This article is written by Shivani Agarwal from the Institute of Law, Nirma University. This is a comprehensive article that critically analyses the gender gap in micro, small, and medium-sized enterprises (MSMEs) in India.
Table of Contents
Micro, small, and medium-sized enterprises (MSMEs) are critical growth engines for India’s economy. After agriculture, the MSME sector contributed roughly 8% to 9% of India’s GDP in 2012, making it the second-largest source of employment in the country. For inclusive and equitable growth, it is crucial to understand how to improve women’s roles in the economy, particularly in the MSME sector.
The Ministry of MSME has emerged as the principal institution responding to the topic of female entrepreneurship, having just convened its inaugural Conclave on Empowering Women Entrepreneurs of Marginalized Sections, which garnered mammoth applications. The conclave saw multiple sessions where influencers from various walks of life came together to discuss and debate on critical issues to awaken the country to the problems of hidden disparities and discuss a range of subjects to highlight the evolving role of women entrepreneurship in India. The conference was a big success among Scheduled Caste/Scheduled Tribe women entrepreneurs. Women are society’s foundations, and when they are empowered, the entire world is empowered. The Ministry of Micro, Small, and Medium Enterprises (MSME) empowers women entrepreneurs via various programs that assist women in developing their skills and establishing their own identities.
Not only MSME, but the Indian government also has made several efforts to empower and protect women such as Beti Bachao Beti Padhao, Stand Up India, Mission Indradhanush, Mudra Yojana Scheme, TREAD (Trade-Related Entrepreneurship Assistance and Development) Scheme, Mahila Udyam Nidhi Scheme, Annapurna Scheme, Stree Shakti Package for Women Entrepreneurs, Bhartiya Mahila Business Bank Loan, Dena Shakti Scheme, Udyogini Scheme, Cent Kalyani Scheme, etc. While the Indian government works tirelessly to improve women’s lives, we must also become aware of their rights, programs, and perks that can aid in their total empowerment. Women entrepreneurs who are illiterate or semi-literate, from rural and urban regions, have benefited from several Indian government programs to assist them in establishing or maintaining a business.
About MSME industry
The Micro, Small, and Medium Enterprises (MSMEs) sector contribute significantly to the country’s socio-economic growth. The industry has grown in prominence in India as a result of its contribution to the country’s Gross Domestic Product (GDP) and exports. The industry has also made significant contributions to entrepreneurial growth, particularly in India’s semi-urban and rural areas. Government e-Marketplace (GeM), which is owned and administered by the government and from which Ministries and PSUs (public sector undertakings) get their purchases, is encouraging MSMEs to promote their products on the e-commerce platform. MSMEs have the potential to significantly contribute to the creation of jobs and the growth of the Indian economy. One of the main drivers of India’s shift from an agricultural to an industrialized economy is the MSME sector. MSMEs make up a considerable percentage of industrial units.
- The Khadi and Village Industries Commission (KVIC), which is in charge of promoting and developing khadi and village industries to provide employment opportunities in rural areas and thus strengthen the rural economy.
- The Coir Board, which is in charge of promoting the overall development of the coir industry and improving the living conditions of workers in this industry.
- The National Institute for Micro, Small and Medium Enterprises (NI-MSME), which is in charge of enterprise promotion and entrepreneurship development, as well as enabling enterprise creation and conducting diagnostic development studies for policy formulation, among other things.
- The Mahatma Gandhi Institute for Rural Industrialisation (MGIRI), which is in charge of accelerating rural industrialization for a sustainable village economy.
The Ministry of MSME administers many programs for MSMEs around the nation, including credit and financial aid, skill development training, infrastructure development, marketing help, technology, and quality improvement, and other services.
Major developments in the MSME sector
There have been various significant developments in the MSME sector such as:
- In March 2021, the National Small Industries Corporation (NSIC), an MSME assistance and development organization, stated that it will help MSMEs working with the Agricultural and Processed Food Products Export Development Authority (APEDA) in numerous sectors.
- Walmart’s Vriddhi program was expanded to Uttar Pradesh in February 2021, with the opening of an e-institute to help small companies get access to skills and competencies across online and offline platforms including Flipkart’s marketplace and Walmart’s global supply chain. According to the firm, this new e-institute will help 50,000 MSMEs across the country to develop locally and internationally.
