Scroll

► NEW (UPDATE: 18/07/2018) | CALL FOR SUBMISSIONS | VOL. 02 ISSUE 01: We are accepting submissions for the upcoming issue. Kindly check the "Submit Article" Page. ► Please read the "Submit Article" Page thoroughly before submitting your article. ► Declaration of Originality and Copyright is an essential document needed for submission and in absence of which the article shall be automatically rejected.

Monday, June 18, 2018

WOMEN ENTREPRENEURS- CHALLENGES AND SOLUTIONS WITH FOCUS ON SMEs [PART 1]

ABHIJEET KUMAR PANDEY
DAMODARAM SANJIVAYYA NATIONAL LAW UNIVERSITY,
VISAKHAPATNAM

(First Published on Volume 01 Issue 02, July 2016)
Read similar articles here

[Image Courtesy: Pexels.com]


Abstract
As India has paved its way from being a land of snake charmers towards becoming a well-established economy, the status and empowerment of women has been a very important issue in the Indian society. As of today, it can be said that the status of women has changed and they have been contributing to the country’s economy, though in a very less percentage.
Today, women want to be independent in terms of making decisions about their life and career. Today they don’t just want to have domestic responsibilities; they want to be economically independent. Entrepreneurship provides a stable platform for economic empowerment of women and thus the nation.
Small and Medium Enterprises (SMEs) has been a significant part of the Indian Economy and is now being promoted and developed by Indian Government by passing an act in 2006. Women entrepreneurs have become a major part of SMEs in India. About 98% of women-owned enterprises are SMEs.
As of 2014, contribution of women-owned enterprises to the industrial output has only been 3.09%. The main challenges faced by them in the SME sector are lack of access to easy financing and latest technologies. The lack of sufficient exposure to the global economy as compared to their male counterparts has also been a hindrance for them.
The scope of this research paper will be limited to a brief study of Woman Entrepreneurs in India, the challenges faced by them in the SME sector and the various solutions and government resolutions.

WOMEN ENTREPRENEURS
As India has paved its way from being a land of snake charmers towards becoming a well-established economy, the status and empowerment of women has been a very important issue in the Indian society. As of today, it can be said that the status of women has changed, and they have been contributing to the country’s economy, though in a very less percentage.
Once Pandit Jawaharlal Nehru said, “You can tell the condition of a Nation by looking at the status of its women.”
According to the Government of India, Women Entrepreneurship has been described as an enterprise venture owned and controlled by women, which has the financial interest of at least 51% of the capital and which provides at least 51% of the employment generated in the organisation to women.
For the development of the organisation, women entrepreneurs need to explore the prospects of new enterprises, venture into the global market to get introduced to the innovations and developments. They need to revamp their skills of leadership, business administration, coordination and control of the business.
A 2009 study on Women Entrepreneurs in Small and Medium Enterprises in Asian developing countries, states that the SMEs are gaining overwhelming importance, but the representation of women entrepreneurs in this sector is relatively low due to some factors like lack of high level of education, lack of proper capital and cultural and social restraints and stigma. This study also depicted that most of the women entrepreneurs are literary being forced into this kind of job ventures for seeking better family income.[1]
According to the United Nation Industrial Development Organisation, Women play a significant role in the society and the economic well-being of the family and communities at large. Therefore, gender equality is an essential factor for poverty reduction. It has also been stated that women must be an integral part of development not only as beneficiaries but also as decision-makers and agents of change in the micro, medium and large enterprises, be it in rural or urban areas.[2]
It has become clear that women are, and will continue to be the powerful drivers of development in a nation. It has been observed that when men and women become equal, economies grow faster, there is a reduction in poverty, and overall well-being increases. Studies have reported that raising female employment to male levels can have a direct impact on GDP growth rates, increasing it by as much as 34% in some countries, and that countries’ productivity can increase by as much as 25 % if discriminatory barriers against women are removed.[3]

