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History of Entrepreneurship in India

The history of entrepreneurship is important worldwide, even in India. In the pre


colonial times the Indian trade and business was at its peak. Indians were experts in
smelting of metals such as brass and tin. Kanishka Empire in the 1st century started
nurturing Indian entrepreneurs and traders. Following that period, in around 1600
A.D., India established its trade relationship with Roman Empire. Gold was pouring
from all sides. Then came the Portuguese and the English. They captured the Indian
sea waters and slowly entered the Indian business. They forced the entrepreneurs
to become traders and they themselves took the role of entrepreneurs. This was the
main reason for the downfall of Indian business in the colonial times which had its
impact in the post-colonial times too. The colonial era make the Indian ideas and
principles rigid. A region of historic trade routes and vast empires, the Indian
subcontinent was identified with its commercial and cultural wealth for much of its
long history. Gradually annexed by the British East India Company from the early
eighteenth century and colonized by the United Kingdom from the mid-nineteenth
century, India became an independent nation in 1947 after a struggle for
independence that was marked by widespread nonviolent resistance. It has the
world's twelfth largest economy at market exchange rates and the fourth largest in
purchasing power. Economic reforms since 1991 have transformed it into one of the
fastest growing economies however, it still suffers from high levels of poverty,
illiteracy, and malnutrition. For an entire generation from the 1950s until the 1980s,
India followed socialist-inspired policies. The economy was shackled by extensive
regulation, protectionism, and public ownership, leading to pervasive corruption and
slowgrowth. Since 1991, the nation has moved towards a market-based system.
Entrepreneurship is the result of three dimensions working together conducive
framework conditions, well-designed government programmes and supportive
cultural attitudes. Across these three perspectives of entrepreneurship, two major
conclusions are apparent. Firstly, the economic, psychological and sociological
academic fields accept that entrepreneurship is a process. Secondly, despite the
separate fields of analysis, entrepreneurship is clearly more than just an economic
function.

Future of Indian Entrepreneurship in Light of Current Worries

India is celebrating 66 years of independence with a flurry of negative coverage in


the international media. The Economist leads with Made outside India (As growth
slows and reforms falter, economic activity is shifting out of India) Fareed Zakarias
GPS blog on CNN has an interview with Ravi Venkatesan, a former Chairman of
Microsoft India: India remains a ferociously tough place to do business, ranked

#132 out of 200 countries in terms of ease of doing business by the World Bank. Its
hard to see a scenario when India can sustain its progress without addressing these
issues. Embarrassing.The rupee is at a new low. The growth rate has plummeted.
The World Banks Chief Economist Dr. Kaushik Basu cautions that it might drop
further. Corruption is at its worst. The political future of India is precarious.
Infrastructure remains dreadful. Foreign investment is fleeing. The Gangotri glacier
is melting without any attention from those responsible for Indias water policy. The
government seems blissfully unaware of one of the greatest dangers facing the
country: a monumental water crisis. Against that dismal backdrop, I want to discuss
the future of Indian entrepreneurship. It is an area in which the country has made
some distinct progress. I graduated from college in 1993. At the time, young people
seeking a promising future in India didnt even think about entrepreneurship as an
option. It took at least another decade, if not a good 15 years for entrepreneurship
to become a significant consideration in the consciousness of the Indian youth.
Today, 20 years later, I see that college campuses in India are buzzing with talks of
entrepreneurship, business plan competitions, and many even have incubators and
e-cells of their own. On the Internet, aspiring and practicing entrepreneurs are
actively seeking knowledge and networks to execute on their aspirations. This is a
gigantic socio-cultural change that bodes well for the country. Fueled by the IT
revolution during the same 20 years, India has millions of IT and ITES workers who
have at least some knowledge of technology. Millions of others are savvy users of
technology. At least 100,000 of these people are either aspiring or practicing
entrepreneurs within the IT sector alone. Other sectors like retail, entertainment,
healthcare, energy, and education, are also seeing active entrepreneurship. The
media is paying attention to entrepreneurs, celebrating their success, making
heroes out of them. Local role models and success stories are emerging. Of course,
we need to do more of this, but the situation is dramatically better than what it used
to be even five years ago. This is no small achievement. Socio-cultural change is the
hardest. India has cracked the formula to set this change in motion. So, what does
the future hold for Indian entrepreneurship? To answer that question, let me point
out a few mistakes that have been made. In a nutshell, the Indian eco-system tried
to run before it learnt how to walk. Instead of trying to learn how to build
businesses, Indian entrepreneurs got sidetracked by Western medias obsession
with financing, and started chasing venture capital. VCs, in their turn, raised sizable
funds and tried to invest in Indian startups without taking into consideration ground
realities. The Western model of venture capital requires very large market
opportunities and very high growth rates. While at first blush the Indian market did
appear very large, the reality is that the market is a slow-growth one. Internet
penetration in India has been low. E-Commerce in India is a small industry still,
relative to the US, Europe, or China. Businesses buy technology cautiously, drawing
out sales cycles that deeply frustrate entrepreneurs trying to make ends meet. To
build companies under these conditions requires patience, passion, conviction,
blood, sweat, and tear. Overnight, speculative success, as we often see in Silicon
Valley is seldom seen in India. This is also due to the fact that the investors are

more conservative and less speculative to begin with. I have a hard time seeing an
investor in India invest millions of dollars without a monetization model figured out.
I also do not believe this is a bad thing at all Speculative bubbles create instability
and chaos that I am not a fan of.
Today, many VCs in India are considering returning capital to their investors. I
expect that the industry will shrink substantially and get right-sized. There are not
enough venture fundable deals in India at the moment, and until some macro-issues
get sorted out, there wont be. However, there are now thousands of entrepreneurs
in the country, and many more will get bitten by the entrepreneurial bug in due
course. And from what I know of the entrepreneurial psyche, it is a path, that, once
you set on it, is hard to turn back. Failures, set-backs, disappointments
notwithstanding, entrepreneurs tend to continue to want to build on their dreams.

Indias greatest achievement in the last decade has been the consistent unleashing
of the entrepreneurial movement. The risk tolerance of the Indian population has
increased. No longer is it the holy grail to lust after fat salaries at multi-nationals.
The dreams of building something of their own seduce people in India, even if that
implies a built-in risk of failure. This socio-cultural change, I believe, is irreversible.
And it is in the hands of these entrepreneurs that Indias future squarely rests. I
believe, the depth of knowledge of how to build a business from scratch with
customers, revenues, and profits is rapidly increasing in India. Give it 10 years.
There will be hundreds of thousands of entrepreneurs perhaps not heavily venturefunded ones, but nonetheless, entrepreneurs with sustainable businesses. Say, 1%
of these will attract venture capital. But many more will build value, create jobs, and
sustain hope. And in the absence of abundantly flowing startup capital, it is likely
that these businesses will be built on conservative principles, disciplined structures,
making them robust at the face of economic bubbles and busts. Western Capitalism
is dominated by speculative capital. Indian Capitalism, quite possible, will be
dominated by entrepreneurs. Sramana Mitra is a Silicon Valley entrepreneur and
strategy consultant, and founder of One Million by One Million (1M/1M), a global
virtual incubator that aims to help one million entrepreneurs globally to reach $1
million in revenue and beyond.