local cable operators.
(13). MINING
(A) Investors in India: Rio Tinto, BHP Billiton, Australian Indian Resources
(Australia), De Beers (Anglo American)
(B) Reason to invest: Per capita steel consumption in India is four times lower than
the global world, It is convenient to exports because of strategic location in India,
Next 15 years the demand for various minerals an metal will increase
(14). OIL & GAS
(A) Investors in India: British petroleum, Shell, Hardy oil & gas plc. (UK), Niko
resources (Canada), OILEX limited (Australia)
(B) Reasons to invest: For growth in economy & increase in population year by
year, Oil & gas sector which is getting liberalized for private investors for increase
in domestic production, For the policy reform undertaken by Government for
removal of obstacles to investment in oil & gas sector, Private co. player an
important role in investment claim India produces more than 23% of India‟s crude
oil production. Reliance industry limited &Essar oil have become major refiners,
Upcoming opportunities in gas pipeline, city gas distribution (GGD), LNG,
petrochemical & refinery.
(15)PHARAMACEUTICALS:-
(A) Investors in India: Teva pharmaceuticals (Israel), Nipro corporation (Japan),

Procter, Johnson and Johnson (USA), Atra Zeneca (Sweden UK )
(B)Reasons to invest: Increase in the growth of pharmaceutical sector in India,

India generic drug account for 20% of global export in term of volume and the
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largest provider of medicines across the world, The cost of production is lower as
compare to US and UK, Skilled workforce as well as high manpower and technical
competence, Development of economy helps to improve the affordability for the
mediviers in the market
(16) PORTS AND SHIPPING:-
(A) Investors in India: AP Moller Maersk (Denmark), Psa Singapore (Singapore),

Dubai ports world (UAE), Royal BoskalisWestminister (Netherlands)
(B)Reasons to invest: The cargo traffic is handled by India is going to reach up to

1695 million metric tons by 2021-22, There are development policies which is
going to increase to 643 million metric tons, The capacity of handling cargo is
going to increase by 2021-21 is 2422 million metric tons.
(17). RAILWAYS
(A) Investors in India: EMD, GE (USA), Bombardier Transportation (Canada),

Siemens (Germany), Alston (France)
(B) Reasons to invest: Investment in railway Infrastructure segment through FDI

projects like high speed railway,coal mines & parts etc. Through FDI, Investment
in public private partnership (PPP) for provision of foot over bridges, Escalator &
Lifts at all major stations & junctions, Indian railways promote participation in
private equity through individual, Nao, trust, charitable institution corporate etc,
Facilities of wifi in more than 400 stations
(18). ROADS & HIGHWAYS
(A) Investors in India: Apollo, JLI, LOR, Consortium (UK), CIDBO Malaysia,
Consortium of gomuda, WCT Engineering (Malaysia), ERA-SIBMOST (Russia),
Galfar Engineering and contracting SAOG (Oman), Ramkey Infra and JPTEG,
RIL-AAA-JTEG consortium (China)
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(B)Reasons to invest: The contribution of the country‟s GDP is 6% &70% is with
road, 60% with freight & 90% passenger traffic, Till 2030 India is expecting
1,68,000 billion passenger km, Government has introduce and launched many
policies to upgrade the highways and expressways.
19) RENEWABLE ENERGY SECTOR:-
(A) Investors in India: Enercon (Germany), Vestas (Denmark), Applied materials

(USA)
(B)Reasons to invest: India is the 5th largest country in power generation as it

produces about 304.76 GW, Growing urbanization, growing prosperity in the
economy and risen per capita income has resulted into high demand to power
supply in the country, The National Solar Mission of India is said to be scaled-up
to100 GW from about 20 GW by 2022.This has created has wave of positive
responses among the existing as well as potential investors of this sector.
20) SPACE:-
(A) the Growth drivers in this sectors: Space science programs, Launch vehicles,
Space commerce.
(B)Reasons to Invest: The growth rate of India in space programme in last 4

decades has taken everyone‟s attention worldwide, These cost effective
programmes included launching 51 satellites for 20 countries for far and soon
India is willing to serve as a launch pad of the world, ISRO has built a healthy and
strong relation with numerous industrial enterprises both in public as well as
private sector and also ISRO has well equipped itself with latest technologies and
number of inter-planetary missions creating a tremendous scope in its as well as
nation‟s overall development.
21) TEXTILE AND GARMENT:-
(A) Investors in India: Rieter (Switzerland), Bilsar (Turkey), Nissinbo(Japan),
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Skaps(USA)
(B)Reasons to invest: Favorable and friendly trade environment and policies

encourages and contributes more startups and FDI to the economy, Availability of
raw materials and skilled labors is high which helps to reduce the cost of
production attracting major textile producers across the Globe, Ongoing market
access with Japan, Korea,ASEAN and other countries and regional comprehensive
economic partnership (RCEP)are also initiated for a better textile and garment
sector.
22) THERMAL POWER:
(A) Investors in India: CLP holdings (Hong Kong), GE energy (USA), Abellon
clean energy (Canada), Kosep (South Korea)
(B)Reasons to invest: The modified tariff policies of 2016 promises adequate

return on investment to all the investor of this sectors who provide power
generation, transmission and distribution of the electricity, The Ministry of Power
along with the government of India has started with the initiative of UMPPs (Ultra
Mega Power projects) which will have about 4000 MW thermal projects,
Guidelines has been finalized by The Ministry of Power regarding the tariff and
the policies for transparent process of bidding based on BOO (Build Own Operate)
basis.
23) TOURISM AND HOSPITALITY:-
(A) Investors in India: Accor (France), The Four Seasons Group (Canada),
Thomas Cook (UK), Expedia (USA)
(B)Reasons to Invest: India in the year 2012-13 recorded 6.88% GDP from
tourism and hospitability making this sector to b the 3rd largest foreign exchanger
of the nation, FEE (foreign exchange earnings) from this sector in 2015 was
around USD 21.07 million, India holds about 35 heritage sites,10 geographic zones
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and has most exotic diversification which gives India 1.62% of world tourism
receipts and also India holds 15th rank in international tourism receipts.
24) WELLNESS:
(A) Investors in India: Ayurveda Medicines Manufacturing (naturaceuticals, food

supplements etc.), specialized treatment centers, Medical tourism for rejuvenating
and curative treatments.
(B)Reasons to Invest: India acquires world most ancient knowledge of medicines

both for curative and preventive healthcare which has a growing demand
worldwide, Western world has a growing interest towards India‟s ancient
Ayurveda, yoga, naturopathy, Unani and siddhaetc.which is opening doors for
more and more foreign investors, Investors of corporate houses and increasingly
investing in AYUSH sector which includes the whole Ayurveda, herbal, and other
traditional wellness techniques of India.
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CHAPTER 11:
SPECIAL SCHEMES BY THE GOVERNMENT FOR

THE DEVELOPMENT OF MSME
11.1 Small and medium-sized enterprises (SMEs) Division Schemes
Development Commissioner Ministry of Micro, Small &

11.2
Medium Enterprises(DC-MSME) Schemes
11.3 National Small Industries Corporation(NSIC) Schemes
11.4 ARI Division Scheme
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CHAPTER 11:
SPECIAL SCHEMES BY THE GOVERNMENT FOR

THE DEVELOPMENT OF MSME
This chapter elaborates on the various schemes of the government, in specific to

the Micro, small and medium enterprises. The schemes and subsidies of the
government are for the sectors ranging from Agriculture and farmers, chemicals
and fertilizers, commerce and industry, communication and information
technology, micro small and medium enterprises, finance, food processing,
textiles, women and child, tourism, Housing and urban poverty alleviation,
corporate affairs, culture, rural development, science and technology, social
justice, tribal affairs and urban development. Each sector carries multiple
schemes and subsidies by the government for the development of the
entrepreneurs.
Below given are the schemes and subsidies developed by the government for
the development of entrepreneurs in the area of Micro, small and medium
enterprises.
The MSME‟s schemes are divided into 4 sections:
1. Small and medium-sized enterprises (SMEs) Division Schemes
2. Development Commissioner Ministry of Micro, Small & Medium
Enterprises(DC-MSME) Schemes
3. National Small Industries Corporation(NSIC) Schemes
4. ARI Division Scheme
The following are the schemes and subsidies that come under each section of
MSME’s.
11.1SMALL AND MEDIUM-SIZED ENTERPRISES (SMES) DIVISION

SCHEMES
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International Cooperation
Assistance to Training Institutions (ATI)
Marketing Assistance
Source : www.sarkariyojna.co.in
1. Scheme for International Cooperation financial assistance, space rent
The scheme covers the following actions:
Commission of MSME business delegations to other nations for exploring new

areas of technology concoction/upgradation, facilitating shared ventures,
improving markets for MSMEs goods, overseas collaborations, etc.
Partaking of Indian MSMEs in global exhibitions, business fairs and buyer-seller

meetings in distant countries as well as in India, in which there is global
involvement.
Conducting global conferences and seminars on issues and themes of concern to

MSMEs.
Eligibility
1. State/Central ruled Organizations

2. Business/Enterprise links
3. Registered Societies/Trusts and Organizations linked with help and growth
of MSMEs
Benefits
International Cooperation scheme provides monetary assistance of up to 95% of

airfare and space lease for entrepreneurs. Support is provided on the basis of size
and variety of the enterprise. It also provides help for the costs incurred on the
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delegations like shipment & insurance, local transportation,
clerical/communication services, printing of common brochures etc.
How to Apply
An Entrepreneur/Udyami Helpline: 1800-180-6763 has been provided for queries

connecting to this Scheme. Else the entrepreneur could apply online or
applications can be sent for monetary support in the approved form to the Director
(International Cooperation), Ministry of MSME, UdyogBhavan, New Delhi – 110
011
2. Assistance to Training Institutions (ATI)
Support is given to the training institutions in the form of fund for

conception/strengthening of infrastructure and support for conducting enterprise
development and 134kilfulness training programmes.
Beneficiaries: Any State/Union Territory Government/Management training

bodies, NGOs and other progressing agencies can apply for support for
conception or strengthening of infrastructure.
Training institutions who wish to carry out training programmes under the scheme
will have to register themselves with any of the three nationalized EDIs of the
department viz, NIESBUD, Noida; IIE Guwahati and ni-msme, Hyderabad.
Benefits: Utmost assistance for formation or strengthening of infrastructure will

be Rs.150 lakh on a basis, not exceeding 50% of project cost. Nevertheless, for
the North Eastern Region (including Sikkim), Andaman & Nicobar and
Lakshadweep, upper limit on matching basis would be Rs.270 lakh or 90% of plan
cost, whichever is less. Utmost support per trainee per hour for entrepreneurship
development and skill development programmes is Rs.50 (Rs.60 for NER, A&N
and Lakshadweep).
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How to Apply: An Entrepreneur/Udyami Helpline: 1800-180-6763 has been
provided for queries connecting to this Scheme. Organizations who wish to apply
should send their applications to the Director (EDI), Ministry of Micro, Small and
Medium Enterprises, UdyogBhawan, Rafi Marg, New Delhi – 110 107. Also the
training institutions who desire to conduct training programmes or individuals
who wish to register for training programmes under the scheme may visit
http://msmetraining.gov.in/
3. Marketing Assistance Scheme Financial assistance, air-fare, space

rent
The assistance is provided for following activities: Conducting exhibitions

overseas and contribution in global exhibitions/trade fairs. Co-sponsoring of
exhibitions arranged by other organizations/business
associations/agencies.Organizing buyer-seller meetings, thorough campaigns and
advertising promotion events
Eligibility: MSMEs, trade relations and further organizations associated to the

MSME sector
Benefits
1. Monetary assistance of up to 95% of the air-fare and space rent for

entrepreneurs.
2. Support is provided on the foundation of extent and type of the enterprise.
3. Monetary assistance for co-sponsoring would be limited to 40% of the net
costs, subject to a maximum sum of Rs.5 lakh.
How to Apply
connecting to this Scheme. The applicants looking for assistance under this
scheme should connect to the nearest office of the National Small Industries
Corporation, with full information and rationalization.
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11.2 DEVELOPMENT COMMISSIONER MINISTRY OF MICRO, SMALL &
MEDIUM ENTERPRISES(DC-MSME) SCHEMES
Credit Guarantee
Credit Linked Capital Subsidy for Technology Upgradation
ISO 9000/ISO 14001 Certification Reimbursement
Micro & Small Enterprises Cluster Development Programme
Micro Finance Programme
MSME Market Development Assistance (MDA)
National Awards (Individual MSEs)
Marketing Support/Assistance to MSMEs (Bar Code)
Entrepreneurial and Managerial Development of SMEs through Incubators
Enabling Manufacturing Sector to be Competitive through QMS & QTT
Building Awareness on Intellectual Property Rights (IPR)
Lean Manufacturing Competitiveness for MSMEs
National Manufacturing Competitiveness Programme (NMCP)
Design Clinic for Design Expertise to MSMEs Manufacturing sector (DESIGN)
Marketing Assistance & Technology Upgradation
Technology and Quality Upgradation Support to MSMEs
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Scheme for Credit Guarantee for Micro and Small Enterprises free loans
Ministry of Micro, Small and Medium Enterprises, Government of India and Small
Industries Development Bank of India (SIDBI), recognized a Trust named Credit
Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement
Credit Guarantee Fund Scheme for Micro and Small Enterprises. The body of
CGTMSE is being contributed by the Government of India and SIDBI.
Eligibility
Both present and new enterprises are qualified to be covered under the scheme.
Benefits
Guarantee free loans up to a maximum of Rs.50 lakh - for individual MSEs
How To Apply

connecting to this Scheme. Candidates meeting the eligibility criteria may move
towards banks/financial institutions, which are qualified under the scheme, or
scheduled commercial banks and some Regional Rural Banks.
Scheme for Credit Linked Capital Subsidy (CLCS) for Technology

Upgradation
Industrial up gradation would normally mean creation of state-of-the-art or near

state-of-the-art technology. In the unstable mosaic of technology obtaining in more
than 7,500 goods in Indian small scale sector, technological upgradation would
mean a major step up from the present technology state to a substantially advanced
one involving enhanced productivity, and progress in the quality of products and
improved environmental surroundings as well as work environment for the entity.
It includes setting up of improved packaging techniques as well as anti-pollution
procedures and energy preservation equipment. Additionally, entities in need of
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introducing amenities for in-house testing and on-line quality control would meet
the criteria for support, as the same are a case of technology up-gradation.
Substitute of existing equipment/knowledge with the same equipment/ skill will
not meet the criteria for the subsidy under this scheme, nor would the scheme be
applicable to units upgrading with second-hand machinery.
Eligibility
Eligible beneficiaries for this scheme comprise of sole proprietorships,
partnerships, co-operative societies, and public and private limited companies in
the MSME sector.
Benefits
The revised scheme looks at facilitating technology upgradation by providing 15%

up-front capital funding to MSME units, including micro, coir, village and khadi
industrial units, on institutional funding, availed by them for orientation of well
reputable and enhanced technologies in specified sub-sectors/goods approved
under the scheme.
Revised CLCS has been amended as follows:
1. The upper limit on loans under the scheme has been increased from Rs.40 lakh to
Rs.1 crore
2. Charge of subsidy has been improved from 12% to 15%.
3. Permissible capital subsidy is calculated keeping in mind the procurement price of
the plant and machinery, instead of term loan disbursed to the beneficiary unit.
4. Practice of classification of MSME units in different slabs on the basis of their
current investment for determining eligible subsidy has been cancelled.
Scheme for ISO 9000ISO 14001 Certification Reimbursement for

Enterprises
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MSME‟s have emerged as vibrant and pulsating and is making a significant
contribution to industrial production, export and creation of employment. The
process of economic liberalization and market reforms has opened up India‟s
MSMEs to international competition. In order to develop the competitive strength
of MSME, the Government has introduced an incentive plan for their technological
up gradation/quality enhancement and environment management. The scheme
provides incentives to those MSMEs, cottage and ancillary units who have
acquired the certifications of ISO 9000/ISO 14001/HACCP certification. The
scheme is amended so as to include the cost expenditure for acquiring ISO-14001
certification.
Eligibility
1. Only registered entities of micro and small enterprises (MSMEs) are eligible to
avail the scheme.
2. The scheme is applicable to those MSME units who have already acquired ISO-
9000/ISO-14001/ HACCP certification standard certifications.
Benefits
The scheme includes reimbursements of charges for acquiring ISO-9000/ISO-

14001/HACCP certification to the extent of 75% of the cost incurred which is a
maximum of Rs.75,000 in each case.
Micro and Small Enterprises Cluster Development Programme (MSE-

CDP)
The Ministry has adopted cluster development as a key strategy for increasing
productivity and capacity building as well as competitiveness of MSMEs.
Clustering of units also enables them to provide various services to them, including
banks and credit facilities, to provide them with more economical services, thus
decreasing the costs and increasing the availability of services for these enterprises.
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Objective
1. To support growth and sustainability of MSMEs by addressing common challenges

such as improvement of equipments, skills, market access and access to funds.
2. To strengthen the productivity of MSMEs for common supportive action through
the formation of clusters, self-help groups, associations, etc.
3. To enhance the infrastructural amenities in the new/existing industrial regions of
MSMEs.
4. To set up common facility processes (for testing, training of personnel, raw
material, high-end treatment, check production processes etc.)
Benefits, the Cost of the project and the assistance provided by the
Government of India
1. Diagnostics testing - cost Rs.2.5 lakh.

2. Soft interventions - cost of project Rs.25 lakh, with 75% of the contribution by the
Government of India (Special cases: 90% contribution by the GoI for special
category States and for groups with more than 50% village/ Micro/ women and SC/
ST units).
3. Hard interventions, i.e., setting up of CFCs – the eligible project cost Rs.15 Crore
contribution of 70%by the Government of India (Special cases: 90% contribution
by the GoI for special category States and for groups with more than 50% village/
Micro/ women and SC/ ST units).
4. Infrastructure development in the new/existing industrial areas; with the eligible
project cost Rs.10 crore, with Government of India contribution of 60% (Special
cases: 80% contribution by the GoI for special category States and for groups with
more than 50% village/ Micro/ women and SC/ ST units).
Micro Finance Programme for MFIs / NGOs funding
The central government has initiated a scheme of microfinance, in collaboration

with the existing programme of SIDBI by way of contributing towards funds of
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security deposits needed from the NGOs to get the loan from SIDBI. The scheme
is operational in the under-developed States and regions of the country.
Benefits
The government of India provides monetory support for microfinance initiatives to

SIDBI, which is called „Portfolio Risk Fund‟(PRF). Currently SIDBI receives fixed
deposit equal to 10% of the principle amount. The capital investment of NGOs is
2.5% of loan amount (i.e., 25% of security deposit) and balance 7.5% (i.e., 75% of
security deposit) is adjusted from funds provided by the Government of India.
MSME Market Development Assistance (MDA) Scheme forIndividual

MSMEs, Industry
As part of the widespread policy package for MSMEs, the MSME-MDA scheme
has been initiated with a view to generating an increase in the participation of
representatives of MSME units. MDA is offered in three forms as mentioned
below:
 Active participation in the worldwide exhibitions/fairs - For registered small &
micro manufacturing enterprises.
 Monetary assistance for using Global Standards (GS1) in bar-coding.
 Improved importance of bar-coding and financial assistance.
Benefits
The scheme offers support of up to 75% in respect of the travel fare for the
representatives of MSME‟s entrepreneurs in overseas fairs/trade delegations. The
scheme also has provision of monetary support for producing publicity material
and for contesting anti-dumping cases for MSMEs & associations.
National Awards (Individual MSEs) Scheme forentrepreneurs
MSMEs have shown tremendous growth and increase in terms of quality of

production, EXIM, technological innovation, research and development and import
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substitution, very much beyond the anticipated objectives of the setting up of
MSMEs. Entrepreneurial hard work have made it possible to fabricate a number of
items, which were until now imported. In quite a few cases, innovative variants so
produced are having additional features over their original versions and are
competent in solving a multitude of user challenges. All this has become possible
due to the ambitious and futurist spirit of entrepreneurs of MSMEs.
The Ministry of MSME with a view to recognize the efforts and contribution of
MSMEs gives National Awards annually to chosen entrepreneurs and enterprises
under the scheme of National Awards.
Eligibility
Those entrepreneurs having permanent registration and managing MSMEs are

elegibile to file Entrepreneurs‟ Memorandum Part-II. The entrepreneurs interested
should have their entities working for a minimum of 3 years in continuous
production or service.
Marketing Support Assistance to MSMEs (Bar Code) forEnterprises

Financial assistance
Through this scheme, the MSEs are encouraged and motivated to use bar-codes
through seminars inorder to receive the reimbursement of registration fees.
Benefits
The Reimbursement is provided for the registration fee for bar coding. It provides
for a reimbursement of 75% of the onetime fee and 75% for the next 3 years of
recurrent charge for the financial assistance to the entrepreneurs for the amount
paid as the registration charge for product barcode.
On getting registration for the use of barcode for products,

(http://www.gs1india.org/), take the following steps for reimbursement of fee:
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1. Filling of the prescribed application form by the entrepreneur for claiming
reimbursement on bar code.
2. The application form along with formats for supporting documents is said to be
available at the Director, MSME-DI, or can be downloaded from
http://www.dcmsme.gov.in/
3. The filled-in application form with required documents is to be submitted to the
office of MSME-DI which is available on the website: www.dcmsme.gov.in/
MSME-DO/DCmsmeaddress.html
Entrepreneurial and Managerial Development of SMEsthrough Incubators

funds
The scheme is initiated to provide early stage financial support for nurturing
innovative business ideas (new original technology, processes, goods, procedures,
etc.) which could be commercialized in a year. Under this scheme monetary
assistance is provided for setting up of incubators.
Beneficiaries
An entrepreneur or a MSME having innovative ideas set for commercialization can

register with the host institution (e.g., IITs, NITs, technical colleges, research
institutes, etc.).
Benefits
Financial support for setting up of „Business Incubators (BI)‟: The expenditure

may vary from Rs.4 to 8 lakh for each incubate, subject to overall ceiling of
Rs.62.5 lakh for each BI, which includes
1. Advancement of infrastructure Rs. 2.50 lakh

2. Orientation Rs1.28 lakh thus the total assistance per BI – Rs.66.50 lakh
3. Clerical expenses Rs. 0.22 lakh
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Enabling Manufacturing Sector to be Competitive throughQuality
Management Standards and Quality TechnologyTools
The scheme aims to create awareness and encourage MSEs to understand and
implement latest Quality Management Standards (QMS) and Quality Technology
Tools (QTT).
Eligibility
Expert entities like Quality Council of India (QCI), National Recruitment Board
for Personnel and Training, Consultancy Development Corporation, National
Productivity Council, Standardisation Testing & Quality Certification (STQC, a
Society under the Ministry of IT), IIQM (Indian Institute of Quality Management),
Industry Associations that have taken active interest in QMS/QTT, technical
institutions, engineering institutions and colleges, MSEs and similar bodies.
Benefits
1. Financial support for induction of appropriate course modules in technical

institutions
2. A total monetary contribution of Rs.425 lakh per year made by the Government
of India for introduction of course matter, teaching the trainer, awareness
seminars and other activities
3. Funding support of Rs.1.25 lakh per course to be provided for conducting
awareness programme.
1. The contribution of the government of India of Rs.2.5 lakh for professional study
on threatened products.
2. The contribution of the government of India of Rs.7.5 lakh for technical exposure
visit
3. The contribution of the government of India of Rs.2.5 lakh for procurement of
samples
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4. The contribution of the government of India of Rs.5 lakh for product
development
5. The contribution of the government of India of Rs.1.5 lakh for awareness of
improved products
6. The contribution of the government of India of Rs.2.5 lakh/unit to jacket cover
the costs of diagnostic study and for execution of Quality Technology
Tools/Quality Management Standards
7. The contribution of the government of India of Rs.2.5 lakh per SME for overseas
visit (25% and 50% cost to be collected by the micro and small enterprise
respectively)
Building Awareness on Intellectual Property Rights (IPR)
The basic objective of the scheme is to bring in awareness among the MSMEs
about IPR‟s - Intellectual Property Rights, to take steps inorder to protect their
ideas and business strategies. Effective use of IPR tools by MSMEs would also
help in technology upgradation and thereby increasing the competitiveness.
Benefits
Monetary support for conducting awareness/sensitization programmes on IPR,

pilot studies for selected clusters of industries, grant support for conducting
interactive seminars/workshops, providing grants for conducting focused training
on IPR, monetary support in the form of Grant on Patent/GI Registration, funding
support for setting up IP Facilitation Centre (IPFC) for MSME, funding support for
organizing interaction with international agencies.
1. Assistance by the government of India of Rs.1 lakh per awareness programme

2. Assistance by the government of India of Rs.2.5 lakh per pilot study
3. Assistance by the government of India of Rs.2 lakh per programme of
interactive seminar
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4. Assistance by the government of India of Rs.6 lakh per short term training
programme and Rs.45 lakh for an extensive training programme. For
registered Indian MSMEs, a single financial support limited up to Rs.25,000
on funding of domestic patent and Rs.2 lakh for international patent; for
registering as a Geographical Indications of Goods Act, one-time monetary
support limited to Rs.1 lakh
5. The overall financial Assistance by the government of India up to Rs.65 lakh
each for establishing IPFCs which will include one-time fund of Rs.45 lakh
and Rs.18 lakh as inveterate expenses for 3 years, and Rs.2 lakh as
miscellaneous expenses.
6. Monetary support by the government of India up to Rs.5 lakh and Rs.7.50 per
event for domestic interventions and international exchange programme
respectively.
Lean Manufacturing Competitiveness for MSMEs SchemeFinancial

assistance
The scheme is introduced to increase the manufacturing competitiveness of

MSMEs through the involvement of various Lean Manufacturing (LM) techniques.
This scheme can be enjoyed by all manufacturing MSEs with a condition that the
unit must be registered with the DIC.The units are expected to form an MC to
participate in the scheme involving 10 units (minimum 6), by signing a
Memorandum of Understanding (MoU) among themselves..
Benefits
Availability of Monetary assistance for the implementation of lean manufacturing

techniques, primarily the cost of lean manufacturing (80% of the cost subsidized by
the Government of India and 20% by the beneficiaries).
Method of application for the Scheme :
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1. Connect to the national monitoring and implementing unit or a group of
SMEs should be able to apply for the scheme, hence either a recognized SPV can
apply or a mini cluster can be formed by a group of 10 or more units.
2. The approval is given in two steps; first, the provisional approval and then
the final approval is received once the conditions for the provisional approval are
fulfilled.
National Manufacturing Competitiveness Programme(NMCP)
The National Manufacturing Competitiveness Council (NMCC) has finalized a

five-year national manufacturing programme. Ten schemes have been designed
for the various support processes for SMEs. Under this plan following schemes
are being implemented.
 Marketing Assistance to MSMEs (Bar Code).

