18 Factors Affecting Entrepreneurship Growth in India

There are various impediments in the growth of entrepreneurship development, like lack of
viable concept, lack of market familiarity, lack of Technical skill, lack of business
knowledge, lack of seed capital, lack of self satisfaction, and motivations, social evils, lack of
jobs, pressures of time and attention towards other sides, legal obstacles, monopoly, etc.

In India, various efforts have been made, after independence for entrepreneurship development,
both at Government and non-government levels, which includes industrial policy, commercial
policy, Licensing Policy, Globalisation, and simplification, etc.But the progress in this regard
may not be termed as satisfactory.

Following are the factors affecting entrepreneurship growth in India.

1. Traditional Society

Indian society suffers from traditions, customs, and superstitions. Religion, caste, and creed
still dominate Indian society. Traditionally, some jobs are treated as inferior jobs.

Due to the caste system, people hesitate to leave their traditional occupations. Such situations
have resulted in a lack of interest in business, capacity to take a risk and constructive
thinking.

So the pace of entrepreneurship development has been slow.

2. Hereditary Jobs

In India, selection of work, occupation, and business has continued on the basis of hereditary
adoption, caste system, religious and sex differentials, and other factors and not on the basis
of interest, capacity, and feelings.

As a result, the entrepreneurs are not able to select the business or industry, according to their
capacity, tastes, interests, and aspirations etc.

3. Unproductive Expenditure

The Indian capital has always been shy. Indian people either keep their savings hidden or
spend it for unproductive purposes, like on marriages, religious festivals, and occasions, feast
on death, birth celebrations, ornaments, fixed property, luxury goods and likewise.

As a result, capital resources required for the establishment of new and industries are not
sufficiently available and it blocks the entrepreneurship development or growth also.

4. Lack of Basic Infrastructure

Basic infrastructure facilities, like transportation, communication, banks, insurance, water,

electricity, Raw materials, stock exchange, Marketing Services, capital market, organized
product marketing, etc. have not been up to the mark in India.

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As a result, the progress of industries has been slow and the new entrepreneurs have to face
difficulties in establishing the industries.

5. Lack of Entrepreneurial Spirit

The development of enterprise and Entrepreneurship depends upon the nature of human
resources.

In India, most of the people, particularly the younger generation have the inclination for
services and not for establishing and operating the business or industry.

Lack of business aptitude, lack of risk taking capacity, lack of business and Technical
abilities and also lack of constructive thinking, entrepreneurship development or growth in
India is at a slow pace

6. Cultural Values

The cultural values have negotiated the entrepreneurship development or growth. Religion
has Deep Impact on Indian society.

Our Ideal has always been, ‘simple living and high thinking’.

In Indian culture, much emphasis has not been given on material gains, personal wealth,
economic changes, personal gains, economic works, and high living standards and hence
non-economic culture has proved to be an obstacle for entrepreneurship growth.

7. Lack of Education Training Facilities

Education and training facilities relating to entrepreneurship skill lack in India.

Although some training institutes and Technical Education institutes have been established in
private and government sectors, after independence, these are not adequate to prepare new
entrepreneurs, because the type of Education and Training provided therein, is like that of
degree providing Institutions.

8. Lake of Favourable Environment

All sections of the society like workers, consumers, investors, government, society, and even
the competitors, etc. Have contribution in operating an Enterprise. But, it is unfortunate that
in India, labour does not have the enthusiasm to work.

The consumers’ view regarding the entrepreneur have various doubts, capital is always
lacking, government policies are impractical, the suppliers also exploit the new entrepreneurs
and the competition is cutthroat and not healthy.

In such conditions, favourable entrepreneurship environment is not taking place and

perspective and have an adverse effect on their spirit.

9. Deficiency of Capital

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As compared to the people Western countries, Indian people at large are not capable to
maintain their living standard, due to price rise. Only the capitalistic class has the courage to
establish Industries.

The contribution of banks and Financial Institutions in establishment and expansion of

industries in India has also been insufficient.

Loans given for the establishment of industries are not easy terms and conditions. Interest
rates are also high.

Hence, entrepreneurship growth has been slow, due to the low repayment capacity.

10. Social and Cultural Factors

Socioeconomic factors have also proved to be the obstacle in entrepreneurship growth in

India. Reason being that country is dominated by the caste system, social evils, religious
superstitions, etc.

Besides, with an increase in incomes of the new entrepreneurs, demonstrative tendencies crop
in. Its ill effect that the entrepreneurs start making use of their savings for big buildings,
valuable ornaments, luxury items, dowry. etc.

And as a result, possibilities of higher investments for development of industries are

substantially reduced.

11. Competition with Big Industrial Houses

In India, business activities are centralized in hands of few Industrial houses. They have
a Monopoly in business. Similarly, priority is being accorded only to public industries in the
country. The new entrepreneur does not think of establishing a new industry, the reason being
that he is not in a position to compete with the industrial houses and public sector industries.
Hence, the entrance of new entrepreneurs remains Limited.

12. Resistance against Innovations and Changes:

Our country has been dominated by traditional perceptions. The scientific and logical
approach towards the problem has been lacking. Neglect of innovations, Research, and
investigations, resistance to changes, etc. have blocked the entrepreneurship growth in India.
In addition, Research and investigation facilities are also lacking and government facilities
and assistance in this regard are also very inadequate. Due to all these reasons,
entrepreneurship development has been slow.

13. Lack of Techno structure

Professional managers, experts, and trained employees are required for efficient operation of
the companies and public sector enterprise.J.K. Galbraith has termed these as
‘Technostrure’. Lack of techno structure, in India, makes the entrepreneurs feel hesitation in
taking risks of the big business.

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14. Centralization of Economic Power

Dominance by few industrialists on most of the industries in India implies that small
entrepreneurs do not get the opportunity to get ahead. The big industrialist is capable of
moulding the government policies and rules in their favour. These big Industrialists run their
industrial Empire, parallel to the government, and as a result, the government is also unable
to have the adequate industrial development of the country. The centralization of economic
power in the hands of a few big Industrialists has also resulted in slow entrepreneurship
growth in India.

15. Low Expenditure on Research and Development

The government and private entrepreneurs incur expenditure on research and development
activities. The entrepreneurs regard expenditure on research and investigation is unnecessary.

As a result, innovations do not get encouragement. The Indian entrepreneurs incur

expenditure on research and development only for strategy formation for competitions,
whereas expenditure incurred on research and development is a long-term investment in the
real sense.

16. Insufficient Government Facilities and Incentives

In India, the development of infrastructural facilities is quite inadequate. In backward areas,

the entrepreneurs are unable to establish Industries because sufficient incentives are not being
provided by the government to the entrepreneurs in the form of allotment of suitable land,
sources of energy and other required infrastructural facilities.

17. Bureaucracy and Red tapism

Besides the fact that Government of India has been provided providing very few facilities to
the entrepreneur, another fact is that due to the prevalence of Bureaucracy and red-tapism,
even these facilities have benefited very few entrepreneurs.

Several times, the entrepreneur runs away, rather than obtaining these facilities, on account of
lots of formalities.In government offices, the officers and staff do not pay attention to
entrepreneurs style and adopting old traditional walking style.

18. Other obstacles

The entrepreneurship growth or development has also not been possible due to the
competition of the public sector with the private sector.

Persons with higher qualifications and abilities are attracted to government jobs.

The purchasing power of the consumers is still low, due to low national income and per
capita income.

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