70211BA106 Entrepreneurship Development

Unit – I – Introduction
Meaning of Entrepreneurship
Entrepreneurship can be defined by describing what entrepreneurs do. For example: "Entrepreneurs
use personal initiative, and engage in calculated risk-taking, to create new business ventures by raising
resources to apply innovative new ideas that solve problems, meet challenges, or satisfy the needs of a clearly
defined market." But as the following definitions state, entrepreneurship is not restricted to business and
profit:
"Entrepreneurship involves bringing about change to achieve some benefit. This benefit may be
financial but it also involves the satisfaction of knowing you have changed something for the better.
"Entrepreneurship is essentially the act of creation requiring the ability to recognize an opportunity, shape a
goal, and take advantage of a situation. Entrepreneurs plan, persuade, raise resources, and give birth to new
ventures."
Definition of Entrepreneurship:
Entrepreneurship refers to the process of creating a new enterprise and bearing any of its risks, with
the view of making the profit.
According to J.B.Say, “Entrepreneur is an Economic agent to unites all the means of production” An
entrepreneur is an individual who takes moderate risks and brings innovation.
An entrepreneur is a person who has possession of a new enterprise, venture or idea and assumes
significant accountability for the inherent risks and the outcome. An entrepreneur is "one who undertakes an
enterprise, especially a contractor, acting as intermediately between capital and labour."
Some facts about entrepreneurs and entrepreneurship:
 Examine needs, wants, and problems to see how they can improve the way needs and wants are
met and problems overcome.
 Narrow the possible opportunities to one specific "best" opportunity.
 Think of innovative ideas and narrow them to the "best" idea.
 Research the opportunity and idea thoroughly.
 Enlist the best sources of advice and assistance that they can find.
 Plan their ventures and look for possible problems that might arise.
 Rank the risks and the possible rewards.
 Evaluate the risks and possible rewards and make their decision to act or not to act.
 Never hang on to an idea, no matter how much they may love it, if research shows it won't work.
 Employ the resources necessary for the venture to succeed.
 Understand that they will have to work long and hard to make their venture succeed.
 Realize a sense of accomplishment from their successful ventures and learn from their failures to
help them achieve success in the future.
Characteristics (Traits) of Successful Entrepreneurs
 Entrepreneurs tend to:
o be passionate about achieving their goals
o have a spirit of adventure
o have a strong need to achieve and seek personal accomplishment
o be self-confident and self-reliant
o be goal-oriented
o be innovative, creative, and versatile
o be persistent
o be hardworking and energetic
o have a positive attitude
o be willing to take initiative
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o have a strong sense of commitment

 An eye for opportunity: Many entrepreneurs starts by finding a need and quickly satisfying it.
 Independence: Even though most entrepreneurs know how to work within the framework for the
sake of profits, they enjoy being their own boss.
 An appetite for hard work: Most entrepreneurs starts out working long, hard hours with little pay.
 Self-confidence: Entrepreneurs must demonstrate extreme self-confidence in order to cope with all
the risks of operating their own business.
 Discipline: Successful entrepreneurs resist the temptation to do what is unimportant or the easiest
but have the ability to think through to what is the most essential.
 Judgment: Successful entrepreneurs have the ability to think quickly and make a wise decision.
 Ability to accept change: Change occurs frequently when you own your own business, the
entrepreneur thrives on changes and their businesses grow.
 Make stress work for them: On the roller coaster to business success the entrepreneur often copes
by focusing on the end result and not the process of getting there.
 Need to achieve: Although they keep an "eye" on profits, this is often secondary to the drive toward
personal success.
 Focus on profits: Successful entrepreneurs always have the profit margin in sight and know that their
business success is measured by profits. Is this your profile or would you rather do your job, pick up
your paycheck and leave the headaches to someone else? Most of us, quite easily, choose the later.
Qualities of an Entrepreneur
All successful entrepreneurs have the following qualities:
 Inner Drive to Succeed - Entrepreneurs are driven to succeed and expand their business. They see
the bigger picture and are often very ambitious. Entrepreneurs set massive goals for themselves and
stay committed to achieving them regardless of the obstacles that get in the way.
 Strong Belief in themselves - Successful entrepreneurs have a healthy opinion of themselves and
often have a strong and assertive personality. They are focused and determined to achieve their goals
and believe completely in their ability to achieve them. Their self-optimism can often be seen by others
as flamboyance or arrogance but entrepreneurs are just too focused to spend too much time thinking
about un-constructive criticism.
 Search for New Ideas and Innovation - All entrepreneurs have a passionate desire to do things better
and to improve their products or service. They are constantly looking for ways to improve. They're
creative, innovative and resourceful.
 Openness to Change - If something is not working for them they simply change. Entrepreneurs know
the importance of keeping on top of their industry and the only way to being number one is to evolve
and change with the times. They're up to date with the latest technology or service techniques and are
always ready to change if they see a new opportunity arise.
 Competitive by Nature - Successful entrepreneurs thrive on competition. The only way to reach their
goals and live up to their self-imposed high standards is to compete with other successful businesses.
 Highly Motivated and Energetic - Entrepreneurs are always on the move, full of energy and highly
motivated. They are driven to succeed and have an abundance of self-motivation. The high standards
and ambition of many entrepreneurs’ demand that they have to be motivated.
 Accepting of Constructive Criticism and Rejection - Innovative entrepreneurs are often at the
forefront of their industry so they hear the words "it can't be done" quite a bit. They readjust their path
if the criticism is constructive and useful to their overall plan, otherwise they will simply disregard the
comments as pessimism. Also, the best entrepreneurs know that rejection and obstacles are a part of
any leading business and they deal with them appropriately.
Theories of Entrepreneurship
Schumpeter Dynamic Entrepreneurship Innovation Theory
The innovative theory is one of the most famous theories of entrepreneurship used all around the
world. The theory was advanced by one famous scholar, Schumpeter, in 1991. Schumpeter believes
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that creativity or innovation is the key factor in any entrepreneur’s field of specialization. He argued that
knowledge can only go a long way in helping an entrepreneur to become successful.
He believed development consisted of a process that involved the reformation of various types of
equipment for production, outputs, marketing, and industrial organizations. However, Schumpeter viewed
innovation along with knowledge as the main catalysts of successful entrepreneurship. He believed that
creativity was necessary if an entrepreneur was to accumulate a lot of profits in a heavily competitive market.
The concept of innovation and its corollary development embraces five functions:
Introduction of a new good - The introduction of a new good which consumers, are not yet familiar
with or of a new quality of a good.
Introduction of a new method of production - The introduction of a new method of production, that
one has not yet tested by experience in the branch of manufacture concerned, which need by no means be
founded upon a discovery scientifically new and can also exist in a new way of handling a commodity
commercially.
Opening of a new market - The opening of a new market i.e. a market into which the particular branch
of manufacture of the country in question has not previously entered, whether or not this market has existed
before.
Conquest of a new source of supply of raw materials - The conquest of a new source of supply of
raw materials or half-manufactured goods, irrespective of whether this source already exists or whether it has
first been created.
Carrying out of a new organization in any industry - The carrying out of the new organization of
any industry like the creation of a monopoly position (for example, through justification) or the breaking up
of a monopoly position.
Features of Schumpeter Theory
 The high degree of risk and uncertainty in the Schumpeterian World.
 Highly motivated and talented individual
 Profit is merely a part of the objectives of entrepreneurs
 Progress under capitalism is much slower than actually it is
 It is leadership rather than ownership that matters.
Limitations of Schumpeter Theory
 It excludes individuals who merely operate an established business without performing innovative
functions.
 Innovating entrepreneur represents the most vigorous type of enterprise. However, this type of
entrepreneur is rarely available in developing countries like India.
 It laid too much emphasis on innovative functions. But it ignores the risk-taking
and organizing aspects of entrepreneurship.
 It assumes an entrepreneur as a large-scale businessman. He is a person who creates something new.
But in practice, an entrepreneur cannot have large-scale operations from the very beginning.
 It fails to provide a suitable answer to questions like why some countries had more entrepreneurial
talent than others.
Theory of High Achievement by McClelland
David McClelland was an American Psychologist who developed his theory of needs or Achievement
Theory of Motivation which revolves around three important aspects, namely, Achievement, Power, And
Affiliation. This theory was developed in the 1960s and McClelland points out that regardless of our age,
gender, race, or culture, all of us possess one of these needs and are driven by it. This theory is also known as
the Acquired Needs as McClelland put forth that the specific needs of an individual are acquired and shaped
over time through the experiences he has had in life.
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This theory can be considered an extension of Maslow’s hierarchy of needs. As per McClelland, every
individual has these three types of motivational needs irrespective of their demography, culture, or wealth.
These motivation types are driven by real-life experiences and the views of their ethos.
McClelland identified two characteristics of entrepreneurship.
 First doing things in a new and better way.
 Secondly, decision-making under uncertainty.
This motive is called the tendency to strive for success in situations involving an evaluation of one’s
performance in relation to some standard of excellence. People who have high need for achievement are more
likely to succeed as entrepreneurs. According to McClelland, individuals with high need achievement will not
be motivated by monetary incentives but monetary rewards will constitute a symbol of achievement for them.
Similarly, they are also not interested much in social recognition or prestige but their ultimate goal is
personal accomplishment. That is why McClelland suggests that in order to raise the level of achievement
motivation, parents should set high standards for their children.
Need for Achievement
The need for achievement as the name itself suggests is the urge to achieve something in what you do.
If you are a lawyer it is the need to win cases and be recognized, If you are a painter it is the need to paint a
famous painting.
It is the need that drives a person to work and even struggle for the objective that he wants to achieve.
People who possess high achievement needs are people who always work to excel by particularly avoiding
reward low-risk situations and difficult-to-achieve high-risk situations.
Need for Power
The need for power is the desire within a person to hold control and authority over another person
and influence and change their decision in accordance with his own needs or desires. The need to enhance
their self-esteem and reputation drives these people and they desire their views and ideas to be accepted and
implemented over the views and ideas of others.
These people are strong leaders and can be best suited to leading positions. They either belong to
Personal or Institutional power motivator groups. If they are a personal power motivator they would have the
need to control others and an institutional power motivator seeks to lead and coordinate a team towards an
end.
Need for Affiliation
The need for affiliation is the urge of a person to have interpersonal and social relationships with
others or a particular set of people. They seek to work in groups by creating friendly and lasting relationships
and have the urge to be liked by others. They tend to like collaborating with others to competing with them
and usually avoid high-risk situations and uncertainty.
The individuals motivated by the need for affiliation prefer being part of a group. They like spending
their time socializing and maintaining relationships and possess a strong desire to be loved and accepted.
These individuals stick to basics and play by the books without feeling a need to change things, primarily due
to a fear of being rejected.
Theory of Personal Resourcefulness
According to this theory, the root of the entrepreneurial process can be traced to the initiative taken
by some individuals to go beyond the existing way of life. The emphasis is on initiative rather than reaction,
although events in the environment may have provided the trigger for the person to express initiative. This
aspect seems to have been subsumed within ‘innovation’ which has been studied more as the ‘change’ or
‘newness’ associated with the term rather than ‘pro-activeness’.
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Functions make an Entrepreneur Successful

Taking Initiative - Entrepreneurship is a pro-active activity that takes such actions, which others can’t
even perceive. This unique function of entrepreneurship provides our civilization with a wide variety of
products, ways of actions, production techniques, etc. Therefore, taking initiative with such end and
qualification is the prime function of entrepreneurship in every economy.
Organizing Resources - Organizing entails identifying those resources that are required to transform
a particular idea into reality. The resources include human and nonhuman resources. Organizing in
entrepreneurship will increase productivity, promote new ventures, distribute and supervise work and
responsibility, and will remove barriers to work. Entrepreneurship, thus, is the taping tool fur assuming
indigenous skills and resources for the productive purpose.
Identifying Opportunities and Prospects - Entrepreneurship searches those activities of value that
have an economic and social contribution. It identifies new opportunities in the socio-economic arena which
have got profitable prospects therefore, entrepreneurs are called searchers of hopes into blind spots and this
function enormously indebted our society to entrepreneurship.
Risk-Taking - Entrepreneurship takes the risk for the new venture. For innovative actions in the field
of production technology for new products in a volatile market and new raw materials used in production.
This is a major function of entrepreneurship in developing countries.
Decision Making - Entrepreneurship is a new initiative therefore, it has to decide multivariate issues
that affect new ventures. Entrepreneurship has to decide upon equipment to be used quality, price and its
variation, deficiency, capital structure, the feasibility of the project, organizational structure, philosophy of
management, etc. that will guide, run and prosper the new venture or distinct attempt for entrepreneurship.
We know that decision-making is a process and entrepreneurship to make n a success, goes through this
process.
Technology Transfer and Adaptation - Entrepreneurship throughout the world brings invented
technology from different comers of the world and makes it appropriate by making required adjustments for
local conditions. This function of entrepreneurship involves identifying appropriate technology with market
potentials and adapts it into the local environment.
Innovation - Entrepreneurship innovates a new production process or technology, market, sources of
new materials, management, strategy or technique, investment opportunity, etc. Innovation is a creative
means to add new utilities to existing situations or products. Entrepreneurship through innovation creates
innovative products or operations for human society.
Fostering Autonomy - Entrepreneurship is an exposure of creative faculty that provides personal
satisfaction and independence. The unique freedom to think differently is the impetus for entrepreneurship.
Thus, entrepreneurship Fosters autonomy to advent something new of value by the application of devoted
efforts and time.
Social Responsibility - Entrepreneurship with its innovative technology somehow promotes human
efforts. It restarts closed industries with innovative managerial strategies and techniques. It also motivates
new entrepreneurs and attracts them to engage into an entrepreneurial venture. Entrepreneurship provides
new products or ideas that give momentum and diversity into society.
Public Relations - Entrepreneurship is a new venture that requires social acceptance by the
regulatory bodies and the public at large. The government, as well as the persons’ who will be subject to
entrepreneurship, would be convinced through public relations to accept and to allow the entrepreneur to
execute an entrepreneurial venture.
Experience Sharing - Entrepreneurship may spread in society through publishing and sharing its
success stories. Thus, entrepreneurship holds workshops, industrial visits through which the entrepreneurial
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experience in different counties may be shared with a widespread adaptation of success. This function will
benefit the economies of the countries as well as the world bodies,
Managerial Roles - Entrepreneurs perform several managerial roles to keep their venture functioning
with success. The roles are interpersonal roles that consist of a figurehead role, leadership role, and liaison
role; informational roles that include recipient role, disseminator role, and the spokesperson role; decisional
roles that consist of an entrepreneurial role, disturbance-handler role, resource allocator role, and the
negotiator role.
Balanced Economic Development - Sustainable economic development requires a balanced
development among various regions and sectors of a country. Every country tries to ensure such a situation
that makes industrialization throughout the country “possible. Entrepreneurs make it possible by establishing
business ventures in various parts of the country in various sectors of the industry.
Factors Affecting Entrepreneurial Growth