 Support for managerial and entrepreneurial development of SMEs via
incubators.
 Enabling industrialized sector to be viable through Quality Mgmgt Standards &
Quality Tech. Tools
 Creating awareness on Intellectual Property Rights (IPR) for SME.
 Assistance in marketing & technology upgradation plans for MSMEs.
Design Clinic for Design Expertise to MSMEs ManufacturingSector

(DESIGN)
The scheme is for rising competitiveness of MSMEs and hence to create awareness
on the significance of design and its learning.
Eligibility
1. industry associations, agencies and other technical institutions for conducting

seminars and workshops
2. MSMEs or groups of MSMEs
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3. Individuals (design students) as co-applicants in collaboration with the academic
institution
Benefits
1. Financial support for „Design Awareness‟ workshops & seminars

2. Financial support for implementing „Design‟ projects
3. Government of India contributes Rs.60,000 per seminar and 75% subject to a
maximum of Rs.3 lakh per workshop
4. 60% of the total accepted project expenditure or Rs.9 lakh, either is less, in case
of individual MSME or a set of not more than three MSME applicants
5. 60% of the total accepted project cost or Rs.15 lakh, either is less, in case of
individual MSME or a set of four or more MSME applicants
6. 40% of the principle to be contributed by the applicant MSME(s) in both cases
How to Apply
1. For holding workshops and seminars, agencies can directly apply to design clinic
centers across the nation.
2. For design projects, MSMEs can set off without a design company or with a
design academic institution, by submitting an application to Design Clinic Centre,
or through internet.
Marketing Assistance and Technology Upgradation Fundingsupport
This is a government of India initiative for the MSME‟s inorder to adopt the
modern marketing techniques by MSMEs, consistent with the requirement of
global markets. The scheme is divided into eight sub-components and assistance by
the government of India is available in various extents.
Benefits
 Financial support for creating awareness on new packaging equipments.
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 Group based studies on packaging position and must for upgradation
 Financial support for conducting skill upgradation / expansion programmes for
modern marketing practices
 Financial support for conducting trade competition studies
 Funding support to MSMEs belonging to North-Eastern Region for contribution
in marketing events
 Funding support (in the form of re-imbursement) to MSMEs for taking up
corporate governance practices
 Financial support for setting up of advertising hubs
 Re-imbursement to ISO 18000/ISO 22000/ISO 27000 certification for MSMEs
 Assistance of the government of India for Rs.0.50 lakh per programme (GoI:unit
:: 80:20) - per awareness programme
 For SC/ST/woman/physically handicapped entrepreneurs, a re-imbursement up to
Rs.30,000 per unit and for other MSME units for participation in state and district
level trade fairs, Rs.20,000 per person.
 Funding support of Rs.30 lakh by the Government of India for marketing hubs,
plus Rs.5 lakh for furniture, IT, etc., and recurring expenses of Rs.15 lakh (80%
reimbursed by the Government of India and the other 20% of the principle
amount by the private units) for 2 years
 For acquiring ISO certification a onetime re-imbursement of expenditure to the
extent of 75% subject to a maximum of Rs.1 lakh is provided.
Technology and Quality Upgradation Support to MSMEs fororganizations
The scheme supports the use of energy efficient technologies (EETs) in

manufacturing units so as to reduce the manufacturing expenditure and take up
clean progress mechanism.
Benefits
The benefits of this scheme are
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1. Capacity building of MSME for energy efficiency/clean development and linked
technologies
2. Use of energy efficient technologies in MSME units
3. Encouraging MSMEs to obtain product certification/licenses from
nationalized/global agencies
4. Financial support of 75% for awareness programmes subject to highest limit of
Rs.75,000 per programme
5. 25% of the project expenditure as subsidy by Government of India, balance
amount to be acquired through the loan from SIDBI/banks/financial institutions;
least contribution, as required by the funding agency, to be made by the MSME
6. 75% of the actual expenditure, subject to a highest Rs.15 lakh for setting up
Carbon Credit Centers
7. 75% grant to manufacturing MSME towards licensing of goods to
nationalized/global standards; highest allowance per MSME: Rs.1.5 lakh for
obtaining merchandise licensing to nationalized standards and Rs.2 lakh for
obtaining product licensing/marking to global standards.
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11.3 NATIONAL SMALL INDUSTRIES CORPORATION(NSIC) SCHEMES :
Performance and Credit Rating
Bank Credit Facilitation
Raw Material Assistance
Single Point Registration
Infomediary Services
Marketing Intelligence Services Lease
Bill Discounting
Exhibition cum Marketing Development Business Park
Exhibition Hall, Hyderabad
IT Incubator
Exhibition Grounds, New Delhi
Software Technology and Business Parks
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Performance and Credit Rating Scheme for Micro, Mediumand Small
Enterprises
This scheme looks at establishing an independent, trusted third party outlook on

capabilities and credit-worthiness of MSEs, and makes credit accessible at
attractive interest rates. It envisions to enable MSMEs get recognition in global
trade, ensure timely sanctions of credit from banks and monetary institutions,
subsidized ranking fee structure for MSEs help vendors and/or buyers in
competence and capacity assessment of MSEs enables the MSEs to determine the
strengths and weaknesses of their existing operations and obtain corrective actions.
Salient features
The scheme is a permutation of credit and performance factors including, finance,

operations, business and management risk, allowing even rating scale for all rating
agencies. MSEs have the freedom to choose from those empanelled Rating
Agencies. The fee composition is turn-over based. Partial repayment of rating fee
may be obtained through NSIC.
Re-imbursement
Turnover of MSE Re-repayment of fee through NSIC

75% of the fee or Rs.25,000
Up to Rs.50 lakh (whichever is less)
More than Rs.200 lakh (whichever is less)
Above Rs.50 to 200 lakh (whichever is less)
Table 12.1
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Bank Credit Facilitation
To meet the credit necessities of MSME units, NSIC has come into a
Memorandum of Understanding with various nationalized and private banks. By
way of syndication with these banks, NSIC arranges for credit hold (fund or non-
fund based limits) from banks without any expenditure to MSMEs.
Furthermore, MSMEs can raise their proficiency in terms of business and

technologies by getting rated through autonomous, well-known and trained rating
agencies empanelled with NSIC. MSEs which get rated under NSIC-Performance
and Credit Rating scheme have the freedom to get rated by any one of the rating
agencies of their liking. It also invariably boosts their creditability in business and
helps them in getting apt credit from banks at moderate rates of interest.
Scheme for Raw Material Assistance for Micro, Medium andSmall

Enterprises
The scheme stands in aid of MSEs by way of financially supporting the

procurement of raw materials. This in turn gives space to the MSEs to focus on
developing quality products.
Benefits
1. Monetary assistance for purchase of raw material up to 90 days
2. Assistance to avail economics of procurement like whole-sale large purchases,

discount, etc.
3. All measures related to the processes, documentations & an issue of the letter of
credit in case of imports is taken care and overseen with the help of the scheme.
The scheme can be applied and registered in contact with the regional & branch
offices of NSIC.
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Single Point Registration Scheme tender (SPRS)
The government in itself is the single largest purchaser of a variety of goods. The
Government Stores Purchase Programme was launched with a view to increase the
share of procurement from MSEs. In order to encourage the MSEs to buy their raw
materials from the government storages, the NSIC registers MSEs under a Single
Point Registration Scheme (SPRS).
Eligibility
MSEs which are registered with the Director of Industries (DI) or the District
Industries Centre (DIC) as manufacturing or service enterprises or having
acknowledgement of Entrepreneurs Memorandum (EM Part-II) are eligible for
registration with NSIC under SPRS.
MSEs which have already started their commercial business in production and
manufacturing / services but not completed one year of existence can be provided
with the Provisional Registration Certificate under SPRS with a funding limit of
Rs.5 lakh, which will hold a validity period of one year from the date of issue after
imposing the registration fee and receiving the required documents.
Benefits
The registered entities under the scheme will be eligible to get the benefits listed
below:
 Free of cost issue of tender.

 Exclusion from payment of Earnest Money Deposit (EMD)
 The MSEs participating in the tender quoting a price within the price limit of
L1+15% are allowed to supply a portion up to 20% of a requirement by lowering
their price to L1 price.
 Every Central government Department and the public sector units (PSU) shall set a
yearly target of a total annual procurement of products and services of a minimum
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of 20% rendered by MSEs; out of the fixed 20% purchase of goods and services
from MSEs, 4% is marked for the enterprises owned by Schedule Castes/Schedule
Tribe entrepreneurs..
 In addition to the above, 358 items also reserved for exclusive purchase from MSE
sector which includes pickles, coir products, handicrafts and other handmade in-
house produced materials.
Scheme for Infomediary Services for business, technology and

Finance
Information technology is on the verge of taking over a critical place, with the kind
of innovations, researches, consultancies and technical advancements in the area.
With the increase in competition and the melting away of global borders, demand
for information and technology is reaching new heights. National Small Industries
Corporation-NSIC is offering Infomediary Services which is a one-way, one-stop,
one window array of aids that will provide vital information on business,
technology and finance, and also exhibit core strengths and competencies of Indian
SMEs thus help it to reach the world. The corporation is also contributing services
through its MSME Global Mart www.msmemart.com; which is a Business to
Business (B2B) and Business to Customer (B2C) compliant web portal in which
the services are available through annual membership.
Benefits: Platinum membership :A member, who joins both B2B and B2C
portals, will get unlimited access to all B2B and B2C features and is allowed to
upload images of 10 products on the MSME Global mart website.
1. Joining fee of Rs.10,000 + service tax for one year

2. Renewal charges of Rs.10,000 + service tax
3. For international clientele, US$ 250 for one year
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Gold membership
1. A member who wishes to join on the gold membership slab will be allowed the
features of any one portal i.e.; only B2B or B2C portal, whichever is opted for, and
allowed to upload images of 10 products.
2. Joining fee of Rs.5,000 + service tax for one year
3. Renewal charges of Rs.5,000 + service tax for one year
4. For international clientele, US$ 125 for one year
Basic member: Free, with limited access for B2B portal only
Scheme for Marketing Intelligence Services Lease forExporters, importers
Marketing Intelligence Cell attains and examines information of both existing and
potential consumers, to understand the market, determine existing and future
requirements and preferences, attitudes and nature of the market; and to evaluate
changes in industry environment that may influence the size and nature of the
market. The information includes:
1. Database of product-wise lot buyers and the buyers in Government/public sector

undertakings.
2. Database of price contracts of various Government divisions and Public Sector
Units.
3. Information on tenders announced by the Government and Public Sector Units.
4. Extending the list of Indian exporters to various countries, with lists of products
manufactured and services provided.
5. Database of global buyers with lists of products manufactured and services
provided.
6. Database of equipment suppliers & projects for MSMEs
7. Business collaborator meetings (arrange one-to-one meetings for overseas
delegations with Indian exporters)
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8. Market acumen reports available on web portals pertaining to several sectors,
trend analysis and export – import figures.
9. International library/database/list provision with: worldwide importers‟
directory, area explicit booklets, general and worldwide business related
magazines / articles / databases / booklets, information guides.
10. Database of micro & small enterprises registered with National Small Industries
Corporation for Government procurements, raw material assistance,
performance & credit rating schemes, list of MSME business relations
Benefits: Online request form: MSMEs willing to avail any marketing intelligence
services of NSIC may apply for:
1. Bulk purchaser in Government/public & private zones

2. Exporters and International buyers
3. Technology suppliers
4. Entities registered with NSIC under the SPRS
5. DGS & D registered suppliers
Scheme for Bill Discounting for Micro, Medium and SmallEnterprises
The scheme handles procurement and discounting of bills arising out of authentic
trade dealings i.e., purchase of products and services made by small scale units and
selling to reputed public limited companies/State and Central Government
Departments/Undertakings.
Bills drawn by the small-scale units for the produce made by them and duly
acknowledged by the purchaser will be funded by the security of bank guarantee in
favor of NSIC.
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Benefits
Assistance against the security of BG/SDR/FDR
Particulars Effective rate of

interest (w.e.f.,
20/09/2011)
(i) Units having valid SE 1A rating 12.40%

under NSIC‟s rating scheme
(ii) Units having valid SE 2A rating 12.90%

(iii) Units having valid SE 1B rating 12.90%

(iv) Other units 13.40%
Table 12.2
Scheme for Exhibition-cum-Marketing Development BusinessPark

exhibition, office space
The need of rising corporate and trade entrepreneurs for the establishment of their
operations in an extraordinary - business environment is increasing. To cater to
such requirements, an Exhibition-Cum-Marketing Development Business Park, a
five storied infrastructural facility, covering a vast area of 1,50,000 sq. ft. with the
availability of exhibition space on the ground floor and office space on the upper
floors have been constructed at NSIC-TSC Complex, ECIL Post, Hyderabad
spread over a rambling area of 8 acres.
Benefits
1. Aesthetics of building by providing ACP, structural glass work, fountains, etc.
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2. 100% power generator back-up facility
3. Enormous parking space
4. Capsule Lifts/elevators
5. Large column free space in office areas
6. Conference hall with a seating capacity of 100 persons
7. Exhibition hall of 18,000 sq. ft.
8. Restaurant / food space
9. Earthquake resistant structure
10. Polished granite flooring in all common areas
11. Two atriums for ventilation and natural lighting
12. CCTV for safety measures and surveillance
13. PA surround sound system
14. Modern fire-fighting technology for safety
15. Pleasing lush green setting all around the building
16. Rain water harvesting
17. Infrastructural development : Wide approach road for hassle-free traffic
movement
18. Wide corridors for easy movement
Scheme for Exhibition Hall, Hyderabad – a perfect venue fororganising

exhibitions conferences
Exhibitions/Merchandise display events are prearranged in the conference hall

to showcase competencies of MSEs and to capture global opportunities. The
exhibition complex is strategically positioned and has lush green surroundings.
It has very good transport connectivity.
Benefits
1. Exhibition hall of 18,000 sq.ft.

2. Conference hall with a seating capacity of 100 persons
3. Enormous two- wheeler & car parking space
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4. 100% power generator back-up facility
5. Restaurant
6. Natural calamity resistance structure
7. Two atriums for ventilation and natural lighting
8. CCTV for safety measures and surveillance
9. PA surround sound system
10. Modern fire- fighting system technology
11. Pleasing lush green countryside all around the building
12. 24 hrs. water supply through R.O. system
Scheme for IT Incubator for fostering, business, Enterprisesand computer

facilities
Promising technological and knowledge-based emerging ventures look at fostering

ideas from professionals for which the idea needs to go beyond the conventional
venture capital activity. Such entrepreneurial ideas have to be fostered and nurtured
in a conducive environment before they become attractive for venture capitalists.
Incubation centers are the need of the hour to fulfill this need.
This scheme has been initiated in order to create a long run, dependable
entrepreneurship development in the area of ICT especially among first generation
entrepreneurs, fostering the innovative ideas into commercially viable business
propositions, encouraging commercialization of R&D into profit making
commercial businesses.
Also, the scheme enhances the expertise of NSIC in extending personalized hand-
holding to start-up companies in order to become successful MSEs. A close
association and networking between Research and development and the industry is
part of the initiative, particularly to target beneficiaries. For the space and
infrastructure utilization of NSIC-TBI, the budding prospective entrepreneur shall
pay a monthly license charge to NSIC. In addition to the license charge, the
utilization of the business center, telephone expenditure and internet charges are
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also payable on actual depending on the use. Expert personalized services like
marketing, legal, accountancy are also chargeable.
Eligibility
Every persons who would like to become an entrepreneur or has established an

enterprise; groups of researchers´ from the nearby universities who are partially
funded by an industrial partner-in-charge and who develop products adapted to this
partner´s needs; students from various institutions and universities or ideally
potential employees of start-ups, who are in need of some practical preparation in
the industry; people who have established standing in the industry and would
consequently like to start product development on their own are all eligible to
apply.
Investors who monetarily commit themselves to researchers´ clusters as well as to

the start-ups at the incubator; clients and sales associates who are interested in
cooperation with researchers´ groups and start-ups at the incubator; industrialized
enterprises, universities and private training institutions which are interested in
transfer their know-how within the criteria of the incubator and mediate their
clients may also apply.
Benefits
 Ready to move built-up space, computer hardware facilities, access to software

database and library, internet and business centre facilities
 primary level training/counseling, handholding into fine tuning the business plans,
specialized training, close mentoring of services, market exposure
 Advanced facilitation of seed capital/venture capital, market survey, support in
official formalities and documentation support
 Sourcing of business partners, technology transfer, legal formalities for launch of
enterprise, selection process
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Scheme for Exhibition Grounds for enterprises, New Delhi
A platform to showcase competencies and strengths of small scale industries and to

capture market opportunities, the NSIC has established its own state-of-the-art
Exhibition Complex next to its corporate office. The Exhibition Complex is
strategically located which makes it easy for transportation and connectivity and
has lush green surroundings in the plush South Delhi area which enjoys good
connectivity from the international airport, New Delhi railway station and
commercial centers of Delhi like the Connaught Place and Nehru Place.
Benefits
1,500 sq. mtrs.of fully air-conditioned built-up area
16,000 sq. mtrs.of open space with hard standing base
Facility of cafeteria
Open theatre
Separate entry and exit gates.
Huge parking space to accommodate more than 1,000 cars.
500 KVA uninterrupted power supply through DG set
24 hours water supply
Facility available for conferences and business meetings
Scheme for Software Technology and Business Parks
NSIC has brought up Software Technology-cum-Business Parks in New Delhi and

Chennai for providing space to small and medium enterprises in advanced software
development and to IT/ITES/MSME units not registered with STPI or units that are
falling under the overall definition of MSME. Enterprises other than MSME such
as banks/Public Sector Units/financial institutions, corporate sector would also be
considered for allotment under the below scheme.
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Benefits
Facilities available: Built-up area in modules having areas varying from 400 sq. ft.
to 4,000 sq. ft. This enables units to start their business/operations with minimum
waiting period.
Speed data link: High-speed internet facility through satellite link is available. The
member units can avail 64 kbps to 2 Mbps dedicated leased channels. TCP/IP
connections are available for us to members.
Each member is also provided with one telephone line for a business promotion
and connectivity.
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11.4 ARI DIVISION SCHEME
Prime Minister Employment Generation Programme (PMEGP)
Janshree Bima Yojana for Khadi Artisans
Market Development Assistance (MDA)
R&D Activities of Coir Board Under Central Sector Plan of Science & Technology
(S&T)
Rejuvenation, Modernization and Technology Upgradation of Coir Industry (REMOT)
CSS of Export Market Promotion
Skill Upgradation & Quality improvement and Mahila Coir Yojana
Development of Production Infrastructure (DPI)
Welfare Measures Scheme (Coir workers)
Programme for promotion of Village Industry Cluster - Rural Industry Service Centre
(RISC) for Khadi and Village Industry
Prime Minister’s Employment Generation Programme(PMEGP)
The scheme is executed by Khadi and Village Industries Commission (KVIC) as

the apex agency at the nationalized level. At the state level, the scheme is
executed through State KVIC Divisions, State Khadi and Village Industries
Boards (KVIBs), District Industries Centers (DICs) and banks. The Government
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subsidy under the scheme is given way by of KVIC through a select bank in-order
to reach the funds of beneficiaries/entrepreneurs into their bank accounts.
Eligibility
The entrepreneur or beneficiary should be least VIII standard passed for a venture
costing above Rs.10 lakh in the manufacturing sector, and above Rs.5 lakh in the
service sector. Only new projects are considered for sanction under PMEGP.
SHG-Self Help Groups and those belonging to BPL can avail the scheme under a
condition that they do not avail any benefits under any other scheme, entities
registered under Societies Registration Act, 1860, Co-operative Societies and
Charitable Trusts are also eligible.
All those entities who have registered and units that have already availed
Government subsidy under any other scheme of the government of India or State
Government are not eligible to enroll for this subsidy.
Benefits
The maximum cost of the project/unit admissible in manufacturing sector is Rs.25

lakh and in business/service sector is Rs.10 lakh. Levels of funding under
PMEGP:
Beneficiary’s Rate of
Categories of beneficiaries under
contribution (of subsidy (of
PMEGP
project cost) project cost)
Area (location of project/unit) UrbanRural
General category 10% 15%25%
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Special (including SC/ST/ OBC/
Minorities/Women, Ex-servicemen,
05% 25%35%
Physically handicapped, NER, Hill
and Border areas, etc.)
Table 12.3
In-order to apply for the same, the State Directors of KVIC in consultation with
KVIB and Director of Industries of the respective states will launch
advertisements locally and call for invitations for those interested, through print
& electronic media inviting applications along with project ideas and proposals
from prospective beneficiaries desiring to establish the enterprise units under
PMEGP.
JanshreeBimaYojana for Khadi Artisans
In association with the KVIC and the LIC-Life insurance corporation of India, a
group insurance in the name of Khadi KarigarJanshreeBimaYojana (JBY) in
specific for the Khadi Artisans was been launched. This scheme was designed by
KVIC in association with the Life Insurance Corporation of India (LIC)
Objective: it is an insurance cover to khadiKarigars and their families for natural

death of the insured due to accident and loss of both eyes and both limbs, plus a
scholarship up to 12th standard for two children
Eligibility
Khadi workers/Karigar aged between 18 years and 59 years and below or

marginally above the poverty line
Benefits
1. For death due to: (1) natural reasons – Rs.20,000; and (2) accident – Rs.50,000
2. For permanent disability (loss of two eyes or two limbs) – Rs.50,000.
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3. For partial disability (loss of one eye or one limb) – Rs.25,000.
4. Free add-on benefit: Scholarship of Rs.300 per quarter for children of Khadi
artisans.
Scheme for Market Development Assistance for KhadiFinancial