- The NSIC will assist its MSME members in investigating the export potential of their agricultural and processed food products through a Memorandum of Understanding with APEDA. Members of APEDA will also have access to NSIC schemes, which will aid them in addressing challenges such as technology adoption, skills, product quality, and market access.
There are numerous MSMEs in India, and they operate in a wide range of industries. They are also dispersed all over the country. A vast number of MSMEs function informally and are not part of the formal MSME ecosystem. Building and implementing a new wave ecosystem that enables their development and grabs growing local and global opportunities will require fundamental changes in thought and approach of the current industrial system. At the very least, all impediments and hindrances for conducting business should be removed. This would assist in unleashing a new generation of Indian entrepreneurs who are eager to make self-employment their primary career choice and build growing companies.
In five years, the Indian government hopes to double the country’s economy to $5 trillion. Career Options for the young population have been created to attain this aim, and MSMEs have the potential to act as a vital job generator. As a result, the government has prioritized MSMEs for promotion to create new employment in the industry. In addition, the government wants to increase MSME exports and GDP contribution. The government should invest in providing additional back-end services to improve the performance of the MSME sector, which supplies goods and services to large industrial businesses to meet these goals. Bottlenecks in the sector’s ability to become competent include a lack of technology-based manufacturing activities and a low investment in Research & Development. The government might subsidize globally available technologies, allowing MSME businesses to increase their product quality with existing resources.
About women entrepreneurs
The development includes economic, social, and political components, and it would be incomplete without the development of women, who make up almost half of the population. As a result, women’s participation in economic activities is critical for the development of a healthy nation. When we talk about women’s entrepreneurship, we’re talking about a type of business ownership and creation that empowers women monetarily and improves their social standing. Women entrepreneurs are one of the most understudied groups of entrepreneurs. We know relatively little about female entrepreneurs. Our lack of knowledge about this crucial group is a prominent blind spot to boost the total number of women entrepreneurs in our economy.
Women entrepreneurs are described as individuals or groups of individuals who start, organize, and operate a business. Thus, a woman entrepreneur is a self-assured, creative, and imaginative woman who seeks financial independence while also providing job chances for others. They take on the responsibility of organizing and managing their businesses’ resources while also taking all of the risks to make a profit. They are shown as conscious decision-makers and managers in this description.
Women’s entrepreneurship is concerned with both the status of women in society and the function of entrepreneurship within that society. Women encounter unique challenges (such as family duties) that must be addressed for them to have equal access to opportunities as men. Some women have great entrepreneurial goals on a personal level.
On an institutional level, the government has undertaken some initiatives to boost women’s entrepreneurial incentives, and there is a more substantial political commitment to empowering them. India is a varied country, and so are the different types of business that women pursue. Microfinance has aided women’s empowerment and entrepreneurship, with 98 percent of women-owned firms being micro-enterprises, with around 90% of them operating in the informal sector.
Impact of women in the entrepreneurial sector
Women’s entrepreneurship directly impacts income, employment, and capital formation while also indirectly benefiting household resource allocation. Women entrepreneurs benefit not just from support but also the creation of jobs. Participating in numerous development initiatives is necessary for women’s empowerment. In other words, women’s participation in multiple entrepreneurial enterprises has given them influence in social, economic, cultural, and other areas. They have had a considerable impact on all sectors of the economy in industrialized nations such as Canada, the United Kingdom, and the United States.
In today’s world, women entrepreneurs play a critical role in commerce, trade, and industry. Their foray into business is relatively new. Other fields, such as politics, administration, medical and engineering, technical and technological, social and educational services, have already demonstrated the importance of women. This is true in advanced nations, and they have begun to penetrate these industries in our country in recent years.
In the last 50 years, the position of women in the workplace has changed dramatically, as has the perspective of entrepreneurs throughout history. There were just a handful of women who owned and ran their businesses just five decades ago. Even though the Second World War brought many more women into the workforce, social beliefs such as the male being the head of the family and women being dependent and staying inside did not create an environment that encouraged women to work unless it was indispensable.
Women have attempted to break free from the constraints of the past. In addition, significant social, political, and economic developments have offered possibilities for women while also increasing their acceptability and acknowledgement in the workplace. A woman entrepreneur is a woman or a group of women who start, organize, and run their own company. They are gradually establishing themselves as businesswomen and giving their male counterparts a run for their money. Women entrepreneurs have been a part of the Indian business environment for a long time, and they have had a lot of success. However, their number is still insignificant when compared to the total number of small businesses.