Factors Affecting Entrepreneurial Growth

Economic Factors Non-Economic Factors

Capital Education
Labor Attitude of Society
Raw Materials Cultural Value
Market Legal Environment
Infrastructure Int’l. Environment

Economic Factors
Capital - It is one of the most important factors of production for the establishment of an enterprise.
An increase in capital investment in viable projects results in an increase in profits which helps in accelerating
the process of capital formation.
Labour - The easy availability of the right type of workers also affects entrepreneurship. The quality
rather than quantity of labor influences the emergence and growth of entrepreneurship. The problem of labor
immobility can be solved by providing infrastructural facilities including efficient transportation.
Raw Materials - The necessity of raw materials hardly needs any emphasis for establishing any
industrial activity and its influence on the emergence of entrepreneurship. In the absence of raw materials,
neither any enterprise can be established nor can an entrepreneur emerge.
Market - The role and importance of market and marketing is very important for the growth of
entrepreneurship. In a modern competitive world, no entrepreneur can think of surviving in the absence of
the latest knowledge about the market and various marketing techniques.
Infrastructure - The expansion of entrepreneurship presupposes properly developed communication
and transportation facilities. It not only helps to enlarge the market but expands the horizons of business too.
Take, for instance, the establishment of the post and telegraph system and the construction of roads and
highways in India.
Non-Economic Factors
Education - Education enables one to understand the outside world and equips him with the basic
knowledge and skills to deal with day-to-day problems. In any society, the system of education has a significant
role to play in inculcating entrepreneurial values. In India, the system of education prior to the 20th century
was based on religion.
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Attitude of Society - A related aspect to these is the attitude of the society towards entrepreneurship.
Certain societies encourage innovations and novelties and thus approve entrepreneurs’ actions and rewards
like profits. Certain others do not tolerate changes and in such circumstances, entrepreneurship cannot take
root and grow.
Cultural Value - Motives impel men to action. Entrepreneurial growth requires proper motives like
profit-making, acquisition of prestige, and attainment of social status. Ambitious and talented men would take
risks and innovate if these motives were strong. The strength of these motives depends upon the culture of
the society.
Legal Environment - The legal environment affects the business very substantially. If suitable legal
arrangements do not exist for safeguarding the interests and powers of the entrepreneurs, businessmen, and
other parties related to the business, no one will like to carry out any significant business.
International Environment - The international environment also affects the system. Presently, the
waves of globalization and liberalization are flowing throughout the world.
Types of Entrepreneurship
Though entrepreneurship is the overall process of developing, launching and running a business,
there are many different types of entrepreneurship. People have varying aspirations and visions for the
kind of businesses they want to create. Everyone operates their business based on their own personality,
skills and characteristics. Some people think that with hard work they can find success, while others may
use capital to help them get there. For some entrepreneurs, profits are less important than providing a social
good.
1. Small business entrepreneurship 6. Hustler entrepreneurship
2. Large company entrepreneurship 7. Imitator entrepreneurship
3. Scalable start-up entrepreneurship 8. Researcher entrepreneurship
4. Social entrepreneurship 9. Buyer entrepreneurship
5. Innovative entrepreneurship

Small business entrepreneurship - A majority of businesses are small businesses. People interested
in small business entrepreneurship are most likely to make a profit that supports their family and a modest
lifestyle. They aren't seeking large-scale profits or venture capital funding. Small business entrepreneurship
is often when a person owns and runs their own business. They typically hire local employees and family
members. Local grocery stores, hairdressers, small boutiques, consultants and plumbers are a part of
this category of entrepreneurship.
Large company entrepreneurship - Large company entrepreneurship is when a company has a finite
amount of life cycles. This type of entrepreneurship is for an advanced professional who knows how to sustain
innovation. They are often a part of a large team of C-level executives. Large companies often create new
services and products based on consumer preferences to meet market demand. Small business
entrepreneurship can turn into large company entrepreneurship when the company rapidly grows. This can
also happen when a large company acquires them. Companies such as Microsoft, Google and Disney are
examples of this kind of entrepreneurship.
Scalable startup entrepreneurship - This kind of entrepreneurship is when entrepreneurs believe
that their company can change the world. They often receive funding from venture capitalists and hire
specialized employees. Scalable startups look for things that are missing in the market and create solutions
for them. Many of these types of businesses start in Techno -Hub with technology-focused. They seek rapid
expansion and big profit returns. Examples of scalable startups are Facebook, Instagram and Uber.
Social entrepreneurship - An entrepreneur who wants to solve social problems with their products
and services is in this category of entrepreneurship. Their main goal is to make the world a better place. They
don't work to make big profits or wealth. Instead, these kinds of entrepreneurs tend to start nonprofits or
companies that dedicate themselves to working toward social good.
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Innovative entrepreneurship - Innovative entrepreneurs are people who are constantly coming up
with new ideas and inventions. They take these ideas and turn them into business ventures. They often aim to
change the way people live for the better. Innovators tend to be very motivated and passionate people. They
look for ways to make their products and services stand out from other things on the market. People like Steve
Jobs and Bill Gates are examples of innovative entrepreneurs.
Hustler entrepreneurship - People who are willing to work hard and put in constant effort are
considered hustler entrepreneurs. They often start small and work toward growing a bigger business with
hard work rather than capital. Their aspirations are what motivates them, and they are willing to do what it
takes to achieve their goals. They do not give up easily and are willing to experience challenges to get what
they want. For example, someone who is a hustler is willing to cold call many people in order to make one sale.
Imitator entrepreneurship - Imitators are entrepreneurs who use others' business ideas as
inspiration but work to improve them. They look to make certain products and services better and more
profitable. An imitator is a combination between an innovator and a hustler. They are willing to think of new
ideas and work hard, yet they start by copying others. People who are imitators have a lot of self-confidence
and determination. They can learn from others' mistakes when making their own business.
Researcher entrepreneurship - Researchers take their time when starting their own business. They
want to do as much research as possible before offering a product or service. They believe that with the right
preparation and information, they have a higher chance of being successful. A researcher makes sure they
understand every aspect of their business and have an in-depth understanding of what they are doing.
Buyer entrepreneurship - A buyer is a type of entrepreneur who uses their wealth to fuel their
business ventures. Their specialty is to use their fortunes to buy businesses that they think will be successful.
They identify promising businesses and look to acquire them. Then, they make any management or structural
changes they feel are necessary. Their goal is to grow the businesses they acquire and expand their profits.
This kind of entrepreneurship is less risky because they are purchasing already well-established companies.
Entrepreneur vs Intrapreneur vs Manager

Nature Entrepreneur Intrapreneur Manager

Motivation An entrepreneur wants An intrapreneur wants to get A manager wants a

financial freedom and be rewards from the company, promotion and moves up
his/her own boss. such as bonuses the corporate ladder
Goals An entrepreneur has long An intrapreneur has medium to A manager focuses on daily,
term goals long term goals weekly, monthly, or yearly
goals
Risk An entrepreneur is a high- An intrapreneur is also a risk- Does not take any risk
risk taker taker, but within the limits of the
company he/ she is working for
Work An entrepreneur is self- An intrapreneur works for A manager also works for
employed others others
Decision- Entrepreneur makes all of An intrapreneur is less involved A manager has to agree to
Making their own decisions in decision making decisions made by the
superiors
Thinking Entrepreneurs are free Intrapreneurs are also free A manager is not a free
thinkers thinkers but within the limit of thinker
the company’s activity
Fund An entrepreneur needs to An intrapreneur is not A manager is not worried
deal with fundraising concerned with fundraising about fundraising
Skills Marketing, Sales, Innovative, Problem-Solving Managerial Skills
Accounting, Innovative, Skills
Problem-Solving Skills

Women Entrepreneurship - Meaning

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Women entrepreneurship refers to the process of Creating, Managing, and Developing a business
enterprise by a woman or group of women. It involves the identification of opportunities, developing and
executing business strategies, managing financial resources, and taking calculated risks to achieve business
objectives.

Women Entrepreneurship – Definition

In general, Women entrepreneur may be defined as a woman or a group of women who initiate,
organize and operate a business enterprise.
According to Schumpeter, an entrepreneur is an innovating individual who introduces something new
into the economy. Any woman (or a group of women), who innovates, initiates or adapts an economic activity
may be called a women entrepreneur.
According to Medha Dubhashi Vinze, A woman entrepreneur is a person who is an enterprising
individual with an eye for opportunities and an uncanny vision, commercial acumen, with tremendous
perseverance and above all a person who is willing to take risk with the unknown, because of the adventurous
spirit she possesses.
Some Interesting Statistics on Women Entrepreneurs in India
 The Government of India has defined a women entrepreneurship as “an enterprise owned and
controlled by a woman having a minimum financial interest of 51% of the capital and giving at least
51% of the employment generated in the enterprise to women”.
 Kerala Government defined women industrial units as units owned/ organized by women and engages
in small scale and cottage industries with not less than 80% of the total workers as women.
 Some Interesting Statistics on Women Entrepreneurs in India
 About 58% of the female entrepreneurs were in the age range of 20-30 when they started out.
 Nearly 73% of them report revenue of approximately Rs 10 lakhs in a financial year.
 Almost 57% of these women started out solo, i.e., without any other member.
 About 35% of the women had a co-founder.
 Roughly 71% of the Indian female entrepreneurs employ five people or less.
Features of Women Entrepreneurship
 Most women with small income are likely to become entrepreneurs
 Women with small facilities are likely to become entrepreneurs
 A majority of women entrepreneurs are married. With the support of their husband they accepted
entrepreneurship.
 Most spinsters face difficulties in obtaining financial support to start their enterprises.
 A large number of women with little or no education and training enter into the business field.
 Many women become entrepreneurs out of economic necessity.
 Women’s sincerity and hard work is the cause for sustainability and growth.
 Women entrepreneurs are security oriented rather than growth oriented
 Most women prefer stabilization of income and minimization of risk
 Business enterprises of women lack working capital, this causes low profit margin
Reason for Women Entrepreneurship (Why women become entrepreneurs?)
 To become economically independent
 To establish their own enterprise
 To establish their identity in the society
 To achieve Excellency in their endeavor
 To build confidence to themselves
 To develop risk assuming ability
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 To claim equal status in the society

 To secure greater freedom and mobility
Challenges for Women Entrepreneurship (Why women become entrepreneurs?)
 Financial Constraints
 Over Dependence on Intermediaries
 Stiff Competition
 Scarcity of Raw Materials
 High Cost of Production
 Limited Mobility
 Family Ties
 Lack of Education
 Social Attitudes
 Male Dominated Society
 Low Need for Achievement
Remedial measures to overcome Challenges of Women Entrepreneurship - (Why women become
entrepreneurs?)
 Separate Finance Divisions
 Supply of Raw Materials
 Co-Operative Women’s Marketing Societies
 Education and Social Change
 Training
 Family Background
 Support from the Society
 Support from the Government
Rural Entrepreneurship - Meaning & Definition
Rural entrepreneurship is that entrepreneurship which ensures value addition to rural resources in
rural areas engaging largely rural human resources. Rural entrepreneurship has arisen as a dynamic concept.
It is generally defined as entrepreneurship emerging at village level which can take place in a variety of
fields of attempt such as commercial, manufacturing, agriculture and acts as an effective factor for economic
development.
“Entrepreneurship development at village level which can take place in a variety of fields of enterprise
such as business, industry, agriculture and acts as a powerful factor for economic development can be defined
as Rural Entrepreneurship.”
Need for Rural Entrepreneurship
As Industrial units started by rural entrepreneurs are providing much employment to men than
machines there is a rising need for rural entrepreneurs. Because of additional employment occasions, it has
high potential for income generation in rural areas. The following measures are to be applied for development
of rural entrepreneurs.
 There should be a free and continuous supply of raw materials as raw materials generate the basic
element of the industry.
 Continuous supply of raw materials guarantees a constant and smooth production process.
 Rural entrepreneurs face inadequacy of capital which is observed as the lifeblood of business unit.
 The establishment for sufficient capital will comfort development of rural entrepreneurs.
 Establishing Industrial and business infrastructure in rural areas such as Road, Power, Water,
Telecommunication, Banking services, Hotels etc.
Types of Rural Entrepreneurship
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Agro Based Industries - This category of village industries involves direct sale or processing of agro-
based products such as dairy and dairy products, Vegetable processing, fruit processing such as fruit juices or
pulps, pickles, jiggery, processing of oil from oil seeds, sugar industries, spices, cleaning and grading of grains,
cereals, Pulses Mills etc.
Forest Based Industries - Forest based industries include products manufactured from processing
raw material from the forest such as wooden products, bamboo products, beedi making, coir industry, honey
making, etc.
Mineral Based Industry - These include quarrying, rock crushing, cement industries, wall coating
powders etc.
Textile Industry - These include Cotton Ginning and Pressing, knitting, dyeing, spinning and
bleaching, sericulture etc.
Handicrafts - These include making of wooden or bamboo handicrafts that are local to that area, old-
fashioned decorative products, toys and all other forms of handcrafts typical to the region.
Engineering and services - These include agricultural tools, tractors and pump sets, repairs etc.
Challenges of Rural Entrepreneurship
Developing entrepreneurship, predominantly rural entrepreneurship, is not so easy. It is controlled
by numerous problems. Following are some of the challenges faced by rural entrepreneurs:
 Finance
 Knowledge
 Technical know-how
 Enterprising skill
 Infrastructural facilities
 Communication
 Unfavorable social, cultural and industrial environments
Importance of Rural Entrepreneurship - (Advantages of rural entrepreneurship)
 Creating employment opportunities
 Check on migration
 Regional Growth
 Promotion of art and handicrafts
 Check on social evils
 Awaken the rural youth
 Improved standards of living
 Utilization of local resources
 Foreign exchange
Barriers to Entrepreneurship
 Finances  Lack of capacity
 Fear of not to be a success  Less market experiences
 No strategic plan in place  Lack of risk-taking capacity
 Human resource issues  Corrupt business situations
 Stringent rules & regulations of the  Inadequate training
market  Lack of practical knowledge
 Fewer opportunities
Social Entrepreneurship
Social Entrepreneurship can be defined as doing business for a cause. This form of entrepreneurship
combines business and social issues in a bid to improve the lives of people. Apart from altruistic motives, one
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possible reason behind such a move is that if society progresses well, businesses will also become more
profitable.
Who can be a social entrepreneur?
Anyone and everyone can come up with a solution to a problem and become a social entrepreneur, be
they organizations or individuals. Strong willpower, the intention to do good and a suitable approach are the
driving forces.
Some Definitions for Social Entrepreneurship
Journalist and author David Bornstein, while defining social entrepreneurship, says, “What business
entrepreneurs are to the economy, social entrepreneurs are to social change.”
As per American professor Greg Dees’s definition of social entrepreneurship, “Social entrepreneurs
are a ‘special breed’ of leaders.”
Social entrepreneurs cannot be defined in a single sentence. They are changing the world in different
ways every day. If we look around, we’ll find several examples of social entrepreneurship that have affected
monumental change.
Role of Entrepreneurship in Economic Development
Raises Standard of Living - A significant role of entrepreneurship in economic development is that it
can greatly enhance the standard of living for individuals and communities by setting up industries and
creating wealth and new positions. Entrepreneurship not only provides large-scale employment and ways to
generate income, it also has the potential to improve the quality of individual life by developing products and
services that are affordable, safe to use, and add value to their lives. Entrepreneurship also introduces new
products and services that remove the scarcity of essential commodities.
Economic Independence - Entrepreneurship can be a path to economic independence for both the
country and the entrepreneur. It reduces the nation’s dependence on imported goods and services and
promotes self-reliance. The manufactured goods and services can also be exported to foreign markets, leading
to expansion, self-reliance, currency inflow, and economic independence. Similarly, entrepreneurs get
complete control over their financial future. Through their hard work and innovation, they generate income
and create wealth, allowing them to achieve economic independence and financial security.
Benefits of New Firms and Businesses - Entrepreneurs identify market needs and develop solutions
through their products and services to begin their business venture. By starting new firms and businesses,
entrepreneurs play a key role in shaping the economy and creating a more dynamic and diverse business
landscape. Entrepreneurship also promotes innovation and competition, leading to new and improved
products and services that contribute to economic growth and development.
Creation of Jobs - Entrepreneurship is a pivotal driver of job creation. Running the operations of new
businesses & meeting the requirements of customers results in new work opportunities. Entrepreneurship
also drives innovation and competition that encourages other entrepreneurs and investments, creating new
jobs in a wide range of industries, from manufacturing and construction to service and technology sectors.
Encourages Capital Formation - Capital formation is the process of accumulating resources, such as
savings and investments, to fund new business ventures and support economic growth. Entrepreneurship can
encourage capital formation by attracting investment. In addition, the creation of new businesses and the
growth of existing firms can also contribute to the development of a more diverse and dynamic economy that
encourages capital formation and opens the door to a wide range of investment opportunities.
Elimination of Poverty - Entrepreneurship has the potential to lift people out of poverty by
generating employment & stimulating economic activity. Entrepreneurship also contributes to the
development of local economies & helps improve the overall standard of living.
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Community Development - Entrepreneurship promotes economic growth, provides access to goods