Assistance
A flexible, expansion stimulating and artisan oriented Market Development

Assistance (MDA) scheme hasbeen introduced. Under the MDA, monetary
assistance is provided to institutions @ 20% of the rate of production of khadi
and poly-vastra (poly clothes), to be shared among the artisans
manufacturinginstitutions and selling institutions in the ratio 25:30:45. MDA
allows the entities flexibility to use the support for improving the outlets,
products and production processes, besides encouraging the customers with
incentives etc.
Objective
Monetary assistance to Khadi institutions to use for improving the outlets,

production, processes or giving incentive to customers
Benefits
MDA subsidy is allowed @ 20% on cost of production of Khadi (cotton, silk,

woollen) and poly-vastra to the extent of manufacturing target approved by the
Standing Finance Committee (SFC) of KVIC for the year.
How To Apply
The total amount of MDA on production will be taken up by the manufacturing

institution from the KVIC and will be distributed amongst the stakeholder‟s viz.,
25% to spinners and weavers, 30% to producing institutions and 45% selling
institutions. Producing institutions have to submit a quarterly report of MDAbased
on the actual manufacturing achieved during the preceding quarter of the financial
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year. The difference, if any, should be adjusted in the last quarter of the financial
year on the basis of audit conducted by the Chartered Accountants. The MDA will
be preferably reimbursed electronically by the Divisional office of the KVIC on the
quarterly basis.
R and D Activities of Coir Board under the Central SectorPlan of Science

and Technology
The Coir Board has been responsible for the undertaking, assisting or encouraging
economic, technological and scientific research, also maintaining and assisting one
or more research institutions for their researches in the development and the use of
coir. Two Research and Development institutes, namely; CCRI, Alleppey and
CICT, Bengaluru are functioning under the Coir Board.
Objective
To encourage economic research with the maintenance and assisting of research

institutions - CCRI, Alleppey and CICT, Bengaluru
Eligibility
Assistance is provided only to the two R&D institute's functioning under the Coir
Board.
Benefits
The fund is released to the two Research and Development institutes: CCRI,
Alleppey and CICT, Bengaluru by the Government through the Coir Board for
Research and Development activities and creation of infrastructure & civil
construction/repairs, etc., relating to R&D activities only as specified in the action
plan under different programme heads of the scheme.
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Rejuvenation, Modernization and Technology Upgradation ofCoir
Industry (REMOT)
This is a credit linked scheme for setting up of coir units with venture cost up to
Rs.10 lakh plus one cycle of working capital which shall not exceed 25% of the
project cost. Working capital will not be considered for subsidy.
Eligibility
Any individual above 18 years of age with Indian citizenship can apply. There is
no income ceiling for the assistance for setting up of the project under REMOT
scheme, Assistance under the scheme is only available for projects for the
production of coir fibre/ yarn/ products, etc., coming under the coir sector.
Assistance will be made available to individuals, SHG‟s, NGO‟s and companies

registered under Societies Registration Act 1860, production of cooperative
societies, joint liability groups and charitable trusts. Women, SC/ST and the
Andaman and Nicobar Islands and Lakshadweep beneficiaries will be given
priority.
Benefits
The funding pattern of the scheme is
Bank loan - 55%
Government fund (margin money – subsidy) - 40%
Beneficiary‟s contribution - 5%
Scheme for CSS of Export Market Promotion for Indianexporters’ subsidy
Coir Board is implementing Export Market Promotion scheme in-order to carry out
a strategic and aggressive product and market specific awareness programmes for
advertisement and promotion of the coir and coir products in the global markets,
supporting export based industry on modernisation programme, and to attain an
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overall and long run sustainable development of Indian coir industry by
participating in international fairs/produce promotion
programmes/conferences/seminars etc thereby assisting entrepreneurs to participate
in such programmes through export market development assistance scheme.
Objective
For overall development of coir industry; to support modernisation of export

oriented units to popularize coir products in international markets, to participate in
international fairs, seminars etc
Eligibility
All micro, small and medium exporters, with FoB turnover of less than Rs.2 crore
worth coir and coir products in the previous year and micro, small & medium
entrepreneurs of coir and coir products, registered with the Coir Board, would be
eligible to register under the scheme, with a condition that they do not avail the
facility from any other source for the same reason or participated three times in the
same exhibition to the same destination, with assistance from the government.
Benefits
TA financial assistance of up to Rs.2 lakh is given to eligible coir exporters to

participate in the global fairs or product awareness programmes, etc. Support for
publicity material up to 25% of the production cost with over all ceiling of
Rs.15,000 is also admissible.
Skill Upgradation and Quality Improvement and Mahila CoirYojana

(MCY)
The scheme is for training individuals for the levels of supervisors, instructors and
artisans to meet the need of skilled manpower for the development and growth of
the coir industry. Transfer of technology to non-traditional areas by ways of the
development of the skill of coir workers is also a provision of the scheme. Training
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programmes and EDPs (Entrepreneurship Development Programmes) are held by
the Coir Board through its regional training centres.
Mahila Coir Yojana (MCY), in particular, works at women upliftment through the
provision of spinning equipment at lower rates after appropriate skill development
training.
Objective
Skill training to boost coir industry, and subsidisation of spinning equipment to

women to empower them
Eligibility
All micro, small and medium enterprises dealing with exports, with a FoB turnover
of less than Rs.2 crore worth coir and coir products in the past year and micro,
small & medium entrepreneurs of coir and coir products, registered under the Coir
Board, would be qualified to register under the scheme, with a condition that they
do not avail the facility from any other source for the same reason or participated
three times in the same exhibition to the same destination, with assistance from the
government.
Benefits
The training programme is of a duration of two months and a monthly

remuneration of Rs.750 is provided to the trainees. The returns for the trainer is
limited to Rs.5,000 per month. An amount of Rs.250 per month is provided by the
individual as monetary assistance to the training sponsoring agency to meet the
operational cost.
Under MCY, the Coir Board provides 75% rate of motorized rates/motorized
traditional rates as the one-time subsidy, subject to a ceiling of Rs.7,500 in the case
of motorized rates and Rs.3,200 for motorized traditional rates.
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Development of Production Infrastructure (DPI) Scheme forEnterprises in
India
Coir Board is implementing the plan scheme „Development of Production

Infrastructure‟ with an aim to provide modern infrastructure facilities to coir
production units, which in-turn results in the improvement of production and
quality of coir and also in the creation of employment opportunities especially for
women in the rural areas.
Objective
Provides modern infrastructure developments to production units leading to

increased and improved productivity, quality and employment opportunities
Eligibility
All the new coir processing units registered with Coir Board under Coir Industry
Registration, 2008, and registered with the DIC of the respective region of the
entire coir sector of the country with venture cost exceeding Rs.5 lakh each is
qualified for aid under the scheme.
Benefits
Under the DPI scheme, the Coir Board provides monetary assistance to the coir
manufacturing units @ 25% of the cost of equipment subject to a maximum of
Rs.6 lakh for setting up of a de-fibering unit, Rs.4 lakh for the automatic spinning
unit, and Rs.5 lakh for others including coir pith. For a fused or multiple units, the
maximum ceiling of financial assistance is Rs.9 lakh. The scheme also provides aid
in monetary assistance up to Rs.2 lakh for re-creating/renovation of the existing
units.
Scheme for Welfare Measures (Coir Workers) financialcompensation
The Coir Board has executed the plan scheme „Welfare Measures-Coir Workers
Group Personal Accident Insurance‟ for the monetary compensation to
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deceased/disabled coir worker or his family. The entire insurance premium is paid
by the Coir Board to the insurance company by ways of calling quotations. The
compensation is provided by the insurance company to the disabled coir workers or
nominee of the disabled or deceased coir workers.
Eligibility
Coir workers aged 18 years and above engaged in the industry are covered under
the insurance scheme. The disabled coir worker or nominee of the
disabled/deceased coir worker can apply for the claim. As per the suggestion by
some of the women from this group who also happens to be the majority in coir
manufacturing industries, the accident in their case mostly includes death and
disablement arising out of consequent complications which could be arising out of
pregnancy, childbirth, caesarean hysterectomy, removal of the breast as well as
murder and rape, etc.
Benefits
Compensations payable under the scheme are given below.
1. Accident death: Rs.50,000

2. Permanent total disability: Rs.50,000
3. Permanent partial disability: Rs.25,000
4. Provision for finger cut: Depending upon the finger and limited to applicable
percentages of capital sum insured.
Programme for Promotion of Village Industry Cluster -Rural Industry

Service Centre (RISC) for Khadi and VillageIndustries
RISC is the Common Facility Unit which aims to provide necessary services and
infrastructural support to local units to upgrade their production capacity, skill
upgradation and market promotion.
RISC must cover one of the following services:
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 Provide testing facilities by launching a laboratory to ensure quality of the
products.
 Provide advanced machinery/equipment to be utilized as common utility facilities
by closeby units/artisans to improve manufacturing capacity or value the addition
of the product.
 Provide attractive and appropriate packaging facilities and machineries to local
units/artisans for better advertisement and promotion of the products.
Eligibility
Farmers, NGOs, individual entrepreneurs, groups of unorganized and organized

sector and cooperatives which include Self- Help Groups (SHGs), rural youth, etc.
Benefits
Maximum of Rs.25 lakh with entrepreneurs contribution of 25% releases will be

made by the Commission in 3 equal installments after the institution utilizes its
own proportionate contribution of sanctioned amount of the project.
1. Skill development & training and/ or product brochure establishment should

acquire the required instructions for staff functioning of project/prepare product
brochure, etc., from own contribution. Maximum 10% of project cost
2. Pre- operative & post-commissioning costs: Institution should make expenditure
towards the expenses of preparation of project report, etc., emergencies,
travel/transport, miscellaneous expenses, etc., from own contribution. Maximum
5% of project cost.
3. Building/infrastructure subject to evaluation by appropriate authority. Maximum of
15% of project cost should be borne.
4. Plant & machinery for production or testing facilities and packaging with sales tax
number affiliation to Association / Federation. Minimum 50% of project cost
5. Raw material/new design for product Diversification, etc. Maximum 25% of
project cost.
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CHAPTER 12:
RISKS FACED BY ENTRERPENEURS
12.1 Identification of Risk factors faced by India‟s MSME
12.2 The Internal Challenges Faced By The MSMEs.
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CHAPTER 12:
RISKS FACED BY ENTRERPENEURS
12.1IDENTIFICATION OF RISK FACTORS FACED BY INDIA’S MSME’S
With the help of the detailed discussions with the entrepreneurs/knowledgeable

persons regarding the challenges faced by them in the smooth running of an MSME,
the following factors of risks and challenges have been identified.
In the last decade many changes have taken place in the economy mainly in the
corporate sector. Today, the Business world is not stable and in-transparent, laced
with uncertainty; it keeps on changing and leading to many challenges and
opportunities. Particularly small & medium sized enterprises are facing many unique
challenges in the Business world which has led to change in Practices, Technologies
and also identify the opportunities arising at the right time and face them with the
right strategy.
The Risks faced by entrepreneurs are of two types i.e. Internal & External, here the
External Risks are the environmental Conditions which are beyond the control of the
organization. The External Risk Factors are as follows,
Types of Risks: Risks Factors can be of 4 types i.e. Political, Environmental,

Social& Technological.
To identify these risks, PEST analysis is done.
PEST Analysis stands for Political, Environmental, Social and Technological. This
technique was developed by Francis Aguilar (Book, Scanning the Business
Environment-1967) he elaborated on the technique to study and analyze the Risks
taking place in the organization.
Political Factors-
The factors involve the following,
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 Political Climate and stability.
 Political Philosophy and stability.
 Stand on opposition Parties on business.
 Level of Political Mortality.
 Taxation policies.
 Law and order situation.
The Political environment of a region plays an important role on growth and

developments of MSME. The Government plays an important role as a Promoter,
Planner and Regulator of Business firms .The Ideologies of Government plays an
essential role influencing the growth in business.
Economic Factors-
The Economic factors are as follows-
 Money supply.
 Trade Restrictions.
 Industrial Production.
 State of MSME business cycle.
 Distribution of income within People.
 Government monetary & fiscal policies.
 Productivity of factors of production.
 Stock of food grains and essential conditions.
Economic state refers to the overall country economy. It plays a vital role in growth
of Industries and profitability of Individual Firms. The survival and business of
industry largely depend on Purchasing power of people which is dependent on
Economic status of country.
Social factors-
The Social risks are as follows-
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 Social traditions.
 Beliefs.
 Values.
 Literacy of the population.
 Extent of social satisfaction.
 Conflicts.
 Religious languages.
It includes the lifestyles and values that characterize the Society in which the
different industries or Firms operate. A class is identified by occupation, lifestyle,
and income; a social environment plays an important role for the organization to
obtain its goals, Market its goods and services. It also helps to identify the
opportunities and threats in an organization.
Technological Factors-
Technological risks includes-
 Computing Speed affects the design and manufacture of products.

 Internet technologies are changing business models and challenging the
Old/Traditional structure.
 Dissemination or Technological Acquisition.
Business and Technology are interrelated with each other; technological changes
may bring new opportunities to the organization. The changing technology may
affect the demand for a firm‟s product & services. The advancement in Technology
can reduce or improve opportunities for an organization. These changes will bring
new products into market & ultimately lead to death of existing products.
Internal Factors:
MSMEs play a vital role and it is necessary for the growth of the Economy. Indian
Market is growing rapidly and Indian businessmen and entrepreneurs are making
very good progress in various industries and service sectors like Manufacturing,
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Processing, Textile and Garments, Retail, IT, Agro and Service Sector,
Pharmaceutical, etc. MSMEs are now having greater opportunities for growth
expansion and diversification in the different sectors of Indian market. It is very
important to empower the MSME sector to utilize the limited resources i.e. both
human and economic, which they have in an optimum manner.
The MSME‟s hold a lot of importance in the Indian market and in the growth of the
Economy, but the sector faces some stiff challenges and does not get the required
support from the government or the Institutions which are helpful for financial,
corporate or business issues faced by the MSME‟s, thus this prove to be the biggest
problem in the growth path of MSMEs.
In the world of any business entity there is a need of a robust risk management
system but the MSMEs need much more than those as the resources are limited as
the size varies from one another. The large corporate entities are well trained
professional personnel who take care of many aspects related to risk of the entities.
The units which take risk must operate within approved procedures, limits and
controls. There exists a major difference between the way they function and the way
they will be served in the financial market, as the character and integrity of the
promoter and owner are the prime and critical credit indicator and hence play a large
role in the risk taking of the business of MSMEs in the economy. In MSME
business, the gut feeling to achieve which is subjective is more relied upon than the
pure analysis and they are more objective-oriented. Hence, both the business and
professional relationships are summed into one in MSMEs. Small to medium
businesses are exposed to risks all the time in the market. Such risks can directly
affect day-to-day operations, decrease revenue or increase expenses of the
enterprise. Most business managers know naturally that they should have insurance
policies to cover risks to their own life and property. There are many other
innumerable risks that all business managers‟ face, some of which are overlooked or
ignored by the managers in their business or some are backed by the manager on its
own. Every business is subject to possible losses from unmanaged risks due to less
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knowledge about the situation. Sound risk management should reduce the chance
that a particular event will take place and, if it does take place, sound risk
management should reduce its impact in the business and should take a chance to
improve the factors. Sound risk management also protects and guides the business
wealth from going in to a sick position of the company. Risk management starts by
checking possible threats and then implements processes to minimize or nullify them
in the longer run of the business.
Well defined risk management can produce the following benefits:
• Lower insurance Surcharges
• Reduces chances of legal action
• Reduced losses of cash or stock.
• Reduced business time to produce results.
The below given passages identifies some of the risks and areas where risks may
unfold. The MSME sectors unveilsome specific risks, some of which are discussed
as under:
12.2 THE INTERNAL CHALLENGES FACED BY THE MSMES ARE:
 Structure of Business Entity
The business entities under SME sectors are mostly proprietorship and partnership
concerns. Few are private limited or closely held public limited companies or joint
limited company. Thus, structure itself proves to be risky due to lack of
professionalism and overdependence on one or two key persons for running the
company in a way to get a return. Lenders and other stakeholders in the MSME
sector cannot afford to forget this fact there only one person or two who would be
working to make the company work as a manger and with all the role involved.
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 Credit: Credit is the lifeline of business, in Small businesses there is always a need
and lack of capital and money markets. Investors who are investing are not willing to
invest in small companies, in India, there is no 100% support from the banks to the
small manufacturing enterprises and only about 16% of total bank credit finds its
way to this sector. Total requirements are about 20% for small manufacturing
enterprise but only 8% annual lending is received despite it‟s a priority sector for
lending.
 Tough Competition and Insufficient Margin
By virtue of the fact that most of the entities in SME sector are small participate in
their field; they may have to encounter tough competition from the bigger players in
the field with new innovation to stand in the market. They face the pressure on their
margin price and have to absorb the high input cost to stand against the bigger
player.
 Infrastructure: Poor Infrastructure facilities including power, water and roads and
inadequate market linkages are the key factors that have constrained growth in the
sector.
 Manpower: Lack of skilled manpower for manufacturing, marketing, etc. at
affordable cost. Also the follow-up with various government agencies to resolve
problems due to lack of manpower and knowledge is a big issue.
 Finance: Absence of adequate finance to the MSME is the biggest challenge faced
by the industry. The institution which help with funding have very limited exposure
in the sector due to higher risk and limited access of MSMEs to immovable
collateral. MSMEs are facing monetary problems because they do not have enough
capital in the country. Because of the weak economic base, they are not able to take
financial assistance from the banks. But they can obtain credit from money lenders
at a high rate of interest and are thus, exploited in practice.
 Low Collection in Account Receivables
As it indicate the increasing trend of outstanding receivables in the small scale
industry India (SSI) sectors, there exists collection risk in the receivable portfolio of
SME sectors for the reason that SMEs cannot control terms to their customers. As
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SME sector business entity is at the receiving end, this may put force on the liquidity
position of the business entity. However, the track record of SMEs as borrowers
reveals that the default rate is low that bad debts may be the result of banks
restricting their exposure to this sector.
 Incapacity to go for Technological Progress
With very little financial resources and poor ability for leveraging the financial
structure, the SME sectors mostly have less technology and won‟t have the resource
to go for highly advanced technological which would help them optimize their
available resources in the better way and at a high end results from the process.
 Market Access: In today‟s world, small enterprises can hardly match the advertising
support or distribution reach of a large corporation. There is an ineffective marketing
strategy.
 Procedures: Government and bank procedures like Complicated Service Tax,
Customs, Shipping, Exports procedures or paperwork coupled with inspections
remain a major hurdle in growth of small units.
 Problems of Storage, Designing, Packing and Product Display.
 Lack of access to Global Markets.
 Low Production Capacity.
 Constraints on modernization and expansion.
 Non-availability of suitable technology.
 Inefficiencies of supply chain
 Monetary issues
 An increase in domestic and global competition
 Lack of infrastructure like roads, warehousing, water supply.
 Barriers to enter International Market: MSMEs always have shortage of working
capital to finance exports. They are unable to contact potential overseas customers.
They lack quality, standards, and specifications and are unfamiliar with foreign
business practices.
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 The MSMEs need to be educated and informed about the latest developments taking
place globally and should be helped to acquire skills necessary to keep pace with the
global developments.
 For the solutions of the challenges faced by MSME sector and to have the
opportunities in the market, the Chamber of Commerce has developed some
promotional strategies to support the MSMEs. The Chamber encourages MSMEs to
adapt innovative ideas and concepts for the promotion of their business. The goal is
to promote thorough organizing Seminars, Conferences and Workshops, provide
Training Programs and other promotional activities to educate & create awareness
amongst the MSMEs.
 Problem of Raw Material: The small and micro enterprises are facing the problem
of raw materials. There is an absolute scarcity of raw materials, poor quality of raw
materials and a high cost. The modern small scale industries are involved in
manufacturing highly sophisticated products which results into a serious problem of
raw materials on their production efforts. The quality and quantity of the raw
materials is not satisfactory and due to financial problems these sectors are not able
to secure the raw materials in large quantities in the competitive market.
 Problem of Marketing: One of the major problems faced by MSME is in the field
of marketing. The small and micro enterprises do not possess marketing skills. They
are lacking in the quality of the products as compared to the large enterprises. To
protect MSME from competitive pitfall, the government has secured certain items
for the small-scale industries. The National Small Industries Corporation which was
set up in 1955 is also helping the small sectors in gaining the orders and locating
them in the markets. Also, they are lacking in co-ordination among the various
support organizations for the promotion and development of these industries.
 Absence of vertical growth: There is lack of ancillarisation and sub-contracting
which restricts the growth of small scale industries with large scale industries. Even
the small scale industry policy does not identify the industries, which is suitable for
ancillarisation and sub-contracting to exploit economies.
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 Problem of Out-dated Technology: Most of the small-scale industries are
depended upon old techniques and equipment. Due to the limited capacity and
capital, they find it very difficult to modernize their plant and machinery. In the
absence of modern technology the quality of product and productivity tend to be
low. Cost of production per unit remains high.
 Inadequate Infrastructure: Infrastructure quality and quantity of transportation,
communications and other basic services particularly in backward areas is another
problem. Infrastructure gap results in underutilization of capacity and wastages. For
example, instability of voltage, unscheduled power cuts and long delays in getting
power connections are common. Poor communication and transportation, low
quality of civic services, etc. are detrimental to efficient and time bound production
so essential in a competitive world.
 Poor Project Planning: In the absence of education and experience, small-scale
businessman often depends upon consultants. They are not able to understand
project details, because of its poor planning; the problem of cost and time arises.
 Other Problems: Shortage of trained technicians, technological obsolescence, and
insufficient managerial expertise is also one of the problems faced by MSME. This
took place because of lack of coordination among the organizations set up for the
development of small scale industries. The cost structure is inappropriate and quality
consciousness is still low which affects the position of the industries.
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CHAPTER 13
STRATEGIES ADOPTED BY ENTREPRENEURS TO
OVERCOME RISKS IN BUSINESSES.
13.1 Kinds of Risk Management Strategy
13.2 Kinds of Strategies Implemented by Entrepreneurs
13.3 The Governments Focus to Bring in Growth and Development
Reforms By The Government To Promote Entrepreneurship In

