The Multipronged Challenges Faced by Indian Entrepreneurs
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Business is all about the challenges that have to be faced day-in and day-out. However, the current economic condition requires measures that are in a way not in an entrepreneur's control. Earlier it was all about expansion plans and innovative products, but now all that has taken a back seat. Entrepreneurs are facing challenges at a level that needs immediate attention of the government and policymakers.
A business cannot achieve its targets without adequate funds and working capital. But, in the present scenario—especially after the IL&FS episode—the country went into a crisis mode wherein the flow of capital saw a downward trend. Although the current liquidity crisis is affecting small as well as large organizations, these are the MSMEs of various sectors which are bearing the maximum brunt.
With a consolidated debt of around INR 90,000 crore, IL&FS was unable to find resources to pay its debt and found itself in an asset-liability mismatch. As the company was raising money from the market by way of a commercial paper, the worst affected were investors, including banks, mutual funds investors, and individuals. Being an NBFC, the Reserve Bank of India did not exercise much control over operations, and as a result, the spillover effect on other segments was undeniable.
In the absence of the right amount of capital, companies are facing a tough time to plan their business which in turn is further affecting the overall health of country's economy. Expansions have stopped and there is a slowdown in diversification plans. This single challenge is the largest one as almost everything depends on it. Even if someone gets the capital, banks declare it NPA immediately after 90 days of non-payment despite borrower’s positive intention to repay the loan amount.
The second challenge being faced by entrepreneurs is retaining and attracting manpower. No denying the fact that India is full of manpower, but the best ones have single-point agenda, i.e., to join a multinational company (MNC). The bright brains do not prefer working with Indian entrepreneurs as they are lured by the MNCs work culture and attraction of getting international transfers. But, the youth of the country must realise that Indian entrepreneurs are serving the country while the MNCs are taking money out of the country. Everyone in the country has to work towards economic growth, and it cannot be done alone by the Indian entrepreneurs.
The third challenge is getting business. It is a tragedy for the Indian entrepreneurs that they cannot find business in their own country. Take example of the auto component industry, the original equipment manufacturers (OEMs) prefer products by MNCs and do not trust the Indian manufacturers. Even if the Indian companies are investing significantly in research and development, the OEMs ask them to try their product somewhere else. Compare this with the situation where research and development is done by a Japanese firm; then their product will be lapped up immediately by the OEMs.
This is the situation when many of the foreign markets prefer Indian products, the indigenous players are reluctant to support the young Indian businesses. Hence, besides developing favourable economic policies for domestic businesses and ensuring substantial liquidity flow in the market, the government and Indian corporates must also start campaigns that may change people mindset towards Indian entrepreneurs and businesses.