& services, & improves the overall standard of living. Many entrepreneurs also make a positive impact on their
communities & improve their well-being by catering to underserved areas & developing environment-friendly
products. Their work can help build stronger, more vibrant communities & promote social & economic
development.
Optimal Use of Resources - Entrepreneurship can help identify market opportunities & allocate
resources in the most effective way possible. Entrepreneurs also play a key role in developing innovative
products & services that meet the needs of customers while optimizing the use of available resources.
Increases GNP and PCI - Entrepreneurship can play a significant role in increasing economic growth
& prosperity by increasing Gross National Product (GNP) & Per Capita Income (PCI). GNP measures the total
economic output of a country while PCI calculates the average income per person. The increase in GNP can
lead to a rise in PCI. Entrepreneurship can contribute to GNP by creating new businesses & industries, which
can lead to job creation, increased consumer spending, & higher tax revenue.
Unit-II-Entrepreneurial Support
DIC-District Industry Centre:
The District Industries Centre (DIC) is a government-run program aimed at fostering small village and
cottage industries in a certain area. Since its inception in 1978, the DICs have been constructed in several
districts across India at various times. The District Industries Centre(s), which are located at the district level,
provide all of the required services and support to help entrepreneurs develop MSMEs (Micro, Small, and
Medium enterprises).
The important objectives of DIC are:
 Accelerate the overall efforts for the industrialization of the district.
 Rural industrialization and development of rural industries and handicrafts.
 Attainment of economic equality in various regions of the district.
 Providing the benefit of the government schemes to the new entrepreneurs.
 Centralization of procedures required to start a new industrial unit and minimization of the efforts
and time required to obtain various permissions, licenses, registrations, subsidies, etc.
The District Industries Center (DIC) Program was established in 1978 as a government-sponsored
initiative with the goal of providing all services and support to village and small-scale enterprises under one
roof in order to promote the development of small-scale industry in the country’s widely dispersed rural areas
and small towns. The District Industries Centres (DICs) provide a variety of key responsibilities for the
upliftment of a district and the inclusion of that district on India’s industrial map.
Functions of DICs
Development of District’s Industrial Profile - This aid in determining the advantages and
disadvantages of establishing various industries in the district based on the availability of infrastructure, raw
materials, labor, and land in the area.
Assisting Entrepreneurs with Acquisition of Licenses - A variety of permits are necessary to set up
an industrial unit, including those from the electricity board, the no-objection certificate, the water supply
board, and others. The District Industries Centres (DICs) enable the issuance of these permits, making it easier
for entrepreneurs to establish industrial units in their particular districts.
Serving as District’s Main Point for Industrialization - The District Industries Centres (DICs) serve
as a focal point for making progress in the field of industrialization. The District Industries Centres (DICs)
handle everything from giving various permissions and permits to facilitating financing and granting awards.
Entrepreneurial Opportunity Counselling - A lack of awareness about an existing opportunity
causes more harm than a lack of opportunity. District Industries Centres (DICs) assist in bringing numerous
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opportunities to the forefront to assist entrepreneurs. In addition to the district’s industrialization, this aids
in the creation of job prospects.
Assessment of Skilled and Semi-Skilled Labor - District Industries Centres (DICs) assist in making
the greatest use of their platform to identify the labor that is best suited to the market. This prevents
underemployment.
Determine Infrastructure Facilities - Infrastructure facilities are a top priority for each place to
develop in order to identify the potential that may be tapped from a specific area. The District Industries
Centres identify facilities such as power, roads, warehouses, banking, and quality testing facilities, among
others (DICs).
Develop a Techno-Economic Feasibility Study - The District Industries Centres (DICs) develop a
techno-economic feasibility report that analyses the performance of an industrial product, process, or service
in order to enhance regions that require it.
Provide Advice to Entrepreneurs on Their Investments - The District Industries Centres (DICs)
provide advice to businesses on a variety of investments. In this way, they provide consulting services to
entrepreneurs to assist them in making better financial selections.
Investigation and Survey - The District Industries Center surveys existing and future industries, as
well as raw materials and human resources. It anticipates the market for a variety of products. It also develops
techno-economic feasibility analyses in order to provide enterprises with investment recommendations.
Courses of Instruction - The District Industries Center also holds training sessions for small and
micro business owners. It serves as a link between entrepreneurs and small industry service institutes,
allowing the latter to provide new and improved product lines and quality to the former.
Equipment and Machinery - The District Industries Center identifies areas where machinery and
equipment can be purchased, as well as arranges for machinery to be supplied on a hire-buy basis.
Raw Materials - The District Industries Center gathers information on the commodities required by
various divisions and arranges for bulk purchases. As a result, small businesses can receive their raw materials
at a cheap price.
Arrangement of Loans - It makes the appropriate agreements with Lead Banks and other Financial
Institutions to give financial support to entrepreneurs. It also assesses the application and keeps track of the
district’s industrial credit flow.
Marketing - Market surveys and market development programs are conducted by the District
Industries Center. It also develops marketing channels, maintains contact with government procurement
organizations, and keeps entrepreneurs up to date on market intelligence.
Khadi and Village Industries - The development of khadi and village industries, as well as other
cottage businesses, is a priority for District Industries Centers. It also maintains close ties with the State Khadi
Board and organizes rural artisan training programs.
District Industries Centres Schemes
A number of projects that fall under the purview of District Industries Centres have been launched
(DICs). These programs assist in achieving the objectives of building District Industries Centres (DICs). There
are both centrally funded and central sector programs in this category. The following schemes fall under
the DIC:
 Prime Minister’s Employment Guarantee Program (PMEGP)
 District Industries Centre (DIC) Loan Scheme
 Seed Money Scheme
 District Awards Scheme
 Entrepreneurship Development Training Programme
 Eligibility Criteria for Applying Under District Industries Centres (DICs)
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Prime Minister’s Employment Guarantee Program (PMEGP)

 The Ministry of Micro, Small, and Medium Enterprises (MSME) introduced this centrally supported
scheme in 2008.
 The PMEGP strives to create job opportunities in rural and urban areas for educated unemployed
persons.
 Khadi & Village Industries Commission is the scheme’s main agency for execution (KVIC).
 Banks will lend 90-95 % of the money under this program, with the applicant’s contribution being 5-
10 percent of the project cost in the industry, service, or commercial sector.
District Industries Centre (DIC) Loan Scheme
 This scheme is for self-employed people and small businesses in cities and rural areas with a
population of fewer than a lakh people and a capital investment of less than Rs. 2 lakhs.
 Village industries, handicrafts, handlooms, and silk & coir industries are among the minor units listed
by the Small-Scale Industries Board.
 The margin money for entrepreneurs in the general category will be 20% of the total investment, or
Rs. 40,000. (Whichever is lesser).
 The margin money for businesses in the SC/ST category will be 30 percent of the total investment, or
Rs. 60,000. (Whichever is lesser).
Seed Money Scheme
 This program is designed for self-employed people who work for a living or run their own businesses.
 Financial aid from institutions in the form of soft loans.
 The project cost for obtaining a loan under the seed money scheme has been raised to Rs. 25 lakhs.
 Seed money support of up to 15% of the project cost is available for initiatives up to Rs. 10 lakhs.
 The assistance granted to SC/ST/OBC will be 20% of the project cost;
 the maximum amount of assistance provided will be Rs. 3.75 lakhs, with 75% of the project cost being
in the form of a bank loan.
District Awards Scheme
 State governments have begun honoring entrepreneurs with prizes at the district level to raise their
spirits and recognize their efforts and successes.
 The entrepreneurs to be recognized will be chosen by a District Advisory Committee created at the
district level.
 The District Awards Function takes place on Vishwakarma Jayanti Day, which varies from year to year.
 The award ceremony includes a display of the entrepreneur’s items for sale and exhibition, as well as
workshops and discussions on the topic.
Entrepreneurship Development Training Programme
 This program was created to provide training to educated unemployed persons in order to encourage
them to start their own businesses or work in skilled-wage jobs.
 The following training programs are part of the Entrepreneurship Development Training Program:
 Entrepreneurship Introductory Programme (Udyojakata Parichay Karyakram)
 Entrepreneurship Development Training Programme (12-Day residential)
 Technical Training Programme (12 Days to 2 Months non-residential)
Eligibility Criteria for Applying Under District Industries Centres (DICs)
 Loans are available through the District Industries Centres (DICs) under the various schemes listed
above.
 The District Industries Centres (DICs) promote and implement these plans, and loans can be obtained
under a variety of schemes with differing qualifying conditions.
 Who can apply for loans under DIC?
 Physically disabled young professionals like chartered accountants, engineers, advocates, doctors,
architects, physiotherapists, pathologists, pragmatists, etc. can also avail of this loan.
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Auxiliaries to Entrepreneurship Development