Successful women entrepreneurs
In a country like India, where most women aren’t encouraged to think large (particularly in rural areas), some have risen higher than one might imagine in such a constrictive environment. Through their success stories, which include personal obstacles and hurdles, these wonder women are motivating other women to pursue entrepreneurship. Some famous women entrepreneurs are:
- Vandana Luthra, the founder of VLCC Health Care Ltd., is an inspiring woman entrepreneur. She is an Indian businesswoman, philanthropist, and the chairperson of the Beauty and Wellness Sector Ability Council (B&WSSC). There were very few women entrepreneurs in India when Vandana began her entrepreneurial adventure. In a male-dominated setting, she had to deal with a lot of criticism. But she persisted in her opinion that her concept was original and novel and that it was being offered for the first time in India. She was named Women Entrepreneur of the Year by Enterprise Asia in 2010. In 2013, India’s fourth-highest civilian accolade, the Padma Shri award, was bestowed onto Vandana by the President of India.
- Shahnaz Hussian is the founder of Shahnaz Herbals, a globally recognised and appreciated company. She never pictured herself as a beauty mogul and one of the world’s most renowned ladies when she married as a teenager and had a daughter at the age of 16. Shahnaz is renowned as the “Queen of Herbal Beauty Care” and was honoured by the Indian government with the Padma Shri award in 2006. She is India’s most well-known entrepreneur, with a company that operates in 138 countries and has 600 franchisees and related clinics throughout the world. Shahnaz was recently asked to talk at Harvard Business School on how she built a worldwide brand without using commercial advertising.
Women entrepreneurs have certain special features among them:
- The whole business of the enterprise is managed by a woman or a group of women. She makes numerous plans and sees to them that they are carried out under her supervision and direction. A woman entrepreneur isn’t afraid to take measured risks. She takes risks and meets uncertainty with confidence. She’ll have to put money aside and hope for a decent return. The capacity to construct a solid organization is the essential talent necessary for industrial progress.
- The other variables, such as land, labour, and capital, are assembled, coordinated, organized, and managed by a woman entrepreneur. Being self-assured is crucial for a woman entrepreneur. She needs to believe in herself and her ability. Her primary responsibility is to make decisions. She makes a variety of judgments about her company’s operations. She determines the sort of business to be conducted and how it will be conducted. A woman entrepreneur’s decision-making process must be straightforward and imaginative.
- A woman entrepreneur’s willingness to work hard is one of her distinctive characteristics. She must adhere to the tenet that “hard work is the key to success.” An entrepreneur who is a woman must be upbeat. Rather than being afraid of failure, she should approach her business with the prospect of success and an attitude of success. Women entrepreneurs overcome adversity with courage and boldness. She believes in herself and, despite the pressure, tries to address the difficulties. A woman entrepreneur is vivacious, focused, and has a clear goal. She should be a lady who can think both creatively and analytically.
Women’s entrepreneurship has long been connected with themes like independence and empowerment for women. It is increasingly being pushed as critical for improving the quality of life of women in impoverished countries.
Obstacles to women’s entrepreneurship
There are many barriers for women working in the entrepreneurial sector like:
- The skill gap between men and women
Being a woman is the most significant impediment. They are constructing a patriarchal, male-dominated social order as a foundation for their financial success. Male members believe it is a significant risk to fund women’s businesses. Women frequently lack the education, vocational and technical abilities, and job experience required to promote the growth of highly productive firms. Male entrepreneurs, for example, are more likely to have worked in the wage sector before beginning a firm than female entrepreneurs.
- Informal/unorganized sector
Smaller businesses account for the majority of women’s entrepreneurship, with 90% of these operating in the informal sector. Female ownership and employment are also concentrated in less profitable and more competitive sectors like food, clothing, and retail, whereas male ownership and employment are concentrated in more profitable areas like materials and construction.
- Access to financial resources
A good funding source is an essential requirement of any business. Women lack in obtaining accessible credit facilities. Many reasons can be associated with it, like the old notion that women won’t be able to run businesses successfully, their liabilities, etc. Women have limited access to essential financial services like checking and savings accounts on average. As a result, many female entrepreneurs rely on personal savings, family and friend loans, or microloans to fund their businesses. Micro-loans, on the other hand, due to their tiny size and short-term character, do not allow women borrowers to make long-term investments in their enterprises.