13.4
India
185
CHAPTER 13
STRATEGIES ADOPTED BY ENTREPRENEURS TO
OVERCOME RISKS IN BUSINESSES.
The Micro small and medium enterprises play a very important role in the
economic development of the country. The MSMEs play an important role in the
Indian economic growth by contributing 40% in the industrial output, 45% of the
Export and the employing close to 70 million people wherein it createsmore than
3.5 million employment opportunities every year, even though they are faced by
challenges every day. Challenges like,
 Insufficient marketing business strategy
 Modern & inflation of market
 Scarcity of Manpower & Knowledge
 Deficit of new technology innovation
 The burden of monitoring the work alone or with less employee base
 SMEs unable to create benefits from CSR
 Lack of technology, training and investment necessary to make improvement
 Much pressing need to improve the quality of technology in the market
 Price competition and limited consumer‟s pressure
 CREDIT Gap
 New method of finance
13.1 KINDS OF RISK MANAGEMENT STRATEGY:
After the risk has been identified and evaluated, an entrepreneur develops a plan or
a Risk Management Strategy to reduce the impact of an unexpected event. This
plan manages risks in various ways:
 Risk avoidance
 Risk sharing
 Risk reduction
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 Risk transfer
Each of these management techniques can be an effective tool in reducing

individual risks and the risk profile of the entrepreneurial venture. These strategies
capture the risk management approach for each identified risk event and the
actions the risk management team will take to reduce or eliminate the risk.
A risk avoidance technique involves reducing the risk by eliminating its cause. It
involves selecting/choosing existing/old technology over the new technology
because the existing technology has been used and proven earlier, even though the
new technology may give better result. Proven and existing technologies or
procedures are preferred over new process because they are tested and used and
thus a proved one. Risk avoidance can be implemented by stating policies,
training, education and technologies.Risk avoidance is used to overcome
technology risk. The entrepreneur may keep alternative vendor ready in case one
vendor refuses.
Risk Transfer Method involves transfer of risk from the company to another
party, like purchasing insurance will transfer the risk from the company to the
insurance company, example, buying insurance for transport of goods will take
responsibilities of any loss occurring during transportation.
In the Risk Reduction Method,companies often buy/purchase guarantee or

security on currency rate in order to reduce risk on foreign funds due to fluctuation
in currency exchange rate. For this purpose they hire experts who keep a check on
the companies‟ technical plans and strategies.
Risk Sharing involves formation of joint ventures to share the responsibilities and
risk activities, companies working on international project will make joint venture
with company located in that country. So that it will reduce their political, legal
&labor related risk.
187
13.2 KINDS OF STRATEGIES IMPLEMENTED BY ENTREPRENEURS
Strategy is the primary building block of competitive advantage. This

encompasses a range of activities in which firms engage to establish and sustain
competitive advantage.
Entrepreneurial Strategy is the means through which an organization establishes

its fundamental set of relationships with its environment. It is characterized by
widespread and simultaneous change in the pattern of decisions taken by an
organization.
1. Study the competition.
As an entrepreneur, it is important to know who the competitors in the market are

and also about the rival product and the service being offered by the competitors. It
is very important to use the competition‟s weakness. This gives the entrepreneur
information about how to market your product and how will the services stand out.
2. Conservation of cash irrespective of how good the business is.
Conservative use of money will help the entrepreneur to deal with any rough
situation that arises. This will help the individual to survive most unforeseen
circumstances.
3. Research of emerging products and services:
Continual research in the emerging products and services could improve your
company's operations, taking advantage of the technology and thus could help
entrepreneurs to manage time more efficiently or a service that lets them delegate
ordinary tasks to free up more time for priority projects
4.To never tackle huge markets at first.
Never expand into large markets in the initial stages.Niche marketing can be
extremely cost effective if three things are kept in mind:
188
1. Meet the market‟s unique needs by offering something new and innovative.
2. Speak the market‟s language and understand its needs.
3. The entrepreneur‟s language should be in synch even for the minor aspects of a
marketing campaign like the company's slogan.
5.Customer feedback and adapt to the requirements and changes:
Entrepreneurs can evolve and expand their business only when they're listening to
customer feedback. It may not mean much if one customer doesn‟t like or
appreciate the product but if this is same for many customers and they're
requesting for another feature then it is wise for the entrepreneur to listen, take up
the criticism and be ready to adapt. Entrepreneurs always need to be adaptive
depending upon the needs of the consumers. Whether the entrepreneur isonly
simplifying a product or responding to new trends, paying close attention to
customer feedback or adapting the marketing plan, all that the entrepreneur needs
to consider is Customer‟s Feedback.
6. Respond to change.
Being flexible, accepting change and adapting to business operations is all what an
entrepreneur needs to remember. A lack of adaptability can result in loss in
customers, profits and even business failure.
7.Growth orientation:
Motivation and education plays a very key role in the growth of any business.
8.Adequate firm resources:
Resources include financial as well as human resource.Market is not just finding

new customers but finding gaps that can be satisfied in an economically viable
way.It should not only find out the solution of the customer but also take care of
their preferences.
189
9.Develop new connection to the customers.
To connect more closely to the customers, it is important for MSMEs to leverage

BRANDING. It builds reliability amongst the customers. It also creates good will
and enhances the position in the market.
10.Inorganic growth strategy:
It includes acquisition, mergers, strategic partnership and joint ventures.
11.Marketing strategy:
Internet is a vast marketing tool. Customer relationship management

(CRM),Digital advertising, Information and communication technology and E-
marketing,focus on fresh ideas and innovations,cluster approach etc.There is no
single advertising, promotional or any marketing strategy that will work in
isolation. Marketing strategies, advertisements and promotional channels that will
be used will completely depend on the product or service you provide, and the
customers you are trying to reach. The objective is to create a plan that integrates
all of the primary marketing channels for your business (e.g., Print Advertising,
Brochures, Yellow Pages advertising, Websites, Online Advertising, Targeted
Direct Mail, Public Speaking, Networking, Incentives). While you are creating
your marketing plan - for today and tomorrow –it is necessary to be sure to identify
all channels and to identify them that will lead you to your targeted customer
13.3 THE GOVERNMENTS FOCUS TO BRING IN GROWTH AND

DEVELOPMENT
Three Pillars - In order to maximize the utilization of the resources, the

government is trying to focus on three major pillars of growth and development.
1. Infrastructure
The National Investment and Manufacturing Zone (NIMZ) is considered to be a
major industrial green field township which promotes world class manufacturing
190
activities. Providing land specifically to MSME at reasonable rates helps them to
set up their business even during industrial clusters. Within these clusters, MSMEs
are provided with technological support from various regional institutions and
R&D facilities. In order to enhance connectivity for MSME businesses, modern
cities require infrastructure investment in roads, rail, air and water, for which the
government plans to bring in large scale development in all the three modes to
bring in an ease n the logistics ad supply chain functions of businesses.
2. Finance
Expanding the investment opportunities in MSME to High Net Worth Individuals

(HNWI) will ensure additional growth in the sector. To optimize the scope of
growth and increase the investment opportunities, tax pass through status is given
to venture capital funds which have their main focus on MSMEs. Apart from this,
MSME can also raise debt from banks. They are being providing with incentives
for lending to MSME. These funding can also be obtained through government
initiatives.
3. Skilled Labour
One of the major drawback faced by Indian MSME sector is lack of skilled labour.
According to the facts, huge skilled workforce is required in the next 7 years in
most of the sectors except agriculture. In order to reduce the gap between demand
and supply of skilled manpower, government has taken certain initiatives to
improve quality and innovation in vocational education. Few such initiatives
provide skill training across sectors. These trainings will be incentivized through
skill loan schemes, by providing scholarships to candidates who complete skill
training programmes successfully.
Thus MSMEs have played an important role in the overall industrial development
and the economic growth in the country. TheMSMEs need to be educated and
informed of the latest developments, techniquesalong with the ways of improving
191
technologies and helpto acquire skills necessary which help us to develop the
country‟s economy.
13.4 REFORMS BY THE GOVERNMENT TO PROMOTE

ENTREPRENEURHIP IN INDIA
National Policy for Skill Development And Entrepreneurship 2015
This national policy for skill development and entrepreneurship scheme has been
approved by Prime Minister, ShriNarendraModi as India‟s first integrated national
policy for skill development and entrepreneurship in the year 2015. This policy
undertakes the need for an effective promotion of entrepreneurship as the key to
flourishing skills of the youth power of the nation.
The goal of the policy is “to create an ecosystem of empowerment by providing

skills on a large scale at a speed with high standards and to promote a culture of
innovation based entrepreneurship which can generate wealth and employment so
as to ensure sustainable livelihoods for all citizens in the country”.
To achieve this vision, the policy has four thrust areas. It has key obstacles to
skills, which includes lack of integration with formal education, lack of focus on
outcomes, low quality of training infrastructure and trainers, low aspirational value
etc. This policy also focuses on the supply and demand of skills by bridging skill
gaps, promoting industry engagement, leverage technology and promoting greater
opportunities for training. This policy also focuses on equity which targets skilling
opportunities for geographically marginalized and disadvantaged groups. This
policy also focuses to promote women entrepreneurship and also focus to educate
individuals through the entrepreneurship development programmes.
The objective of this policy is to provide skills to large number of persons at the
same time with speed, quality and sustainability. It also focuses to provide
framework to all skilling activities that is carried out within the country.
192
Approach adopted in the policy: the policy focuses on skill development to
improved productivity and employment opportunities for the growth of the
economy and also to develop entrepreneurship in the nation.
Start-up India initiative
This scheme is mainly to encourage entrepreneurship among the youth of India.

Under this scheme the government provides funds and incentives to budding
entrepreneurs to set-up their business in the market, through which the exemption
in various factors and benefit for business can be acquired. This scheme helps new
entrepreneurs to start up their own business by taking benefit of these government
exemptions. This will help both the entrepreneurs and thus the nation, as it will
have a direct impact on the national income and a direct impact on the employment
ratio, young budding entrepreneurs can freely do their business with the help of
government benefit schemes. Under this scheme women are also encouraged to
start their business. Women receive the capital required to start the business, which
in turn encourages them into startups. This initiative will provide a new dimension
to entrepreneurship and help in setting up of network of start-ups in the country.
This initiative will also attract much outsider business thereby increasing the
capital and the technology to increase in the economy.
Mudra bank
This bank has been set up on the 8th April 2015 for the development of
entrepreneurs in India and to provide funding to the non-corporate small business
sector. This Mudra bank provides finance to banks, MFIs, NBFCs, etc for loans to
micro units with limit from Rs 50,000 to 10 lakhs. Under the Mudra Bank, the
government has launched three schemes namely Shishu ,Kishor, and Tarun to help
them in growth and to provide funds to entrepreneurs. Rs 20,000 crore has been
allotted to Mudra bank to give credit facility to small business and manufacturing
units
193
National Skill Development Mission
National skill Development Mission was launched on 15th July 2015 on the eve of
World Youth Skills Day. The Mission was developed to create awareness of the
various Sectors and States in terms of skill training activities to achieve the vision
„Skilled India‟. This scheme mainly focuses on the vision of „Skilled India‟ and
thus works towards empowering the country in order to make the people with
strength of skill.
Entrepreneurship Development Scheme
Entrepreneurship Development Scheme is currently developed by the Ministry of

Skill Development and Entrepreneurship. The scheme is being designed of various
factors like entrepreneurship education curriculum,entrepreneurship hubs,
promotion of entrepreneurship among women and minorities, web and mobile
based networking platform, national entrepreneurship day, social entrepreneurship
etc. This scheme is helpful for entrepreneurship growth.
PradhanMantriKaushalVikasYojana(PMKVY)
PradhanMantriKaushalVikasYojana is the scheme of the Ministry of Skill
Development & Entrepreneurship (MSDE).
The main aim of this scheme is to enable large number of youngsters to take
industry related skill training which will help them to get a better livelihood.
It aims to offer jobs to 24 lakh youngsters all over India. On 3rd March 2016,
15,99,895 people have been enrolled, 9,56,871 completed trainings and 2,90,002
got certified under PradhanMantriKaushalVikasYojana. The skill certificate will
be awarded to those certified under PMKVY which will act as authenticate skill
certification under recognition of Prior Learning (RPL).
Under this Scheme, Training and Assessment fees are completely paid by the
Government. This scheme is a skill development initiative scheme of the
Government of India for standardization and recognition of skills.For this project
194
an outlay of Rs120 billion has been approved by the cabinet. This scheme helps to
increase overall production of the country. The National Skill Qualification
Framework (NSQF) would work as a benchmark of training programs carried out
under the PM KaushalVikasYojana. This scheme would also award monetary
rewards to the trainees after completion and the certifications which would be
carried out by third party assessment bodies. The average reward that would be
given to each trainee would be around 8000. Sachin Tendulkar has become the
brand ambassador of KaushalVikas Scheme. There are some eligibility conditions
for skill India; these are the following conditions,
 Youth with only Indian Nationality may enroll
 Youth should be willing to work in a sector for which they are eligible
 The youth should compulsorily have a one year certification programme from the
start day of the scheme.
195
CHAPTER 14
DATA ANALYSIS
14.1 Test of Reliability
14.2 Administration of the Questionnaire
14.3 Data Interpretation and Hypothesis Testing
14.4 Summarisation of Findings
196
CHAPTER 14
DATA ANALYSIS
The questionnaire was circulated among 293 entrepreneurs, out of which a total of
263 reliable and valid filled data instruments were received.
The structure of the same is as follows:

EDUCATION NUMBER
School 80
Degree 30
Post Graduate 153
Total 263
Table 15.1
AGE NUMBER
25-35 142
36-45 61
45 and above 60
Total 263
Table 15.2
INDUSTRY NUMBER
Manufacturing 52
Service 93
I.T. 64
Others 54
Total 263
Table 15.3
From the data the following analysis has been derived.
14.1 TEST OF RELIABILITY:

On the basis of the pilot testing, a reliability test was conducted to ascertain the
research parameters and to test the validity and reliability of the instruments used
197
in the study and received a reliability test on Cronbach Alpha as 0.819 which
proves the reliability of the questionnaire.
The reliability was conducted on the same through a pilot study of 50 filled in
questionnaire as follows:
Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on N of Items

Standardized Items
.814 .819 19
Table 15.4
14.2 ADMINISTRATION OF THE QUESTIONNAIRE
The filled-in questionnaire was collected from the entrepreneurs in the following
ways;
 Through personal contact
 Through E-mail
 Through a common Site (SurveyMonkey.com)
The study was conducted with a sample of 50 entrepreneurs in and around Mumbai
city following which the questionnaire was slightly revised. The finalized
questionnaire was taken across to the entrepreneurs in Mumbai and Pune.
14.3DATA INTERPRETATION AND HYPOTHESIS TESTING
Socio-Demographic profile of the entrepreneurs
This section includes the demographic factors of the entrepreneurs, the profile of
the respondents and the kind of industry they are involved in, followed by the
correlation of the demographic factors with the kind of risks that are faced by the
entrepreneurs. It attempts to give a detail of the profiles of the entrepreneurs and
the factors of risks faced by them.
198
14.3.1. DEMOGRAPHIC : AGE
Particulars Frequency Percent Valid Percent
25-35 142 54.0 54.0
36-45 61 23.2 23.2
Category Above
60 22.8 22.8
45
Total 263 100.0 100.0
Table 15.5
Age Distribution: The Age of the Entrepreneur has been used to determine the
kind of risks that the entrepreneur is facing. The frequency and the percentage
chart shows that the analysis was done on a majority of male entrepreneurs with
the highest of 54% of entrepreneurs in the age group of 25-35 years, 23% of
entrepreneurs in the age group of 36-45 years and 22% entrepreneurs in the age
group of 46 and above. This shows that the entrepreneurs ventured in the age
group of 25-35, this is mostly the age wherein the entrepreneur either finishes
his/her college life and moves into business or a time frame when the entrepreneur
experiences the work life and feels best to move out and make an entity of his own.
14.3.2. DEMOGRAPHIC : EDUCATION QUALIFICATION
Valid
Particulars Frequency Percent
Percent
School 35 13.3 13.3
Category
Junior
45 17.1 17.1
College
199
Degree\
144 56.0 56.0
Graduate
Post
12 4.6 4.6
Graduate
Total 263 100.0 100.0
Table 15.6
The Education Qualification of the entrepreneur is used to determine the level of

risks that the entrepreneur is facing on account of his qualification. The frequency
and the percentage chart shows that out of the total responses about 13% of the
entrepreneurs have completed school as their qualification, 17% of entrepreneurs
having completed junior college and the rest 56% of entrepreneurs being graduates
and a very small number, almost negligible 4% of entrepreneurs being post
graduates . This shows that today‟s entrepreneurs have started their business
enterprises post their graduation. This makes them well educated, Independent and
knowledgeable in order to startup their businesses.
14.3.3. DEMOGRAPHIC : TYPE OF INDUSTRY
Valid
Particulars Frequency Percent
Percent
Manufacturing 52 19.8 19.8
Service 93 35.4 35.4
Category IT 64 24.3 24.3
Others 54 20.5 20.5
Total 263 100.0 100.0
Table 15.7
200
The Type of Industry is a factor in the research in-order to determine the kind of
risk faced by the entrepreneur on account of the kind of industry the entrepreneur
is in. From the above chart, it is seen that about 20% of entrepreneurs are from the
field of manufacturing, 35% from service, 24% from information technology (IT)
and another 20% from „Other‟ streams which include Real Estate, Pharmaceuticals
and Hospitals.
HYPOTHESIS TESTING
In this section, the various hypothesis will be tested and proved by ways of
statistical data received by way of the questionnaire and the analysis with the help
of the research instrument SPSS software.
The below given are the charts and tables used to prove the analysis and the
relationship between various variables, thus proving the facts in Hypothesis.
HYPOTHESIS 1:
H01 – There is no effect of age of the entrepreneur on the factors of risk faced by
him
H11 – The impact of risks differs with varied ages
Relation between Age and the Kind of Risk Faced While Starting The
Enterprise
Age
25-35 36-45 Above 45 Total
Count Column Count Column Count Column Count Column

N% N% N% N%
Q1 No family
11 7.7% 7 11.5% 8 13.3% 26 9.9%
Problems support
faced
Finance /
while 43 30.3% 45 73.8% 35 58.3% 123 46.8%
capital
starting
201
enterprise Governme
nt policies / 88 62.0% 13 21.3% 12 20.0% 113 43.0%
licenses
Logistics
and
1 0.7% 6 9.8% 2 3.3% 9 3.4%
transportati
on
Market
Unavailabili 7 4.9% 7 11.5% 4 6.7% 18 6.8%
ty
Competitio
34 23.9% 22 36.1% 17 28.3% 73 27.8%
n
Other 0 0.0% 1 1.6% 2 3.3% 3 1.1%
Total 142 100.0% 61 100.0% 60 100.0% 263 100.0%
Table 15.08
In the above table correlating the Age and risk factors faced by entrepreneurs, it
shows that the highest risks faced by the entrepreneurs in the age group of 25 to 35
is the government policies or licenses with a high percentage of 62%, whereas the
age groups of 35 and above faces high risks of finance or capital accumulation.
This shows that the younger generation of entrepreneurs faces risks more with
government policies than with the older age group who faces risks of funds. With
this it can be assumed that the individuals with higher age groups find it difficult to
gather funds from their friends, families or banks due to the possibility of low
repayment periods and so on also the higher ager groups do not show much of
risks in the government factors since they are more experienced in handling the
government and policy matters whereas the younger age groups of 25-35 find it
comparatively difficult to manage the licenses for the business and handling the
government procedures and policies.
202
Pearson Chi-Square Tests
Age
Chi-square 104.924
Q1 Problems faced while

df 14
starting enterprise
*,b,c
Sig. .000
Table 15.09
According to the above given table, it is clearly seen that there is a significant
difference between the means i.e. there is clearly a significant difference in the
level of risks faced by the entrepreneurs belonging to different age groups as seen
by the p value = .000 (< 0.05)
Therefore, Ho is Rejected.
Hence it is clear that there is a significant effect of age of the entrepreneur on the
factors of risk faced by him
HYPOTHESIS 2:
H02 – The education Qualification of the entrepreneur has no effect on level of risk
faced by the entrepreneur
H12 - The education Qualification of the entrepreneur determines the level of risk
Relation between Education Qualifications of the Entrepreneur by Factors of

Risks Faced By Them
Education
School/Junior Degree Graduate & PG Total

College
Count Column Count Column Count Column N Count Column N

N% N% % %
203
Problems you
faced while
starting your
11 13.8% 5 16.7% 10 6.5% 26 9.9%
enterprise -
No family
support
Finance
56 70.0% 17 56.7% 50 32.7% 123 46.8%
/capital
Q1
Problems Government
faced policies 13 16.2% 14 46.7% 86 56.2% 113 43.0%
while /licenses
starting
Logistics and
enterprise 2 2.5% 1 3.3% 6 3.9% 9 3.4%
transportation
Market
7 8.8% 3 10.0% 8 5.2% 18 6.8%
Unavailability
Competition 26 32.5% 8 26.7% 39 25.5% 73 27.8%
Other 2 2.5% 0 0.0% 1 0.7% 3 1.1%
Total 80 100.0% 30 100.0% 153 100.0% 263 100.0%
Table 15.10
In the above given table, it is clear that the risk of finance is maximum for the
entrepreneurs with basic education of school or junior college and also in those
who have left their degrees mid way, this might be the reason since the banks for
loans of friends of families do not believe in the people with lesser qualification
whereas those having the highest qualification of post graduation face the most
difficult as government policies and the licensing process. This could be because
of the low tolerance level of those entrepreneurs who are well educated with
knowledge and also carry the experience and the funds to start the business and
also the knowhow of the schemes and policies that are available for the
entrepreneurs from the government yet find it disheartening when the polices and
204
the registration process or other help from the government is not easily available at
the grass root level where such subsidies are most required.
Education
Chi-square 75.116

df 14
starting enterprise
*,b,c
Sig. .000
*. The Chi-square statistic is significant at the .05 level.
b. More than 20% of cells in this subtable have expected cell

counts less than 5.
Table 15.11
level of risks faced by the entrepreneurs belonging to different education
qualifications as seen by the p value = .000 (< 0.05)
Hence it is clear that there is a significant effect of education qualification of the

entrepreneur on the factors of risk faced by him
HYPOTHESIS 3:
H03 – The type of Industry of the entrepreneur has no effect on the level of risk
H13 - The type of Industry of the entrepreneur has a direct effect on the level of risk
Relation BetweekThe Type Of Industry And Factors Of Risks Faced By

Entreprenbeurs In Starting Their Enterprises
Type of Industry
205
Manufacturing Service IT Others Total
Count Column Count Column Count Column Count Column Count Column
N% N% N% N% N%
Problems you
faced while
starting your
3 5.8% 12 12.9% 2 3.1% 9 16.7% 26 9.9%
enterprise -
No family
support
Finance/
32 61.5% 55 59.1% 1 1.6% 35 64.8% 123 46.8%
capital
Q1
Government
Problems
policies/
faced 16 30.8% 22 23.7% 59 92.2% 16 29.6% 113 43.0%
while
licenses
starting
enterprise Logistics and
3 5.8% 5 5.4% 0 0.0% 1 1.9% 9 3.4%
transportation
Market
5 9.6% 7 7.5% 0 0.0% 6 11.1% 18 6.8%
Unavailability
Competition 19 36.5% 26 28.0% 2 3.1% 26 48.1% 73 27.8%
Other 2 3.8% 0 0.0% 0 0.0% 1 1.9% 3 1.1%
Total 52 100.0% 93 100.0% 64 100.0% 54 100.0% 263 100.0%
Table 15.12
From the above table it is clear that the maximum risk faced by the manufacturing
sector of MSME‟s is the capital. The reason behind this is the heavy cost of
machinery and the raw materials that is required in order to function the
manufacturing units. The service sector faced the maximum risk of finance
followed by stiff competition. The IT (information technology) faced the greatest
risk of the government policies and licensing, this is either because of low
awareness of the kinds of government structuring for the IT sector or because the
government might not be helping the IT sector in the kinds of personalized
206
subsidies that could be available to them. Also in opur nation, even though there
are IT giants in the making, yet there is no strong motivation from the government
into taking the IT capacities of the nation into the ends of the world. The others
which includes the Hospitals, dispensaries, pharmaceuticals and real estate
developers face the most competition on funds and then on competition. The
reasons being the high cost of setup required in building businesses in this sector,
followed by the competition faced by them in running the businesses.
Type of Industry
Chi-square 211.929

df 21
starting enterprise
*,b,c
Sig. .000
Table 15.13
level of risks faced by the entrepreneurs belonging to different types of Industries
as seen by the p value = .000 (< 0.05)
Hence it is clear that there is a significant effect of the type of Industry of the
entrepreneur on the factors of risk faced by him
HYPOTHESIS 4:
H04 - The entrepreneurs are not aware of the government policies