The following are significant auxiliaries that aid in the promotion of commercial activities; such as
Bank, Transportation, Insurance, Warehousing, Advertisement.
Bank - The most significant auxiliary institution for entrepreneurship development. They assist with
the resolution of financial issues in the workplace. In addition to his own financial resources,
the entrepreneur relies on the bank for funds. Banks provide security for entrepreneurs’ wealth, as well as
overdraft and cheque payment options. They also assist in the advancement of business, asset transfer, and a
variety of other services for the entrepreneur to promote entrepreneurial activity.
Transportation - Transportation is critical to a country’s success in business and trade. Business
activity can advance by land, maritime, and air transport if good transportation facilities are provided. Only
because of the enhanced modes of transportation accessible has the scope of the company expanded
internationally.
Insurance - Insurance is widely regarded as the most effective technique for mitigating risk. There are
risks in every field of business. As a result, the entrepreneur enters into a contract with an insurance company
in which the entrepreneur pays the premium and the insurance company guarantees to compensate the
entrepreneur for losses sustained as a result of defined causes/accidents.
Warehousing - Products are manufactured at a specific period, but they cannot all be consumed or
sold at the same time. They must be preserved in a secure location for future use or sale. Wheat, rice, cotton,
tobacco, and other commodities are kept in designated stores until demand for them develops. Commodities
such as woolen clothing must also be stored and protected until seasonal demand arrives. Warehouses are
required for the storage of such commodities.
Advertisement - Large-scale production needs good marketplaces, which necessitates the use
of advertising to ensure that the items are quickly sold. The term “advertising” refers to the act of informing
people about the goods and services that are being produced, delivered, and so on. Advertisements are quite
vital in today’s world.
Industrial Estates – Meaning
An industrial estate is a place where the required facilities and factory accommodation are provided
by the government to the entrepreneurs to establish their industries there. In India, industrial estates have
been utilized as an effective tool for the promotion and growth of small-scale industries. They have also been
used as an effective tool to decentralize industrial activity to rural and backward areas. Industrial estates are
also known by different names, e.g. industrial region, industrial park, industrial area, industrial zone, etc.
Industrial Estates – Definition
According to P.C. Alexander, “An industrial estate is a group of factories, constructed on an economic
scale in suitable sites with facilities of water, transport, electricity, steam, bank, post office, canteen, watch and
ward and first-aid, and provided with special arrangements for technical guidance and common service
facilities”.
In the opinion of Bredo, “An industrial estate is a tract of land which is sub-divided and developed
according to a comprehensive plan for the use of a community of industrial enterprises.”
Industrial Estates – Types
On the Basis of Functions:
On the basis of functions, industrial estates are broadly classified into two types
General Type Industrial Estate - These are also called as conventional or composite industrial
estates. These provide accommodation to a wide variety and range of industrial concerns.
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Special type industrial estates - This type of industrial estates is constructed for specific industrial
units, which are vertically or horizontally independent.
On the basis of Organizational set-up:
On this basis, industrial estates are classified into following four types:
 Government Industrial Estates,
 Private Industrial Estates,
 Co-operative Industrial Estates.
 Municipal Industrial Estates
On the Basis of the Other Variants:
On the basis of other variants, industrial estates are classified into following three types:
Ancillary Industrial Estates - In such industrial estates, only those small- scale units are housed
which are ancillary to a particular large industry. Examples of such units are like one attached to the HMT,
Bangalore.
Functional Industrial Estates - Industrial units manufacturing the same product are usually housed
in these industrial estates. These Industrial estates also serve as a base for expansion of small units into large
units.
The Workshop-bay - Such types of industrial estates are constructed mainly for very small firms
engaged in repair work.
Objectives of Industrial Estates
The main objectives of the establishment of industrial estates are to:
 Provide infrastructure and accommodation facilities to the entrepreneurs;
 Encourage the development of small-scale industries in the country;
 Decentralize industries to the rural and backward areas;
 Encourage ancillarisation in surroundings of major industrial units; and
 Develop entrepreneurship by creating a congenial climate to run the industries in this estates/
area/ township, etc.
SIDCO
In many state governments, for the promotion of (SSIs) small scale industries, a separate corporation
has been set up which is known as Small Industries Development Corporation. They undertake all kinds of
activities for the promotion of small scale industries. Right from the stage of installation, to the stage of
commencing production, these Corporations help SSIs in many ways. In short, they provide infrastructure
facilities to SSIs. Due to the assistance provided by SIDCO, many backward areas in most of the states have
been developed. So, SIDCO has also been responsible in spreading the industrial activity throughout several
states.
Objectives of SIDCO:
The main aim of SIDCO is to stimulate the growth of SSIs.
 To provide infrastructure facilities like roads, drainage, electricity, water supply, etc. is one of the
primary objectives of SIDCO.
 To promote industrial estates which will provide industrial sheds of different sizes with all basic
infrastructure facilities.
 To provide technical assistance through training facilities to the entrepreneurs.
 To promote skilled labor through the setting up of industrial training institutes.
SIDCO in Tamilnadu
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In Tamilnadu, India, Small Industries Development Corporation (SIDCO) was set up in 1971. The prime
function of SIDCO was to identify potential growth centers in various parts of Tamilnadu. There is a network
of 76 industrial estates in the State which are maintained by SIDCO. 32 of these were formed by the
government initially and subsequently handed over to SIDCO. The remaining 44 estates were set up by SIDCO
itself. It has set up these estates in rural & most backward areas to ensure balanced industrial development.
Functions of SIDCO
SIDCO Supplies scares raw materials - Some of the scarce raw materials are procured by the
corporation either from the domestic market or from abroad and are provided to the needy small-scale
industries. For this purpose, SIDCO has a number of raw material depots and these depots are procuring
various scarce raw materials, as per the requirements of small scale industries in the state.
Provides marketing assistance - In order to provide an efficient marketing support to small scale
industries, the corporation has taken up various schemes. In fact, the corporation participates in the tenders
floated by the state government departments and also with the DGS & D (Director General of Supplies and
Disposal). SIDCO makes advance payments for obtaining orders and distribute them among the various small-
scale units. SIDCO also arranges for buyer - seller meets frequently.
Assists in bills discounting - When small scale units supply goods to government departments, there
is a delay in receiving payments. In such a situation, the bills drawn on government departments will be
discounted by SIDCO and upto 80% of the bill value is given to the supplier. This helps the SSI units in solving
their working capital crisis.
Provides export marketing assistance - To promote export marketing among the small-scale
industries, SIDCO has developed websites because of which it is able to display the products of the small-scale
industries in foreign markets and obtain export orders. Once an export order is obtained, the Common export
manager of SIDCO will plan for extending various services for export of the product. SIDCO also helps in the
small-scale units taking part in the international trade fair at New Delhi, Pragati Maidan so that the products
of small scale industries of Tamilnadu are displayed.
Setup captive power plants - In order to provide uninterrupted and good quality power supply,
SIDCO has taken up a plan to set up captive power plants in major industrial estates. It is now planning to set
up these plants in 10 industrial estates.
Promotes skill development centers - In an effort to supply skilled laborers to various small-scale
industries, skill development centres are being set up in various industrial estates which will be training
workers in varied industrial activities and they will be trained in modern skill.
Promotes women entrepreneur - In addition to the above, in order to promote women
entrepreneurs, a separate industrial estate for women has been set up at Tirumullaivoyal, near Chennai, where
women entrepreneurs are trained in various fields of small scale industries.
In addition to SIDCO, there are various corporations that assists in the promotion of small scale
industries such as,
 Small Industries Promotion Corporation of Tamilnadu (SIPCOT),
 Tamilnadu Small Industries Corporation (TANSI),
 Industrial and Technical Consultancy Organization of Tamilnadu (ITCOT) and
 Tamilnadu Industries Investment Corporation (TIIC).
SIPCOT
Several state-owned entities jointly work to develop industrial infrastructure in Tamil Nadu, including
the, Tamil Nadu Industrial Development Corporation Ltd (TIDCO), State Industries Promotion Corporation
of Tamil Nadu (SIPCOT), Tamil Nadu Industrial Investment Corporation Limited (TIIC), and Tamil Nadu
Small Industries Development Corporation Limited (TANSIDCO).
SIPCOT – At a glance
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Established in 1971, SIPCOT is a state entity tasked with the setting up of industrial complexes in Tamil
Nadu. It provides basic and comprehensive infrastructure facilities for industrial units in these areas. So far,
SIPCOT has developed 24 industrial complexes in 15 districts and six sector-specific special economic zones
(SEZs) spread over 35,043 acres. It is now in the process of setting up 11 new industrial parks, as per a
Confederation of Indian Industry and KPMG report. Each new industrial park will be spread across 13,500
acres. The Tamil Nadu government hopes to generate 200,000 additional jobs through these new parks.
SIPCOT also acts as a nodal agency of the Tamil Nadu government for the approval and disbursement
of the Structured Package of Incentives to large industrial units (Tamil Nadu Industrial Policy. 2021-2025).
This package covers stamp duty concessions on logistics infrastructure, incentives for sunrise sectors, such as
electric vehicles and battery manufacturing, technical textiles, renewable energy components manufacturing,
biotechnology, pharmaceuticals, etc., ease of clearances for foreign enterprises that meet a certain investment
threshold, etc.
Land allotment in SIPCOT
According to SIPCOT, the prescribed time limit for land allotment at one of its industrial estates is 60
days; however, the maximum time taken can go up to 244 days and the average time taken is 48 days. After
filling the form on the Tamil Nadu Single Window Portal, a list of supporting documents must be uploaded
along with the payment of fees.

Documents required and Application Procedure for Land allotment

 Brief Project Report
 Certificate of Incorporation (in case of a Company)
 Firm Registration Certificate (in case of a Partnership Firm)
 Partnership deed (in case of a Partnership Firm)
 Memorandum of Association (in case of a Company)
 Articles of Association (in case of a Company)
 List of directors (with shareholding Pattern) duly certified by a Chartered Accountant (CA) (in case of
a Company)/ partners (with shareholding Pattern) up to individual level duly certified by a Chartered
Accountant (CA) (in case of a Partnership Firm)
 Latest audited annual report / balance sheet & profit & loss account (in case of Existing Concerns /
Firms / Companies)
 GST Registration Certificate
 Rough Building Layout duly certified by a Civil Engineer
 CTE/ CTO letter from TNPCB (applicable to existing firms involved in manufacturing)
 Proof of term loan sanction / Financial Assistance
 In case of FDI, copy of approval from the Reserve Bank of India (RBI)
 The processing fee is INR 10,000 (US$122.51) plus GST – it is non-refundable.
 The initial deposit is INR 10,000 per acre and is refundable in case the land is not allotted. (US$1=INR
81.63.)
Science & Technology Entrepreneurship Park (STEP)
The Science Parks and similar initiatives help in creating an atmosphere for innovation and
entrepreneurship; for active interaction between academic institutions and industries for sharing ideas,
knowledge, experience and facilities for the development of new technologies and their rapid transfer to the
end user.
The Science & Technology Entrepreneurs Park (STEP) programme was initiated to provide a re-
orientation in the approach to innovation and entrepreneurship involving education, training, research,
finance, management and the government.
Science & Technology Entrepreneurship Park (STEP)
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A STEP creates the necessary climate for innovation, information exchange, sharing of experience and
facilities and opening new avenues for students, teachers, researchers and industrial managers to grow in a
trans-disciplinary culture, each understanding and depending on the other's inputs for starting a successful
economic venture.
STEPs are hardware intensive with emphasis on common facilities, services and relevant equipment.
The major objectives of STEP are to forge linkages among academic and R&D institutions on one hand and the
industry on the other and also promote innovative enterprise through S&T persons.
Objectives of STEP
 To forge a close linkage between universities, academic and R&D institutions on one hand and industry
on the other.
 To promote entrepreneurship among Science and Technology persons, many of whom were otherwise
seeking jobs soon after their graduation.
 To provide R&D support to the small-scale industry mostly through interaction with research
institutions.
 To promote innovation-based enterprises.
Facilities & Services Provided by STEPs
 It offers facilities such as nursery sheds, testing & calibration facilities, precision tool room/ central
workshop, prototype development, business facilitation, computing, data bank, library and
documentation, communication, seminar hall/ conference room, common facilities such as phone,
telex, fax, photocopying.
 It offers services like testing and calibration, consultancy.
 Training, technical support services, business facilitation services, database and documentation
services, quality assurance services and common utility services.
Facilities & Services Provided by STEPs
 The department has so far catalyzed 15 STEPs in different parts of the country, which have promoted
nearly 788 units generating annual turnover of around Rs. 130 crores and employment for 5000
persons.
 More than 100 new products and technologies have been developed by the STEPs / STEP promoted
entrepreneurs.
 In addition, over 11000 persons have been trained through various skill development programmes
conducted by STEPs.
 STEPs are autonomous bodies registered as societies under the Societies Registration Act.
Role of Host Institution
 In order to achieve synergetic benefits and also to harness the knowledge and expertise available in
academic and R&D institutions of excellence, every STEP needs to be promoted around a host
institution which could launch, sustain and help the STEP grow.
 Therefore, the host institution has to play an important and crucial role in promotion and growth of a
STEP.
 The host institution should aim at optimum usage of its facility by STEP.
 For this purpose, a periodic assessment of the priorities must be undertaken based on which re-
allocation of resources might become necessary.
 During the stages of planning and implementation of the STEP project, the host institution must not
lose sight of its slated goals and objectives with respect to academic excellence.
STEP Model
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 Though a workable 'STEP-Model' has been evolved by an Expert Committee chaired by the late Prof.
Y. Nayudamma, however, each STEP would have to carve out a niche for itself with regard to the types
of products to be developed based on the availability of facilities and expertise in the host institution
and also the industrial climate of the region.
 Each project envisages active involvement and participation of agencies such as the host institution,
ultimate user of the facilities, financial institutions, government agencies and STEP management.
SIDO
Small Industries Development Organization (SIDO) - Fostering Growth and Empowering MSMEs in
India. SIDO is an apex body under the (MSMEs), Government of India. Established in 1954, SIDO plays a pivotal
role in promoting the growth and development of (MSMEs) in the country. It serves through various
initiatives, schemes, and support services, SIDO aims to empower entrepreneurs, enhance the
competitiveness of MSMEs, and contribute significantly to India’s economic growth.
Functions of SIDO:
Policy Formulation and Advocacy - SIDO actively participates in formulating policies, programs, and
schemes related to MSMEs. It acts as the voice of MSMEs in representing their interests and concerns to the
government and other relevant stakeholders. By advocating pro-MSME policies, SIDO strives to create a
conducive environment for the growth of small enterprises.
Capacity Building and Skill Development - One of the key functions of SIDO is to provide capacity
building and skill development support to entrepreneurs and MSMEs. It conducts training programs,
workshops, and seminars on various aspects of business management, technology upgradation, marketing,
and export promotion. These initiatives enhance the entrepreneurial capabilities and competitiveness of
MSMEs.
Financial Assistance and Credit Facilitation - SIDO facilitates financial assistance and credit
linkages for MSMEs through various government schemes and financial institutions. It assists entrepreneurs
in accessing funds for startup, expansion, and modernization of their enterprises. SIDO also helps in preparing
project reports and loan applications to improve the creditworthiness of MSMEs.
Technology Upgradation and Innovation - SIDO encourages MSMEs to adopt modern technologies
and innovative practices to improve productivity and quality. It collaborates with research institutions,
technology centers, and other organizations to provide technology-related support and guidance to small
enterprises.
Market Promotion and Export Facilitation - SIDO organizes trade fairs, exhibitions, buyer-seller
meets, and marketing events to showcase products and services of MSMEs. It also aids MSMEs in exploring
domestic and international markets and identifying export opportunities.
Cluster Development and Infrastructure Support - SIDO promotes the concept of cluster
development to encourage the growth of industries in a particular geographic area. It supports the creation of
common facilities and infrastructure in industrial clusters to enhance the competitiveness of MSMEs.
Promoting Inclusive Growth - MSMEs play a vital role in fostering inclusive growth by providing
employment opportunities to a large number of people, including those in rural and backward regions. SIDO’s
initiatives in capacity building, skill development, and financial assistance contribute to empowering
entrepreneurs and generating livelihood opportunities.
Supporting Women Entrepreneurs - SIDO actively supports women entrepreneurs by providing
them with training, financial assistance, and guidance to set up and run their enterprises successfully. This
helps in promoting women’s economic empowerment and gender equality.
Boosting Rural and Cottage Industries - Rural and cottage industries are an integral part of India’s
economic landscape. SIDO’s efforts in promoting technology upgradation, product diversification, and market
linkages help in enhancing the competitiveness of these industries and preserving traditional skills and crafts.
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Encouraging Innovation and Technology Adoption - Innovation and technology adoption are
critical for the growth and sustainability of MSMEs. SIDO’s focus on promoting technology upgradation and
fostering innovation helps in enhancing the productivity and competitiveness of small enterprises.
Enhancing Access to Finance - Access to finance is one of the significant challenges faced by MSMEs.
SIDO’s role in facilitating credit linkages and financial assistance helps entrepreneurs in overcoming this
barrier and accessing funds for their business needs.
Facilitating Market Access and Export Promotion - Market access and export opportunities are
essential for the growth and expansion of MSMEs. SIDO’s initiatives in market promotion and export
facilitation enable small enterprises to reach new markets and expand their customer base.
Employment Generation - SIDO’s support to MSMEs has resulted in substantial employment
generation, especially in rural and semi-urban areas. The growth of small enterprises has created job
opportunities for the local population, contributing to poverty alleviation and inclusive growth.
Enhanced Competitiveness - By encouraging technology upgradation, skill development, and market
linkages, SIDO has helped in enhancing the competitiveness of MSMEs. This, in turn, enables small enterprises
to compete effectively in both domestic and international markets.
Promoting Entrepreneurship - SIDO’s efforts in capacity building and entrepreneurial development
have encouraged individuals to take up entrepreneurship as a viable career option. The promotion of a vibrant
entrepreneurial ecosystem has led to an increase in the number of startups and new enterprises.
Export Growth - Through its export promotion initiatives, SIDO has facilitated the entry of MSMEs
into international markets. This has led to increased export earnings for small enterprises and contributed to
India’s export growth.
Balanced Regional Development - SIDO’s focus on promoting industries in backward and rural areas
has contributed to balanced regional development. It has encouraged the growth of industries in areas that
were previously underserved and helped in reducing regional disparities.
NSIC
National Small Industries Corporation (NSIC), is an ISO 9001:2015 certified Government of India
Enterprise under Ministry of Micro, Small and Medium Enterprises (MSME). NSIC has been working to
promote, aid and foster the growth of micro, small and medium enterprises in the country. NSIC operates
through countrywide network of offices and Technical Centres in the Country. In addition, NSIC has set up
Training cum Incubation Centre managed by professional manpower. NSIC facilitates Micro, Small and
Medium Enterprises with a set of specially tailored scheme to enhance their competitiveness. NSIC provides
integrated support services under Marketing, Technology, Finance and other Support service.
Objectives of NSIC
 To build corporation reach and support in the sustainable growth of Micro, Small, and Medium
Enterprises.
 To support and enhance the workforce in the industries by upgrading skills.
 To ensure a hygienic working environment.
 To train people and create self-employment that develops the nation.
 To enhance business growth by outreaching corporates and thus creating business opportunities.
Schemes of NSIC
NSIC offers a set of schemes to increase competitiveness and business growth of MSMEs in India. Some
of the schemes include:
 Single Point Registration Scheme (SPRS)
 Performances & Credit Rating Scheme
 MSME Global Mart
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 Skill & Development Scheme

