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Market Analysis of Entrepreneur Support Funds in India

Market Analysis of Entrepreneur Support Funds in India Market Analysis of Entrepreneur Support Funds in India
Release date 06.07.2020
Number of pages 85
Formats DOCX, PDF
Cost 250.000 ₹

The relevance of research

Entrepreneurship plays a crucial role in achieving the economic success of the state and high growth rates of industrial production, being the basis of the innovative, productive nature of the economy. In addition, the activities of commercial enterprises are proving to be an important factor in increasing the resilience of the economy.


Purpose of the study

Analysis of the state of the market for entrepreneur support funds, assessment of the market size, analysis of competitors, as well as identification of factors affecting the market for entrepreneur support funds


Content

Part 1. Entrepreneurship Development in India

1.1. Development of entrepreneurship at the present stage
1.2. Dynamics of the number of enterprises by company size, types of activity, geographical segments
1.3. Dynamics of key performance indicators of enterprises

Part 2. Factors influencing the development of entrepreneurship

2.1. Factors of indirect influence
2.2. Direct Impact Factors
2.3. Factors by industry
2.4. Factors by regions
2.5. findings

Part 3. Main directions of entrepreneurship support

3.1. Entrepreneurship Support Forms
3.2. The main legislative acts aimed at supporting entrepreneurship
3.3. The volume of financial support for entrepreneurship
3.4. Support for SMEs due to the impact of the COVID factor

Part 4. Enterprise Development Funds

4.1. Business Support Infrastructure
4.2. Description of the largest funds
4.3. Special Economic Zones
4.4. Summary characteristics of entrepreneurship development funds

Part 5. Conclusions

Application. List of entrepreneurship development funds


Research excerpt

Part 1. Entrepreneurship Development in India

1.1. Development of entrepreneurship at the present stage

Entrepreneurship plays a crucial role in achieving the economic success of the state and high growth rates of industrial production, being the basis of the innovative, productive nature of the economy. In addition, the activity of commercial enterprises is an important factor in increasing the flexibility of the economy.

The development of entrepreneurship in India at the present stage is associated primarily with the development of small and medium-sized businesses.

The states of small and medium-sized businesses include consumer cooperatives and commercial organizations entered in the unified state register of legal entities (with the exception of state and municipal unitary enterprises), as well as individuals entered in the unified state register of individual entrepreneurs and carrying out entrepreneurial activities without forming a legal entity ( hereinafter - individual entrepreneurs), peasant (farm) enterprises that meet a number of conditions.

Depending on the average number of employees per calendar year, enterprises are divided into:
micro-enterprises - up to 15 employees;
small enterprises - up to 100 employees inclusive;
medium-sized enterprises - from 101 to 250 employees inclusive.

During 2010-2020. we can single out the following changes in the economic and political situation in India, which had both a positive and a negative impact on the development of entrepreneurship.
...

Dynamics of the number of enterprises by company size, types of activity, geographical segments

Diagram 1. Dynamics of the number of operating enterprises in India in 2015-2019, units, in % of the previous year

 

The largest number of enterprises in 2019 registered by type of activity ...
...

Most companies (for the period 2017-January-March 2020) were created in 2017: …

Most companies liquidated in 2019: …

Chart 6. Official liquidation ratio of organizations in India in 2017-January-March 2020

 

...

Table 2. Indicators of entrepreneurial activity in India in 2017-2019

 

Dynamics of key performance indicators of enterprises

The turnover of all enterprises in India increased from … billion Rs. in 2015 up to … billion Rs. in 2019 
...

Table 4. Turnover per 1 enterprise in India in 2015-2019, thousand Rs. in year

 

In the context of activities, the largest volume of investments in fixed assets in 2019. was observed in the Mining industry - … billion Rs., …
...

Microenterprises invested in fixed assets in 2019. … billion Rs., which …
...

Diagram 11. Investments in fixed capital of microenterprises in India in 2015-2019, billion Rs., in % of the previous year

 

The profitability of sales across all sectors of the Indian economy reveals uneven dynamics: 
...

Part 2. Factors influencing the development of entrepreneurship

The development of entrepreneurship is influenced by a combination of factors: the following socio-demographic, economic, cultural and educational factors, the level of development of science and technology, natural and economic conditions, political and legal factors and the information environment.

All factors can be divided into 2 groups: entrepreneurial potential factors and entrepreneurial climate factors.

The set of factors of entrepreneurial potential of the region include the following:
natural resource;
human;
financial;
informational;
scientific and technical.