Women entrepreneurs are up against a lot of competition from men entrepreneurs, who can quickly get involved in promotion and development and advertise their products to the organized sector as well as their male counterparts. Women entrepreneurs are eventually liquidated as a result of such a competition.
- Difficulties in having easy market access and establishing a good network
Expertise, experience, and relationships are required to tap into new markets. Women entrepreneurs frequently lack training and expertise, making it difficult for them to sell their products and services successfully. Because most women entrepreneurs operate on a small scale, they also lack adequate market knowledge regarding pricing, inputs, and rivals, as well as access to support services.
There are various other challenges that a woman has to face while surviving in the industry. To overcome these kinds of problems, a woman entrepreneur should possess specific skills and the aid of government or local authorities to encourage them in the business sector. Following actions can be taken to ensure that there is equal participation and consideration of women in such fields:
- Awareness programs should be held so that women can learn better about the industry in which they are working.
- Financial, as well as family support, is a major factor that influences a woman’s way of conducting the business. Good financial and family support provides more independence, power, and decision-making ability for women.
- Various other schemes are provided by the local government like:
- Pradhan Mantri’s Rozagar Yojana
Women receive preferential treatment under the plan. Standing instructions are provided to ensure that the number of women beneficiaries under PMRY does not go below 30% when the Scheme’s goals are communicated to the States/Union Territories and the Reserve Bank of India (RBI). In addition, to make it easier for women beneficiaries to participate in this plan, the following concessions have been made:
- Age relaxation
Women’s maximum age limit is 45 years, compared to 35 years for general category candidates.
- Relaxation of residence requirements for married women
In the case of married women candidates, the residency requirement of the previous three years applies to their spouses/in-laws.
- Mahila Coir Yojana
Mahila Coir Yojana is a woman-centred self-employment program in the coir sector that enables rural women artisans in coir-producing regions with self-employment options. After receiving instruction, women craftsmen will be given motorized rafts to use in spinning coir yarn. This scheme has features like at the Coir Board’s training centres, women spinners are trained for two months in spinning coir yarn on a motorized raft, and they are paid a stipend of Rs. 500/- each month.
- Trade Related Entrepreneurship Assistance and Development (TREAD) scheme for women
The Trade Related Entrepreneurship Assistance and Development (TREAD) scheme for women initiative aims to empower women entrepreneurs economically through trade-related training, information, and counselling extension efforts connected to trades, goods, and services. Because such women do not have easy access to loans, it will be made available to women applicants through non-governmental organizations (NGOs) that are capable of properly managing finances. These NGOs will not only distribute the money that women require, but they will also offer them proper counselling, training, and aid in creating marketplaces. This scheme provides facilities such as funds credit, training, and counselling, etc.
While a pro-entrepreneur legislative environment is critical, there is also an urgent need to make it more gender-inclusive. To invigorate women-owned businesses and close the gender gap, the proper combination of regulations, and enabling ecosystem, infrastructure, access to funding, and incubation is essential.
The gender gap in MSME Industry
MSMEs have risen to become India’s second-largest source of employment. Understanding how to improve the role of women in the economy, particularly in the MSME sector, is crucial for inclusive and equitable growth. On the other hand, women’s entrepreneurship is becoming more widely recognized as a significant but underutilized source of economic growth. Women entrepreneurs, despite their underrepresentation, contribute to the economy by creating new employment for themselves and others and contributing to the family’s financial well-being, poverty reduction, and women’s empowerment. There has been no systematic study of gender concerns in the MSME sector in India, although it has been investigated and appraised from a financial standpoint.
Analyzing the performance of female-owned enterprises compared to male-owned enterprises and examining the disparities in their observed performance is, therefore, a linked subject of significant policy significance on gender, entrepreneurship, and firm performance.
If women’s empowerment has been any yardstick, especially at the MSME level, West Bengal leads the country by miles. According to the report, the percentage share of states in MSMEs owned by women shows Bengal having 23.42 percent owned percent. In addition, women entrepreneurs lack institutional and informal networks through which they might gain access to critical information about loans, goods, and markets. Women’s entrepreneur networks are great sources of knowledge and a platform for company promotion and information exchange.
