Women Entrepreneurs in MSMEs
Published on : Saturday 04-03-2023
India is set to witness a significant shift, with women dominating the workforce and shaping the countrys future, says Darshana Thakkar.
Micro, Small & Medium Enterprises (MSMEs) play a very important role in the Indian economy. MSMEs have contributed significantly to expanding entrepreneurial endeavors through business innovations. They are widening their domain across sectors of the economy, producing a diverse range of products and services to meet the demands of domestic and global markets. MSMEs play a crucial role by providing significant employment opportunities at comparatively lower capital costs than large industries. Through industrialisation of rural and backward areas, among other things, reducing regional imbalances and assuring more equitable national income and wealth distribution.
Lots of talk, focus, and promotion of MSMEs across the country. But what about women’s entrepreneurship? The female population in India is around 48.39%. But what's the contribution of women to the country's growth? Let's understand a few numbers.
Employable women in 2021 were around 41.25% against men, 34.26%. In 2022, employable women were around 51.44% against 45.97% for men. It proves that women have better skill sets for getting employment.
The participation of women in the labour force has helped millions of families pull out of poverty and has led to job creation. Women are well known for their leadership skills and dominate in new-age industries such as electronic manufacturing, where more than 50% of the employees are women because of their high-precision work and better productivity. This attitude towards work and commendable business skills has also emphasised the importance of women in the modern workforce.
According to a report by McKinsey Global, India can potentially add US$ 700 billion to global GDP by increasing women's participation in the labour force. The percentage of women working in the manufacturing and agriculture sectors is higher than that of men.
Now let's look at women's entrepreneurship in India.
Increasing numbers of women entrepreneurs in India have a vital influence on the social and economic demographics of the country. In India, 20.37% of women are MSME owners, accounting for 23.3% of the labour force. They are considered to be the backbone of the economy.
Women-led businesses provide a great impetus to the economy. Consider these facts and figures:
i. 43.2 crore working-age women in India
ii. 1.35-1.57 crore women-owned businesses
iii. These provide direct employment to 2.2-2.7 crore people
iv. Women-led businesses are estimated to grow 90% in the next five years
v. According to Boston Consulting Group, start-ups founded or co-founded by women generate 10% more cumulative revenue over five years
vi. Women entrepreneurs are empowering 50% of India's start-up ecosystem, and
vii. Start-ups have a more inclusive work culture and employ 3x more women than men.
The good thing is that Indian women are independent and are motivated to start their businesses.
So what are the factors driving women to start an entrepreneurship journey or to join the workforce?
Recognition: Appreciation, fame, regard, popularity, self-esteem and admiration are a few forms of credit that motivate women entrepreneurs. According to a survey by Bain & Company, more than 45% of Indian women in rural areas were driven to start a business to gainsome or the other form of recognition.
Outcome: Due to detail orientation and focused approach, women-led start-ups provide 35% higher RoI than men. This ability generates more returns and encourages women to start their businesses.
Lifestyle improvement – fulfilling unmet needs: The important motivation factor is to provide a better lifestyle to the family. Women make almost 85% of purchase decisions for the family. By working, she tries to fulfill the unmet needs of the family by earning additional income. The inherent need in women to uplift families is a crucial factor.
Education: India ranks among the top worldwide for producing female graduates in the science, technology, engineering, and mathematics (STEM) industry. Worldwide 40% of women graduating in the STEM fields are from India.Indian women are game-changers in the fields of science and technology.
Higher profitability and overall efficiency
Businesses having women in leadership positions and management cadre are considered to run very efficiently. Some important reasons to engage more and more women in entrepreneurship are:
Higher & Faster return on investment: Women are inherently very precise in money matters. Women-led businesses require comparatively less investment but generate higher net revenue. As per the report, women-led start-ups provide a 78% higher return on investment compared to 31% men-led start-ups.
Multi-tasking: Women are great multitaskers, without any doubt. The majority of women juggle multiple things at a time – be it different tasks of business or household or together. These multitasker forces have proved themselves highly valuable in generating various income streams. This way, women are excellent at nurturing any start-ups. According to a survey conducted by psychologists at the University of Hertfordshire, When women and men were given two tasks simultaneously, women slowed by 61%, whereas men slowed by 77%.
High-risk appetite: As per a KPMG survey, 43% of women are willing to take more risks. As women are born fighters in taking different dangers in their life span, they do the same regarding business. Of course, they are very conservative regarding financial risk, which is a concern; that's why they work with lower capital and provide a higher return on investment. But otherwise, in all areas, women have higher courage to take risks. Women are found to be better than men at envisioning opportunities.
Adaptability and higher EQ: Women have a dynamic ability to adapt. In India, women face more life changes that help them be resilient at any time. A survey was conducted by Bain & Company, Google, and AWE Foundation for 350 women solopreneurs and small company owners in urban India. The result showed that companies run by women founders were resilient and fast to adapt. The results also showed that women had a higher emotional quotient (EQ) that aids in better business decision-making.