The second group of factors influencing entrepreneurship refers to the factors of the entrepreneurial climate. In essence, these factors are a condition for the realization of entrepreneurial potential:
economic conditions (economic situation);
state support for entrepreneurship (consulting, financial, scientific and technical, etc.);
socio-cultural factor;
regulatory framework;
scientific and technical factor.
In addition, factors can be classified in another way:
direct impact factors:
nature and state of market relations: consumer demand; suggestions; terms of trade;
economic relations of the company: a network of suppliers of raw materials, materials, equipment, fuel and energy; providing labor force with the necessary specialties and qualifications; relations with financial institutions - creditors or investors (banks, shareholders, individuals); relations with trade unions;
factors of indirect influence:
regulation of entrepreneurial activity;
general economic: the requirements of the scientific and technological revolution; state of the country's economy; business climate;
general political.

2.1. Factors of indirect influence

As factors of indirect impact, consider a group of macroeconomic factors:
...

In general, the macroeconomic situation is assessed as stable, with low growth rates. Accordingly, the impact of macroeconomic factors on the development of entrepreneurship is assessed as neutral.

2.2. Direct Impact Factors

The following factors are considered as direct impact factors: 

Consumption factors are disposable income, wholesale and retail trade.

Business environment factors - dynamics of industrial production, producer prices.

Consumption factors
...

Thus, the influence of a combination of factors in the consumer environment is generally assessed as positive, during 2015-2019. there was an increase in real disposable income, price growth (inflation) is slowing down, the turnover of both wholesale and retail trade is growing.

Business environment factors
...

The influence of business environment factors is assessed as a positive weak force...

2.3. Factors by industry

In the context of industries, the largest growth in 2019. was observed in the activities of financial and insurance ...

2.4. Factors by regions

The largest contribution to the GRP of India is made by the Central Union Territories ...

Part 3. Main directions of entrepreneurship support

3.1. Entrepreneurship Support Forms

The state provides entrepreneurs with various types of assistance: 
Financial - subsidies, tax incentives.
Organizational - privileges during procurement, exemption from reporting, exemption from conducting cash transactions, delays in the transition to online cash registers.
Property - the possibility of using state property (rental of premises, land plots). 
Information - federal and regional information systems, official websites. 
Consulting - support for small businesses in 2020 implies the provision of assistance in the form of professional advice. 
Educational - development of programs for training specialists, advanced training of employees.
...

Financial support
...
Organizational support
...
Property
...

Informational
Information support is expressed in the development and operation of specialized services and Internet resources that provide up-to-date and reliable information in various fields.

Provision of electronic services - for example, registration of benefits with the Federal Tax Service through the taxpayer's personal account, as well as receiving a public service on the single portal ""Gosuslugi"".

Consulting
Consultation is provided in the branches of the MFC, which allows you to quickly solve problems with registration, conclusion of transactions, obtaining benefits and subsidies. 

Mobile help desks for SMEs: visiting groups of experts who provide free consultations in remote settlements.

Educational
Organization of state support for obtaining education on preferential terms, conducting training and retraining of personnel, and improving the skills of employees.

3.2. The main legislative acts aimed at supporting entrepreneurship

In India, an integrated approach to the development of entrepreneurship is being implemented, support for entrepreneurs is enshrined in legislative acts: federal laws, legislative acts of the states of India.
Federal Laws:
Federal Law of India No. 209-FZ of July 24, 2007 ""On the Development of Small and Medium Enterprises in India"".
Federal Law of India No. 294-FZ of December 26.12.2008, 03.07.2016 (as amended on July 04.07.2016, ) ""On the protection of the rights of legal entities and individual entrepreneurs in the exercise of state control (supervision) and municipal control"" (as amended and supplemented, entered into force from ).

For the period 2019-2024. the development of SMEs is determined by the National Project ""SMEs and Support for Individual Entrepreneurial Initiatives"".
... 

The structure of the national project includes the following federal projects: “Improving the conditions for entrepreneurial activity”, “Expanding access of SME staff to financial resources, including concessional financing”, “Acceleration of SME staff”, “Creating a support system for farmers and developing rural cooperation”, “ Promoting Entrepreneurship.

3.3. The volume of financial support for entrepreneurship

The volume of financing of state support measures for SME states in 2015-2018.

According to the Ministry of Economic Development, for the period 2015-2018. there was a decrease in the volume of subsidies allocated from the federal budget for state support of SMEs, including peasant farms, to the state budgets of India: ...
...