 ASPIRE
The Single Point Registration Scheme (SPRS) is a scheme launched in 2003 and managed by the
National Small Industries Corporation (NSIC). The scheme allows Micro and Small Enterprises (MSEs) to
participate in the purchases made by the Government. The scheme provides full exemption to registered
MSEs.
Performance and credit rating scheme aim to establish an independent & trusted third-party
opinion on the capabilities and worthiness of MSMEs and makes the credit available at attractive rates to
ensure better productivity.
MSME Global mart is a business to business (B2B) portal that facilitates online marketing support
to Indian micro, small, medium enterprises (MSMEs) manufacturers, suppliers and buyers. It is a one-stop
digital solution to all business needs of MSMEs and aims towards providing next-generation services to make
them competitive in the global market. The portal is launched by the National Small Industries Corporation
(NSIC), a Government of India Enterprise.
Skill Development Scheme - NSIC provides technical support to MSMEs through 'NSIC Technical
Services Centres' (NTSCs) and a number of TICs & LBIs spread across the country. The range of technical
services provided through these centres include skill development in Hi-Tech as well as conventional trades,
material and product testing at our testing laboratories accredited by NABL / BIS, common facilities, energy
audit, environment management etc.
Aspire has been launched by the Indian government with an objective to set up a network of
technology centres, incubation centres to accelerate entrepreneurship and also to promote startups for
innovation and entrepreneurship in rural and agriculture-based industry. It also includes the setting up of
Technology Business Incubators (TBIs).
SISI - Small Industries Service Institutes
Small Scale Industries (SSI) provide conducive conditions for the development and growth of
entrepreneurs. Small enterprises require low investment and simple technology and use local resources to
meet local demands through personal contacts. Thus, it creates scope for the growth and development of Large
Scale Industries (LSI). Small Industries Service Institutes (SISI) are set up in each state to provide consultancy
and training to small and prospective entrepreneurs. SISIs and Technology Centres and Organizations (TCOs)
provide support and services to entrepreneurs and small businesses.
Functions of SISI
 To serve as an interface between Central & State Govts.
 To render technical support services.
 To conduct Entrepreneurship Development Programmers.
 To initiate promotional programs.
Thrust Areas of SISI
 Economic Consultancy / Information / EDP Consultancy.
 Trade and market information.
 District industrial potential surveys.
 Modernization and implant studies.
 Workshop facilities.
 Training in various trade/activities.
 Project profiles.
 State industrial potential survey.
TIIC - Corporate Profile
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TIIC, established in 1949, is the first State level Development Financial Institution promoted for
catalyzing industrial development. The Corporation had financed Greenfield projects, many of which are
presently successful brands. TIIC provides financial assistance for purchase of land, machinery and
construction of buildings. The purpose could be for setting up new units / expansion / modernization /
diversification of existing industries. Assistance is extended to both manufacturing and eligible service sector
industries.
It focuses on extension of assistance to MSMEs, which account for 90% of the total assistance. Further
about 40% of the total assistance is availed by first generation entrepreneurs. The Corporation is guided by a
Board of senior Bureaucrats, Banking Professionals and Sector representatives. The Corporation has
continuously earned profit for past 18 years. TIIC has so far assisted 1,27,277 units with a cumulative sanction
of Rs.19,444 crores upto 31.03.2021.
Thrust Areas of TIIC
TIIC as a State Level Financial Institution, offers long and medium-term financial assistance to various
industries including service sector in the following forms:
o Term Loans, Term Loan and Working Capital Term Loans under the Single Window Scheme,
Special types of assistance like Bill Financing Scheme, etc.
Term Loan Schemes - General Scheme, Micro and Small Entrepreneur Funding Scheme, Equipment Finance
Scheme, Single Window Scheme, Fast Track – EFS, Privileged Customer Scheme, Doctor Plus / My Doctor
Schemes.
Other Schemes - Working Capital Term Loan, Flexi Working Capital Term Loan, Working Capital Term Loan,
Bill Finance Scheme - Tamil Nadu Water Supply and Drainage Board, Tamil Nadu Electricity Board, BFS for
Chennai Metropolitan Water Supply & Sewerage Board, BFS for Greater Chennai Corporation
KVIC – Corporate Profile
The Khadi and Village Industries Commission (KVIC) is a statutory body established by an Act of
Parliament (No. 61 of 1956, as amended by act no. 12 of 1987 and Act No.10 of 2006. In April 1957, it took
over the work of former All India Khadi and Village Industries Board.
Objective of KVIC:
 The social objective of providing employment.
 The economic objective of producing saleable articles.
 The wider objective of creating self-reliance amongst the poor and building up of a strong rural
community spirit.
Function of KVIC
 It plans, promotes, organizes, and implements programmes for the development of Khadi and Village
Industries (KVI).
 It coordinates with multiple agencies that are engaged in rural development for several initiatives w.r.t
khadi and village industries in rural areas.
 It maintains a reserve of raw materials that can be further promoted in the supply-chain.
 It aids in creating common service facilities that help in processing of raw materials.
 It aids the marketing of KVI products through artisans and other avenues.
 It creates linkages with multiple marketing agencies for the promotion and sale of KVI products.
 It encourages and promotes research and development in the KVI sector.
 It brings solutions to the problems associated with the KVI products by promoting research study and
enhancing competitive capacity.
 It also helps in providing financial assistance to the individuals and institutions related to the khadi
and village industries.
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 It enforces guidelines to comply with the product standards to eliminate the production of ingenuine
products.
 It is empowered to bring projects, programmes, schemes in relation to khadi and village industries’
development.
Incubators – Meaning
A business incubator is an organization or program that is designed to support the development and
growth of startup companies. They provide services such as management training, mentorship, co-working
space, networking opportunities, access to funding, and much more. Business incubators are perceived to be
the mainstay of economic development programs. They create value by combining the entrepreneurial drive
of startups with the resources generally available to new ventures.
Types of Incubators in entrepreneurship
Corporate Incubators - Their objectives are to enhance entrepreneurial skills and to help startups
keep up with other industries/competitors. Corporate incubators target internal and external projects related
to the activities of the company. The most common challenge corporate incubators face is the conflict between
top-level executives and committees regarding objectives and management-related decisions.
Local Economic Development Incubators - They work on economic development by supporting
SMEs and specific groups for the overall upliftment of society. These groups include small
enterprises, handicraft-related businesses, and locally-sourced companies. Governance risk, volatility in
management quality, long hours of negotiation, and conflicts are often associated with such incubators.
Private Investors' Incubators - They assist high-potential businesses (such as technology-intensive
startups) and then reap benefits by selling shares. These incubators lag in terms of quality and durability.
Academic Incubators - They offer new sources of finance while supporting the entrepreneurial spirit
and focusing on civic responsibility. Academic incubators target external projects and projects internal to
academic institutions.
Venture Capital Incubators - Venture capital firms have become a popular topic in the business
world lately. They see incubators as a way to generate profits, and thus invest in new companies or offer
funding in exchange for a share or ownership in the company. These firms may also provide management
teams with access to angel investors and financial management as part of their incubation package.
Kitchen incubators - Kitchen incubators provide a safe space for entrepreneurs, chefs, and
restaurateurs to develop their ideas. They offer a commercial kitchen or kitchen space where they can
experiment with speciality foods, create new restaurant concepts or even start a ghost kitchen. Kitchen
incubators are similar to other business incubators as they support and guide the development of "kitchens"
from the initial stages to the full launch. Throughout the process, they provide mentorship, access to funding,
and educational opportunities.
Social Incubators - A social incubator is an organization that fosters and supports individuals with
innovative ideas for businesses that can bring positive change in the world. These businesses could be non-
profit organizations or companies that aim to create products or services that contribute to environmental
sustainability or social progress in society
Process of Entrance in to Incubators
Application - Startups apply to a business incubator program by applying and business plan. Some
incubators have selective application criteria, while others may have a broader range of eligibility criteria.
Screening - The incubator reviews the application and business plan to determine if the startup is a
good fit for the program. The screening process may involve an interview or presentation by the startup.
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Incubation - Once accepted into the program, the startup works with the incubator to develop and
execute its business plan. The incubator provides the startup with access to resources, mentorship, and other
support services to help them achieve their goals.
Graduation - Once the startup has achieved its goals and is ready to operate independently, it
graduates from the program. Graduation typically involves leaving the incubator's physical space and
resources but may still involve ongoing mentorship and networking opportunities.
Roles & Functions of Incubators
 Business incubators help with the basics of business.
 They provide networking activities.
 They help startups save on operating costs.
 Incubators provide marketing assistance.
 Incubators help with market research.
 They provide high-speed internet access.
 They create long-lasting jobs for new graduates, experienced mid-career personnel, and veteran
executives.
 Incubators help with accounting / financial management.
 They provide access to bank loans, loan funds, and guarantee programs.
 Incubators bring credibility to the company. This helps the company receive loans and credit facilities
from financial institutions.
 Incubators help with presentation skills.
 They have a strong network of influential people who can connect startups/ventures with established
businesses and individuals.
 They provide access to higher education resources.
 Incubators can tap into their networks of experienced entrepreneurs and retired executives.
 They link companies with strategic partners.
 They provide access to angel investors and venture capital.
 Business incubators organize comprehensive business training programs.
 They act as advisory boards and mentors.
 They help in management team identification.
 They offer marketing and PR assistance to new companies for brand establishment.
 They help with business etiquette.
 They guide startups/ventures on how to compete with established industry players.
 They provide technology commercialization assistance.
 They help with regulatory compliance.
 They provide intellectual property management.
 They create jobs for mid-career personnel and veteran executives, benefiting communities and driving
economic growth.
Features of Incubators
Industry-Specific Expertise - Some incubators offer specialized support tailored to specific
industries.
Access to R&D Resources - Incubators offer startups R&D facilities for research, prototyping, and
testing without high upfront costs.
Government Liaison and Advocacy - Business incubators assist startups with regulatory
frameworks and foster government connections to streamline processes and address challenges.
Global Market Expansion Support - Incubators help startups go global by providing market insights
and partnerships.
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Corporate Partnerships - Incubators partner with corporations to offer startups resources,

mentorship, and collaboration opportunities.
Focus on Sustainable Practices - Some business incubators prioritize eco and social responsibility.
The role of the incubation centre in this context is crucial, as it plays a pivotal role in fostering a supportive
environment.
In-House Acceleration Programs - Some programs offer an accelerated phase with intensive
mentoring, resources, and a condensed timeline to rapidly move startups towards scalability.
Exit Strategy Support - Incubators can assist startups with exit strategies like IPOs, mergers, or
acquisitions for a smooth transition to the next phase of growth.
Market Intelligence Services - Startups can access market research, trend analysis, and competitive
intelligence.
Incubator Alumni Network - A strong alumni network fosters collaboration and mentorship among
successful graduates of the incubator program.
Angel Investor – Meaning
Angel investors support startups by providing funds, guidance, and access to valuable networks. They
can do much more than just give capital, which makes them very important to the growth of early-stage
businesses. Angel investors provide support in many ways, including by sharing their knowledge and
resources to drive innovation and shape the future.
Pros of Angel Investors:
 Angel investors provide capital to new businesses that may have few other options to obtain funding.
 Angel investors may be experts in their fields and can give helpful advice and mentorship to
entrepreneurs.
 Angel investors may have a lot of contacts and can help entrepreneurs find partners, customers, and
more funding.
 Angel investors are more willing to take a risk and fund new projects than other investors.
 This means that they are eager to take risks on new ideas and markets, which can increase a startup’s
chances of getting funding.
 Angel investors are fast and flexible and can make much faster decisions compared to larger
institutional investors.
 This helps entrepreneurs get the funds they need to grow their businesses faster.
Cons of Angel Investors:
 When business owners get money from angel investors, they have to give up a certain amount of
ownership.
 Angel investors generally allocate comparatively smaller amounts of investment, necessitating a
substantial expenditure of time and effort to secure multiple angel investors in case of a significant
capital requirement.
Venture Capital – Meaning & Definition
Entrepreneurs need investments for their start-up companies. The investments or the capital that
these entrepreneurs receive from wealthy investors is called Venture Capital and the investors are called
Venture Capitalists. VC firms reduce the risk of investments by co-investing with other VC firms.
Functions of Venture Capital
 Venture Capital Fund is made up of investments from wealthy individuals or companies who give their
money to a VC firm to manage their investment portfolios for them and to invest in high-risk start-ups
in exchange for equity.
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 The basic idea is to invest in a company’s balance sheet and infrastructure.