There are various types of industries in the MSME sector and some can be discussed to analyze the gender division in the MSME industry:
- Readymade Garments Industry
The Textile and Clothing (T&C) industry accounts for 4% of India’s GDP, 12% of industrial output, and 10.5 percent of total goods exports. The informal home-based sector accounts for a substantial portion of the garment industry, accounting for 94 percent of units and 70 percent of employment. Ready-made garments are labour-intensive, low-tech products, yet there is a growing need for high-tech techniques in the ready-made garment sector. In 2005-06, 1.28 million people were employed in the commercial clothing sector, with half of those employed in small, medium, and large businesses that used power. The readymade garments industry employs roughly 9.9 percent of all registered manufacturing MSMEs and 15.67 percent of all registered MSME employees. The sector has a large number of female entrepreneurs. The RMG industry accounts for about half of all women-owned registered MSMEs, making it the industry with the greatest percentage of women-owned businesses in the MSME sector.
- IT Hardware & Electronics manufacturing sector
India’s IT and electronics manufacturing industry is costing the country more than it is bringing in terms of GDP and other metrics. It is predicted that the country’s electronics export bill would soon surpass the country’s oil expenditure. The government is encouraging the Electronic System and Design Manufacturing (ESDM) business through a variety of initiatives, including cluster development and skill development to generate skilled labour. Consumer electronics, industrial electronics, IT hardware, electronic components, and strategic electronics are the six main segments of the Indian electronics and IT hardware industry. Consumer electronics and telecommunications equipment are the two largest divisions, each accounting for roughly 27% of the market. There is some indication that in this business cluster, there are extremely few female entrepreneurs in electronics production. Because the industry is being pushed, it does not appear in important MSMEs databases, such as the MSME Census of Registered Enterprises.
- Food Processing Industry
In India, the Food Processing Industry (FPI) is the fifth-largest economic sector. It accounts for more than 14% of manufacturing GDP and more than 6% of the country’s overall GDP. In India, the food processing industry is divided into organized and unorganized sectors, with the unorganized sector accounting for more than 70% of output in terms of volume and 50% of output in terms of value.
In India, the food processing industry is a newcomer with a lot of potential. This is evident since the food processing sector’s contribution to GDP has been expanding faster than the agriculture sector’s. After Readymade Garments, the Food Processing Industry has the second greatest female participation in the MSME sector, both in terms of entrepreneurship and employment. Women own approximately 13.3 percent of FPI businesses in the MSME sector.
Under numerous government initiatives and programs, women entrepreneurs are entitled to particular incentives and discounts. Men may register units in their wives’ names to take advantage of the benefits provided to women entrepreneurs while retaining the de-facto owners of the companies. Another reason registration statistics may be deceptive is that many women-owned businesses are home-based or operate in an unstructured, unregistered environment. Women’s capacity and confidence to take risks in their enterprises seem to be contingent on having family support. When they have great support from their families and, in certain situations, male business partners, women are ready to accept significantly more significant risks. The presence of a male family member boosts confidence in the more challenging aspects of marketing and financing.
Women’s participation in the workforce is mostly determined by the type of labour required and what was seen as proper for women at the time. There were gender-specific positions for employment along the value chain of production in every cluster.
Women’s engagement in the sphere of entrepreneurship is expanding at a significant rate. Therefore we can say that we are in a better position now. Efforts are being made in the economy to ensure that Indian women have equal chances in all domains, and legislation guaranteeing equal rights of participation in the political process and equal opportunities and privileges in education and work have been adopted. However, government-sponsored development programs have only helped a tiny group of women, namely urban middle-class women. Nearly 45 percent of India’s population is made up of women.
Effective actions must now be taken to offer women entrepreneurial knowledge, orientation, and skill development programs. Women’s involvement in economic growth is also being recognized, and initiatives are being done to encourage women to start businesses. The resurgence of entrepreneurship is urgently needed, with a focus on educating the female population, promoting knowledge and consciousness among women so that they may shine in the business sphere, realizing their talents and vital role in society, and the significant contribution they can make to their industry and the overall economy. Women entrepreneurs must be adequately shaped with entrepreneurial qualities and talents to face changing trends, global market problems and be competent enough to maintain and strive for excellence in the entrepreneurial sphere.
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