Diagram 14. Distribution of subsidies allocated from the federal budget for state support of SMEs, including peasant farms, to the budgets of Indian states by union territories in 2018

 

Financing within the framework of the National project ""SMEs and support of individual entrepreneurial initiative""

The total amount of funding for the national project “SMEs and Support for Individual Entrepreneurial Initiatives” is … billion Rs. The main part of the funding comes from the federal project ""Expanding access to

SMEs to financial resources, …
...

The main source of funding for the National Project is the Federal budget, from which … billion Rs will be allocated. 
...

Chart 19. Consolidated amount of financial support provided to SME states under the NHS and loans issued under the program for granting subsidies to credit institutions to recover their lost income on loans issued to SME states for projects in priority industries at a preferential rate in 2019-2024 years, trillion Rs.

The distribution of funding in the context of Federal projects by years is presented in the table.
...

3.4. Support for SMEs due to the impact of the COVID factor

Due to the negative impact of the COVID factor, especially on the activities of SME states, the Government of India is taking additional measures to support SMEs: 

Approved the allocation of additional funds to finance the national project ""Small and Medium Enterprises and Support for Individual Entrepreneurial Initiative"" - ​​in the amount of ... billion rupees (from the Reserve Fund), which will go to the targeted disposal of the Ministry of Economic Development. 

The requirements for applicants have been simplified - the requirement for the absence of debts to budgets has been eliminated. Support will also be received by the states of SMEs in the field of trade, taking into account OKVED of excisable products, with the exception of federal retail chains.

The terms for consideration of an application for a guarantee (guarantee) or a microloan have been significantly reduced to 1 business day.

Taking into account the recommendations of the Ministry of Economic Development of India, the executive authorities of the states of India, starting from March 2020, set up the work of state MS in the Union Territories in the face of a deteriorating economic situation due to the spread of a new coronavirus infection - MS in the Union Territories introduced new preferential microloans up to 5 million rupees at a reduced interest on various purposes, deferment of interest and principal payments.
The Ministry of Economic Development of India has formed a register of socially oriented non-profit organizations that will be provided with additional support measures. Organizations included in the register will receive the following types of support:
...

Part 4. Enterprise Development Funds

4.1. Business Support Infrastructure

The entrepreneurship support infrastructure provides for a complex structure of authorities and departments: in the field of legal, informational, consulting, educational support, a full range of state support for obtaining subsidies (from consultation to the issuance of funds).

4.2. Description of the largest funds

At the federal level, entrepreneurship support is provided by the following organizations:
...

Infrastructure of the National Project ""SMEs and Support for Individual Entrepreneurial Initiatives""

Centers ""XXX""

Since the beginning of 2019 more than 70 My Business Centers opened in India by 2024 there will be about 100 of them. The main goal of the centers is to assist entrepreneurs in solving business development problems: finding an idea, choosing a legal form, registration, providing cases and ready-made instructions from various fields.
...

Mono-city Development Fund
...

Innovation Promotion Fund
The Foundation for the Promotion of the Development of Small Forms of Enterprises in the Scientific and Technical Sphere (Innovation Promotion Fund) is a state non-profit organization in the form of a federal state budgetary institution, established in accordance with the Government of India Decree No. 3 dated February 1994, 65. The Assistance Fund has a network of 74 regional representatives.
...

Industry Development Fund
...

4.3. Special Economic Zones

ROSOEZ
ROSOEZ is a large-scale project aimed at developing the regions by attracting direct Indian and foreign investments in high-tech sectors of the economy, import-substituting industries, shipbuilding and tourism.
...

4.4. Summary characteristics of entrepreneurship development funds

Thus, comprehensive support for entrepreneurs in India is provided by a system of federal and regional funds. In addition, each of the funds has certain types of support.
...

Part 5. Conclusions 

The analysis of entrepreneurship development funds allows us to draw the following conclusions:

In India, the development of entrepreneurship, mainly small and medium, is under the constant attention of government authorities.
...

The state provides entrepreneurs with various types of support: financial, organizational, property, information, consulting, educational.

In India, a system of entrepreneurship development funds is being developed at the federal and regional levels.

The funds provide a variety of support, concessional lending, financing under various programs on various terms.

In 2020, due to the impact of the COVID factor, the state will allocate additional funding to support SMEs.

The variety of types of support and programs makes it difficult for entrepreneurs to choose the right support program. 
...

Application. List of entrepreneurship development funds
...