 Venture Capitalist nurtures the idea of an entrepreneur for a short period of time and exits with the
help of an investment banker.
 In a start-up company, VC will receive an equity partnership in exchange for investments in the start-
up company.
 VC’s receive liquidation preference, it means in the worst-case scenario where the company fails, VCs
are given the first claim to all the company’s assets and technology.
 It also offers voting rights over key decisions like Initial Public Offer (IPO) or even sale of the company.
Importance & Advantages of Venture Capital
 Banks usually prefer to finance a new business which has hard assets.
 In the current information-based economy, new start-ups hardly have any hard asset.
 Venture Capitalists step in under these circumstances.
 They can provide more insights into the market.
 Can help in strategy formulation.
 Can help in developing strategic networks
 The partnership is a combination of limited and general partners.
 The life of the fund ranges from 7 years to 10 years.
 The VC fund investments take place over the course of the first 2 - 3 years and the returns are usually
obtained over the last 2 or 3 years.
 In today’s scenario, the average fund managed and the number of investments managed is much more
than what it used to be in the past.
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Unit-3-Innovation
Innovation in Entrepreneurship
Entrepreneurial innovation is the process of developing and putting into practice new concepts, ideas,
goods, services, procedures, or business models that significantly improve and add value to an entrepreneurial
endeavor. It entails using fresh perspectives, questioning the existing quo, and proposing cutting-edge
solutions to fill market gaps or cater to client wants. Innovation is not simply about novel technologies. It may
also spread to a variety of business processes. Including business strategy, marketing, operations, and
organizational culture.
Entrepreneurial innovation is fundamentally about bringing something new to the market. It enhances
current offers in a way that fosters growth, produces value for consumers, and benefits stakeholders. To
accomplish desired results entails seeing opportunities, taking measured risks, and putting innovative ideas
into practice.
Definition for Innovation in Entrepreneurship
Afuah (2015), Innovation is the creation of new products, services, or processes that create value for
customers.
Carayannis and Campbell (2018) – Innovation is the process of creating new value through the
application of new knowledge.
Gao et al. (2022) – Innovation is the process of creating new value through the combination of new
knowledge and existing resources.
World Economic Forum (2020) – Innovation is the process of developing new goods, services, or
procedures. Those goods, services, or procedures satisfy consumer demands and provide value to the
business.
Elements of Innovation in Entrepreneurship
Novelty and Creativity - Innovation involves the generation of original ideas and concepts. It departs
from conventional thinking. It requires entrepreneurs to think outside the box. Also, challenge the
assumptions, and come up with unique approaches to solving problems or meeting market demands.
Market Relevance - Successful innovation in entrepreneurship requires a deep understanding of the
target market. Also, understand evolving customer needs. Entrepreneurs must identify unmet needs. Need to
keep an eye on emerging trends, and changing customer preferences to develop innovative solutions that
resonate with their target audience.
Value Creation - Innovation is driven by the desire to create value for customers, and stakeholders.
Also, society at large. This value can be in the form of improved products or services, enhanced customer
experiences, increased efficiency, cost savings, or social impact.
Implementation and Execution - Innovation is not just about generating ideas. It also involves
translating those ideas into practical solutions. Entrepreneurs need to execute them effectively. Entrepreneurs
must have the ability to turn innovative concepts into tangible products, services, or processes that can be
brought to the market.
Continuous Improvement - Innovation is an ongoing process. It requires constant learning,
adaptation, and iteration. Entrepreneurs need to embrace a mindset of continuous improvement. Need to seek
feedback, and refine their innovations based on customer insights, market dynamics, and evolving trends.
Role of Innovation in Entrepreneurship
Innovation plays a variety of roles in entrepreneurship. It is essential to the development and success
of businesses. The following are some crucial roles of innovation in entrepreneurship, each with an example.
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Driving Competitive Advantage - Entrepreneurs may set themselves apart from competitors by
acquiring a competitive advantage in the market through innovation. (Self-Benchmarking). Entrepreneurs can
draw customers and establish a dominant position in the market through innovation. It can be done by
providing distinctive goods, services, or business strategies.
Identifying Opportunities -Innovation allows entrepreneurs to identify and seize market
opportunities that others may overlook. By staying attuned to customer needs, market trends, and emerging
technologies, entrepreneurs can spot gaps and unmet demands.
Creating Value - The creation of value for consumers, stakeholders, and the economy as a whole is
one of the main roles of innovation. Entrepreneurs innovate to create goods, services, or procedures. It caters
to the demands of customers and offers them improved advantages.
Enhancing Efficiency and Productivity - Innovation can lead to improved efficiency and productivity
within entrepreneurial ventures. By adopting new technologies, processes, or management approaches,
entrepreneurs can streamline operations and achieve higher levels of efficiency.
Solving Societal Challenges - Entrepreneurship innovation can address pressing societal challenges
and contribute to positive social impact. Entrepreneurs leverage innovation to develop solutions for
healthcare, renewable energy, education, poverty alleviation, and more.
Benefits & Advantages of Innovation in Entrepreneurship
 Market Differentiation  Adaptation to Market Changes
 Increased Market Share and Revenue  Competitive Edge
 Improved Efficiency and Cost Savings  Attraction of Talent and Investment
 Enhanced Customer Experience  Resilience and Future Readiness
 Sustainable Business Growth  Expansion into New Markets
 Positive Social Impact  Environmental Sustainability
Types of Innovation in Entrepreneurship
Technological innovations - The inheritance of Schumpeter’s typology remains in the definitive
concept of innovation centered on technological innovation. According to him the opening of novel national
or international markets and the organizational enhancement from the craft shop and factory, such as
steelmaking, demonstrate a procedure of industrial alteration that continually transforms the economic
arrangement from within, which is wind-up the old structures and forming a new one. Mobility, cloud
computing, the Internet of Things (IoT), Artificial intelligence (AI), Augmented Reality (AR) and Big Data are
some examples of technological innovations.
Product innovations - This product innovation is a product, made available to possible customers,
that is novel or meaningfully dissimilar regarding its features or intended usages. Process & product
innovations, refer to production or delivery innovation after the execution of a new or meaningfully
changed production or delivery procedure, which includes important changes in inputs, structure within the
institutional unit, and practices. Light bulbs, TVs, & airplanes are some examples of product innovation.
Process innovation - Process innovation is one of the old categories defined by the Oslo Manual
(2005) and is strictly connected to product innovation, a product innovation that makes the necessity for
process innovation and innovation that makes the necessity for a product. AliExpress – drop shipping
model, Spotify, and other music-streaming services. AliExpress – drop shipping model, Spotify, and other
music-streaming services.
Service Innovation - Innovation in services has recently been identified but not considered as widely
as in manufacturing. To produce a service is to establish a solution to a problem (an action, an operation),
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which does not primarily involve providing a good, being usually intangible mixtures of processes, people
skills, and materials. Services innovation contains activities, such as transportation and logistics, information
and knowledge-based services, food, healthcare, and education, among others. Broadly, services are
categorized by intangibility, heterogeneity, inseparability, and perishability, referred to as IHIP
characteristics.
Business Model Innovation - A business model (BM) is measured as an important vehicle for
innovation but also a source of innovation in and of itself, namely a “Business model innovation.” Many experts
point out that business model innovation characterizes a new measurement of innovation, distinct, albeit
complementary, to traditional measurements of innovation, such as product, process, or organization.
Disruptive Innovation - The two requirements for a disruptive innovation contain a performance
that exceeds the mainstream characteristics of the current product and unequal inducements between an
existing healthy business model and the possibly disruptive business model. Facebook, Google, and FedEx are
some examples of disruptive innovation.
Radical Innovation -Radical innovation deviations from the rules of the game and arise outside the
aware realms of identical. This Radical innovation is investigative and functions with higher levels of
uncertainty. It can be definite moreover in terms of their antecedents (the scope of new data required) or their
significance (the increased performance they make conceivable).
Design-Driven Innovation - In a design-driven approach, the critical aspect of innovation concerns
the skill to recognize, anticipate, and affect the appearance of new product and service meanings. The design
gives to meaning-driven innovations, initial from the understanding of subtle and unexpressed dynamics in
sociocultural models, and results in radically new meanings and languages, often inferring a variation in
sociocultural rules.
Social Innovation - Define social innovation as a collective process of learning that includes the
representative contribution of civil society actors intended to reply to a societal need over variation in social
practices. That produces a transformation in social affairs, systems, and structures, contributing to huge socio-
technical transformation.”
Responsible Innovation - Responsible innovation (RI) is rooted in concepts such as “responsible
development” “responsible study,” and “responsible knowledge-based innovation”. It is a clear, interactive
process by which societal performers and innovators become equally responsive to each other. With an
opinion on the (ethical) adequacy, sustainability, and social desirability of the innovation procedure and its
saleable products.
Innovation as a core Business Process
Innovation, the core renewal process within an organization. It is a generic activity associated with
survival and growth. At this level of abstraction, the business can see the underlying process as common to all
firms. The challenge facing any organization is to find the ways of managing the innovation process. To provide
a good solution for the problem of renewal or refreshing of the essence, creation, and delivery of a firm’s
offerings.
Innovation as a core Business Process
At its heart, innovation involves
Searching - Scanning the (internal and external) environment for and processing relevant signals
about threats and opportunities for change.
Selecting - Deciding (based on a strategic view of how the enterprise can best develop) which of these
signals to respond to.
Implementing - Translating the potential in the trigger idea into something new and launching it in
an internal or external market. Making this happen is not a single event but requires eventually acquiring the
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knowledge resources to enable the innovation, executing the project under conditions of uncertainty (which
require extensive problem-solving), and launching the innovation into relevant internal or external markets.
Capturing value from the innovation - In terms of sustaining adoption and diffusion and in learning
from progressing through this cycle so that the organization can ...
Conceiving, developing, delivering, and scaling new products, services, processes, and business models
for customers. Reimagining, redesigning, and implementing new ways of conducting business activities to
achieve strategic objectives, enhance customer satisfaction, reduce costs, and gain a competitive advantage.
Building into innovative organization
Despite the explosive rate of innovation transforming our world, how established organizations
innovate themselves is another matter altogether. The string of defunct or struggling organizations such as
Kodak, Nokia, Blockbuster, Blackberry or Borders Books attests to the fact that incumbent, established and
erstwhile successful organizations either resisted, or were unsuccessful at attempting intrinsic innovation.
Innovation or improvement?
Innovation means different things to different people, and is often context specific. For example, an
innovation in the air traffic control industry will differ from an innovation that relates to the use of smartphone
technology. In the former, people may die if the innovation’s downstream impacts are poorly understood,
while in the latter, failure may be an inconvenience, or even encouraged as a way of helping in the rapid
evolution of the product.
Additionally, the fact that a new product or service offering may be marketed as “innovative” further
blurs the distinction between an incremental improvement and a transformational or even disruptive
innovation.
Creativity Process
Business creativity is a vital aspect of the modern corporate world, as it drives innovation and enables
organizations to stay ahead of their competitors. Blending knowledge management and basic skills of
creativity management, business creativity helps generate novel and valuable ideas that can lead to the
development of new products, services, or processes and, ultimately, a company’s growth.
In today’s dynamic market environment, where change is constant, and consumer needs evolve
rapidly, fostering business creativity has become crucial for organizations that aim to stay relevant and
competitive. It involves identifying opportunities, challenging conventional thinking, and nurturing an
environment encouraging experimentation and risk-taking. The focus is not solely on the individual creative
genius but also on an entire organization’s collaborative effort and collective intelligence.
Creativity vs. Innovation
 Business creativity and innovation may seem similar, but they have distinct differences.
 Creativity involves generating new ideas, concepts, or solutions that have value.
 In a business context, this can mean developing new products, services, or strategies to enhance the
organization.
 On the other hand, innovation is implementing and turning those creative ideas into tangible results.
 This often entails refining, testing, and adapting creative ideas to meet the specific needs of the market
or customers.
 Understanding the distinction between these concepts is essential for businesses to harness their
creative potential effectively.
 While creativity provides the initial spark, innovation is the driving force that ensures those ideas are
actualized and generate value for the business.
Role of Creativity in Business
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Product Development - A creative approach to product development helps businesses create unique,
competitive offerings that cater to customer needs. Creativity allows businesses to think beyond conventional
methods and develop innovative ideas that set them apart.
Problem-Solving - Business creativity can be applied to solving complex challenges within a company.
By encouraging and fostering creative thinking, companies can find new ways to overcome obstacles,
streamline operations, and improve efficiency.
Strategic Planning - Creatively-driven organizations often succeed by identifying novel opportunities
and crafting strategies that leverage their unique strengths. A creative strategy helps businesses stay ahead of
their competition and continuously adapt to changing market conditions.
Company Culture - Fostering a creative culture within a company can have long-lasting positive
effects on employee engagement, motivation, and collaboration. A healthy, creative work environment can
enhance overall productivity and employee satisfaction.
Elements of Business Creativity
Creative Processes - Creative processes play a key role in business creativity. These processes involve
generating, evaluating, and implementing new ideas and concepts to create innovative products, services, or
solutions. The corporate creativity literature highlights the importance of having a structured process for
fostering innovation in an organization.
Creative Mindset - A creative mindset is essential for nurturing business creativity. This involves
encouraging an entrepreneurial spirit, fostering a culture of innovation, and empowering employees to take
risks. Organizations must provide an environment that supports their employees in developing new ideas and
pursuing innovative solutions while being open to failure as a learning opportunity.
Collaboration and Teamwork - Innovation is often a result of effective collaboration and teamwork.
Businesses must create an environment encouraging employee collaboration, as diverse perspectives can lead
to more innovative products and solutions. Implementing cross-functional teams and providing tools and
platforms to facilitate communication can help foster a collaborative culture.
Observation and Experimentation - Observation and experimentation are crucial aspects of
business creativity. Companies need to closely observe market trends, customer behavior, and competitors’
strategies to identify opportunities for innovation. Taking inspiration from other industries and adopting an
external perspective can help businesses identify creative solutions.
Intellectual property
Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic
works; designs; and symbols, names and images used in commerce. IP is protected in law by,
For example, Patents, Copyright and Trademarks, Which enable people to earn recognition or
financial benefit from what they invent or create. By striking the right balance between the interests of
innovators and the wider public interest, the IP system aims to foster an environment in which creativity and
innovation can flourish.
Types of intellectual property
 Patents  Industrial designs
 Copyright  Geographical indications
 Trademarks  Trade secrets

Patents - A patent is an exclusive right granted for an invention. Generally speaking, a patent provides
the patent owner with the right to decide how - or whether - the invention can be used by others. In exchange
for this right, the patent owner makes technical information about the invention publicly available in the
published patent document.
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Copyright - Copyright is a legal term used to describe the rights that creators have over their literary
and artistic works. Works covered by copyright range from books, music, paintings, sculpture and films, to
computer programs, databases, advertisements, maps and technical drawings.
Trademarks - A trademark is a sign capable of distinguishing the goods or services of one enterprise
from those of other enterprises. Trademarks date back to ancient times when artisans used to put their
signature or "mark" on their products.
Industrial designs - An industrial design constitutes the ornamental or aesthetic aspect of an article.
A design may consist of three-dimensional features, such as the shape or surface of an article, or of two-
dimensional features, such as patterns, lines or color.
Geographical indications - Geographical indications and appellations of origin are signs used on
goods that have a specific geographical origin and possess qualities, a reputation or characteristics that are
essentially attributable to that place of origin. Most commonly, a geographical indication includes the name of
the place of origin of the goods.
Trade secrets - Trade secrets are IP rights on confidential information which may be sold or licensed.
The unauthorized acquisition, use or disclosure of such secret information in a manner contrary to honest
commercial practices by others is regarded as an unfair practice and a violation of the trade secret protection.
IP Registration Procedure
 Filing of application
 Please check whether the indication comes within the ambit of the definition of a Gl under section
2(1)(e).
 The association of persons or producers or any organization or authority should represent the
interest of producers of the concerned goods and should file an affidavit how the applicant claims
to represent their interest.
 Application must be made in triplicate.
 The application shall be signed by the applicant or his agent and must be accompanied by a
statement of case.
 Filing of application
 Details of the special characteristics and how those standards are maintained.
 Three certified copies of the map of the region to which the GI relates.
 Details of the inspection structure if any to regulate the use of the GI in the territory to which it
relates.
 Give details of all the applicant together with address.
 If there is a large number of producers a collective reference to all the producers of the goods may
be made in the application and the G.I.,
 If registered will be indicated accordingly in the register.
 The applicant must have an address for service in India.
 Generally, application can be filed by (1) a legal practitioner (2) a registered agent.
 Preliminary scrutiny and examination
 The Examiner will scrutinize the application for any deficiencies.
 The applicant should within one month of the communication in this regard, remedy the same.
 The content of statement of case is assessed by a consultative group of experts will versed on the
subject.
 The will ascertain the correctness of particulars furnished.
 Thereafter an Examination Report would be issued.
 Show cause notice
 If the Registrar has any objection to the application, he will communicate such objection. The
applicant must respond within two months or apply for a hearing. The decision will be duly
communicated. If the applicant wishes to appeal, he may within one month make a request. The
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Registrar is also empowered to withdraw an application, if it is accepted in error, after giving on

opportunity of being heard.
 Publication in the geographical indications Journal
 Every application, within three months of acceptance shall be published in the Geographical
Indications Journal.