H14 - The government policies are well published and aware to the entrepreneurs
207
AWARENESS OF THE GOVERNMENT POLICIES BY THE ENTREPRENEURS
WITH RESPECT TO THE DEMOGRAPHICS
Awareness of the Government Policies by the Entrepreneurs With Respect To

the Age of the Entrepreneur
Age
25-35 36-45 Above 45 Total
Count Column Coun Column Coun Column Coun Column

N% t N% t N% t N%
Training 22 15.6% 15 26.3% 11 19.6% 48 18.9%
Finance 35 24.8% 35 61.4% 30 53.6% 100 39.4%

Q15 Are you
aware of the Export-
23 16.3% 21 36.8% 23 41.1% 67 26.4%
various Import
support
policies of the Marketing 30 21.3% 22 38.6% 22 39.3% 74 29.1%
government?
None 96 68.1% 15 26.3% 19 33.9% 130 51.2%
Total 141 100.0% 57 100.0% 56 100.0% 254 100.0%
Table 15.14
The above table based on the age of the entrepreneur, the entrepreneurs in the age
group of 25 to 35 had no idea of any of the policies of the government. This could
be because of the reason that the younger entrepreneurs are unaware or uninformed
about the various support policies of the government,
The age groups of 36 to 45 and 45 to above had some information with Finance
policies of the government, with the experience in business, these entrepreneurs
are wise enough to understand the strength of funds that helps in the smooth flow
of the organization. Also this is this is in specific to the subsidies or the interest
rate exemptions that the government keeps for the businesses of MSME‟s.
208
Age
Chi-square 95.071
Q15 Are you aware of the various support policies

df 10
of the government? - Training
*
Sig. .000
Table 15.15
level of awareness by the entrepreneurs belonging to different age groups as seen
by the p value = .000 (< 0.05)
level of awareness.
Awareness of The Government Policies By The Entrepreneurs With Respect To

The Education Qualification of The Entrepreneur
Education
School/Junior Degree Graduate & Total

College PG
Count Colum Cou Colum Cou Colum Cou Colum

nN% nt nN% nt nN% nt nN%
Q15 Are you

Training 15 19.5% 9 32.1% 24 16.1% 48 18.9%
aware of the
various support
Finance 44 57.1% 18 64.3% 96 64.4% 100 39.4%
policies of the
209
government? Export-
32 41.6% 5 17.9% 30 20.1% 67 26.4%
Import
Marketing 30 39.0% 11 39.3% 33 22.1% 74 29.1%
None 23 29.9% 11 39.3% 38 25.5% 130 51.2%
100.0 100.0 100.0 100.0

Total 77 28 149 254
% % % %
Table 15.16
From the above table, it is clear that inspite of the difference in the education
levels of the entrepreneurs. All entrepreneurs have knowledge on the finance
support policies of the government. This shows the importance that is felt by the
entrepreneurs in saving their hard earned funds and utilizing it effectively in the
working of the entity. Hence it is clear that the government needs to move further
and extend their support to the MSME‟s in providing them the financial subsidies
that will help boost the progress in businesses.
Education
Chi-square 81.198
Q15 Are you aware of the various support

df 10
policies of the government? - Training
*
Sig. .000
Results are based on non-empty rows and columns in each innermost sub table.
Table 15.17
210
level of awareness faced by the entrepreneurs belonging to different education
qualifications as seen by the p value = .000 (< 0.05)
Hence it is clear that there is a significant effect of the education background of the
entrepreneur on the level of awareness.
Awareness of the Government Policies by The Entrepreneurs With Respect To

The Type of Industry of The Entrepreneur
Type of Industry
Manufacturing Service IT Others Total
Coun Colum Cou Colum Cou Colum Cou Colum Cou Colum
t nN% nt nN% nt nN% nt nN% nt nN%
Training 9 17.3% 26 29.5% 3 4.7% 10 20.0% 48 18.9%
Finance 29 55.8% 53 60.2% 2 3.1% 16 32.0% 100 39.4%
Q15 Are you

aware of the Export-
19 36.5% 30 34.1% 1 1.6% 17 34.0% 67 26.4%
various Import
support
Marketing 21 40.4% 38 43.2% 2 3.1% 13 26.0% 74 29.1%
policies of the
government? None 19 36.5% 25 28.4% 60 93.8% 26 52.0% 130 51.2%
100.0 100.0 100.0 100.0 100.0

Total 52 88 64 50 254
% % % % %
Table 15.18
Based on the above table in connection with the type of Industry of the
entrepreneur it is clear that the Manufacturing sector and the service sector have most
knowledge of the finance policies of the government. Whereas in the IT industry, the
Healthcare sector, the pharmaceutical and other kinds of business entities, most of the
entrepreneurs had no idea of the kind of government policies offered by the
government in specialization to the fields in specifics.
211
Type of Industry
Chi-square 202.536
Q15 Are you aware of the various support

df 15
policies of the government? - Training
*
Sig. .000
Table 15.19
level of awareness faced by the entrepreneurs belonging to different types of
industries as seen by the p value = .000 (< 0.05)
Hence it is clear that there is a significant effect of the type of industry of the
entrepreneur on the level of awareness.
HYPOTHESIS 5 :
H05 - The government is not a source of support to the entrepreneurs.

H15 - The government is standing strong in support of the entrepreneurs.
UNDERSTANDING THE ASSISTANCE RECEIVED BY THE ENTREPRENEURS

FROM THE GOVERNMENT IN CORRELATION TO THE DEMOGRAPHICS
Understanding The Assistance Received By The Entrepreneurs From The

Government In Correlation With The Age Of The Entrepreneur
Age
212
25-35 36-45 Above Total
45
Count Count Count Count
Loan 9 22 10 41
Training 4 1 1 6
Easy policies / Tax

Q17 What kinds of 9 7 7 23
holiday
help/assistance have
you received from the
Subsidy on water,
government? 2 6 4 12
electricity
No help 124 36 42 202
Total 142 61 60 263
Table 15.20
Age
Chi-square 60.329
Q17 What kinds of help/assistance have you

df 10
received from the government? - Loan
*,b
Sig. .059
Table 15.21
According to the above given table, it is clearly seen that there is no significant
difference between the means i.e. there is no significant difference in the level of
help received by the entrepreneurs belonging to different age groups as seen by the
p value = .059 (> 0.05)
Therefore, Ho is Accepted.
Hence it is clear that there is no help received by the entrepreneur from the
government
213
Government In Correlation With The Education Qualification Of The
Entrepreneur
Education
School/J Degree Graduate & Total

unior PG
College
Loan 15 7 19 41
Training 2 2 2 6
Easy policies / Tax

Q17 What kinds of 10 3 10 23
holiday
you received from the
Subsidy on water,
government? 5 2 5 12
electricity
No help 57 19 126 202
Total 80 30 153 263
Table 15.22
Education
Chi-square 17.311

df 10
received from the government?
a,b
Sig. .068
a. More than 20% of cells in this subtable have expected cell counts less than 5.
Table 15.23
214
help received by the entrepreneurs belonging to different education qualifications
as seen by the p value = .068 (> 0.05)
government

Government In Correlation With The Type of Industry of The Entrepreneur
Type of Industry
Manufact Service IT Others Total

uring
Count Count Count Count Count
Loan 14 19 1 7 41
Training 0 4 1 1 6
Easy policies / Tax

Q17 What kinds of 3 9 2 9 23
holiday
you received from
Subsidy on water,
the government? 5 2 0 5 12
electricity
No help 35 63 62 42 202
Total 52 93 64 54 263
Table 15.24
Based on the statistics in the above table, out of all the entrepreneurs responses
received, the maximum response for the kind of help received from the
government to the entrepreneurs has been an alarming Zero. According to the
215
study, the entrepreneurs have not received any hep in terms of loans or training or
policies by the government.
Type of Industry
Chi-square 58.658

df 15
received from the government? - Loan
*,b
Sig. .061
Table 15.25
help received by the entrepreneurs belonging to different types of Industries as
seen by the p value = .068 (> 0.05)
government based on the type of Industry.
HYPOTHESIS 6:
H06 - The entrepreneurs have very limited or no expectation from the government
in terms of enterprise formulation.
H16 - The entrepreneurs have high expectation from the government in terms of
enterprise formulation.
ENTREPRENEURS EXPECTATIONS FROM THE GOVERNMENT

TOWARDS DOCUMENTATION WITH RESPECT TO THEIR
DEMOGRAPHICS
216
Entrepreneurs Expectations from the Government towards Documentation With
respect To the Age of the Entrepreneur
Age
25-35 36-45 Above Total

45
Easy licensing 110 30 31 171
Easy renewals 95 22 24 141
Q21 What are your Single window

98 23 17 138
expectations from the clearance
government in terms of
easy documentations? Less number of
106 21 23 150
documentations
Others 0 0 0 0
Total 142 61 60 263
From the above table, it is clear that in all the age groups the entrepreneurs
expected easy licensing, followed by less number of documentation.
Table 15.26
Age
Chi-square 117.405
Q21 What are your expectations from the
government in terms of easy documentations? df 8
Easy licensing
*,b
Sig. .000
Results are based on nonempty rows and columns in each innermost sub-table.
217
Table 15.27
difference between the means i.e. there is clearly a difference in the level of
expectation of the entrepreneurs belonging to different age groups as seen by the p
value = .000 (< 0.05)
level of expectation
Entrepreneurs Expectations From The Government Towards Documentation

With respect To The Education Qualification Of The Entrepreneur
Education
School/J Degree Graduate & Total

unior PG
College
Easy licensing 45 16 110 171
Easy renewals 24 15 102 141
Single window
Q21 What are your 27 17 94 138
clearance
expectations from the
government in terms of
Less number of
easy documentations? 30 18 102 150
documentations
Others 0 0 0 0
Total 80 30 153 263
Table 15.28
218
According to the table given above, the analysis shows that the entrepreneurs with
their qualification of School and college are expecting easy bank policies and easy
licensing, the entrepreneurs with the qualification of a degree has shown interest in
less number of documentation followed by single window clearance and followed
by easy licensing and the most upper ended qualification of Graduate and PG have
expected easy licensing followed by easy less number of documentation and easy
renewals.
Education
Chi-square 71.009
government in terms of easy documentations? df 8
Easy licensing
*,b
Sig. .000
Results are based on nonempty rows and columns in each innermost subtable.
Table 15.29
expectation of the entrepreneurs belonging to different education qualifications as
seen by the p value = .000 (< 0.05)
Hence it is clear that there is a significant effect of the education qualification of

the entrepreneur on the level of expectation.
Entrepreneurs Expectations From The Government Towards Documentation

With respect To The Type of Industry Of The Entrepreneur
219
Type of Industry
Manufac Service IT Others Total

turing
Count Count Count Count Count
Easy licensing 30 47 61 33 171
Easy renewals 27 32 60 22 141
Q21 What are your Single window

expectations from the 23 34 59 22 138
clearance
government in terms
of easy Less number of
24 45 61 20 150
documentations? documentations
Others 0 0 0 0 0
Total 52 93 64 54 263
Table 15.30
According to the table given above, the analysis shows that the entrepreneurs in
the Manufacturing sector expect easy licensing followed by easy renewals,
whereas the entrepreneurs in the Service sector have expectations of easy licensing
followed by less number of documentations and the IT sector have their
expectations on less number of documentation and easy licensing is the same
demands of the people followed by easy renewals.
Type of Industry
Chi-square 201.641
government in terms of easy df 12
documentations? Easy licensing
*,b
Sig. .000
220
Table 15.31
expectation of the entrepreneurs belonging to different types of Industries as seen
by the p value = .000 (< 0.05)
Hence it is clear that there is a significant effect of the type of industry of the
entrepreneur on the level of expectation.
Hence, based on the above tables and conclusions, it is evident that the
entrepreneurs have good expectations from the government in terms of easy
documentation, simplified procedures and policies of the government.
221
CHAPTER 15
FINDING OF THE STUDY, CONCLUSION AND

SUGGESTIONS
SUMMARISATION OF FINDINGS
The environment and the cultures of entrepreneurship is evolving all around the world
with the stream of start-ups arising, with a fun filled work place culture and with
investors running in to bright ideas asking to get funded. Having said that, it cannot be
ignored that today‟s start-ups also face many risks and problems that could be reduced
with the timely intervention from the government. There has been an evident gap
between the government‟s support and the need of the enterprise which needs to be
tackled and now is the time to bridge the gap.
The analysis was done on a majority of male entrepreneurs with 54% of entrepreneurs in
the age group of 25-35 years, 23% of entrepreneurs in the age group of 36-45 years and
22% entrepreneurs in the age group of 46 and above, with 13% of the entrepreneurs
interviewed having completed school as their qualification, 17% of entrepreneurs having
completed junior college, 11% of entrepreneurs having dropped out of degree/graduation
and the rest 56% of entrepreneurs being post graduates. 19% of entrepreneurs from the
field of manufacturing, 35% from service, 24% from information technology (IT) and
another 20% from other which include real estate, pharmaceuticals and health and
hospitals.
It is found from the analysis that most of the entrepreneurs have good support from their
families in terms of moving from a job to a self-owned business, it was also known that
some entrepreneurs have faced issues from families as reluctance from the family in
moving from a job to an enterprise, this is keeping in mind the risks and issues faced by
the entrepreneurs in terms of entrepreneurship. It was also noticed that most
entrepreneurs faced problems of difficult loan procedures followed by the no availability
of a capitalist or a funder. As a solution, most entrepreneurs depended on family
222
contributions and friends for their source of funds. As expectations from the government,
it was seen that the easy Licensing was the highest followed by less number of
documentations, followed by easy document renewals, and the least being single
window clearance keeping in mind that the analysis shows a minor difference of scale in
the 4 given options.
The analysis is divided also on the basis of dependable variables namely, 1) Age 2)
Education 3) Type of Industry.
In order to find out the number of entrepreneurs who face the problems, a question on
the kinds of problems was asked, from the analysis it has been found that the younger
age group faces the highest challenge in terms of the problems faced by government
policies and the older age groups ranging from 36years and above, face capital as their
highest challenge. In terms of the education qualification of the entrepreneurs, it has
been noticed that the education qualification of an entrepreneur is no barrier to the level
of risk faced by them. The less, the moderate educated and the highly educated, all three
face the risks with respect to finance and funds thus followed by the risks they face by
the government regulations and policies. It has been analysed that the manufacturing and
service face capital or funds as a threat followed by tough competition whereas the
Information Technology finds the government policies to be on the highest threat than
anyone else.
On the basis of the question in specific to financial or fund related problems faced by the
entrepreneur, it is analysed that in the age group of 25-35 years, the factor of difficulty in
loan procedures have been the most difficult, whereas the other age groups of 36 years
and above, have found it very different in the kinds of financial risks faced by them ,
according to the research it is found that the people over the age groups of 35 and above
have found a huge difficulty in finding a capitalist or a funder in terms of financing the
entity. This might be because of the reason that the age plays a major factor in
convincing an investor to invest in the business. It could also mean that the venture
capitalists find it easier to connect with the younger generation in funding the entity. The
223
people above the age groups of 45 have also found it difficult to gain loans and
procedures since the banks too might not be in a position to depend on a mid-aged
entrepreneur to run or function of the smooth flow of the entity.
in specific to the kind of risks faced by entrepreneurs in Finance, the entrepreneurs with
the education of school and junior college faces highest risk of Non availability of a
venture capitalist or a funder followed by difficulty in loan procedures whereas the
entrepreneurs with Degree and further education find it very difficult to get through loan
procedures. This is mainly because the less educated individuals are not much
appreciated by the venture capitalists or funders this might be because of the fact that the
venture capitalists or the funders may have a feeling that the less educated would be less
knowledgeable about the business or the working of the business. Whereas for the
entrepreneurs who have completed their degree or have further studies face difficulties in
loan procedures, this could be mainly because of the tedious procedures for the loans
also for the well-educated entrepreneurs, their first option for funds or finance would be
from family and friends following the fact that they depend on venture capitalist or a
funder and hence the conclusion.
In-terms of the distribution by Industry, the manufacturing sector faces the highest issue
as the difficulty in loan procedures followed by non-availability in capitalist or funder.
The service sector aced the highest problem to be the non-availability of capitalist and
funder followed by difficult loan procedures. The IT faced the highest si the difficulty in
loan procedures and finally the category of other which includes the medical fraternity,
the pharmaceutical industry, real estate and other such small entities face the highest risk
as the non-availability of capitalist or funder
Hence it is analysed that all three sectors face varied levels of problems with respect to
the finances.
The analysis indicates the ways and means of how they overcame the risk of funds and
finances, it was analysed that the younger age groups (25-35 years) overcome the
problems related to funds by way of family contributions, the age group of 36-45
224
overcome the problems of funds with the help of loans from banks, and the age group of
45 and above face the problems of funds by way of both borrowing from friends and
loans. The younger generation keeps itself away from the loan procedures and as the
people get older and personal priorities take a stand, hence they move in to take loans
from the banks rather than family contributions. In terms of education qualification it is
noted that, the people with lower qualification has solved the problem of funds by
borrowing from friends and family. The people having a degree have maximum family
contributions followed by loans from banks, the graduates and post grads have
maximum family contributions in a large number. In terms of industrial sectors, it has
been analyzed that the manufacturing sector overcomes the problems related to finance
with the help of family contributions, the service industry mostly takes loans followed by
borrowing from friends, a whooping number from the IT has been shown as taking funds
by ways of family contributions.
The analysis also indicated the solutions of the entrepreneurs who overcame the
problems related to business or competition or location, it was interesting to know that
inspite of risks in finance, competition, business or government, the entrepreneurs from
every sector, every age group and every qualification has „adjusted to the
competition/Adjusted to the location‟ by means of their businesses or issues or locations
or any other factor that is pertaining to the business.
The analysis revealed the kinds of help/assistance that the entrepreneurs have received
from the government in terms of funds, loans, trainings or any subsidies it was surprising
to know that majority of the people have not received any help or support from the
government by ways of finance, marketing, training or business.
It also brought about the problems related to the government policies that were faced by
the entrepreneurs when they started the business, it was analyzed that all age groups
found the government policies tedious and most also had no awareness of the policies of
the government. On the basis of qualification it was interestingly found that education
has high impact in the awareness of the policies. Higher the education better is the
225
awareness of policies. The lower educated ones said that they were unaware of the
policies and also that they had no problems which clearly shows that the less educated
entrepreneurs either outsourced or haven‟t even registered their entity. On account of the
kind of industry, it was found that on an average all the three industries found the
government policies tedious to understand and implement.
The analysis revealed the ways they chose to overcome the problems related to
government policies, almost all the age groups said that they were unregistered and some
others mentioned that they hit the wall everywhere and finally done the registration and
other formalities through agents. On the basis of education it was noted that the lower
educated said that they overcame the problems through agents followed by a general
idea that most of them were unregistered. By means of distribution by industry type,
almost all the units said that they were unregistered and the others mentioned that they
did the registration and other formalities through agents and the expectation from the
government, onan equal note, almost all the entrepreneurs want all the four factors on an
approximate equal note namely, easy licensing, easy renewals, single window clearances
and less number of documentations. This shows there is a high need for the government
to realize the gaps in the registration and the entrepreneurial structure of the country.
CONCLUSION OF THE STUDY
MSME‟s are considered to be one of the major segments of Indian economy. It plays an
important role in employment generation, production system, increasing exports and
GDP. This indirectly leads to economic development of the nation. In order to acquire
technological effectiveness joint efforts is required both on the part of government and
MSME‟s. The analysis was carried out to judge the level of risks by ways of three major
demographic factors namely, Age, Education Qualification and Type of Industry.
In this research study, it can be clearly derived that the entrepreneurs in the nation face
high risk in starting their enterprises. Risks like finance, government policies, social
stigma‟s, registrations procedures and others. It is the responsibility of the government to
226
work towards the building of businesses, this could be one major cause for the
undeveloped condition of the nation today, wherein the harvest is plentiful but the
labourers are few. Wherein the scope for employment generation is plentiful but the
starters are few. There is need for more business to flow, need for more enterprises to get
established, all of which will work towards the strengthening of the economy. The
government needs to help the entrepreneurs to plunge into entrepreneurship, give them
the leisure of tax and get them free from the worry of risks involved in start-ups. It is
only when the entrepreneurs receive the strength and support, will they work towards the
building of the economy thereby starting businesses.
The largest strength of the nation being the Youth, the government needs to bring in
policies for the younger minds, the young generation has to be revived, this resource
includes the college students/the dropouts/the post graduates, the policies that would
enable them to bring out wings and thus enable them to explore and discover the
opportunities that is waiting in-store for them to experience.
The nation also has a large stratum of the society which belongs to the Bottom of the
Pyramid which is considered as the lowest yet the most promising are for business and
entrepreneurs to expand ad flourish. Being one the fastest growing economies in the
world, with a pace of 7.6% of growth rate in the year 201, India is on its way to become
the super power and a very important consumer worldwide. According to the research
conducted by Deutsche Bank (2010), there are between 30 million to 300 million lower
middle class people in the nation. According to the report by the National Council for
Applied Economic Research (NCAER) centre for Macro Consumer Research by 2015-
16, stated that India will grow to be a nation with 53.3 million middle class households,
which would be of 267 million people in the said category. With a country with such
strength in business resources, the consumers waiting for more technology and
advancements that help them to live their daily lives with easy. There is an urgent need
for the government to bring in strategies to bring those out of the closed doors by giving
them a platform to experiment and discover.
227
There is also a need for the new and advanced research in technological advancements,
which calls for the need in incubation centres to be put up at various states which makes
it accessible for the young minds to gear themselves up for their ideas and helps them
launch into the market.
Furthermore, according to the statistics of National Council For Applied Economic