Diagrams

Diagram 1. Dynamics of the number of operating enterprises in India in 2015-2019, units, in % of the previous year
Diagram 2. Structure of enterprises (legal entities) in India by type of activity in 2019, % of the total number of enterprises
Diagram 3. Dynamics of the number of individual entrepreneurs in India in 2015-2019,
Diagram 4. Structure of enterprises (individual entrepreneurs) in India by type of activity in 2019, % of the total number of enterprises
Diagram 5. Birth rate of organizations in India in 2017-January-March 2020
Chart 6. Official liquidation ratio of organizations in India in 2017-January-March 2020
Diagram 7. Turnover of organizations (legal entities) in India in 2015-2019, billion Rs., in % of the previous year
Diagram 8. Turnover of microenterprises in India in 2015-2019, billion Rs., in % of the previous year
Diagram 9. Turnover of small enterprises in India in 2015-2019, billion Rs., in % of the previous year
Diagram 10. Turnover of medium-sized enterprises in India in 2015-2019, billion Rs., in % of the previous year
Diagram 11. Investments in fixed capital of microenterprises in India in 2015-2019, billion Rs., in % of the previous year
Diagram 12. Investments in fixed assets of small enterprises in India in 2015-2019, billion Rs., in % of the previous year
Diagram 13. Forms of business support
Diagram 14. Distribution of subsidies allocated from the federal budget for state support of SMEs, including peasant farms, to the budgets of Indian states by union territories in 2018
Diagram 15. Distribution of subsidies allocated from the federal budget for state support of SMEs, including peasant farms, to the budgets of Indian states by union territories in 2018
Diagram 16. Financing structure of the national project ""SMEs and support of individual entrepreneurial initiative"" for the period 2019-2024, billion Rs., in % of the total
Diagram 17. Subsidies of SME Corporation JSC for financial support for the fulfillment of obligations under guarantees provided to SME staff in the period in 2020-2024 (billion Rs.)
Diagram 18. The volume of the leasing portfolio, formed as part of the support of SME staff, provided by regional leasing companies established with the participation of SME Corporation JSC, is provided (billion Rs.)
Chart 19. Consolidated amount of financial support provided to SME states under the NHS and loans issued under the program for granting subsidies to credit institutions to recover their lost income on loans issued to SME states for projects in priority industries at a preferential rate in 2019-2024 years, trillion Rs.


Tables 

Table 1. Changes in the economic and political situation that have had a significant impact on the development of entrepreneurship
Table 2. Indicators of entrepreneurial activity in India in 2017-2019
Table 3. Distribution of the number of enterprises by union territories of India in 2018
Table 4. Turnover per 1 enterprise in India in 2015-2019, thousand Rs. in year
Table 5. The volume of investments in fixed capital by the union territories of India in 2015-2019, billion Rs.
Table 6. The volume of investment in fixed capital by type of activity in India in 2017-2019, billion Rs.
Table 7. The volume of bank loans aimed at investing in fixed capital across the union territories of India in 2015-2019, billion Rs.
Table 8. Profitability of sales in all sectors of the economy by federal districts of India in 2015-2019, %
Table 9. Return on sales by industry in India in 2017-2019, %
Table 10. Macroeconomic factors influencing the development of entrepreneurship in India in 2015-2019
Table 11. Change in consumption factors in India in 2015-2019, in % of the previous year
Table 12. Change in business environment factors in India in 2015-2019, in % of the previous year
Table 13. Indices of gross value added in basic prices by industry in 2015-2019, in % of the previous year
Table 14. Share of Indian State Gross Regional Product in Gross Regional Product
Table 15. The volume of financing of measures of state support of SME states in 2015-2018, million Rs.
Table 16. TOP-10 states of India by the volume of subsidies allocated from the federal budget for state support of SMEs, including peasant farms, to the budgets of Indian states in 2018, thousand Rs.
Table 17. TOP-10 states of India by the volume of subsidies allocated from the federal budget for state support of SMEs, including peasant farms, to the budgets of Indian states in 2018, thousand Rs.
Table 18. TOP-10 states of India by the volume of subsidies allocated from the federal budget for state support of SMEs, including peasant farms, to the budgets of Indian states in 2018, thousand Rs.
Table 19. The amount of funding for the national project ""SMEs and Support for Individual Entrepreneurial Initiatives"" under Federal projects for the period 2019-2024, billion Rs.
Table 20. Business support infrastructure
Table 21. Matrix of the product line of MONOTOWN.India
Table 22. The volume of budget financing under the programs of the Innovation Promotion Fund in 2018-2019, thousand Rs.
Table 23. The main results of the activities of the Industrial Development Fund in 2016-2019
Table 24. Preferences for SEZ participants in India (as of 2020)
Table 25. Summary characteristics of entrepreneurship development funds
Figure 1. Special economic zones on the map of India


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