REASONS FOR THE INCREASE IN THE NUMBER OF WOMEN ENTREPRENEURS
There has been an increment in the percentage of the women entrepreneurs in the recent years. The reason for this can be many but to site a few, this can be the changing ideology of the society regarding gender discrimination, or the women desiring a feeling self-sustenance and economically self-dependent. The knowledge grabbing capacity of women and the habit of making out plans and making the best out of efficient policies help women to venture as women entrepreneurs.
Today, women want to be independent in terms of making decisions about their life and career. Today they don’t just want to have domestic responsibilities; they want to be economically independent. Entrepreneurship provides a stable platform for economic empowerment of women and thus the nation.
A drive of having an own career and life having of self-made decisions can also be one of the reasons for women becoming a part of this venture. These women entrepreneurs positively contribute to both family and the society. Today it can be said in the true sense that the glass ceiling is being shattered by the women in India.
It has also been observed that women opt for this venture because of self-satisfaction and self-recognition they get from becoming the part of a global economy. Better quality of education and better facilities provided by the government can also be one of the drivers for women opting for entrepreneurship. Sometimes they may be compelled to do so due to the poor economic condition the family or if the woman has been divorced.
Today, job seekers are turning into job creators. Women are opting for entrepreneurship in the fields of interior designing, exporting, publishing, garment manufacturing, hospitality businesses, etc.
Also today, women are being motivated by many nationally and internationally acclaimed women entrepreneurs. Some of the internationally acclaimed women entrepreneurs are: Madame C. J. Walker, Mary Kay Ash, Martha Stewart, Anita Roddick, Oprah Winfrey, Debbi Fields, etc. some of the nationally acclaimed women entrepreneurs are:
·         Simon Tata – Lakmé
·         Mrs. Sumati Morarji - Shipping Corporation
·         Ms. Nina Mehrotra – Exports
·         Ms. Shahnaz Hussain - Herbal Heritage
·         Dr. Kiran Mazumdar Shaw - Bio-technology
·         Priya Paul - Apeejay Surrendra Group
·         Mrs. Vidhya Manohar Chhabria - Jumbo Group
·         Sulajja Firodia Motwani - Kinetic Motor

WOMEN ENTREPRENEURS AS CONTRIBUTORS IN THE NATIONAL ECONOMY
Research has shown that women are more likely to invest a significant amount of their household income in the education and well-being of their children, as compared to their male counterparts. When women are economically empowered and have the ability to accumulate assets and increase their economic security, it has been seen that they contribute in improving industrial capacity and in spurring economic growth by creating new jobs, as well as in expanding the pool of human resources and talents available in the country.[4]
By establishing their new ventures of entrepreneurship, women generate new jobs for themselves and for others and also provide different skills of management and organization to the society and also help the family and society in coping up with different business problems. Women entrepreneurship can make a very strong contribution to the economic well-being of the family and the nation, and can also help in poverty reduction and women empowerment.

ABOUT SMEs
Small and Medium Enterprises (SMEs) has been a significant part of the Indian Economy and is now being promoted and developed by Indian Government by passing an act in 2006. Women entrepreneurs have become a major part of SMEs in India. About 98% of women-owned enterprises are SMEs.
The Ministry of Micro, Small and Medium Enterprises (MSME) of India recognises SMEs as the engine of growth all over the world. The Administration and development of the Small and Medium Enterprises is now being governed by a separate Act, i.e., Micro, Small and Medium Enterprises (Development) Act, 2006, which came into force on 02nd October, 2006.
This Act facilitates the development of these enterprises and also seeks to enhance their competitiveness. This has been the first-ever legal framework for the recognition of these enterprises in India, which comprises of both manufacturing and service entities. This Act also defines Medium enterprises for the first time and seeks to integrate these three types of enterprises. This Act also provides a statutory consultative mechanism at the national level with the balanced representation of all section of stakeholders, and with a wide range of advisory functions. This Act also facilitates the establishment of specific funds for the promotion and development of these enterprises. This Act also features the implementation of progressive credit policies and practices and assurance of schemes for easy running of these enterprises.
Back in 1954, the office of Development Commissioner was established on the basis of the recommendations of the Ford Foundation. It has been termed as an agency that advocates and facilitates the sector of small industries. Various kinds of facilities such as testing, tool monitoring, training for entrepreneurship development, etc. are being provided by this office. It also advises the government on the formulation of policies for the development of small and medium enterprises sector.
Quick estimates of MSME Sector:[5]
·         Number of MSMEs- 26.1 Million.
·         Number of Manufacturing Enterprises- 7.3 million.
·         Number of Service Enterprises- 18.8 million.
·         Number of Women Enterprises- 2.1 million (8%).
·         Number of Rural Enterprises- 14.2 million (54.4%).
·         Employment- 59.7 million.
·         Per Unit Employment- 6.24.
·         Per Unit Fixed Investment- Rs.33.78 lacs.
·         Per Unit Original Value of Plant and Machinery- Rs. 9.66 lacs.
·         Per Unit Gross Output- Rs. 46.13 lacs.
·         Employment per One lakh Fixed Investment- 0.19.