Research (NCAER) centre for Macro Consumers, it reveals that the number of the
middle class households in India in 2025-26 is expected to increase to more than double
to what it was in the statistics of the year 2015-16, from a 53.3 million middle class
households to a 113.8 million households which comes up to 547 million individuals in
the nation., which directly means that the consumer base is set to increase at a very large
pace and this would require the nation and its government to create a market which is
ready to receive a consumer this large and with the kind of people who are ready to
produce, market and sell the goods created by them. For which the government requires
to create a platform with schemes, subsidies and policies which are ready to open the
markets for such a greater demand.
This sector should have a proactive approach wherein the government should have long
term strategy to retain themselves in the changing economic scenario and progress
themselves beyond the current GDP growth. The MSME sector has been termed as
“Engine of Growth” for budding economies. Poor infrastructure and less sufficient
market link are some of the important factors that have brought a decline in the growth
of MSME sector. Moreover lack of appropriate access to finance has also been the
biggest challenge. In order to solve this problem support given by national and state
government to MSMEs is not enough. It is essential that the entrepreneurs take necessary
steps along with the government support for further developments. It is highly essential
to nurture this sector for the economic well-being of the nation. Clear and simple
policies are to be made so that these enterprises can understand them and implement it in
their business to secure benefits.
228
The MSME sector in India has observed important changes in the post liberation period
since 1991. The facts clearly show that the number of units has increased, which lead to
growth in investment and employment. There is also a great amount of export and the
products of MSME are accepted by both by domestic and international market. However
the challenges they face creates difficulty for them to compete globally. Business
competition in the coming years will even become stronger with an increasingly more
developed, open and integrated economy. In order to tackle this, new measures must be
taken to enable enhancement of competitiveness of MSME.
The growth of entrepreneurship directly affects the economic development of the

economy. The objectives of the study has brought forth certain conclusions with respect
to the study, it has been found that risk in finances is seen highly in the age group of 25-
35, graduates and post graduates face the highest risk in finance, and Information
Technology faces the highest risk in finance followed by manufacture and services both
being equal in the risk factor.The age of 25-35 face a significant high risk in government
policies, Graduates and post graduates face the highest risk In government policies, risk
of government policies is being faced the highest by the IT sector.Business risk is
equally shared by the age groups of 36-45 and 45 and above, but the age group of 45 and
above having this risk on a higher note., the youngest ages of 25-35 face the highest in
business risks in the business, business risk is being faced the highest by the service
sector. The risk of location is equally shared by the age groups of 36-45 and 45 and
above, but the age groups of 25-35 have significantly low risk than the others,
entrepreneurs having school education find it most difficult in the location followed by
those having a degree. Risk of location is being faced the highest by the sector that
includes pharmaceutical, healthcare and others.
It has been noticed that age or location is not a factor of hindrance in the risks faced by
the entrepreneurs. The government needs to take steps so as to enable the entrepreneurs
to have lesser burdens of varied risks when they start their enterprises. This will not only
enhance the current entities that are working, but also motivate and encourage the new
229
vibrant youth of India to bring in new thoughts and ideas so as to foster the spirit of
entrepreneurship.
The main purpose of this research is to study of how the entrepreneurs managed the
micro, small and medium enterprises and what are the various problems faced by these
by these enterprises. It also shows how the role of MSMEs has helped in economic and
restructuring development of India. Empirical data revealed the hurdle like financial
constrain and issues relating to power, raw material procurement should be more
effectively dealt by the government. MSMEs have played a major role in employment
generation in India. Due to the acute power shortage, industrial units are managing only
50 per cent of the optimum capacity and the situation has turned from bad to worse
without inability to pay even the "salary” of the workers. Since most of the enterprises
complained about the non-availability of labour, the government needs to look at ways in
making skilled labour available. Simple and clear policies and acts are to be made so that
these enterprises can understand them and utilize as well as implement them in the
business for compliance and secure benefits. There are many government schemes but
from the study it has been clearly observed that most of these enterprises are not aware
and do not understand how they can benefit out of them.
There is a huge gap existing between the ideal situation and the reality. Given the
picture, to expect speedy adoption of PEST and SWOT analysis tools by MSMEs is
almost impossible. In fact, most of the entrepreneurs became more confused after
exposing to the various techniques. This is indeed a great challenge – to take them from
where they are now, to a level of strategic planning comparable to that of the large
corporations. For those MSMEs with some experience on strategic management, and can
also afford the time
From there, the entrepreneurs can select an assortment of the tools to add on to their
current configurations. The addition must be done to suit their needs, time availability
andof course the bill. With benefits coming through as a result of the approach,
entrepreneurs can then extend the application, by using more of the building blocks
230
given. It is believed that by using the right combination, noticeable results can be safely
expected
On critical analysis of all the above vital points, it is observed that business has one
objective; to make it a success and earn profit. As it is said, “Prevention is better than
cure”, being proactive and creating systems Standard Operating Procedures (SOP) and
control systems will avoid and minimize risk.
Strong strategies have to be developed to neutralize the risk element. One can kill the
business, if not handled properly and a continuous feedback mechanism should be
maintained. Therefore, it is essential that a proper strategy for handling any expected risk
is essential for any business.
SUGGESTIONS
An entrepreneur is a person with an ability to see things differently, when the people see
an issue or a challenge or a problem, the entrepreneur sees an opportunity.
The Indian government needs to look at the grassroots in order to tackle the situation of
ignorance and fear. To start with, the government needs to look at the Chinese and work
a similar model for India, into bringing this large human resource and making them
skilled by providing them the necessary skills and techniques. The Chinese government
takes personalised care into educating the masses about entrepreneurial know-how. Also,
the Chinese government has planned and provided for schemes, subsidies and incentives
for the student entrepreneurs. All education institutes in China hold a national business
Plan Competition annually wherein each competition is arranged by the different
universities but co-held by the different ministries of the government. Such competitions
move from the College level, to the district to the national level and almost all the
schools and colleges participate in the competition. The younger students are made to
experience the show in order to be ready for such a platform in their future. In China,
many universities also have their own incubator for the student start-ups. These
incubators are in collaboration with government ministries ad are setup at affordable
231
prices. In the same way such competitions need to be held and promoted in order to
enhance and promote entrepreneurship in the country.
Refining techniques for entrepreneurship education: the universities are required to

make clear defined syllabus and teaching materials for their students to imbibe the spirit
of entrepreneurship. There is a need for proper curriculum with detailed description for
the students to explore the subject and motivate them to pick up the kind of business that
they would be interested to do.
Another problem that arises for the MSME‟s is the issue of acute power shortage
specially in the rural areas, in such situations, the business comes to a standstill and
causes losses to the entrepreneurs. Such a situation will bring in more problems for the
payment of clients, vendors and workers. Hence a continual uninterrupted and subsidised
power supply should be provided by the government to the MIDC‟s in the country. This
will itself bring in development of the MSME and the rural poor.
Inorder to encourage citizens to take up entrepreneurship, the government along with the
education institutes must encourage research in entrepreneurship ad start-up businesses.
This could be done in collaboration with the Indian and International universities. Such a
step will surely bring a remarkable change in the area of entrepreneurship education.
Most of the enterprises also face the problem of lack of skilled labour. The labour laws
and policies needs to be amended according to the global standards.
Gender related discrimination against the women must be stopped, and a conducive
micro economic environment must be created in order to build an ease to businesses and
reduce the barriers that work against economic growth.
Suggestion to the Entrepreneurs: To overcome the challenges in finding funding for the
start-ups, the entrepreneur needs to sell his/her idea and the vision of the company to
potential investors. Also explore various sources of finance like, banks and government
schemes. Angel Investors and Crowd Funding is another way that the entrepreneurs can
232
find funding for their enterprises. He/she also needs to make sure that the team also
needs to see the future of the enterprise and the entrepreneur sees.
It is also essential the entrepreneur finds out a location that has fast growth in population,
technology, amenities and logistical and supply chain ease for doing business.
The most common challenges faced by the entrepreneurs are developing the business
idea and the vision for the business, Assembling a business team, raising funds for the
enterprise, finalising the right business location, finding good employees, customers,
clients, handling competition, financial challenges of foreseen expenses, lack of support
from family and friends, social pressure, negative thoughts, lack of marketing and sales
facilities and the lack of infrastructural facilities required to run the business. Hence it is
required to overcome the challenges in order to facilitate a smooth flow of business.
Assistance must be provided by the government to ensure the availability of trained and
professional managers for the MSME. The government might also have to re-consider or
reframe the policy initiatives to incentivise MSME‟s to achieve the economies of scale,
whereby allowing special incentives for the larger fund flow of venture capital and
private equity funds into the sector.
233
CHAPTER 16
RECOMMENDATIONS
The discussions with knowledgeable people indicated that there is a need to understand
the vastness of this land in terms of its culture, diversity, language, castes and creed due
to which the penetration of the government into all areas becomes difficult. Although the
government is trying to make ways for its citizens in terms of favourable policies and
subsidies for new entrepreneurs and there has been changes but inconsistent with slow
progress.
Requirement of a pro-active Non-Government or Government institutions.
There has to be clear rules and policies stated for the entrepreneurs. Departments and
ministries distinguished with clear benchmarks for the smooth help and guidance of
entrepreneurs. The existing entrepreneurial divisions need to move out of the old ways of
government offices and have computerized and fast ways of brining solutions to the
entrepreneurs in personally. The decisions made by the top level ministry needs to be
clearly channelized and the order of implementing the policies needs to be put across to
them so as to enable a hassle free execution plan for the entrepreneurs. The registration
processed needs to be simplified, with clear information on documentations that are
needed for starting an enterprise in every field, policies and rules have to be simplified
and taxes reduced. On the other side, an active participation of the people n the
government functioning and continuous updating of policies and rules is expected from
the entrepreneurs. The entrepreneurs are required to keep themselves updated to the
policies of the government, the trainings and the subsidies provided to them. They have
to be continually in touch with the government organizations in-order to get updated on
the new policies of the government. Thus making it a healthy environment for the
entrepreneurs and the government can make sure that there is growth in economy.
234
Financial Institutions
The biggest fear faced by today‟s entrepreneurs is the availability of capital. On the basis
of analysis, it has been found that the maximum number of entrepreneurs depends on
family contributions and monetary help from friends but very less are dependent on the
government bodies.
It clearly shows that the existing bodies have unfriendly rules and policies and hence the
entrepreneurs make their own way in finding funds, hence there has to be an increase in
the financial institutions and capital funding agencies and government bodies in the
country. There has to be more accessibility of entrepreneurs towards the same. Easy loan
availability and tax exemptions have to be incorporated in the working structure of the
country; these factors will surely help in building the entrepreneurial development of the
country.
Land availability and skill development
The availability of land and space for the entrepreneurs is another hurdle in their way;
hence the government needs to work towards availability of more special economic
zones (SEZs). The regulatory bodies have to be simplified and the policies need to be
reworked. The number of licenses required by the startups has to be reduced and ease n
documentation and licensing should be experienced by the entrepreneurs. There needs to
be more skill development workshops conducted and the government needs to promote
the same among the younger generation in colleges and universities via institutions like
WTC and NABARD. A model and promotion and development needs to be created by
the government along with the universities and thus the development of incubation
centers could bring a higher increase in the number of start-ups into the country, thus
creating large scale employment opportunities for the citizens. There has to be specific
funds located for more skill development and the HRD ministry needs to oversee to
make sure that the younger minds n the country are challenged to think beyond their
capacities in terms of idea generation and enterprise development. The government has
to see the education sector as a powerful tool to push the spirit and passion of
235
entrepreneurship and this can be majorly done with tie-ups with corporate and
educational institutes, thus building a space and developmental workshops with
personalized handholding to those students who show a passion to begin an enterprise.
It is clearly understood that only if the government take a strong stand towards the
development of the people only then will the development of the country take place. The
government needs to work towards simple policies, tax exemptions, easy loans
availability, easy licensing and skill development initiatives and thus will be a rise of a
new and vibrant India with skill, expertise and employment generation everywhere all
across the nation, only then will the nation see a new light towards the equality in
regional development of the country.
236
CHAPTER 17
FUTURE SCOPE OF STUDY
This study has immense scope in specific to various sectors of the economy, due to
constrain of cost and time of the research, this research could not be extended beyond
Mumbai and Pune, hence this research extends its scope to various specific states and
cities of the nation, trying to find the challenges faced by entrepreneurs from various
fields and various states and cities, it would also help to understand the policies of the
various state governments, political stability and the restrictions to the entrepreneurs in
their respective home states. This research has immense scope to spread into various
sectors be it pharmacy, manufacturing, service, medicine, automobile or others. Further
areas of research could give deeper insights to the spectrum. Such a research in various
areas and sectors would hold immense array of opportunities which enable the citizens to
explore in varied areas of businesses.
1. Such studies would help develop Managerial capabilities, it can bring in new areas of
improved ideas, thoughts and practices which would enable entrepreneurs to improve
and excel in their businesses.
2. Further research can bring in difficulties faced by the start-ups of today, which can
help bring in models and strategies in order to mitigate such risks.
3. With the spread of such research n various places and states of the country, it can bring
upon various cultural barriers that the entrepreneurs face in terms of domestic exports
within the country, it can bring in light various policies that can work towards the
betterment and development of the future of entrepreneurship in the country.
237
4. A study conducted by EDII - Entrepreneurship Development Institute, India states that
the major reason people do not get into start-ups is because they are not confident, feel
incapable and also lack knowledge in starting enterprises. This can be averted by ways
of making new opportunities for the people to explore identify, thus handhold them to
their areas of businesses.
The research can bring in various standard frameworks and sustainable business
models that can allow entrepreneurs to follow those models for a less dependable and
fool proof business plan.
238
Annexure - I
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Strategies for Survival and Growth in the WTO Era”, in The ICFAI Journal of
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17. KrishnaveniMuthiah and SudhaVenkatesh (2012) “A Study on Barriers

Affecting the Growth of Small Scale Industries in India”, in the Indian
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Sri.Venteshwara, University, Anantapur.
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Banks To SME Customers”, in the SSRN, http://ssrn.com, pp. 1-24.
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entrepreneurs, International journal of current research and academic review,
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29. Raju B, Y (2008) “Small and Medium Enterprises (SMEs) in India: Past,
Present and Future, in the PHDCCI Working Paper, p. 10.
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242
Annexure -II
WEBLIOGRAPHY
1. http://iveybusinessjournal.com/publication/indian-entrepreneurship-and-the-
challenges-to-indias-growth/
2. https://en.wikipedia.org/wiki/Entrepreneurship
3. www.smechamberofindia.com/about_msmes.aspx
4. msme.gov.in/
5. https://www.dnb.co.in/SME_cluster_series2012_Indore/PDF/MSMEs_in_Indi
a.pdf
6. http://msme.gov.in/WriteReadData/DocumentFile/MSME%20ANNUAL%20
REPORT%202014-15_English.pdf
7. http://www.msmementor.in/MSME_Sector_India.asp
8. https://en.wikipedia.org/wiki/Ministry_of_Micro,_Small_and_Medium_Enterp
rises
9. http://indiamicrofinance.com/micro-small-enterprises-india.html
10. http://ficci.in/spdocument/20143/Grant-Thornton-FICCI%20MSME.pdf
11. www.mced.nic.in
12. www.doingbusinessinmaharashtra.org/DIC_schemes.aspx
13. www.msde.gov.in
14. http://yourstory.com?2016/01/maharashtra-women-entrepreneur-policy/
15. http://www.indiafilings.com/learn/maharashtra-subsidy-schemes/
16. www.maharashtratourism.gov.in
17. www.midcindia.org
18. http://www.Maharashtra.gov.in
19. www.dot.gov.in
20. http://mmrda.maharashtra.gov.in/
243
21. M. I. D. Corporation, "WELCOME TO MAHARASHTRA INDUSTRIAL
DEVELOPMENT CORPORATION," 2016. [Online]. Available:
http://www.midcindia.org/home. Accessed: Feb. 4, 2017.
22. "Maharashtra state Khadi & village industries board,". [Online]. Available:
http://www.mskvib.org/index.php. Accessed: Feb. 4, 2017.
23. "Portal home,". [Online]. Available: https://www.maharojgar.gov.in.
Accessed: Feb. 4, 2017.
24. A. R. Reserved, "Dairy development,". [Online]. Available:
http://dairy.maharashtra.gov.in/en. Accessed: Feb. 4, 2017.
25. महाराष्ट्रमत्स्योद्योगविकासमहामंडळ - महाराष्ट्रमत्स्योद्योगविकासमहामंडळ,"
2012. [Online]. Available: https://mfdc.maharashtra.gov.in/MFDCHome.aspx.

Accessed: Feb. 4, 2017.
26. The Maharashtra Agro industries development Corpotation Ltd. (MAIDC),"
2014. [Online]. Available: http://www.maidcmumbai.com/home. Accessed:
Feb. 4, 2017.
27. Available: http://www.mced.nic.in/. Accessed: Feb. 4, 2017.
28. http://ediindia.org/e-reports/
29. BusinessAlligator.com
30. NDTV
31. Times Of India
32. MapsOfIndia.com
33. TopCount.com
34. RealityVeiws.com
35. Wikipedia.org
36. NewsRoomPost.com
37. The Hindu
38. MakeInIndia.com
39. www.wap.business-standard.com
40. www.msme.gov.in
244
41. www.accountlearning.com
42. www.tackletaxhavens.com
43. www.economictimes.com
44. Small and Medium Business Development Chamber of India - website
45. Ministry of Micro Small and Medium Enterprises - website
245
Annexure - III
QUESTIONNAIRE
QUESTIONNAIRE FOR ENTREPRENEURS
Serial No : __________________
(Please fill the information requested below for Research. This study is basically a research to study
the management of risk in the growth of micro and small enterprise in India.
Your information will be coded and will remain highly confidential.
Section A : Demographic Profile
AGE 25-35 Yrs 35-45 Yrs 45-55 Yrs 55-65 Yrs
GENDER Male Female
EDUCATION School Jr. College Degree Graduate Post

Graduate
INDUSTRY Manufacturing Service IT Others

TYPE
TURNOVER
PRODUCTS
MANUFACTURED
YEAR OF
246
ESTABLISHMENT
Number of employees: _________________________________
Location: ____________________________________________
SECTION B :
Factors Influencing the growth of MSME’s and the Risks involved in starting enterprises.
Q1 : What were the problems you faced while starting your enterprise ?
 No family support
 Finance/capital
 Government policies/licenses
 Logistics and transportation
 Market Unavailability
 Competition
Other _________________________________
Q2 :Whatkinds of risks have you come across in finding sources of funds when you started the
business?
(Please rate the degree of risks faced by you on a scale of 1 to 5,
with 1 being the lowest and 5 being the highest)
Don‟t know No Risk Yes but little risk Neutral Highest Risk
1 2 3 4 5
PARTICULARS SCORE
RISKS RELATED TO FINANCE
247
Q2.1 : FUNDS
Q2.2 : KNOWLEDGE ABOUT LOANS
Q2.3 : GOVERNMENT SUBSIDY
Q2.4 : FAMILY BORROWINGS
Q2.5 : HIGH INTEREST RATES
Q2.6 : MONEY LENDERS
Q2.7 : PROPERTY MORTGAGE BY BANKS
Q2.8 : GOLD LOANS
RISKS RELATED TO GOVERNMENT POLICIES
Q2.9 : MULTIPLE WINDOW POLICY
Q2.10 : TAXES
RISKS RELATED TO BUSINESS

Q2.11 : COMPETITION
Q2.12 : UNAVAILABILITY OF RAW MATERIALS
Q2.13 : UNAVAILABILITY OF SKILLED LABOUR
Q2.14 : NO PROPER MACHINERY
RISKS RELATED TO LOCATION
Q2.15 : INACCESSIBLE TO THE CITY
Q2.16 : AWAY FROM THE MARKET
Q2.17 : UNAVAILABILITY OF WATER
Q2.18 : UNAVAILABILITY OF ELECTRICITY
Q2.19 : ACCOMMODATION OF LABOUR
I- FAMILY RELATED
Q3 :Did you face any issues related to support from your family when you started your enterprise?
 Yes
 No
 May be
248
Q4 :If No,what kind of family issues did you face when you started the business?
 Family has been supportive-No problem
 Distrust in Businesses
 Reluctance in moving from a Job to business
 Fear of financial losses/risks
 Fear of Inexperience
Other _________________________________
Q5 : How did you overcome the problems related to family?

 Family has been always supportive
 Convinced Family
 Disapproved but gradually joined in
 Other _________________________________
II - FINANCE/FUNDS RELATED
Q6 : Did you face any problems related to finance/funds?
 Yes
 No
Q7 : If yes, what was the kind of problem/s faced by you ?

 Difficult loan procedures
 Bank mortgage
 Non-availability of a capitalist/funder
 Other__________________________
Q8: How did you overcome the problems related to Finances/funds?

 Loan from Banks
 Crowd Funding
 Borrowed from Friends
 Took some-one as financial partner
249
 Relatives‟ belongings (Gold/Property)
 Family contributions
 Government funds/Subsidy
Other _________________________________
III – BUSINESS/COMPETITION RELATED

Q9 : Did you have any problems related to Business/Competition?
 Yes
 No
Q10 : If Yes, How did you overcome the problems related to Business/Competition?
 Outsourced raw materials
 Purchase of raw materials
 Outsourced marketing / selling
 Adjusted to the competition
 My product/Service has aUSP
 I have strong mentors for guidance
Other __________________________________
Q11 :How did you overcome the problems related to Location?

 Had small issues initially but gradually adjusted to the location
 Took land / shed from the government
 Took help from family
 Started another line of business :__________________
Other _______________________________________
IV – GOVERNMENT TRAININGS AND POLICIES RELATED

Q12 :Did you have any formal education/training in the area of your business?
 Yes----- was it useful? ______________________________________
250
 No----- why not? ________________________________________
Q13 : Did you feel the need for any training ?

 Yes----- was it useful? ______________________________________
 No----- why not? ________________________________________
Q14 : How important are the following parameters to you with respect to your enterprise.
Rate your degree on a scale of 1 to 5, with 1 being the lowest and 5 being the highest
Not at all No Neutral Yes Absolutely
1 2 3 4 5
Particulars
Q14.1 : Do you want to approach the government for the needs of your
enterprise?
Q14.2 : Are you aware of the ways to approach the government for the needs
of your enterprise?
Q14.3 : Would you like to get trained in the area of your business?
Q14.4 : Would you be open to the government extending their support in
terms of Trainings?
Q14.5 : Have you had any difficulty in approaching the government bodies
for the smooth functioning of the enterprise?
Q15 :Are you aware of the various support policies of the government?
Particulars TRAINING FINANCE EXPORT/ MARKETING
IMPORT
YES
NO
MAY BE
Q16 :Have you approached the government or any private institution for any training and
development need of your company?
251
Needed but did not have any
Yes Not Needed
training
Q17 :What kinds of help/assistance have you received from the government?
 Loan
 Training
 Easy policies / Tax holiday
 Subsidy on water, electricity
No help
Q18 :What kinds of problems related to government policies were faced when you started the
business?
 No awareness of the policies
 Did not know of whom to approach
 Found the government policies tedious
 No problems-Positive
Other _________________________________
Q19 :How did you overcome the problems related to government Policies?
 Still unregistered
 Hit the wall everywhere
 It was easy
 Through Agent
Other _________________________________
Q20 :How did you overcome the difficulty of approaching the government bodies?
252
Q21 :What are your expectations from the government in terms of easy documentations?
 Easy licensing
 Easy renewals
 Single window clearance
 Less number of documentations
Q22 :Have you heard of the ‘Make in India’ concept?
 Yes
 No
 May be
Q23 :Do you believe that the government is trying to extend help to you through the ‘Make in India’
concept?
 Yes
 No
 May be
***************************** THANK YOU FOR YOUR PATIENCE ***************************
253
ANNEXURE IV
STATISTICAL TABLES OF SPSS
The below given are the charts proved by way of SPSS software into reaching the
findings of this research study.
FREQUENCY TABLES FOR FINDING ERRORS
Single Response Frequency Tables
Age
Frequency Percent Valid Percent Cumulative

Percent
25-35 142 54.0 54.0 54.0
36-45 61 23.2 23.2 77.2
Valid 46-55 50 19.0 19.0 96.2
56-65 10 3.8 3.8 100.0
Total 263 100.0 100.0
Gender

Percent
Male 248 94.3 94.3 94.3
Valid Female 15 5.7 5.7 100.0
Total 263 100.0 100.0
Education

Percent
254
School 35 13.3 13.3 13.3
Junior College 45 17.1 17.1 30.4
Degree 30 11.4 11.4 41.8

Valid
Graduate 141 53.6 53.6 95.4
Post Graduate 12 4.6 4.6 100.0
Total 263 100.0 100.0
Type of Industry

Percent
Manufacturing 52 19.8 19.8 19.8
Service 93 35.4 35.4 55.1
Valid IT 64 24.3 24.3 79.5
Others 54 20.5 20.5 100.0
Total 263 100.0 100.0
Annual Turnover

Percent
Up to 10 Lakhs 132 50.2 51.2 51.2
11-25 Lakhs 62 23.6 24.0 75.2
Valid 26 Lakhs to 1 Crore 53 20.2 20.5 95.7
Above 1 Crore 11 4.2 4.3 100.0
Total 258 98.1 100.0
Missing System 5 1.9
Total 263 100.0
255
No. of employees

