‘Women entrepreneurship on the rise but challenges pushing founders into informal sector’ – SME News

By Dr Arpita Mukherjee 

As India reports an 8.4 per cent growth rate in Q3 2023-2024, it is thrilling to witness the burgeoning influence of women entrepreneurs. Women are rewriting the rules, building innovative businesses, and shaping a brighter future. Their influence transcends individual triumphs; enterprises led by women are elevating household incomes, propelling progress toward the UN’s Sustainable Development Goals (with a spotlight on SDG5 for gender equality) and making significant strides in poverty alleviation. 

According to the World Bank, women-owned businesses in India generate an estimated 8 million job opportunities, underscoring their substantial importance. According to a 2021 report from the NITI Aayog, women entrepreneurs command a 20 per cent share of all enterprises in India, yet these ventures are primarily rural, small-scale, and informal. Projections indicate that this figure is poised to climb to 30 per cent by 2030, signalling a promising trajectory of growth and empowerment. 

Around 70 per cent of women entrepreneurs find their niche within the manufacturing domain. Operating mostly from home-based setups, these enterprising women navigate the intricate terrain of textiles, garments, handicrafts, food processing, and a variety of service sectors like care work, hospitality, and beauty services. 

Challenges faced by women businesses

While women entrepreneurship is on the rise, female entrepreneurs face a tapestry of challenges, pushing them into the informal sector. Gender biases and scarce resources act as formidable barriers, impeding their access to crucial finance, technology, and market insights. Their absence from official data due to informality and limited access to governmental assistance highlights the pressing need for targeted interventions to unlock their boundless potential and foster a more inclusive MSME ecosystem.

The Indian government offers numerous schemes to support entrepreneurship, but these focus on two areas, namely, access to finance (45 per cent of central schemes) and skilling (27 per cent of central schemes). Other crucial areas like market linkages and mentoring receive significantly less attention, with only 3 per cent of state and 4 per cent of central schemes focusing on them as their primary support.

Many schemes aid entrepreneurs, but only a small fraction, 7 per cent at both central and state levels, are tailored for female entrepreneurs, indicating a notable gap. Additionally, reliance on offline applications, required by 46 per cent of central and 73 per cent of state schemes, poses accessibility challenges, especially for remote or mobility-limited individuals.

Women possess entrepreneurial drive, but the digital era demands specific skills, exacerbated by unequal access to education. Gender stereotypes further limit mobility and decision-making autonomy, hindering resource access and business expansion. Despite these challenges, women entrepreneurs infuse innovation into India’s economy, addressing societal issues and promoting resilience. Recognizing their role and implementing supportive policies is essential for unlocking India’s economic potential.

New avenues for women entrepreneurs

In India, women entrepreneurs are leveraging e-commerce platforms to overcome traditional hurdles. Unlike brick-and-mortar ventures, e-commerce minimizes initial investments in infrastructure, enabling modest beginnings and gradual scalability. This reduced financial commitment empowers women to test products and grow their businesses with minimal risk.

Moreover, e-commerce platforms serve as gateways to an expansive and boundless customer network, transcending local confines. This nationwide and even global outreach emboldens female entrepreneurs to engage with clientele nationwide and abroad, vastly amplifying their market potential beyond the limitations imposed by traditional brick-and-mortar establishments.

E-commerce platforms not only offer financing alternatives but also provide tailored training programs for women entrepreneurs. Integrated payment gateways and online solutions enhance capital access, freeing them from traditional lender constraints. E-commerce also offers a level of flexibility that is particularly valuable for women entrepreneurs balancing their work and family commitments. 

Programmes like Amazon Saheli, are essential catalysts as it empowers Indian women entrepreneurs by offering training, marketing support, and financing options. With SEWA, it has digitized 1.7 million businesses and helped 80,000 women artisans.

Several other innovative initiatives are actively fostering women’s entrepreneurship in India. The WEP (Women Entrepreneurship Platform) by NITI Aayog provides comprehensive support through mentorship, upskilling programs, funding resources, and policy advocacy. HER&NOW by GIZ empowers women with technical and entrepreneurial skills, targeting 10,000 women and girls. The Mann Deshi Mahila Sahakari Bank offers microloans and financial services to rural women entrepreneurs. 

To ensure greater participation and equity for women entrepreneurs in the e-commerce landscape, targeted policy interventions are needed, like government-backed and NGO-supported initiatives focusing on digital literacy and e-commerce training.

Specific financial schemes tailored towards women-owned MSMEs operating in the e-commerce space are needed. This includes flexible loan products, collateral-free options, and partnerships with e-commerce platforms to facilitate access to credit. Government initiatives should actively connect women entrepreneurs on e-commerce platforms with global markets, export opportunities, and mentorship networks. 

These networks provide crucial guidance and knowledge sharing, leveling the playing field. Investment in rural logistics infrastructure, warehousing facilities, and technology-based solutions can significantly boost the participation of women-owned MSMEs in e-commerce, especially those operating from less developed regions.

Recognizing e-commerce’s transformative potential for women entrepreneurs in India, targeted policies can address existing barriers, fostering an inclusive ecosystem. This yields economic empowerment, job creation, and strengthens the MSME sector. Beyond gender equality, it strategically drives India’s economic growth. 

Estimates suggest integrating 68 million more women into the workforce by 2025 could boost GDP by $700 billion, while a 50 per cent rise in female workforce participation could elevate GDP growth by 1.5 percentage points, emphasizing the imperative of supporting women’s entrepreneurship for India’s economic progress.

Dr Arpita Mukherjee is an economist and professor at ICRIER. Views are personal.

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