Ease of doing business has been at the forefront of public discourse but often the reforms are focussed on tech and internet start-ups in urban areas. What they often underplay are the reforms required for the millions of small-size enterprises in the country.
As per National Sample Survey Office data, 630.52 lakh enterprises, which form about 99 per cent of MSMEs, are in the micro sector.
K.P. Krishnan, Secretary, Ministry of Skill Development and Entrepreneurship, says, "Actions taken in ease of doing business serve what I call the Nandan Nilekani world of entrepreneurs. But there are also mass entrepreneurs that require a lot more to be done at local and ground level. We need to serve both of these in parallel because there is a lot of stuff that needs to be done for the biotech unicorn type entrepreneurs. And all of this will impact all sorts of entrepreneurs but if you're talking about mass entrepreneurs, there is a whole host of bigger concerns that require equal focus."
Dun & Bradstreet India's research on Micro, Small and Medium Enterprises (MSMEs) in the report "The Missing Middle", shows that while it seems natural for entrepreneurs to grow their business over the course of time, in India micro enterprises remain at that level and are not able to transition into small enterprises.
Rajiv Kumar, Vice Chairman, NITI Aayog, says that to enable the entrepreneurship ecosystem at the ground level, structural issues in the government need to be reformed. There is a need to empower the mayor and the municipal corporations and hold them accountable so they empower the local entrepreneurs, he adds. Some cities such as Indore and Pune have implemented it well, he says. Usually, "the local governments come in the way of local entrepreneurs rather than helping them."
The second thing that needs to be done, according to Kumar, is "to create trust between the government and the local municipal authority, and the entrepreneur. At the moment, the trust that government and entrepreneur can work together for a common cause is not there."
There is also a need to leverage technology to improve access to credit, especially for small business owners. A good instance of that is Jack Ma's MYbank in China that is revolutionising credit for small business owners. They leverage AI and data science to offer loans in less than three minutes without any human intervention. On the other hand, in India, the situation is that banks ask for double the collateral.
Vidit Aatrey, founder of social commerce platform Meesho, says one of the common concerns that women sellers have on their platform is lack of clarity on new laws. Last year, when it was mandated that people require a GST number to sell online, a lot of women who wanted to start businesses refrained from doing so because they felt that if they have to get a GST, their husband wouldn't allow it. There were also doubts such as whether an offline boutique that has sales less than Rs 40 lakh per year needs a GST, adds Aatrey. A lot of these details get missed out, and that discourages people from starting up, he says.
Anjuly Duggal, former Secretary, Department of Financial Services, Ministry of Finance, says, "There is a need to create systems that make our presence irrelevant to most people who are the users of the process. And I think that is a good objective to work with." She says there is a need to de-risk enterprises, offer credit guarantee at portfolio level, make small loans accessible, make insurance products and credit guarantee schemes available.
The speakers were speaking at a panel discussion organised by Global Alliance for Mass Entrepreneurship (GAME).