Percent
0-10 218 82.9 84.5 84.5
11-20 18 6.8 7.0 91.5
21-30 9 3.4 3.5 95.0

Valid
31-40 6 2.3 2.3 97.3
Above 40 7 2.7 2.7 100.0
Total 258 98.1 100.0
Total 263 100.0
Risks you have come across in finding sources of funds when you started
the business - Q2.1 : FUNDS

Percent
No Risk 39 14.8 15.0 15.0
Yes, Little Risk 131 49.8 50.4 65.4
Valid Moderate Risk 32 12.2 12.3 77.7
High Risk 58 22.1 22.3 100.0
Total 260 98.9 100.0
Total 263 100.0
Q2.2 : KNOWLEDGE ABOUT LOANS

Percent
256
No Risk 65 24.7 24.7 24.7
Yes, Little Risk 127 48.3 48.3 73.0
High Risk 2 .8 .8 100.0
Total 263 100.0 100.0
Q2.3 : GOVERNMENT SUBSIDY

Percent
No Risk 102 38.8 38.8 38.8
Yes, Little Risk 32 12.2 12.2 51.0
High Risk 98 37.3 37.3 100.0
Total 263 100.0 100.0
Q2.4 : FAMILY BORROWINGS

Percent
No Risk 75 28.5 28.5 28.5
Yes, Little Risk 48 18.3 18.3 46.8
High Risk 104 39.5 39.5 100.0
Total 263 100.0 100.0
Q2.5 : HIGH INTEREST RATES

Percent
257
No Risk 55 20.9 20.9 20.9
Yes, Little Risk 40 15.2 15.2 36.1
High Risk 133 50.6 50.6 100.0
Total 263 100.0 100.0
Q2.6 : MONEY LENDERS

Percent
No Risk 72 27.4 27.4 27.4
Yes, Little Risk 115 43.7 43.7 71.1
High Risk 48 18.3 18.3 100.0
Total 263 100.0 100.0
Q2.7 : PROPERTY MORTGAGE BY BANKS

Percent
No Risk 88 33.5 33.5 33.5
Yes, Little Risk 27 10.3 10.3 43.7
High Risk 114 43.3 43.3 100.0
Total 263 100.0 100.0
Q2.8 : GOLD LOANS

Percent
258
No Risk 95 36.1 36.1 36.1
Yes, Little Risk 33 12.5 12.5 48.7
High Risk 111 42.2 42.2 100.0
Total 263 100.0 100.0
Q2.9 : MULTIPLE WINDOW POLICY

Percent
No Risk 49 18.6 18.6 18.6
Yes, Little Risk 47 17.9 17.9 36.5
High Risk 140 53.2 53.2 100.0
Total 263 100.0 100.0
Q2.10 : TAXES

Percent
No Risk 49 18.6 18.6 18.6
Yes, Little Risk 53 20.2 20.2 38.8
High Risk 109 41.4 41.4 100.0
Total 263 100.0 100.0
Q2.11 : COMPETITION

Percent
259
No Risk 18 6.8 6.8 6.8
Yes, Little Risk 112 42.6 42.6 49.4
High Risk 102 38.8 38.8 100.0
Total 263 100.0 100.0
Q2.12 : UNAVAILABILITY OF RAW MATERIALS

Percent
No Risk 142 54.0 54.0 54.0
Yes, Little Risk 43 16.3 16.3 70.3
High Risk 36 13.7 13.7 100.0
Total 263 100.0 100.0
Q2.13 : UNAVAILABILITY OF SKILLED LABOUR

Percent
No Risk 146 55.5 55.5 55.5
Yes, Little Risk 41 15.6 15.6 71.1
High Risk 40 15.2 15.2 100.0
Total 263 100.0 100.0
Q2.14 : NO PROPER MACHINERY

Percent
260
No Risk 165 62.7 62.7 62.7
Yes, Little Risk 33 12.5 12.5 75.3
High Risk 27 10.3 10.3 100.0
Total 263 100.0 100.0
Q2.15 : INACCESSIBLE TO THE CITY

Percent
No Risk 166 63.1 63.1 63.1
Yes, Little Risk 29 11.0 11.0 74.1
High Risk 29 11.0 11.0 100.0
Total 263 100.0 100.0
Q2.16 : AWAY FROM THE MARKET

Percent
No Risk 164 62.4 62.4 62.4
Yes, Little Risk 29 11.0 11.0 73.4
High Risk 32 12.2 12.2 100.0
Total 263 100.0 100.0
Q2.17 : UNAVAILABILITY OF WATER

Percent
261
No Risk 181 68.8 68.8 68.8
Yes, Little Risk 27 10.3 10.3 79.1
High Risk 25 9.5 9.5 100.0
Total 263 100.0 100.0
Q2.18 : UNAVAILABILITY OF ELECTRICITY

Percent
No Risk 167 63.5 63.5 63.5
Yes, Little Risk 30 11.4 11.4 74.9
High Risk 37 14.1 14.1 100.0
Total 263 100.0 100.0
Q2.19 : ACCOMMODATION OF LABOUR

Percent
No Risk 156 59.3 60.0 60.0
Yes, Little Risk 42 16.0 16.2 76.2
High Risk 29 11.0 11.2 100.0
Total 260 98.9 100.0
Total 263 100.0
262
Did you face any issues related to support from your
family when you started your enterprise?

Percent
Yes 63 24.0 24.0 24.0

V
aNo 189 71.9 72.1 96.2
l
iMay be 10 3.8 3.8 100.0
d
Total 262 99.6 100.0
M
i
s
sSystem 1 .4
i
n
g
Tota
263 100.0
l
How did you overcome the problems related to family?
Frequency Percent Valid Cumulative

Percent Percent
Family has
been always 111 42.2 42.2 42.2
supportive
Convinced
53 20.2 20.2 62.4
Family
Valid
Disapproved
but gradually 93 35.4 35.4 97.7
joined in
Others 6 2.3 2.3 100.0
263
Total 263 100.0 100.0
Did you face any problems related to finance/funds?

Percent
Yes 207 78.7 79.6 79.6
Valid No 53 20.2 20.4 100.0
Total 260 98.9 100.0
Total 263 100.0
Did you have any problems related to Business/Competition?

Percent
Yes 238 90.5 90.5 90.5
Valid No 25 9.5 9.5 100.0
Total 263 100.0 100.0
Did you have any formal education/training in the area of your

business?

Percent
Yes 93 35.4 35.4 35.4
Valid No 170 64.6 64.6 100.0
Total 263 100.0 100.0
Did you feel the need for any training?

Percent
264
Yes 156 59.3 59.3 59.3
Valid No 107 40.7 40.7 100.0
Total 263 100.0 100.0
Have you approached the government or any private institution for any training and
development need of your company?

Percent
Yes 24 9.1 9.2 9.2
Needed but did not have

113 43.0 43.1 52.3
any training
Valid
Not needed 125 47.5 47.7 100.0
Total 262 99.6 100.0
Missing System 1 .4
Total 263 100.0
How did you overcome the difficulty of approaching the government bodies?
Frequency Percent Valid Cumulativ

Percent e Percent
215 81.7 81.7 81.7
A, I was working with one

Organisation then started this
1 .4 .4 82.1
business was aware about
Policies
Valid
By having Agent 1 .4 .4 82.5
By hiring an agent but the

charges of him was too 1 .4 .4 82.9
expensive
265
By using effective marketing
1 .4 .4 83.3
skill
By Using Latest Technology 1 .4 .4 83.7
Collect the information about

the Documentation & policies
1 .4 .4 84.0
by getting in contact with
related govt portfolios
Communicated with officers

1 .4 .4 84.4
and explained the situtation
Complex Procedure 1 .4 .4 84.8
Did not approach 1 .4 .4 85.2
Did Not approached

1 .4 .4 85.6
Government
Did not face 1 .4 .4 85.9
From Contacts Associates &

1 .4 .4 86.3
Friends
help from friend 1 .4 .4 86.7
Help from Friend 1 .4 .4 87.1
Help from friends 1 .4 .4 87.5
help from relatives 1 .4 .4 87.8
Helps from business partner 1 .4 .4 88.2
Helps from friend 1 .4 .4 88.6
Helps from Friends 1 .4 .4 89.0
Helps from others 1 .4 .4 89.4
Helps from Relatives 1 .4 .4 89.7
266
Hired an agent who has
adequate knoeledge with 1 .4 .4 90.1
respect to govt policies
I have not registered my

1 .4 .4 90.5
business
I Never tried to approach

1 .4 .4 90.9
government
I used to approach myself 2 .8 .8 91.6
Internet,advice from
1 .4 .4 92.0
experience entrepreneurus
Issues like facts, logistics,

1 .4 .4 92.4
local bodies
It was not difficult 1 .4 .4 92.8
No Difficulties 1 .4 .4 93.2
No Difficulty 1 .4 .4 93.5
No difficulty from govrnment 2 .8 .8 94.3
No Problem 1 .4 .4 94.7
Not Applicable 2 .8 .8 95.4
Not approached yet 1 .4 .4 95.8
Skill using 1 .4 .4 96.2
There is no proper way and

1 .4 .4 96.6
support from govt. bodies
Thought Friends 1 .4 .4 97.0
Through agent by clearing

1 .4 .4 97.3
documentation work
267
Through Agent by clearing
1 .4 .4 97.7
documentation work
Through Political 1 .4 .4 98.1
Through proper channels 1 .4 .4 98.5
Utilised private agent for

1 .4 .4 98.9
documentation work
We used to spend time to

meet govt authorities & get 1 .4 .4 99.2
regrets
with the help of agent 1 .4 .4 99.6
with the help of family Friend 1 .4 .4 100.0
Total 263 100.0 100.0
Have you heard of the ‘Make in India’ concept?
Frequenc Percent Valid Percent Cumulative

y Percent
Yes 229 87.1 87.1 87.1
No 33 12.5 12.5 99.6

Valid
May be 1 .4 .4 100.0
Total 263 100.0 100.0
Do you believe that the government is trying to extend help to you through the
‘Make in India’ concept?
Frequenc Percent Valid Percent Cumulative

y Percent
Yes 85 32.3 32.3 32.3
Valid No 48 18.3 18.3 50.6
May be 130 49.4 49.4 100.0
268
Total 263 100.0 100.0
MULTIPLE RESPONSE TABLES
Count Column N %
No family support 26 9.9%
Finance/capital 123 46.9%
Government policies/licenses 113 43.1%
Logistics and transportation 9 3.4%

starting enterprise
Market Unavailability 18 6.9%
Competition 73 27.9%
Other 2 0.8%
Total 262 100.0%
Count Column N %
Family has been

102 38.8%
supportive-No problem
Distrust in Businesses 6 2.3%
Q4 If Yes, what kind of Reluctance in moving

family issues did you 122 46.4%
from a Job to business
face when you started
the business? - Family Fear of financial
43 16.3%
has been supportive-No losses/risks
problem
Fear of Inexperience 17 6.5%
Others 1 0.4%
Total 263 100.0%
269
Count Column N %
Difficult loan procedures 157 59.9%
Q7 If yes, what was Bank mortgage 46 17.6%

the kind of problem/s
Non-availability of a
faced by you? - 98 37.4%
capitalist/funder
Difficult loan
procedures Others 11 4.2%
Total 262 100.0%
Count Column N %
Loan from Banks 75 28.5%
Crowd Funding 5 1.9%
Borrowed from Friends 71 27.0%
Q8 How did you Took some-one as financial

overcome the 14 5.3%
partner
problems related
to Relatives’ belongings
46 17.5%
Finances/funds? (Gold/Property)
- Loan from
Banks Family contributions 139 52.9%
Government funds/Subsidy 4 1.5%
Others 6 2.3%
Total 263 100.0%
Count Column N %
Q10 If Yes, How did Outsourced raw materials 18 6.8%
270
you overcome the Purchase of raw materials 18 6.8%
problems related to
Business/Competitio Outsourced marketing /
27 10.3%
n? - Outsourced raw selling
materials
Adjusted to the
187 71.1%
competition
My product/Service has
26 9.9%
aUSP
I have strong mentors for

29 11.0%
guidance
Others 4 1.5%
Total 263 100.0%
Count Column N %
How did you overcome the

problems related to 225 86.5%
Location?
Took land / shed from the

9 3.5%
Q11 How did you government
overcome the
Took help from family 26 10.0%
problems related to
Location?
Started another line of
6 2.3%
business
Others 1 0.4%
Total 260 100.0%
Count Column N %
Q15 Are you aware Training 48 35.8%
271
of the various support Finance 100 74.6%
policies of the
government? Export-Import 67 50.0%
Marketing 74 55.2%
Total 134 100.0%
Count Column N
%
Loan 41 15.6%
Training 6 2.3%
Q17 What kinds of
Easy policies / Tax holiday 23 8.8%
help/assistance have you
received from the
Subsidy on water, electricity 12 4.6%
government? - Loan
No help 201 76.7%
Total 262 100.0%
Count Column N %
No awareness of the
63 24.0%
policies
Did not know of whom to

Q18 What kinds of 44 16.7%
approach
problems related to
government policies were Found the government
122 46.4%
faced when you started policies tedious
the business? No
awareness of the policies No problems-Positive 65 24.7%
Others 2 0.8%
Total 263 100.0%
272
Count Column N %
Still unregistered 110 41.8%
Hit the wall everywhere 37 14.1%
Q19 How did you It was easy 44 16.7%

overcome the problems
relating to Govt. policies Through Agent 51 19.4%
Others 24 9.1%
Total 263 100.0%
Count Column N %
Easy licensing 171 65.0%
Easy renewals 141 53.6%

Q21 What are your
expectations from the Single window clearance 138 52.5%
government in terms
of easy Less number of
150 57.0%
documentations? documentations
Easy licensing
Others 0 0.0%
Total 263 100.0%
EXPLORATORY FACTOR ANALYSIS - Q2. RISKS
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling

.865
Adequacy.
Bartlett's Test of 2896.38

Approx. Chi-Square
Sphericity 7
273
df 171
Sig. .000
Communalities
Initial Extractio
n
Risks you have come across in finding

sources of funds when you started the 1.000 .639
business - Q2.1 : FUNDS
Q2.2 : KNOWLEDGE ABOUT LOANS 1.000 .399
Q2.3 : GOVERNMENT SUBSIDY 1.000 .653
Q2.4 : FAMILY BORROWINGS 1.000 .577
Q2.5 : HIGH INTEREST RATES 1.000 .708
Q2.6 : MONEY LENDERS 1.000 .462
Q2.7 : PROPERTY MORTGAGE BY

1.000 .713
BANKS
Q2.8 : GOLD LOANS 1.000 .742
Q2.9 : MULTIPLE WINDOW POLICY 1.000 .582
Q2.10 : TAXES 1.000 .628
Q2.11 : COMPETITION 1.000 .420
Q2.12 : UNAVAILABILITY OF RAW

1.000 .555
MATERIALS
Q2.13 : UNAVAILABILITY OF SKILLED

1.000 .560
LABOUR
Q2.14 : NO PROPER MACHINERY 1.000 .657
Q2.15 : INACCESSIBLE TO THE CITY 1.000 .718
Q2.16 : AWAY FROM THE MARKET 1.000 .627
274
Q2.17 : UNAVAILABILITY OF WATER 1.000 .774
Q2.18 : UNAVAILABILITY OF
1.000 .736
ELECTRICITY
Q2.19 : ACCOMMODATION OF LABOUR 1.000 .594
Extraction Method: Principal Component Analysis.
Total Variance Explained
Co Initial Eigenvalues Extraction Sums of Rotation Sums of Squared

mp Squared Loadings Loadings
one
nt Total % of Cumulat Total % of Cumulat Total % of Cumul
Varianc ive % Varianc ive % Varianc ative
e e e %
1 6.097 32.092 32.092 6.097 32.092 32.092 5.265 27.712 27.712
2 4.456 23.452 55.544 4.456 23.452 55.544 4.758 25.044 52.756
3 1.191 6.267 61.811 1.191 6.267 61.811 1.720 9.055 61.811
4 .959 5.047 66.858
5 .887 4.669 71.527
6 .700 3.686 75.213
7 .654 3.442 78.655
8 .558 2.938 81.593
9 .507 2.668 84.261
10 .441 2.319 86.581
11 .407 2.142 88.722
12 .380 1.999 90.721
13 .347 1.826 92.548
14 .303 1.597 94.144
275
15 .293 1.541 95.685
16 .262 1.379 97.064
17 .233 1.227 98.291
18 .194 1.023 99.314
19 .130 .686 100.000
Component Matrixa
Component
1 2 3
276
Risks you have come across in finding sources
of funds when you started the business - Q2.1 : .405 .629
FUNDS
Q2.2 : KNOWLEDGE ABOUT LOANS .527
Q2.3 : GOVERNMENT SUBSIDY -.514 .623
Q2.4 : FAMILY BORROWINGS -.462 .600
Q2.5 : HIGH INTEREST RATES .755
Q2.6 : MONEY LENDERS .537
Q2.7 : PROPERTY MORTGAGE BY BANKS .765
Q2.8 : GOLD LOANS -.428 .740
Q2.9 : MULTIPLE WINDOW POLICY .626
Q2.10 : TAXES -.516 .599
Q2.11 : COMPETITION .599
Q2.12 : UNAVAILABILITY OF RAW

.708
MATERIALS
Q2.13 : UNAVAILABILITY OF SKILLED

.742
LABOUR
Q2.14 : NO PROPER MACHINERY .744
Q2.15 : INACCESSIBLE TO THE CITY .744
Q2.16 : AWAY FROM THE MARKET .701
Q2.17 : UNAVAILABILITY OF WATER .717 .430
Q2.18 : UNAVAILABILITY OF ELECTRICITY .730
Q2.19 : ACCOMMODATION OF LABOUR .713
277
a. 3 components extracted.
Rotated Component Matrixa
Component
1 2 3
Q2.1 : FUNDS .757
Q2.2 : KNOWLEDGE ABOUT LOANS .613
Q2.3 : GOVERNMENT SUBSIDY .790
Q2.4 : FAMILY BORROWINGS .750
Q2.5 : HIGH INTEREST RATES .751
Q2.6 : MONEY LENDERS .512
Q2.7 : PROPERTY MORTGAGE BY BANKS .833
Q2.8 : GOLD LOANS .861
Q2.9 : MULTIPLE WINDOW POLICY .756
Q2.10 : TAXES .774
Q2.11 : COMPETITION -.405
Q2.12 : UNAVAILABILITY OF RAW MATERIALS .659
Q2.13 : UNAVAILABILITY OF SKILLED LABOUR .659
Q2.14 : NO PROPER MACHINERY .767
Q2.15 : INACCESSIBLE TO THE CITY .841
Q2.16 : AWAY FROM THE MARKET .788
Q2.17 : UNAVAILABILITY OF WATER .876
Q2.18 : UNAVAILABILITY OF ELECTRICITY .855
278
Q2.19 : ACCOMMODATION OF LABOUR .752
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 4 iterations.
Exploratory Factor Analysis shows three types of RISK factors.
Facor-1: Resources like Raw material, Labour, Water, Electricity eyc.
Factpr-2: Financial Aspects.
Factor-3: Availability of Loans, Capital.
Reliability - RISK Scale
Cronbach's Alpha Cronbach's Alpha Based N of Items

on Standardized Items
.814 .819 19
Summary Item Statistics
Mea Minimum Maximum Range Maximum / Variance N of Items

n Minimum
Inter-Item Correlations .192 -.401 .771 1.172 -1.925 .091 19
Item-Total Statistics
Scale Scale Corrected Squared Cronbach's

Mean if Variance if Item-Total Multiple Alpha if Item
Item Item Correlation Correlation Deleted
Deleted Deleted
Q2.1 : FUNDS 58.28 98.730 .341 .336 .809
279
Q2.2 : KNOWLEDGE
58.65 101.769 .284 .218 .811
ABOUT LOANS
Q2.3 : GOVERNMENT
58.21 97.677 .268 .629 .814
SUBSIDY
Q2.4 : FAMILY
58.04 98.055 .274 .543 .813
BORROWINGS
Q2.5 : HIGH INTEREST

57.75 93.196 .501 .661 .799
RATES
Q2.6 : MONEY
58.49 95.090 .512 .408 .800
LENDERS
Q2.7 : PROPERTY
MORTGAGE BY 58.02 92.877 .464 .738 .801
BANKS
Q2.8 : GOLD LOANS 58.11 93.976 .410 .705 .805
Q2.9 : MULTIPLE
57.70 97.041 .337 .559 .809
WINDOW POLICY
Q2.10 : TAXES 57.84 99.124 .263 .640 .813
Q2.11 : COMPETITION 57.86 103.320 .102 .382 .820
Q2.12 :
UNAVAILABILITY OF 58.79 96.807 .387 .534 .806
RAW MATERIALS
Q2.13 :
SKILLED LABOUR
Q2.14 : NO PROPER
58.96 94.983 .508 .675 .800
MACHINERY
Q2.15 : INACCESSIBLE
58.95 94.173 .536 .661 .798
TO THE CITY
Q2.16 : AWAY FROM

58.92 96.433 .412 .595 .805
THE MARKET
280
Q2.17 :
WATER
Q2.18 :
ELECTRICITY
Q2.19 :
ACCOMMODATION OF 58.94 96.199 .446 .555 .803
LABOUR
SPLIT HALF RELIABILITY
Value .656
Part 1
a
N of Items 10
Cronbach's Alpha Value .640

Part 2
b
N of Items 9
Total N of Items 19
Correlation Between Forms .838
Equal Length .912

Spearman-Brown
Coefficient
Unequal Length .912
Guttman Split-Half Coefficient .909
a. Q2.1 : FUNDS, Q2.3 : GOVERNMENT SUBSIDY, Q2.5 : HIGH INTEREST RATES, Q2.7 :
PROPERTY MORTGAGE BY BANKS, Q2.9 : MULTIPLE WINDOW POLICY, Q2.11 :
COMPETITION, Q2.13 : UNAVAILABILITY OF SKILLED LABOUR, Q2.15 : INACCESSIBLE
TO THE CITY, Q2.17 : UNAVAILABILITY OF WATER, Q2.19 : ACCOMMODATION OF
LABOUR.
281
b. The items are: Q2.2 : KNOWLEDGE ABOUT LOANS, Q2.4 : FAMILY BORROWINGS,
Q2.6 : MONEY LENDERS, Q2.8 : GOLD LOANS, Q2.10 : TAXES, Q2.12 : UNAVAILABILITY
OF RAW MATERIALS, Q2.14 : NO PROPER MACHINERY, Q2.16 : AWAY FROM THE
MARKET, Q2.18 : UNAVAILABILITY OF ELECTRICITY.
Q1 PROBLEMS FACED WHILE STARTING ENTERPRISESBY AGE,

EDUCATION&TYPE OF INDUSTRY
Q1 by Age
Age
25-35 36-45 Above 45 Total
Coun Colum Co Colum Cou Colum Cou Colum

t n N % unt n N % nt n N % nt n N %
No family
11 7.7% 7 11.5% 8 13.3% 26 9.9%
support
Finance
43 30.3% 45 73.8% 35 58.3% 123 46.8%
/capital
Governm
ent
88 62.0% 13 21.3% 12 20.0% 113 43.0%
Q1 policies/li
Problem censes
s faced
Logistics
while
and
starting 1 0.7% 6 9.8% 2 3.3% 9 3.4%
transport
enterpri
ation
se
Market
Unavaila 7 4.9% 7 11.5% 4 6.7% 18 6.8%
bility
Competiti
34 23.9% 22 36.1% 17 28.3% 73 27.8%
on
Other 0 0.0% 1 1.6% 2 3.3% 3 1.1%
282
100.0 100.0 100.0 100.0
Total 142 61 60 263
% % % %
Age
Chi-square 104.924
Q1 Problems faced while starting
df 14
enterprise
Sig. .000*,b,c
Results are based on nonempty rows and columns in each innermost

subtable.
b. More than 20% of cells in this subtable have expected cell counts less than
5.
c. The minimum expected cell count in this subtable is less than one.
Comparisons of Column Proportionsb
Age
25-35 36-45 Above 45
(A) (B) (C)
Problems you faced while

starting your enterprise -
No family support
Q1
Problems Finance/capital A A
faced while
Government
starting BC
policies/licenses
enterprise
Logistics and transportation A
Market Unavailability
283
Competition
Other .a
Results are based on two-sided tests with significance level .05. For each
significant pair, the key of the category with the smaller column proportion
appears under the category with the larger column proportion.
a. This category is not used in comparisons because its column proportion is

equal to zero or one.
b. Tests are adjusted for all pairwise comparisons within a row of each
innermost subtable using the Bonferroni correction.
Q1 by Education
Education
School/Junior Degree Graduate & PG Total