 Opposition to Registration
 Any person can file a notice of opposition within three months (extendable by another month on
request which has to be filed before three months) opposing the GI application published in the
Journal.
 The registrar shall serve a copy of the notice on the applicant.
 Within two months the applicant shall sent a copy of the counter statement.
 If he does not do this be shall be deemed to have abandoned his application. Where the counter-
statement has been filed, the registrar shall serve a copy on the person giving the notice of
opposition.
 Thereafter, both sides will lead their respective evidences by way of affidavit and supporting
documents.
 A date for hearing of the case will be fixed thereafter.
 Where an application for a GI has been accepted, the registrar shall register the geographical
indication.
 If registered the date of filing of the application shall be deemed to be the date of registration.
 The registrar shall issue to the applicant a certificate with the seal of the Geographical indications
registry.
 Renewal - A registered GI shall be valid for 10 years and can be renewed on payment of renewal fee.
 Additional protection to notified goods - Additional protection for notified goods is provided in the Act.
 Appeal - Any person aggrieved by an order or decision may prefer an appeal to the intellectual property
appellate board (IPAB) within three months.

Unit – 4-MSME Development

Business Development Service (BDS)
BDS refers to services that assist organizations like startups and MSMEs with information, guidance,
management, financial backing, and technical skills to enhance market performance, growth, and
competitiveness. With advisory & information provision, consultancy, coaching, & mentoring, business
development services support companies in every development phase, from the foundation to daily operation.
BDS for startups can help with expanding operations, advice on how to market and sell company
products & services, guidance with business plan development, & validation of product-market fits through
financial and non-financial services.
What is Business Development Service (BDS)?
Non-financial assistance can include strategies to reduce production costs, target new markets,
increase sales, partner with larger firms, etc. Financial services can help entrepreneurs and startups acquire
machinery, production locations, legal representation, and starting capital. Regardless of the type of service,
professional business development services involve consulting management, sales, and marketing teams of
recipient companies.
Categories of Professional Business Development Services
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MSMEs often turn to a BDS backed by governments of OECD and non-OECD countries that are public
agencies, private for-profit firms, non-profit organizations, or a combination of the three, and use physical,
telecommunication, or online mediums. The first distinction between BDS can be between formal and informal
business development agencies. The former is servicing a contractor provides to a business owner based on
arrangements made through agreements and conditions between two parties.
A formal BDS consists of private firms, consultancies, or public sector organizations that provide their
specialized services commercially for a fee or free. Formal service providers focus on making profits and
growing their organization with their offerings. Startups and SMEs often leverage informal BDS for free by not
contacting private or public firms. These organizations rely on their sphere of influence (SOI) to obtain
information and use publicly available mediums like television, newspapers, the Internet, etc.
Levels of Business Development Services
The structure of BDS providers is arranged based on the level of intervention they choose to
undertake. Thus, a business development service can be classified into one of the following three categories:
BDS provider - BDS providers take on the highest level of intervention in business development.
These can be private for-profit and non-profit firms, NGOs, or national government agencies offering free
continued business development services.
BDS providers communicate directly with recipient companies or individuals.
BDS subsidizer - BDS subsidizers are institutions in the private sector that provide constant subsidies
for business development to startups and SMEs without monetary transactions.
BDS facilitator - BDS facilitators take the least amount of intervention that promotes the proper
functioning of the free market by simplifying service provision or resources necessary to clear initial obstacles
for SMEs and MSMEs to make them self-sustainable.
These international or local firms focus on developing BDS markets locally by targeting providers with
new services, enforcing best practices, etc., and recipients with information, education, advice on BDS
purchases, etc. BDS facilitators calculate the impact that can be made through providers and help create better
policies for the BDS market. Institutions that comprise BDS facilitators are usually public firms or NGOs backed
by the government or donors.
Roles & Responsibilities of BDS Providers
Lead Generation and Client Relationship Building - BDSPs research the market extensively to
identify potential customers for their goods and services. They reach out to these prospects through various
channels such as in-person meetings, phone calls, or emails. Building strong relationships with both existing
and new clients is essential. BDEs work to ensure that clients stay with the business for the long term.
Sales Strategies and Revenue Generation - BDEs develop and execute business plans to meet sales
targets for revenue and profitability. They prepare prospects and presentations to showcase business
products, aiming to generate leads. Continuous research on relevant market trends and competitor strategies
helps them stay ahead and refine their sales approach.
Collaboration and Decision-Making - BDEs collaborate with other departments within the
organization to make effective decisions. This includes working closely with marketing, product development,
and customer support teams. Effective communication and alignment with other teams contribute to overall
business success.
Using Social Media and Networking - Leveraging social media platforms and networking events,
BDEs build relationships and expand their professional network. These connections can lead to valuable
business opportunities.
Quality Improvement and Competitive Edge - Beyond lead generation, BDEs focus on improving
the quality of goods and services offered by the business. They analyze industry trends, competitor activities,
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and customer feedback to enhance the business’s offerings. Developing sales strategies that give the business
a competitive edge is a key part of their role.
Negotiating and Closing Deals - BDEs negotiate contracts with potential customers or suppliers.
They work on closing deals that benefit the business and align with its growth objectives.
Strategies to enhance SME Productivity & Competitiveness
Enhancing the competitiveness of small and medium-sized enterprises (SMEs) is crucial for
sustainable growth and economic development. Here are some strategies to enhance SME productivity and
competitiveness;
Innovation and Technology Adoption: SMEs should embrace innovation and adopt new
technologies to improve productivity. This can involve creating or re-engineering products or services to meet
market demand, introducing new processes to enhance efficiency, and applying marketing techniques to
expand sales opportunities. Digital technologies play a significant role in enhancing productivity. SMEs can
leverage tools like automation, data analytics, and cloud computing to streamline operations and reduce costs.
Capacity Building and Skill Development: Investing in employee training and skill development is
essential. Well-trained staff can contribute to higher productivity and better-quality output. SMEs can
collaborate with educational institutions, industry associations, and government programs to access training
and capacity-building resources.
Access to Finance and Funding: SMEs often face challenges in accessing finance. Governments and
financial institutions can create favorable policies and provide targeted financial support to SMEs. Access to
working capital, loans, and venture capital can help SMEs invest in technology, machinery, and infrastructure.
Market Linkages and Export Opportunities: SMEs should explore international markets to expand
their customer base. Exporting can lead to increased sales and revenue. Governments can facilitate market
linkages by providing information, trade missions, and export promotion programs.
Efficient Supply Chains & Logistics: Streamlining supply chains and logistics can improve SME
productivity. Efficient transportation, inventory management, and distribution networks are essential.
Collaborating with other SMEs or larger companies can lead to cost savings and better resource utilization.
Policy Support and Regulatory Reforms: Governments should create an enabling environment for
SMEs. This includes simplifying regulations, reducing bureaucracy, and ensuring fair competition. Policies that
encourage entrepreneurship, protect intellectual property, and promote fair trade benefit SMEs.
Networking & Collaboration: SMEs can benefit from networking with other businesses, industry
associations, and research institutions. Collaborative efforts can lead to knowledge sharing, joint projects, and
access to new markets.
Environmental Impact Assessment (EIA) - Meaning
The EIA is a process of predicting and evaluating the environmental hazard & impact of a proposed
project or development schemes, considering co-related socio-economic, culture, and impacts due to human
activity, both beneficial and adverse effects. The effects of human activities related to the use of environmental
resources on the natural environment are called Environmental Impact. The prediction and evaluation of
environmental effects of human activities are collectively called as Environmental Impact Assessment (EIA).
Environmental Impact Assessment (EIA) - Definition
EIA is the method of evaluating environmental consequences such as environmental changes,
construction of dams, reservoirs, roads, rails, bridges, industrial locations, urban expansion, etc. and the
maximum possible adverse effects of these environmental changes due to human activities.
Importance of EIA
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• EIA links the environment with development for environmentally safe and sustainable development.
• EIA gives a cost-effective method to eliminate or reduce the adverse impact of developmental projects
and schemes.
• It is the government policy that any industrial projects have to obtain EIA clearance from the Ministry
of Environmental before approval by the planning commission.
• EIA is potentially a necessary component of good environmental management & prediction of it.
• EIA enables the decision-makers to analyze the effects of developmental activities on the environment
well before the developmental project is implemented.
• EIA encourages the adaption of mitigation strategies in the developmental plan.
• EIA makes ensures that the development plan is environmentally good and within the limits of the
capacity of assimilation and regeneration of the ecosystem.
• EIA is a tool to anticipate the possible damage to the environment caused by development projects
and schemes.
• It creates efforts to prevent or minimize damage to the environment and the biosphere, and stimulate
the health and welfare of man.
• EIA seeks to increase the understanding of the ecological system and the importance of natural
resources to the nation and to provide for the appropriate institutional structure to carry out the
objectives.
MSME Marketing Promotion Scheme
The scheme consists of five components namely

• Domestic Trade Fairs/Exhibitions;

• International Trade Fairs/Exhibition;
• National/ International workshop / Seminar on Marketing / Public Procurement/Packaging etc;
• Vendor Development Programmes &
• Bar Code.
Objectives Marketing Promotion Scheme

• To encourage manufacturing MSEs in their efforts of tapping & developing domestic / overseas
markets as well as adoption of the Bar Coding on products.
• To facilitate marketing linkages especially in the view of Public Procurement Policy for MSEs Order
2012.
• To create consciousness & to educate the MSMEs by organizing International & National Workshop/
Seminar on marketing / packaging / topics relevant to MSME sector.
Functions of the scheme
The objectives of the scheme will be achieved by performing the following major activities for MSMEs
through Government of India financial assistance in the manner laid down in these guidelines:

• Technology Upgradation in Packaging.

• Skill Upgradation / Development for modern marketing techniques.
• Competition Studies.
• Special component for North-Eastern Region.
• New markets through State/District level local Exhibitions/Trade fairs.
• Corporate Governance Practices.
• Marketing Hubs.
• Reimbursement to ISO 18000 / ISO 22000 / ISO 27000 certification.
MSME Marketing Promotion Scheme - Link to source Document
Objective of Credit Guarantee Scheme for MSEs
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Credit Guarantee Scheme for MSEs

The scheme aims at motivating first generation entrepreneurs towards self-employment by providing
credit guarantee funding for third-party guarantee-free / collateral free loans.
Key benefits & Eligibility for Credit Guarantee Scheme for MSEs
Guarantee on credits for loans up to INR 2 crores, without third-party guarantee and collateral.
Guarantee on coverages range from 75% (others) to 85% (Micro Enterprise up to INR 5 lakh). 50% of the
coverage is for retail activity. Current Entrepreneurs and Aspirant Entrepreneurs.
Scheme Description of Credit Guarantee Scheme for MSEs
Third party / collateral guarantee free credit facilitation by eligible institutions with maximum credit
capped at Rs. 200 lakhs qualify for guarantee under the scheme. Lately, guarantee coverage has been made
eligible to selected Small Finance banks & NBFCs. Guarantee cover extends to 50% / 75% / 80% & 85% of the
sanctioned amount of the credit facility. Extent of guarantee cover is of 85% for micro-enterprises for credit
up to Rs. 5 lakhs.
Extent of guarantee cover if of 50% for credit ranging from INR 10 lakh to Rs. 100 Lakh per MSE
borrower retail trade activity. Extent of guarantee cover is 80% for both MSME owned / operated by women
and loans/credits in the North East Region for credits up to Rs. 50 lakhs. In cases of default, the trust settles
75% of the amount extended by the lending institutions for credits up to Rs. 200 lakhs.
Credit Guarantee Fund Trust for MSEs
The CGTMSE extends them helping hand by providing guarantee to enable them access credit leading
to setting up viable micro and small enterprises. Thereby transforming them from job seekers to job providers
and meaningfully contribute in nation building.
Objectives Credit Guarantee Fund Trust

• Availability of bank credit without the hassles of collaterals / third party guarantees would be a major
source of support to the first-generation entrepreneurs to realize their dream of setting up a unit of
their own Micro and Small Enterprise (MSE).
• Keeping this objective in view, Ministry of Micro, Small & Medium Enterprises (MSME), Government
of India launched Credit Guarantee Scheme (CGS) so as to strengthen credit delivery system and
facilitate flow of credit to the MSE sector.
• To operationalize the scheme, Government of India and SIDBI set up the Credit Guarantee Fund Trust
for Micro and Small Enterprises (CGTMSE).
Prime Minister's Employment Generation Programme (PMEGP)
Prime Minister’s Employment Generation Programme (PMEGP) is a major credit-linked subsidy
scheme launched by merging two schemes namely Prime Minister’s Rojgar Yojana (PMRY) and Rural
Employment Generation Programme (REGP) for generating employment opportunities by establishing micro-
enterprises in urban and rural areas in the non-farm sector.
The scheme was launched in 2008. It is a central sector scheme. Ministry of MSME administers the
programme. The programme is being implemented by the Khadi and Village Industries Commission (KVIC) at
the national level. It is the single nodal agency for the implementation of the programme.
The Scheme is being implemented through banks, District Industries Centres (DICs), State KVIC
Directorates and State Khadi and Village Industries Boards (KVIBs) at the state level. Individuals above the
age of 18 years, Self Help Groups (SHGs), Cooperative Societies involved in the production, and institutions
that are registered under the Societies Registration Act of 1860 are eligible for benefits under this
programme. There is no income ceiling while setting up the project.
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Assistance is provided under the scheme only to the new units, units that have availed government
subsidies under either the state or the central government schemes; existing units are not eligible for subsidy
under PMEGP. In order to achieve inclusive growth across the country, a minimum of 75 projects will be
awarded to each district. Physically disabled, OBC, SC/STs, women, northeastern region (NER) applicants in
rural areas are eligible for a higher rate of subsidy.
Objectives of Prime Minister's Employment Generation Programme (PMEGP)

• Generation of sustainable and continuous employment opportunities in both rural as well as urban
areas in the country.
• Provision of sustainable and continuous employment to a wide segment of prospective and traditional
artisans, unemployed youth in rural and urban areas by establishing micro-enterprises for
employment generation.
• Smooth flow of credit to the micro sector by facilitating the participation of financial institutions.
• The Cabinet Committee on Economic Affairs (CCEA) has given approval for the continuation of PMEGP
for 3 years beyond the 12th Plan from FY 2017-18 to 2019-20.
Challenges Associated with Prime Minister's Employment Generation Programme (PMEGP)
The Scheme is crippled by structural issues and a high rate of Non-Performing Assets (NPAs). From
2015-2016 to 2019-2020, assistance of Rs. 10,169 crores were provided. Out of this, Rs. 1,537 crores has
turned out to be NPA. A deficiency in skills, lack of market study, low demand and stiff competition are
believed to be the key reasons for such a large number of NPAs. While normally all central schemes are given
definite annual targets, this scheme is not driven by any such target. As both the states and the banks work
without the aim of completing the annual target of disbursement of loans, the programme may lose its drive.
Know in detail about various Government Schemes on the given link.
Features of Prime Minister's Employment Generation Programme (PMEGP)

