Industry Updates

How to Accelerate Women’s Entrepreneurship in India to Build a 5 Trillion Dollar Economy

Published: December 26, 2023

The Indian government intends to achieve a USD 5 trillion economy by 2025, and women entrepreneurs, especially in the MSME sector, can play a crucial role in achieving this target. Women own around 20% of India’s 63 million MSMEs, which employ between 22 and 27 million women and men. Increased economic participation by women boosts GDP and promotes sustainable development, gender equality, and poverty reduction. Estimates suggest that adding 68 million women to the workforce by 2025 could raise India’s GDP by USD 700 billion, and including 50% more women in the workforce could boost GDP growth by 1.5 percentage points. Therefore, fostering women’s entrepreneurship is imperative to achieve the Indian government’s economic goal.

Understanding India’s women entrepreneurs

India’s rural women entrepreneurs face unique challenges, with more than 45% starting businesses because they need the money. MSMEs run by women, or wMSMEs, differ from male-owned enterprises and are more vulnerable to economic shocks. They grapple with challenges that include juggling household responsibilities, limited skills, restricted network access, and funding constraints.

Female-owned businesses have an annual turnover of only 59% compared to male-owned ones. Safety and mobility concerns hinder women entrepreneurs from accessing markets. In many cases, male family members exert control over business decisions. These challenges, coupled with societal norms, stifle women’s entrepreneurial aspirations. The pandemic’s impact and the need for rapid digitization have exacerbated these difficulties.

What India’s wMSMEs need

wMSMEs need ongoing support throughout the critical stages of their entrepreneurship journey to ensure they survive, thrive, and become resilient despite adversities. The support spans six fundamental ecosystem-based needs to promote women’s entrepreneurship:

Entrepreneurship promotion, which includes self-employment promotion, seminars and workshops, and business accelerators and incubators

Business support services, which include technical upgrades, quality assurance certification, business management tools, and subsidies

Market linkages, which include exhibitions and fairs, public procurement provision from MSMEs, market infrastructure, and branding services

Access to finance, which includes loans, aids, credit guarantees, seed money, and working capital

Training and skilling, which include exposure visits, technical and soft skill training, stipends, financial assistance to training institutions, and computer training and certification

Mentoring and networking, which include guidance and mentorship with incubators and accelerators, technology centers, promotion of technological innovation, and networking with industry experts

Government schemes’ support for entrepreneurship

Many government schemes in India support entrepreneurship and meet the six ecosystem needs. Most strongly emphasize access to finance and skilling. Approximately 45% of central schemes prioritize access to finance, while 27% support training and skilling. However, areas such as market linkages and mentoring need more attention.

Only 3% of state and 4% of central schemes offer mentoring or networking as their main support area. While 71% of central and 96% of state schemes directly support entrepreneurs or businesses, a mere 7% of central and state schemes exclusively serve female beneficiaries. Additionally, many programs require offline applications, with 46% of central schemes and 73% of state schemes mandating offline enrollment or application submission at designated offices.

What can policymakers do

Entrepreneurs require continuous business support services to support enterprises’ survival and growth. Policymakers can improve this by adopting a lifecycle approach that aligns with the six fundamental ecosystem-based needs stated above and integrates fragmented schemes. Converging central and state schemes can address finance, incubation, handholding, market linkages, and higher-order support services.

However, schemes integrated into the entrepreneurial lifecycle alone may not be sufficient. Governments should ensure convenient last-mile access to all support programs and offer digital and physical assistance. A “phygital” model that combines physical and digital engagement would work best for low- and middle-income households, aided by a village-level frontline force to facilitate enrolment and provide last-mile access.

Moreover, sex-specific data analysis and outcome-driven approaches can benefit women entrepreneurs. This data would enable service providers and policymakers to offer tailored support based on business stage, size, gender, sector, and location.

Mentorship can take wMSMEs a long way ahead if it evolves as a sector. Yet, only some schemes and private sector initiatives offer mentoring support to women. Governments and the private sector should invest in comprehensive mentoring across all ecosystem needs, early-stage incubation, and acceleration support. The expansion of women-focused incubators and accelerators to serve enterprises in both formal and informal sectors could be the first step toward progress.

Together, these strategies can enhance women’s entrepreneurial roles in India to foster economic growth, gender equality, and sustainable development.

Authors: Sonal Jaitly, Global Lead, Gender Equality and Social Inclusion (GESI), MSC, Lakshmi Sruthi Thangallapally, Assistant Manager, MSC, Shantanu Sahay, Associate, MSC.

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