WOMEN IN SMEs
Hina Shah, Director of International Centre for Entrepreneurship and Career Development (ICECD) states, “It is the zeal that gets an entrepreneur started. Before imparting our training for SME ownership, we select women on the basis of their goal setting ability and a desire to grow. Small and medium enterprise (SME) is probably the only sector in which a woman can enjoy being a mother, wife and a self-employed individual all at the same time.”[6]
Women entrepreneurship is considered as one of the most important factors contributing to the economic development of the country. The Planning Commission, as well as the Indian Government, recognises the need for women to be part of the mainstream economic development. The role of women entrepreneurs is very relevant in the situation of large-scale unemployment that the country is facing.
The government has also granted several relaxations for the development of women entrepreneurs. Generally, the contribution from the Ministry of MSME under the MSE cluster development programme varies between 30 to 80% of the total project, but in case of clusters owned and managed by women entrepreneurs, the contribution can be up to 90% of the project cost. Similarly, under the Credit Guarantee Fund Scheme for SMEs, the guarantee cover is generally up to 75% of the loans extended, however, the extent of guarantee cover is 80% for SMEs operated and owned by women entrepreneurs.[7]

CHALLENGES FACED BY THE WOMEN IN THE SME SECTOR
As of 2014, the contribution of women-owned enterprises to the industrial output has only been 3.09%. The main challenges faced by them in the SME sector are the lack of access to easy financing and latest technologies. The lack of sufficient exposure to the global economy as compared to their male counterparts has also been a hindrance for them.
Women entrepreneurs have been particularly taking risks by venturing into the global market and establishing their businesses and going into the outer world to compete with their male counterparts, on their self-established economic goals. In the recent years, they have been quite successful in this venture. However, there have been some of the other obstacles that have been hindering the woman entrepreneurs to develop to a great extent. Also, the ideology of the society in which women is considered to be of lower status has been quite a great obstacle for the development of women entrepreneurship.

Various constraints to the Women Entrepreneurs (Gender Specific) are:[8]

1.    Human Capital-
a. Lack of a combination of various factors such as education, work experience, vocational and technical skills.
b. Differences in endowments, preferences and barriers to entry and exit.

2.    Selection of Sector-
a.Overrepresentation in traditional sectors due to having low start-up costs and limited barriers to entry.
b.Female entrepreneurs, especially those in informal enterprises, generally operate home-based businesses.

3.    Access to information-
a.Lack of or limited access to technology due to various reasons such as affordability, lack of knowledge, and/or social norms.
b. Women are more likely to start an enterprise in sectors with low effective demand leading to lower profits.

4.    Access to finance-
a.Less favourable profile with investors since women own small businesses and do not have adequate collateral.
b.Financial institutions may require higher collateral from female entrepreneurs. Some banks may also require a male co-signer along with the women to open accounts.
c.Low financial market participation.
d. Preference for own savings to finance enterprises instead of credit from financial institutions.

5.    Institutional Factors-
a.Informality and home-based enterprises are mainly the results of a need to combine work and family responsibilities.
b.Having limited vocational and technical skills which may be due to women’s lower educational attainment or various social norms that limit their physical mobility.

6.    Policy/ Legal Factors-
a.Limited awareness and knowledge regarding relevant government legislations and lower experience on starting a business as compared to men and compliance thus discouraged.
b. Women are more vulnerable to corrupt officials.
c.Denial or limited ability to own assets and inheritance due to several existing laws.

7.    Social/ Cultural Norms-
a.Competing for demands between market and household work for the time due to family responsibilities.
b.Limited female labour market participation.
c.Mobility constraints.

[CONTINUED IN PART 2]


[1] Tambunan, Study on Recent Developments of Women Entrepreneurs in Asian developing Countries (2009)
[2] A path out of poverty, Developing Rural and Women Entrepreneurship, UNDIO, Vienna, 2003
[3] “Conflict, Security, and Development,” World Development Report, World Bank, 2011

[4] “Decent Work and Women’s Economic Empowerment: Good Policy and Practice,” UN Women, 2012
[5] Micro and Small Enterprises in India, an Overview, Ministry OF MSME, Government of India.
[6] Savanti Banerjee, ET Bureau, Sep., 2003
[7] Vinesh, Role of Women Entrepreneurs in India, Global Journal of Finance and Management, pg: 473-480, 2014
[8] Based on various studies: Reyes Aterido, Thorsten Beck and Leonardo Iacovone, “Gender and Finance in Sub-Saharan Africa: Are Women Disadvantaged?” 2011; Strengthening Access to Finance for Women SMEs in Developing Countries, International Finance Corporation, www.ifc.org, 2011; Sushma Narain, “Gender and Access to Finance,” 2009; Chamlou, Nadereh, et.al. “The Environment for Women Entrepreneurship in the Middle East and North African Region,” 2007

No comments:

Post a Comment

Did this article tickle your grey matter?
Have something to say?
Say it here.

You May Also Like

x

Get Updates On

Daily Legal Articles

Latest Issue Buzz

Call for Submissions

Exclusive Resources

Straight Into Your INBOX!

Subscribe to The Penstand Journal Mailing List. Don't miss any updates, stay connected!