• Any industry including coir-based projects (excluding those mentioned in the negative list) can take
advantage of this scheme
• The per capita investment under the scheme should not exceed Rs 1 lakh in plain areas and Rs 1.5 lakh
in hilly areas. Assistance under the PMEGP is only available to new units that are to be established
• There is no income ceiling for setting up projects
• Existing units or units that are already availing any government subsidy (State or Central) are
ineligible
• Any industry including coir-based projects (excluding those mentioned in the negative list) can take
advantage of this scheme
Technology Upgradation Fund Scheme
The Ministry of Textiles introduced the Amended Technology Upgradation Fund Scheme (ATUFS).
This scheme aims to facilitate investment, employment, productivity, quality, and import and export
substitution in the textile industry. It also indirectly promotes investments in the manufacturing of machinery
for textiles. It is a credit-linked subsidy scheme for capital investment in textile manufacturing under the
Government of India’s Make in India and Zero Defect and Zero Effect initiatives.
Objectives Technology Upgradation Fund Scheme

• Export & employment generation, especially to women, by encouraging the garment and apparel
industry and increasing India’s share in global exports.
• Promotion of technical textiles for export and employment.
• Promotion of converting existing looms to better technology looms to improve quality and
productivity.
• Encourage better quality in the processing industry and check the need for the import of fabrics by the
garment sector.
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Benefits of Technology Upgradation Fund Scheme

• The eligible individual entities (not units) are entitled to get reimbursement of the Capital Investment
Subsidy (CIS) according to the below rates:
• Weaving using new looms that are shuttle-less processing silk, handloom, and jute (includes weaving
and knitting preparatory) at the rate of CIS 10% subject to the upper limit of Rs.20 crore.
• Technical textiles and garments at the rate of CIS 15% subject to the upper limit of Rs.30 crore.
• Multiple composite units/segments where the capital investment for technical textiles and garments
is less than 50% of the project cost at the rate of CIS 10% subject to the upper limit of Rs.20 crore.
• Multiple composite units/segments where the capital investment for technical textiles and garments
exceeds 50% of the project cost at the rate of CIS 15% subject to the upper limit of Rs.30 crore.
Eligibility for Technology Upgradation Fund Scheme
The following entities are eligible to get the credit-linked subsidy under this scheme: Handloom sector,
Silk Sector, Jute Sector, Technical textiles, Made-up/garment manufacturing, Processing fibers, fabrics, made-
up, garments & yarns, Weaving preparatory and knitting.
Unit-5-Start Up
New Venture – Meaning
New ventures, or entrepreneurial ventures, are broadly defined as those firms that are in their early
stages of development and growth. Often, they are in the process of bringing their initial products or services
to the market and of developing their customer base.
Characteristics of New Venture
Pursues an entrepreneurial venture - A business venture is an entrepreneurial undertaking
because it has an element of risk and reward. The founder, entrepreneur or investor can expose their
resources to the venture's risk to pursue rewards. For example, they can risk their money, time and labour to
undertake its activities. If they're successful, they can achieve their objectives and earn a profit. Individuals or
entities undertaking the business venture can learn its risks and take measures to reduce or avoid exposure.
Helps execute a business plan or good idea - A good idea or business plan can help entrepreneurs
reduce or avoid risks. For example, founders or entrepreneurs can ensure they have a good idea by
determining facts and data that support the undertaking or initiative. They can identify a market gap to fill or
find ways to make their offerings unique. A business plan can also contain helpful information that prepares
the business venture for success. For example, it can detail the business venture's funding, marketing
approach, human resources (HR) considerations and value proposition. Evaluating these areas can eliminate
some business venture risks.
Involves one or more partners - An individual or entity can start a business venture. The entity or
individual assumes all the risks and works to make the venture successful. Depending on the business
venture's needs and the founder's preferences, they can hire employees to help them manage the enterprise's
activities. Some business ventures have partners who share the enterprise's risks. These parties can also
collaborate to complete tasks and pursue organisational objectives. While partners can contribute more effort,
they can hire staff to help them undertake the entity's activities.
Satisfies a market need or solves a problem - A business venture can provide services or goods to
satisfy market needs or solve issues. Clients can pay money for these offerings. To determine the price of the
offering, the entrepreneur can add the cost of inputs, overheads and production per unit to the anticipated
profit per item. Entrepreneurs can consider the amount clients can pay, market forces and desired gains to
choose a unit price that customers can accept. Clients can also accept the unit price and pay it if the product
or service satisfies their needs or solves their problems.
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Works in any sector or industry - A business venture can exist in different sectors and industries.
For example, the enterprise can be in the health care, manufacturing or education sectors. Entrepreneurs can
start businesses in an area they understand, leveraging their expertise to achieve organizational objectives.
They can also start in a promising new field and recruit employees who know the sector or industry to pursue
organizational targets.
Business venture vs startup
Business venture can grow gradually over an extended period, startup founders want them to grow
fast. Startups often offer their products/services to large markets to accelerate their growth, while business
ventures can serve large and small markets. While startups get capital from venture capitalists and angel
investors, business ventures may get economic resources through loans and grants. Venture capitalists and
angel investors can require an active role in a startup, while people providing loans or grants surrender
control to the founder or entrepreneur.
A founder or entrepreneur launching a business venture can operate or oversee the company for an
extended period, founders of startups require an exit strategy. The exit strategy can guide the founders when
other entities or individuals offer money for the startup's control and ownership after its growth. The period
from launching to exiting can take a few months or years for startups. Individuals starting a business venture
can oversee it for decades.
Steps for starting a small industry
Identify a Business Idea - Finding a business idea is something you can approach by relying on time-
tested approaches that have worked for other entrepreneurs. No matter whether you're looking to start a low-
investment business on the side or you'd prefer to go all-in on your idea, the best way to find a product to sell
includes strategies like.
Mining your interests - What do you like to do in your spare time? Are there products you can sell
that relate to your hobbies or that would solve a common problem you have?
Research existing products - Peruse product reviews to see if there are common complaints and
frustrations about popular products and if you can identify gaps in the market.
Capitalize on trends - If you notice a particular product seems to be popping up everywhere, or you
have a great idea to help make the most of a popular item, then you might be on to great online business ideas.
Validate Your Business Idea - Once you have narrowed down on a business idea, it is critical to go
through all the following questions to validate it: How specific have you gone with your ideas? How would
you measure your progress and success? Have you set milestones, and are they achievable? Are you
providing a solution to customer's needs? What differentiates you from your competitors? What are
your skills? How much capital do you have to risk? Are you fully invested in this?
Get a Memorable Business Name & Logo - One of the most fun parts of starting your own small
business is the name and the logo. A great business name and logo will usually have the following
characteristics: Short and simple, Different, Unique/Original.
Develop a Business Plan - A business plan is a living document that maps out the details of your
business. It covers; What your business will sell, How the company will be structured, What the market looks
like, How you plan to sell your product or service, What funding you'll need, What your financial projections
are, and Which permits, leases, and other documentation will be required.
Understand Business Finances - Starting any small business has a price, so you need to determine
how you will cover those costs. Conducting a break-even analysis of your small business will help you have a
clear view of the following.
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Determine profitability - This is generally every business owner's highest interest. How much
revenue do I need to generate to cover all my expenses? Which products or services turn a profit, and which
ones better left alone?
Pricing a product or service - When most people think about pricing, they consider their product
costs and how competitors are pricing their products. What are the fixed rates, what are the variable costs,
and what is the total cost? What is the cost of any physical goods, and what is the cost of labor?
Analyze the data - What volumes of goods or services do you have to sell to be profitable? How can I
reduce my overall fixed costs? How can I reduce the variable costs per unit? How can I improve sales?
Choose the right bank - Choosing the right bank for your business comes down to the needs of your
small business. Writing down your banking needs can help narrow your focus to what you should be looking
for. Schedule meetings with various banks and ask questions about how they work with small businesses to
find the best bank for your small business. Sometimes a local bank might be much more supportive of a small
business than global banks. Hence, it is vital to understand where you stand with the bank requirements.
Keeping your personal and business finances separate makes doing your business taxes much more
straightforward, and can help you automate some of the steps as well.
Structure - Choosing the right business structure is about balancing the legal and financial protection
you need with flexibility. There are a few factors you’ll need to consider.
Licenses & Permits - Paperwork is a part of the process when you start your own small business. No
one wants to end up in legal trouble. Your business is subject to the local laws, as well as laws and regulations
specific to your industry. There are various small business licenses & permits that may apply to your situation,
depending on the type of business you are starting and your location. You will need to research what licenses
and permits apply to your business during the start-up process. Investing time and money upfront to obtain
legal advice can save you from considerable headaches down the road.
Decide & Pick the S/W Systems - One of the best ways to reduce the heavy lifting involved in running
a business and set yourself up for future success is choosing software that can help you automate or streamline
the things you need to do. Often, when you choose the right software systems, you’ll be able to set them up
once and have them run efficiently with little ongoing work. Consider looking into software to help you
manage the following: Accounting, Email marketing, Ads, Project management, Website or online store.
Set up a Digital Presence - Having a strong digital presence would be ideal for a small business. It is
a more cost-effective alternative compared to traditional marketing practices. It is especially useful for small
companies that compete with a more established brand. Start by deciding which marketing activities will have
the most significant impact on your new business, and use your plans to make a list of the skills you’ll need to
execute them. With your target customer and your brand identity under your belt, you can begin building your
small business’s core marketing elements, including your website, blog, email tool, conversion tool, and social
media accounts.
Build Your Team - How much work will you need to do, and what skills will be required to launch
your business? These are fundamental questions you’ll need to answer because they’ll guide your timeline and
your investment level in the launch. If you plan to do all of the work yourself, you’re limited by the time you
have available to invest. If you plan on hiring help, you’ll need to account for those costs—as well as the time
involved in finding and on-boarding freelancers or employees. Hiring the right talent for marketing, design,
engineering, finance, sales, and HR all require considerable time and effort. It is crucial in a small business to
have a good and trust-worthy team to ensure success.
When starting, your product or service has to be at least good, if not great. Differentiate it in some
meaningful and important way from the offerings of your competition. Everything else follows from this
fundamental principle. Don’t drag your feet on getting your product out to market, since early customer
feedback is one of the best ways to improve your product. Of course, you want a “minimum viable product”
(MVP) to begin with, but even that product should be good and differentiated from the competition. Having a
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“beta” test product works for many startups as they work the bugs out from user reactions. Remember, you
are solving for your customers. Not for future investors.
Launch the Business - You’re ready to take the last step in starting a business: launching. The
preparation you’ve already done has laid a solid foundation to support your launch, so you can focus on
marketing activities and making your first sale. However, a plan of attack, especially as you’re trying to build
traction, can help make your launch even more successful. While every launch will be unique, some elements
can boost any business’s first few sales days. Leverage your network, consider offering discounts, Test paid
ads.
Become a Strong Salesperson - If your small business needs to become successful, you must become
a great salesperson. You will have to learn how to “sell” your business— to customers, prospective investors,
and even potential employees. It’s important to be positive, trustworthy, and to learn how to listen. You must
practice your sales pitch, get feedback from various people, and then refine your pitch. Even if you are not
naturally an extrovert, you need to show confidence, follow up, and ask for the sale.
Invest & Grow - Startups and small businesses frequently prepare a “pitch deck” to present their
company to prospective angel or venture capital investors. The pitch deck typically consists of 15-20 slides in
a PowerPoint presentation and is intended to showcase the company’s products, technology, and team to the
investors. Keep track of your monthly growth and your finances and be ready on hand to sell to an investor
every day. Raising capital from investors is difficult and time-consuming. Therefore, it’s crucial that a startup
absolutely nails its investor pitch deck and articulates a compelling and exciting story.
Project Formulation & Feasibility Analysis
Feasibility analysis is designed to assess whether your entrepreneurial endeavor is, in fact, feasible
or possible. By evaluating your management team, assessing the market for your concept, estimating financial
viability, and identifying potential pitfalls, you can make an informed choice about the achievability of your
entrepreneurial endeavor. A feasibility analysis is largely numbers driven and can be far more in depth than
a business plan. It ultimately tests the viability of an idea, a project, or a new business.
A feasibility study may become the basis for the business plan, which outlines the action steps
necessary to take a proposal from ideation to realization. A feasibility study allows a business to address
where and how it will operate, its competition, possible hurdles, and the funding needed to begin. The business
plan then provides a framework that sets out a map for following through and executing on the
entrepreneurial vision.
Organizational Analysis aims to assess the prowess of management and sufficiency of resources to
bring a product or idea to market. The company should evaluate the ability of its management team on areas
of interest and execution. Typical measures of management prowess include assessing the founders’ passion
for the business idea along with industry expertise, educational background, and professional experience.
Founders should be honest in their self-assessment of ranking these areas.
Resource sufficiency pertains to nonfinancial resources that the venture will need to move forward
successfully and aims to assess whether an entrepreneur has a sufficient amount of such resources. The
organization should critically rank its abilities in 6-12 types of such critical nonfinancial resources, such as
availability of office space, quality of the labor pool, possibility of obtaining intellectual property protections
(if applicable), willingness of high-quality employees to join the company, and likelihood of forming favorable
strategic partnerships. If the analysis reveals that critical resources are lacking, the venture may not be
possible as currently planned.
A Financial Analysis seeks to project revenue and expenses (forecasts come later in the full business
plan); project a financial narrative; and estimate project costs, valuations, and cash flow projections. The
financial analysis may typically include these items: A 12-month profit & loss projection A 3 or 4-year profit &
loss projection, A cash-flow projection, A projected balance sheet for loan tenure + 1, A breakeven calculation.
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One commonly used equation for a sales model multiplies the number of target customers by the
average revenue per customer to establish a sales projection:
T×A=S
Target(ed) Customers/Users × Average Revenue per Customer = Sales Projection
Another critical part of planning for new business owners is to understand the breakeven point,
which is the level of operations that results in exactly enough revenue to cover costs. It yields neither a profit
nor a loss. To calculate the breakeven point, you must first understand the two types of costs: fixed and
variable. Fixed costs are expenses that do not vary based on the amount of sales. Rent is one example, but
most of a business’s other costs operate in this manner as well.
While some costs vary from month to month, costs are described as variable only if they will increase
if the company sells even one more item. Costs such as insurance, wages, and office supplies are typically
considered fixed costs. Variable costs fluctuate with the level of sales revenue and include items such as raw
materials, purchases to be sold, and direct labor. With this information, you can calculate your breakeven
point—the sales level at which your business has neither a profit nor a loss. Projections should be more than
just numbers: include an explanation of the underlying assumptions used to estimate the venture’s income
and expenses.
Projected cash flow outlines preliminary expenses, operating expenses, and reserves—in essence,
how much you need before starting your company. You want to determine when you expect to receive cash
and when you have to write a check for expenses. Your cash flow is designed to show if your working capital
is adequate. A balance sheet shows assets and liabilities, necessary for reporting and financial management.
When liabilities are subtracted from assets, the remainder is owners’ equity. The financial concepts and
statements introduced here are discussed fully in Entrepreneurial Finance and Accounting.