The State Of Women-Led Emerging Businesses & MSMEs In India

Evidently, the pandemic decimated industries across the globe. Along with the powerful business houses, its reverberations were also felt on the many women-led enterprises that put them in deep water. A report by Google, Bain and Company and AWE Foundation revealed how nearly 70 per cent of the female-owned businesses in India battled a slew of challenges due to the crisis. 

To add to this, the female labour force participation numbers have also plummeted over the years. While it was 34 per cent in 2004-2005, it came down to 25 per cent in 2017-2018. This number has further fallen post-pandemic, observe industry experts. 

The Chief Executive Officer (CEO) of Pahle India Foundation, Nirupama Soundararajan expounds on how India defines the female-led businesses in the country. “A McKinsey report suggests that by providing opportunities to women, they can contribute to as much as $770m to the GDP by 2025. This will be an 18 per cent boost for the Indian economy. Interestingly, according to the Female Entrepreneurship Index of 2015, India ranked 70 out of 77. However, the report demonstrated a silver lining- India’s positive is in its innovativeness, the ability to create new products and technology. Although the weakness continues to be the low labour force participation and first-tier finance,” she asserts. 

Data from 2016 reveals that out of the 60 million MSMEs in India, 8 million were actually women-led in 2016. This is reflective of the state of women in India. 14 per cent of women-owned enterprises are in the micro space, 4.2 per cent in medium space and 5.6 per cent in the smaller strata. As this size swells, the women-led enterprises sink. 

Another report in 2021 highlighted the funding gap is as high as $158b. Soundararajan expresses, “This is staggering. It shows the biases that exist but also suggests an opportunity that we have.”

She further adds, “Rural entrepreneurship is higher than urban. This is not surprising though. As for the state-wise performance, North-East is by far the best performing, followed by the South. The middle belt is what actually lacks. This signals a strong correlation between social development indicators with regards to the position of women in the society, women entrepreneurs and their access to finance.”

Inclusion Of Women-Led Entrepreneurs:

Soundararajan begins by questioning if we have done enough for the women-led enterprises in the country. “No, but we can do this better. Also, the reason why they haven't been able to scale themselves up to us is because of capital constraints.”

Ironically, global studies show that women-led enterprises contribute more to the economy- nearly 78 per cent. They also have lower NPAs than men. “When this data is compelling enough, it behoves us to ask what we did for this community and what needs to be done more. The structural barriers and biases about women holding money or bank accounts must be broken and this is prevalent in both rural and urban areas.”

To conclude, she urges the government, female entrepreneurs themselves and the lending institutions to work in a more cogent manner and identify an implementable solution for women to access finance more. This will eventually lead to building capacity where she is able to employ more women and create a more gender-equal ecosystem. 

The speaker was present at the Emerging Business Summit & Awards organised by BW SME World.