Women-led start-up ecosystem
In India, 45% of start-ups are run by women. India is known for most women lead start-ups turning into a unicorn in 2021. A few examples of significant start-ups run by women are as follows:
1. BYJU’S by Divya Gokulnath
2. Nykaa by Falguni Nayar
3. Mobikwik by Upasana Taku
4. Zolo by Isha Choudhary, and
5. Thrillophilia by Chitra Gurnani Daga.
Despite all these, the representation of Indian women in entrepreneurship is alarming. Few facts:
• Only 14% of Indian entrepreneurs are women
• Out of 6 crore entrepreneurs, only 80 lakh are women
• 79% of all women-led businesses are self-funded, mainly because they are not able to secure any funding for business expansion, and
• Women contribute only 17% to India's GDP, whereas 37% is the global average.
Government initiatives to encourage women's participation
The government is playing a game-changing role in encouraging women entrepreneurs.The Indian government increased the budget for Women and Child Development by 14% in 2021. It has set aside over Rs 30,000 crore in FY21. This budgetary allocation also includes various development schemes, including funding and market support as follows:
Women Entrepreneurship Platform
It is a flagship platform started by NITI Aayog to promote women's entrepreneurship. The platform hosts workshops and educational events to motivate women to create their businesses.
Reservation in the purchase by Government institutions through GeM
To promote products by women-led businesses, the government has made it mandatory for all the government institutions and PSUs to purchase a certain amount of volume from the GeM portal and reserved 3% to be purchased from women-led businesses only.
Bharatiya Mahila Bank Business Loan
This scheme was introduced in 2017 to help women access cheap loans and dream big. The plan provides loans of over Rs 20 crore for women entrepreneurs. A collateral-free loan of up to one crore is also available under this scheme.
Dena Shakti Scheme
Dena Shakti Scheme was launched for women entrepreneurs to start their businesses in specific sectors such as agriculture, retail, and manufacturing. The scheme provides loans at an interest rate of 0.25% below the base rate. The scheme is for micro-entrepreneurs, and the maximum loan application is Rs 20 lakh
This scheme is for women who want to establish their businesses but don't know where to begin. The GoI intends this scheme for women who belong to a family that earns less than INR 1.5 lakh per year, with no discrimination against widowed, poor, or disabled women. The scheme provides up to Rs 3 lakh in cash, with a low-interest rate. Loan subsidies available help women to embark her on a path of business.
Pradhan Mantri Mudra Yojana
Under this scheme, women entrepreneurs can get loans ranging from Rs 50 thousand to Rs 10 lakh with simple payback terms. It is administered by the Micro Units Development and Refinance Agency (MUDRA) and provides loans to enterprises in the manufacturing, trading, and service sectors a collateral-free loan.
Cent Kalyani Scheme
This scheme is highly advantageous for women working in the MSME sector. Under this scheme, a loan is available for starting a new or existing business. The Central Bank of India has started this scheme that offers loans ranging from Rs 1 crore with no collateral or guarantors necessary. Loan under this scheme is available for agriculture and retail business as well.
Financially independent women can contribute to society's faster growth and development. To achieve these, the Indian government has devised initiatives to make credit available to women, who can then use it to achieve their business goals and provide jobs for more women as a result. Because of the collective efforts of the government, Indian corporates, Indian banks, and responsible citizens of India, there has been a massive transformation in women's entrepreneurship in the past few years. With more significant numbers of women leading start-ups and unicorns, this drastic transformation underlines the potential of Indian women and their determination. In the coming decades, India is set to witness a significant shift, with women dominating the workforce and shaping and enhancing the country's future. It is estimated that over 3 crores more women-owned businesses are expected to provide 15 to 17 crore jobs by 2030. That could be a game changer and help our nation's economic outlook look brighter than ever.
Darshana Thakkar is MSME Transformation Specialist and Founder, Transformation – The Strategy Hub. An Electrical Engineer followed by MBA – Operations with hardcore industry experience in managing business operations, Darshana is an expert in transformation of businesses that helps them achieve growth with speed and scale. She has invested 27 years in transforming Micro and Small Enterprises. Her rich experience in resolving pain areas and the MSME/SME industry's real-life problems are helping the organisation for quick results.
Darshana has helped many MSMEs to increase profitability & achieve sustainable growth. She is keen on the growth of Indian Startups, providing mentoring and hand-holding support to startups to make them succeed quickly.
She is very passionate about supporting women in pursuing their career and life goals. She is actively working for women's entrepreneurship and leadership development.
• Founder and CEO of Transformation
• Certified Women Director by IICA, Ministry of Corporate Affairs, Government of India
• Empanel and recognised Startup mentor and Trainer by CED, Government of Gujarat
• Registered and Verified Business Advisor – Tata Nexarc, Tata Business HUB, Mumbai, and
• Chairperson: MSME Support & PRO at Makarpura GIDC Association, Vadodara.
MSME Transformation and Strategic Advisor – MSME Business Forum India, Darshana has received various accolades:
• Winner of Gujarat Women's leader award 2022 by CMO Asia
• Winner of Influential Women leader in business by Insight Success 2022
• Recognised as India's most trusted consulting company by Insight Success 2022
• Felicitated by Mentor my board in the gracious presence of Honourable FM Mrs. Nirmala Sitaraman during Women Director's conclave – 2022
• Felicitated by the president of Makarpura GIDC Association during the Suvarna Jayanti Mahotsav on 17th December 2022 for her excellent contribution in supporting MSME and startup Businesses.
Apart from this, she is an author and publishes her blog, article, and case study related to the industry. Email: [email protected]