Cpllege
Coun Colum Coun Column Count Column Count Column

t nN% t N% N% N%
Problems
you faced
while
starting
Q1 11 13.8% 5 16.7% 10 6.5% 26 9.9%
your
Problem enterprise
s faced - No family
while support
starting
enterpri Finance
56 70.0% 17 56.7% 50 32.7% 123 46.8%
se /capital
Governme
nt policies 13 16.2% 14 46.7% 86 56.2% 113 43.0%
/licenses
284
Logistics
and
2 2.5% 1 3.3% 6 3.9% 9 3.4%
transportati
on
Market
Unavailabil 7 8.8% 3 10.0% 8 5.2% 18 6.8%
ity
Competitio
26 32.5% 8 26.7% 39 25.5% 73 27.8%
n
Other 2 2.5% 0 0.0% 1 0.7% 3 1.1%
100.0
Total 80 30 100.0% 153 100.0% 263 100.0%
%
Education
Chi-square 75.116
df 14
starting enterprise
Sig. .000*,b,c
b. More than 20% of cells in this subtable have expected cell counts less than 5.
c. The minimum expected cell count in this subtable is less than one
Education
School/Junior Degree Graduate

Cpllege & PG
(A) (B) (C)
285
Problems you faced
while starting your
enterprise - No
family support
Finance/capital C C
Q1 Problems Government
A A
faced while policies/licenses
starting
Logistics and
enterprise
transportation
Market
Unavailability
Competition
Other .a
Q1 by Type of Industry
Type of Industry
Manufacturin Service IT Others Total

g
Count Colu Coun Colu Cou Colu Cou Colu Cou Colu
mn N t mn N nt mn N nt mn N nt mn N
% % % % %
286
Problems
you faced
while
starting
12.9 16.7
your 3 5.8% 12 2 3.1% 9 26 9.9%
% %
enterprise
- No
family
support
Finance/ 61.5 59.1 64.8 46.8

32 55 1 1.6% 35 123
capital % % % %
Q1
Governm
Proble
ent 30.8 23.7 92.2 29.6 43.0
ms 16 22 59 16 113
policies/ % % % % %
faced
while licenses
starting
enterpri Logistics
se and
3 5.8% 5 5.4% 0 0.0% 1 1.9% 9 3.4%
transporta
tion
Market
11.1
Unavailab 5 9.6% 7 7.5% 0 0.0% 6 18 6.8%
%
ility
Competiti 36.5 28.0 48.1 27.8

19 26 2 3.1% 26 73
on % % % %
Other 2 3.8% 0 0.0% 0 0.0% 1 1.9% 3 1.1%
100.0 100.0 100.0 100.0 100.0

Total 52 93 64 54 263
% % % % %
Type of Industry
287
Chi-square 211.929
df 21
starting enterprise
Sig. .000*,b,c

subtable.
b. More than 20% of cells in this subtable have expected cell counts less
than 5.
Type of Industry
Manufa Service IT Others

cturing
(A) (B) (C) (D)
Problems you
faced while
starting your
enterprise - No
family support
Q1 Problems Finance/capital C C C
faced while
starting Government
ABD
enterprise policies/licenses
Logistics and
.a
transportation
Market
.a
Unavailability
288
Competition C C C
Other .a .a
Results are based on two-sided tests with significance level .05. For each significant
pair, the key of the category with the smaller column proportion appears under the
category with the larger column proportion.
a. This category is not used in comparisons because its column proportion is equal to
zero or one.
b. Tests are adjusted for all pairwise comparisons within a row of each innermost
subtable using the Bonferroni correction.
Q7 WHAT WAS THE KIND OF PROBLEM/S FACED BY YOU?
KINDS OF RISKS IN FUNDS BY EDUCATION
Education

College PG
Coun Colum Coun Colum Coun Colum Coun Colum

t nN% t nN% t nN% t nN%
Difficult
loan
34 42.5% 19 63.3% 104 68.0% 157 59.7%
procedure
Q7 If s
yes,
Bank
what was 12 15.0% 8 26.7% 26 17.0% 46 17.5%
mortgage
the kind
of
Non-
problem/
availability
s faced
of a 39 48.8% 12 40.0% 47 30.7% 98 37.3%
by you?
capitalist/f
under
Others 5 6.2% 1 3.3% 6 3.9% 12 4.6%
289
100.0 100.0 100.0 100.0
Total 80 30 153 263
% % % %
Education
Q7 If yes, what was the Chi-square 24.661

kind of problem/s faced
df 8
by you? - Difficult loan
procedures Sig. .002*
Results are based on nonempty rows and columns

in each innermost subtable.
*. The Chi-square statistic is significant at the .05

level.
Comparisons of Column Proportionsa
Education
School/Junio Degree Graduate &

r College PG
(A) (B) (C)
If yes, what was the

kind of problem/s
faced by you? - A
Q7 If yes, what Difficult loan
was the kind of procedures
problem/s faced
Bank mortgage
by you? - Difficult
loan procedures
Non-availability of a
C
capitalist/funder
Others
290
a. Tests are adjusted for all pairwise comparisons within a row of each innermost
KINDS OF RISKS IN FUNDS BY AGE
Age
25-35 36-45 Above 45 Total
Coun Colum Cou Colum Cou Colum Coun Colum

t n N % nt n N % nt n N % t nN%
Difficult
loan
102 71.8% 28 45.9% 27 45.0% 157 59.7%
procedur
Q7 If es
yes,
what Bank
24 16.9% 9 14.8% 13 21.7% 46 17.5%
was mortgage
the
Non-
kind of
availabilit
proble
y of a 41 28.9% 33 54.1% 24 40.0% 98 37.3%
m/s
capitalist/
faced
funder
by
you? Others 4 2.8% 4 6.6% 4 6.7% 12 4.6%
100.0 100.0 100.0

Total 142 61 60 263 100.0%
% % %
Age
Chi-square 34.002
Q7 If yes, what was the kind of
problem/s faced by you? - df 8
Difficult loan procedures
Sig. .000*

subtable.
291
Comparisons of Column Proportionsa
Age
25-35 36-45 Above 45
(A) (B) (C)
If yes, what was the kind

of problem/s faced by
BC
you? - Difficult loan
Q7 If yes, what was
procedures
the kind of problem/s
faced by you? - Bank mortgage
Difficult loan
procedures Non-availability of a
A
capitalist/funder
Others
a. Tests are adjusted for all pairwise comparisons within a row of each innermost
KINDS OF RISKS IN FUNDS BY THE TYPE OF INDUSTRY
Type of Industry
Manufacturi Service IT Others Total

ng
Cou Colu Coun Colu Coun Colu Coun Colum Cou Column N
nt mn N t mn N t mn N t n N % nt %
% % %
292
Difficult
loan 55.8 45.2 98.4
29 42 63 23 42.6% 157 59.7%
procedur % % %
es
Bank 25.0 21.5

Q7 If 13 20 2 3.1% 11 20.4% 46 17.5%
mortgage % %
yes,
what Non-
was the availabilit
46.2 46.2
kind of y of a 24 43 3 4.7% 28 51.9% 98 37.3%
% %
problem capitalist/
/s faced funder
by you?
Others 3 5.8% 5 5.4% 0 0.0% 4 7.4% 12 4.6%
100.0 100.0 100.0 100.0

Total 52 93 64 54 263 100.0%
% % % %
Type of Industry
Chi-square 110.830
Q7 If yes, what was the kind of problem/s faced by you?
df 12
- Difficult loan procedures
Sig. .000*,b
Results are based on nonempty rows and columns in each innermost sub table.
b. More than 20% of cells in this subtable have expected cell counts less than 5.
Type of Industry
Manufacturing Service IT Others
293
(A) (B) (C) (D)
If yes, what was the

kind of problem/s
faced by you? - ABD
Q7 If yes, what
Difficult loan
was the kind of
procedures
problem/s
faced by you? - Bank mortgage C C C
Difficult loan
procedures Non-availability of a
C C C
capitalist/funder
Others .a
Results are based on two-sided tests with significance level .05. For each significant pair,
the key of the category with the smaller column proportion appears under the category
with the larger column proportion.
zero or one.
b. Tests are adjusted for all pairwise comparisons within a row of each innermost subtable
using the Bonferroni correction.
STRATEGIES/WAYS ADOPTED BY ENTREPRENEURS TO MITIGATE

THE FACTORS OF FINANCIAL RISKS
HOW DID YOU OVERCOME THE PROBLEMS RELATED TO FINANCES/FUNDS/
BY WAY OF EDUCATION
Education
School/Junio Degree Graduate & Total

r College PG
Cou Colum Coun Colu Cou Colum Coun Colu

nt nN% t mn N nt n N % t mn N
% %
294
Loan from 40.0 28.5
32 40.0% 12 31 20.3% 75
Banks % %
Crowd Funding 2 2.5% 1 3.3% 2 1.3% 5 1.9%
Borrowed from 33.3 27.0

29 36.2% 10 32 20.9% 71
Friends % %
Q8 How
Took some-
did you
one as 10.0
overcom 9 11.2% 3 2 1.3% 14 5.3%
financial %
e the
partner
problem
s related Relatives’
to 13.3 17.5
belongings 17 21.2% 4 25 16.3% 46
Finance % %
(Gold/Property)
s/funds?
Family 50.0 52.9
25 31.2% 15 99 64.7% 139
contributions % %
Government
1 1.2% 2 6.7% 1 0.7% 4 1.5%
funds/Subsidy
Others 3 3.8% 0 0.0% 3 2.0% 6 2.3%
100.0 100.0 100.0 100.0

Total 80 30 153 263
% % % %
Education
Chi-
64.382
Q8 How did you overcome the problems square
related to Finances/funds? - Loan from
df 16
Banks
Sig. .000*,b,c
295
subtable.
b. More than 20% of cells in this subtable have expected cell counts less
than 5
Comparisons of Column Proportions
Education
School/Junio Degree Graduate &

r College PG
(A) (B) (C)
How did you

overcome the
problems related to C
Finances/funds? -
Loan from Banks
Q8 How
Crowd Funding
did you
overcome
Borrowed from
the C
Friends
problems
related to Took some-one as
C C
Finances/ financial partner
funds? -
Loan Relatives’ belongings
from (Gold/Property)
Banks
Family contributions A
Government
funds/Subsidy
Others .a
296
a. This category is not used in comparisons because its column proportion

is equal to zero or one.
b. Tests are adjusted for all pairwise comparisons within a row of each
innermost subtable using the Bonferroni correction.

BY WAY OF AGE
Age
25-35 36-45 Above 45 Total

Loan from
23 16.2% 28 45.9% 24 40.0% 75 28.5%
Banks
Crowd
3 2.1% 0 0.0% 2 3.3% 5 1.9%
Funding
Borrowed
from 27 19.0% 21 34.4% 23 38.3% 71 27.0%
Q8 How
Friends
did you
overcome
Took
the
some-one
problems 5 3.5% 7 11.5% 2 3.3% 14 5.3%
as financial
related to
partner
Finances/f
unds? Relatives’
belongings
21 14.8% 14 23.0% 11 18.3% 46 17.5%
(Gold/Prop
erty)
Family
contribution 104 73.2% 17 27.9% 18 30.0% 139 52.9%
s
297
Governme
nt
0 0.0% 3 4.9% 1 1.7% 4 1.5%
funds/Subs
idy
Others 2 1.4% 1 1.6% 3 5.0% 6 2.3%
100.0 100.0 100.0 100.0

Total 142 61 60 263
% % % %
Age
Q8 How did you overcome Chi-square 104.590

the problems related to
df 16
Finances/funds? - Loan
from Banks Sig. .000*,b,c
Results are based on nonempty rows and columns in each

innermost subtable.
b. More than 20% of cells in this subtable have expected cell

counts less than 5.
c. The minimum expected cell count in this subtable is less than

one.
Age
25-35 36-45 Above 45
(A) (B) (C)
Q8 How did you overcome

How the problems related to
A A
did Finances/funds? - Loan
you from Banks
298
overc Crowd Funding .a
ome
the Borrowed from Friends A
proble
Took some-one as
ms
financial partner
relate
d to Relatives’ belongings
Finan (Gold/Property)
ces/fu
nds? - Family contributions BC
Loan
from Government
.a
Banks funds/Subsidy
Others
Results are based on two-sided tests with significance level .05. For
each significant pair, the key of the category with the smaller column
proportion appears under the category with the larger column
proportion.
a. This category is not used in comparisons because its column

proportion is equal to zero or one.
b. Tests are adjusted for all pairwise comparisons within a row of

each innermost subtable using the Bonferroni correction.

BY WAY OF TYPE OF THE INDUSTRY
Type of Industry
Manufactur Service IT Others Total

ing
Co Colu Cou Colu Cou Colu Cou Colu Cou Colu

unt mn N nt mn N nt mn N nt mn N nt mn N
% % % % %
299
Loan from 36.5 40.9 31.5 28.5
19 38 1 1.6% 17 75
Banks % % % %
Crowd
2 3.8% 3 3.2% 0 0.0% 0 0.0% 5 1.9%
Funding
Borrowed 13.5 35.5 51.9 27.0

7 33 3 4.7% 28 71
from Friends % % % %
Took some-
one as 11.5
Q8 How 6 4 4.3% 0 0.0% 4 7.4% 14 5.3%
financial %
did you partner
overcome
the Relatives’
problems belongings 15.4 21.5 29.6 17.5
8 20 2 3.1% 16 46
related to (Gold/Propert % % % %
Finances/f y)
unds?
Family 48.1 30.1 95.3 46.3 52.9
25 28 61 25 139
contributions % % % % %
Government
funds/Subsid 0 0.0% 2 2.2% 0 0.0% 2 3.7% 4 1.5%
y
Others 1 1.9% 3 3.2% 0 0.0% 2 3.7% 6 2.3%
100.0 100.0 100.0 100.0 100.0

Total 52 93 64 54 263
% % % % %
Type of
Industry
Q8 How did you Chi-square 174.441
300
overcome the problems df 24
related to
Finances/funds? - Loan
Sig. .000*,b,c
from Banks
Results are based on nonempty rows and columns in

each innermost subtable.
b. More than 20% of cells in this subtable have

expected cell counts less than 5.
c. The minimum expected cell count in this subtable is

less than one
Type of Industry
Manufactur Service IT Others

ing
(A) (B) (C) (D)
How did you

overcome the
problems related
C C C
to
Finances/funds? -
Q8 How did you Loan from Banks
overcome the
problems related Crowd Funding .a .a
to
Borrowed from
Finances/funds? AC AC
Friends
- Loan from
Banks Took some-one as
.a
financial partner
Relatives’
belongings C C
(Gold/Property)
301
Family
ABD
contributions
Government
.a .a
funds/Subsidy
Others .a
Results are based on two-sided tests with significance level .05. For each significant pair,
the key of the category with the smaller column proportion appears under the category with
the larger column proportion.
a. This category is not used in comparisons because its column proportion is equal to zero
or one.
STRATEGIES ADOPPTED BY INDIVIDUALS TO OVERCOME RISKS IN

BUSINESS OR COMPETITION
Education

College PG

Q10 If Yes,
How did Outsourced
12 15.0% 1 3.3% 5 3.3% 18 6.8%
you raw materials
overcome
the
problems Purchase of
related to 10 12.5% 4 13.3% 4 2.6% 18 6.8%
raw materials
Business/
Competitio Outsourced
n? marketing / 17 21.2% 2 6.7% 8 5.2% 27 10.3%
selling
302
Adjusted to
the 50 62.5% 22 73.3% 115 75.2% 187 71.1%
competition
My
product/Servi 8 10.0% 3 10.0% 15 9.8% 26 9.9%
ce has aUSP
I have strong
mentors for 9 11.2% 4 13.3% 16 10.5% 29 11.0%
guidance
Others 2 2.5% 0 0.0% 2 1.3% 4 1.5%
100.0 100.0 100.0 100.0

Total 80 30 153 263
% % % %
Education
Q10 If Yes, How did you Chi-square 42.821

related to df 14
Business/Competition? -
Outsourced raw Sig. .000*,b,c
materials


level.

expected cell counts less than 5
c. The minimum expected cell count in this subtable

is less than one.
303
Education
School/Jun Degree Graduate &

ior College PG
(A) (B) (C)
If Yes, How did you

overcome the
problems related to
C
Business/Competition?
- Outsourced raw
materials
Q10 If Yes, How
Purchase of raw
did you C C
materials
overcome the
problems related Outsourced marketing
to C
/ selling
Business/Compe
tition? - Adjusted to the
Outsourced raw competition
materials
My product/Service
has aUSP
I have strong mentors

for guidance
Others .a
significant pair, the key of the category with the smaller column proportion appears
under the category with the larger column proportion.
a. This category is not used in comparisons because its column proportion is equal
to zero or one.
304
Age
25-35 36-45 Above 45 Total
Count Colum Coun Colum Coun Colum Coun Colum

nN% t nN% t nN% t nN%
Outsourced
4 2.8% 10 16.4% 4 6.7% 18 6.8%
raw materials
Purchase of
raw 6 4.2% 7 11.5% 5 8.3% 18 6.8%
materials
Outsourced
marketing / 11 7.7% 11 18.0% 5 8.3% 27 10.3%
Q10 If Yes,
selling
How did you
overcome the Adjusted to
problems the 115 81.0% 32 52.5% 40 66.7% 187 71.1%
related to competition
Business/Com
petition? My
product/Serv
8 5.6% 6 9.8% 12 20.0% 26 9.9%
ice has
aUSP
I have
strong
11 7.7% 12 19.7% 6 10.0% 29 11.0%
mentors for
guidance
Others 3 2.1% 0 0.0% 1 1.7% 4 1.5%
100.0
Total 142 100.0% 61 100.0% 60 100.0% 263
%
305
Age

related to df 14
materials


level.

c. The minimum expected cell count in this

subtable is less than one.
Age
25-35 36-45 Above 45
(A) (B) (C)
If Yes, How did you

Q10 If Yes, How did you
related to
overcome the problems A
related to
Outsourced raw
materials
Outsourced raw
materials
Purchase of raw
materials
306
Outsourced marketing /
selling
Adjusted to the
B
competition
A
aUSP
I have strong mentors for

A
guidance
Others .a
zero or one.
Type of Industry
Manufactur Service IT Others Total

ing
Cou Colu Cou Colu Cou Colu Cou Colu Cou Colu
nt mn nt mn nt mn nt mn nt mn
N% N% N% N% N%
Q10 If Outsourced 13.5

7 7 7.5% 1 1.6% 3 5.6% 18 6.8%
Yes, raw materials %
How did
you Purchase of 11.5 13.0
6 4 4.3% 1 1.6% 7 18 6.8%
overcom raw materials % %
e the
Outsourced
problems 11.5 10.8 18.5 10.3
marketing / 6 10 1 1.6% 10 27
related to % % % %
selling
Business
307
/Competi Adjusted to
51.9 72.0 93.8 61.1 71.1
tion? the 27 67 60 33 187
% % % % %
competition
My
17.3 16.7
product/Servi 9 8 8.6% 0 0.0% 9 26 9.9%
% %
ce has aUSP
I have strong
15.4 15.1 11.0
mentors for 8 14 2 3.1% 5 9.3% 29
% % %
guidance
Others 1 1.9% 2 2.2% 0 0.0% 1 1.9% 4 1.5%
100. 100. 100. 100. 100.

Total 52 93 64 54 263
0% 0% 0% 0% 0%
Type of
Industry

related to df 21
materials
Results are based on nonempty rows and columns in

each innermost subtable.

c. The minimum expected cell count in this subtable is

less than one.
Type of Industry
308
Manufact Service IT Others
uring
(A) (B) (C) (D)
If Yes, How did you

related to
Outsourced raw
materials
Q10 If Yes,
Purchase of raw
How did you
materials
overcome the
problems Outsourced marketing /
related to C
selling
Business/Co
mpetition? - Adjusted to the
ABD
Outsourced competition
raw materials
.a
aUSP
I have strong mentors

for guidance
Others .a
Results are based on two-sided tests with significance level .05. For each significant pair, the
key of the category with the smaller column proportion appears under the category with the
larger column proportion.
a. This category is not used in comparisons because its column proportion is equal to zero or
one.
309
************************* In the Holy and Matchless name – JESUS CHRIST ********************
YES & AMEN
310

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A RESEARCH STUDY ON THE MANAGEMENT OF

RISK IN THE GROWTH OF MICRO AND SMALL

Thesis Submitted to the D. Y. Patil University,

Enrollment No: DYP-PHD146100002

D.Y. PATIL UNIVERSITY,

I hereby declare that the thesis entitled “A RESEARCH STUDY ON

THE MANAGEMENT OF RISK IN THE GROWTH OF MICRO AND

SMALL ENTERPRISE IN INDIA, (with special reference to Mumbai

and Pune).” submitted for the Award of Doctor of Philosophy in Business

Management at the D.Y. Patil University, Navi Mumbai - School of

The material borrowed from other sources and incorporated in the

dissertation has been duly acknowledged.

I understand that I could be held responsible and accountable for

Plagiarism if any detected later on.

The research paper published based on the research conducted in the

Place: Signature of the Candidate

Date:Navi Mumbai Mrs. MARIA SONIA JUSTIN RAJ

Enrollment No: DYP-PHD146100002

This is to certify that the thesis entitled “A Research Study on the

Management of Risk in the growth of Micro and Small Enterprise in

India, (with special reference to Mumbai and Pune).” submitted by

the Doctor of Philosophy in Business Management at the D.Y.Patil

University School of Management in partial fulfilment of the

requirements for the award of the Degree of Doctor of Philosophy in

award previously of any degree, diploma, associate ship, fellowship or any

other similar title of any University or Institution.

Signature of the Signature of the Guide

I am greatly indebted to the D.Y. Patil University School of Management

Date: Signature of the student

Preliminary Cover Page i.

Index of the report vi.

List of Tables vii.

List of Figures viii.

List of Abbreviations ix.

Chapter 2 Literature Review 14

Objective, Hypothesis, Research

History of Industrial Revolution in

MSME’s After Globalization-

Role Of Government Organizations For

Chapter 8 TAX structure in India 84

India v/s Tax Free Heaven Countries for

Chapter 10 MAKE IN INDIA 115

Schemes Of The Government For The

Chapter 12 Risk Factors faced Entrepreneurs 175

Chapter 13 Strategies Adopted By Individuals 185

Chapter 14 Data Analysis 196

Chapter 15 Findings, Conclusion and Suggestions 222

Chapter 16 Recommendations 234

Chapter 17 Future Scope of the Study 237

Annexe I Bibliography 239

Annexe II Webliography 243

Annexe III Questionnaire 246

Annexe IV Statistical tables of SPSS 254

Table No. Particulars Page No.

Table 12.1 Reimbursements-Credit Rating Scheme 152

Assistance against the security -Scheme of Bill

Categories of beneficiaries under PMEGP

Sample size structure as per Education of the

Sample size structure as per Age of the

Sample size structure as per Industry of the

Table 15.04 Reliability test 198

Table 15.05 Percentage of Respondents : Age 199

Percentage of Respondents : Education