India: The Future of Entrepreneurship

AS the dust in the global financial and capital markets is settling down, India is emerging as the next big center for entrepreneurship. In fact, it will be the only market that global funds and investors will have confidence in.

This strong belief of mine stems from multiple factors. Firstly, India is a strong, inward-looking economy. The country’s rate of growth, even in the current global economic condition, is very good. We can even surpass the projected growth rates if foreign capital flows into the country.

Secondly, the prominence of agriculture in India’s economy is a source of great strength. If the monsoons are good, we will be stronger. Thirdly, the Indian banking system, though many may call it antiquated, has worked to our advantage. How many banking failures have we seen in India in the last 30 years? Very few, when seen in light of what’s happened elsewhere. Moreover, India’s banking system is the strongest and most transparent compared to those of other emerging markets. Ours may be a regulated banking system, but it has helped us stand the test of the time.

Yet another factor that enforces my belief in a bright entrepreneurial future for India is its minimal dependence on external markets. Of course, export zones were hurt—but we are not an export-driven economy. In addition, the fall in the prices of crude oil, which is India’s largest import, has come in as a major boon.

In my view, India is the future—it’s a view shared by many across the world. China is a forerunner, too, but the confi dence that investors have in India’s economy, banking system and markets is far stronger. As a result, a large entrepreneurial pool has emerged in India— one that is, fortunately, not just driven just by technology. We have also seen successes in sectors like education, healthcare, new media and agriculture.

Contrary to expectations, a large number of people were willing to take entrepreneurial risks even during tough economic conditions. In the current scenario, the only thing entrepreneurs need to do is to have patience. Investors and funds are taking longer than usual to commit funds. But, to be sure, investments will come in and business will happen—it may just take a little longer than expected. This is what we’ve seen happen across the world.

Some great good can come of this, though. Only those businesses that are backed by solid business models and are well executed will survive these tough times. In the past, around six out of ten business proposals received funding. Now, the number may have slumped to four out of ten, but you can be sure that every one of those four will be winning ideas.

BHARAT BANKA is the managing director and chief executive officer of Aditya Birla Private Equity.

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Bharat Banka