New Delhi: In January, India will host members of the Group of Twenty (G-20) nations at an interim meeting of the Young Entrepreneurs Alliance. The two-year-old initiative, aimed at discussing issues concerning start-ups, helps make policy recommendations to develop a conducive environment for entrepreneurship.
India will be represented at the summit by the Young Indians forum, initiated by the Confederation of Indian Industry (CII). Rahul Mirchandani, an executive director at Aries Agro Ltd and chairman of international relations and partnerships at CII, speaks in an interview on what it will take to boost entrepreneurship. Edited excerpts:
In today’s world, how important is it to promote entrepreneurship?
We believe that it is the small and medium businesses that will get people to create jobs. The reason why this is so important is that in this kind of environment, small businesses thrive better.
Vital role: Mirchandani says India is a crucial selling point for the G-20 summit, showing how growth is possible even at a time of uncertainty. Photo: Ramesh Pathania/Mint
It’s been often said that there is no recession in rural India because people there have not heard about it. Similarly, the small businesses are the ones that survive no matter what the environment is. Larger businesses have a connect with other ecosystems and, therefore, get affected.
India has featured very prominently in talking to G-20 countries on how price performance equations have been changed. We have many entrepreneurs who have put together a product which is (at a) much lower price point compared globally, but has world-class quality.
What are the India-specific challenges when it comes to entrepreneurship?
There are a couple of areas where India definitely needs support. One is having an environment that promotes entrepreneurship. We are a country of a billion entrepreneurs. But slowly the new generation is looking at getting jobs which are less risky. On the other hand, we have a society where most people are entrepreneurial in the hinterland. So we are living in this dichotomy. We need to have a culture development around entrepreneurship right from the school level. I think that’s where it all starts. The first challenge is that how can we as a government, as a set of entrepreneurs, promote innovation? So it has to start at the education level. Second is access to finance—a lot of it?is available in terms of schemes from the government. However, entrepreneurs don’t know that such schemes are there, so there is an information gap.
How is the government responsible for this gap?
The government has put the information on the table, but the banks don’t promote it. For instance, you have a bank which has funding, which it is supposed to give under the credit guarantee scheme, but they don’t promote it because it’s risk capital. In fact, if you look at Mumbai, the risk rates for small and medium enterprises are much lower than larger businesses. The kind of defaults that take place on loans in Dharavi are much lower than at Nariman Point. Similarly in the rural areas. There is a lot of societal pressure to ensure that you don’t default on your loans. What needs to be done is not necessarily subsidies. One of the things which we have been proposing is that like you have agricultural funding—a minimum ratio of your bank’s funding that goes to agriculture—can you not have a section of that earmarked for start-ups? Can the funding to start-ups be priority sector lending for banks and be provided at a rate which is a few percentage points lower than the usual lending rates?
What is the agenda for the India summit?
The young entrepreneurs summit happens parallelly to the G-20 meeting so that we have access to world leaders. So we go with a set of policy recommendations and not just problems. Also, India has not bid for hosting a G-20 summit, which means that we can’t host the young entrepreneurs summit as well. So the best thing was to get an interim meeting here, which is also a very-high-level interface. The G-20 Young Entrepreneurs Alliance was started two years ago in Toronto. So this group of 20 countries decided to have a common voice, decided that let’s talk to our companies and figure out how can we create a good entrepreneurship ecosystem.
G-20 for India is extremely vital because G-20 is a group of the world’s most powerful countries. We are looked at in this group as a country where growth is a reality whereas most other nations in the group are struggling. So India has become a very crucial selling point for this summit, showing how growth is possible even in this era of uncertainty. As entrepreneurs, whether we are in the UK, Australia or India, we are facing the same set of issues—be it regulation or taxation, access to finance or having an educational foundation. It’s the same issues and we all want the same solutions.