Why India has a poor share of women entrepreneurs; experts share their views on the challenges

Ease of Doing Business for MSMEs: Research has shown that the world a woman entrepreneur encounters is very different from what a male business owner faces.

Why India has a poor share of women entrepreneurs; experts share their views on the challenges

Ease of Doing Business for MSMEs: MSME promoters face many difficulties as they start up. New businesses are not trusted by investors because their operating model is not proven. They also don’t benefit from the economies of scale because they are fledgling companies/businesses. However, if it is a women-led business, they also have the additional burden of being stereotyped, said Neharika Vohra, Vice-Chancellor of Delhi Skill and Entrepreneurship University during the panel discussion “Enabling Women Entrepreneurs” at the Financial Express Digital’s MSME Business Conclave organised recently. 

According to the data published in the MSME Ministry’s FY21 annual report, only 20 per cent of the MSMEs in the country are owned by women. The experts in the panel discussed various reasons on the low share of women MSMEs and the problems they face in scaling up their business. 

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Research has shown that investors don’t view women CEOs favourably as several biases seep in. During an investor meeting, Vohra and her team found that women were interrupted more frequently by the male investors; the use of words expressing negative emotions such as anger, distrust, doubt, and interruptions was also higher towards women making a fundraising pitch as compared to male entrepreneurs. “The world a woman entrepreneur faces is very different from what a man faces,” she said. 

The subconscious biases and stereotyping of the funding community, largely dominated by men, prevents funds from being allocated to women-run businesses.  “It is important to change mindsets about who can run a business and who all can and should be supported,” said Vohra. 

According to the International Finance Corporation (IFC), women MSMEs face the credit gap of $158 billion with 90 per cent relying on informal sources of financing. “The biggest thing in the process of ecosystem creation is capital. Silicon Valley happened because an inundated amount of capital flowed in. The Indian startup ecosystem grew because capital came in. If we want women to be entrepreneurs, we have to make capital available for them,” said Sairee Chahal, Founder CEO of women-led community Sheroes. 

Due to the patriarchal nature of the society, women often don’t own or inherit property which impacts their ability to raise loans against collateral. Even the social networks that men are entrenched in are not accessible to women to get funds. 

Shashi Singh, Chairperson of Consortium of Women Entrepreneurs of India, which strives to build business and income-generating activities for women, said that given most of the women-led businesses are in the micro category, they had proposed to the MSME Ministry to separate the ‘micro’ from the ‘SME’ since the problems of very small businesses are different from the rest of the sector. 

On the availability of credit to women entrepreneurs, Singh said that adequate credit rating and credit availability at the right time are essential. Banks should also give incentives to women to pay back loans on time.

According to Chahal, lack of recognition and classification of women enterprises leads to the funding gap. “Digitisation is changing the process of enterprise creation. There is a new class of women entrepreneurs who are redefining MSMEs. These are women who run an online boutique or an online yoga studio. Since we are not recognising such enterprises because they are not formal, we are also not funding them,” she said. 

Swati Tiwari, Founder Director, Arcturus Business Solutions, which offers artificial intelligence and other deep tech solutions to the infrastructure and energy sector, has found that MSMEs are not able to access funds from retail banks as many of them are unaware of the schemes and policies available. Also, the support system needs to evolve to help women entrepreneurs with market linkages and mentorship, she added.

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