India has strongest entrepreneurial culture among G20 nations: EY
Mumbai, 2 November, 2011 — India has an extremely strong entrepreneurial culture, perhaps the strongest out of any G20 nation, according to Entrepreneurs speak out: a call for action to G20 governments – the Nice Cote d’Azur 2011 Entrepreneurship Barometer, released by EY at the G20 Young Entrepreneurs Summit (G20 YES) held in France this month. 98% of Indian entrepreneurs who were surveyed for this report agreed with the statement that Indian culture encourages entrepreneurship, as compared to 80% for the rapid growth markets and 72% for the mature economies.
The report is based on a survey of 1000 entrepreneurs across the G20 nations, and outlines each country’s areas of potential improvement, recommending actions for governments and entrepreneurs. It notes that innovation and promotion of success stories can enhance the culture of entrepreneurship, adding that in India, the influence of the family, the direct environment and the media have had a strong impact in improving the perception of entrepreneurship in the last five years.
Says Farokh Balsara, Partner and National Leader – EY Entrepreneur Of The Year Program , “We have always known India to be a hotbed of entrepreneurship, despite the hurdles in its business and regulatory environment. Indian entrepreneurs have made their mark both in India as also at a global level. This survey further substantiates the country’s premier position as an emerging hub for entrepreneurial activity and innovation.”
The EY Entrepreneurship Barometer highlights five key pillars to build a successful enterprise environment - entrepreneurship culture; education and training; access to funding; regulation and taxation; coordinated support.
India’s potential, says the report, is still to be fully grasped, with a third of the Indian respondents rating the country as the most favourable business environment out of the G20 countries. According to the survey, there has been a 5.5% decline in costs of starting up a business in India since 2005, while the time to start a business in India has reduced from 56.5 days in 2005 to 29 days in 2010. 71% of Indian respondents recommended a further simplification of procedures to start a business.
The report adds that the implementation of the twin tax policy initiatives – the Direct Taxes Code and the Goods and Services Tax – would be significant in removing the current complexities and bringing simplicity, efficiency and greater certainty in the tax laws for businesses in general, and small and medium enterprises (SMEs) in particular. These reforms would rationalise the tax structure, reduce transaction and compliance costs and would be instrumental in reducing the litigation and controversies that presently surround the tax system in India, it said.
According to the report, 80% of Indian entrepreneurs reported improved access to funding, including bank loans. However, steadily rising interest rates could weigh on lending growth in the future, it cautions. A large majority (80%) reported that funding from PE had improved since 2005. A 523% growth has been registered in PE investment since 2005. IPOs were seen to have improved in terms of the access to funding they provide, by 67% of Indian entrepreneurs.
For 61% of Indian respondents, access to funding from business angels has improved, a smaller proportion compared with some of the other funding instruments. This is common with other rapid-growth markets, where business angels tend not to play as large a role as they do in mature markets. Alongside, these improvements in funding access in India from 2005 to 2010, 67% still rated access as difficult overall.
Interestingly, 94% of Indian entrepreneurs think that promoting success stories to students is a key priority to improve student perception of entrepreneurship as a career option. 67% felt that students need to follow specific training to become entrepreneurs, as compared to an average of 80% for the rapid growth markets and 59% for the mature economies.
While a leading 84% felt that support from entrepreneurs’ clubs and associations have improved in India, they were not so enthusiastic about the coordination between the different bodies.
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