Empowering SC-ST entrepreneurs key to achieving a $5 trillion economy

The recent Bihar caste survey brought out that the SC-ST community consists of over 21 percent of the state’s population, prompting a call for a greater share in the socio-political and socio-economic structures. Currently, Dalits have a poor presence in entrepreneurship and industry ownership across the country – according to the MSME (Micro, Small and Medium Enterprises) Development Commissioner’s report for 2020, ownership of MSME units in India by Scheduled Caste entrepreneurs was only 8.9 per cent, while for Scheduled Tribe entrepreneurs it was only 2.9 per cent of the total. The majority of SC-ST are first-time entrepreneurs with zero business experience and lack credible collateral and credit history to offer lenders. Furthermore, the absence of mentoring, inadequate access to capital, poor marketing skills, repressive social attitudes and rampant discrimination also restricts their growth.

Dalits can play a key role in revitalizing Indian Economy

Overall, Indian MSMEs form the bedrock of the country’s economy. Over 63 million MSME units directly contribute 30% of the GDP, engage 40% of India’s workforce, generate 45% of manufacturing output and account for 40% of exports.

If India has to realise its dream of becoming a USD 5 trillion economy, it is imperative that we embrace inclusive growth by nurturing the entrepreneurial and innovative spirit amongst Dalits. In recent decades, governments have taken noteworthy steps for their mainstreaming in economic growth. Setting up of state backward class development corporations was a major structural initiative, for example, Mahatma Phule Backward Class Development Corporation in Maharashtra.

Besides this, state finance corporations were mandated to financially support the underserved by way of soft loans to SC-ST entrepreneurs. Recently, Tamil Nadu disbursed capital subsidies under its flagship scheme NEEDS to promote first-generation underserved entrepreneurs, while Uttar Pradesh provides a 2% additional subsidy to SC-ST and women entrepreneurs. The Reserve Bank of India has made it mandatory for banks and financial institutions, to lend a certain percentage of total loans to SC-ST applicants. Targeted Government of India schemes such as Stand-Up India have reportedly sanctioned around 175 thousand loans to date for women and SC-ST entrepreneurs. Similarly, National SC-ST Hub supports technological upgradation and capacity building, while the Samriddhi scheme helps SC students start their own enterprises.

Initiatives promoting entrepreneurship among Dalits

Some of the more notable private sector initiatives for promoting entrepreneurship and innovation among SC-ST youth are run by the Dalit Indian Chamber of Commerce (DICCI), which acts as a one-stop resource centre, organising seminars, workshops, and networking meets with industry leaders. DICCI has been playing a catalyst role in implementation of Affirmative Action and Supplier Diversity, partnering with the Tata Group and Confederation of Indian Industry to organise Vendor Development Programmes across India. The Ambedkar Social Innovation Incubation Mission (ASIIM) works to promote innovation and entrepreneurship among SC students. Such examples should be replicated across the country to benefit youth in their entrepreneurial journeys.

Promoting inclusivity and innovation

Our suggested multi-pronged approach to promote inclusivity and innovation in entrepreneurship aims to significantly increase opportunities for marginalised youth.

First, we need to inculcate a grassroots entrepreneurial culture among SC-ST youth, through Business Idea Contests, Entrepreneurship Hackathons, and Incubation Labs at District Industries Centres and Rural Self-Employment Training Institutes.

Second, we need to train and equip young SC-ST students in higher-order skills such as digital technologies to drive innovation, and bridge digital divide for a level playing field.
For instance, Niranjan Ovhal, an engineering graduate from SC community in Pune had started a SIM racing gear manufacturing business during Covid. His mentor convinced him to expand his business during lockdown, and today, he exports to 43 countries.

Third, we must further improve access to bank finance for SC-ST entrepreneurs. Punit Kuchekar and Abhay Nale established their own robotics and automation venture in 2016-2017. They were helped to secure a working capital loan of Rs. 1 million to scale their business. Last year they achieved revenues of over Rs. 30 million, employing a team of twenty-five.

SC-ST owned MSMEs

We need to help SC-ST-owned MSMEs adopt ESG good practices to be able to participate in national and international supply chains. Also, mentorship plays an important role in helping first-time, grassroots entrepreneurs in establishing businesses. The success story of Panchamirtham Elumalai is an example. A school drop-out, she set up a manufacturing unit in male-dominated tools and dies field. She found support from her mentor and former electrical engineer Kunjidhapatham in streamlining business, getting customer references and servicing high-value orders.

With this support, her firm grosses sales of Rs. 60 million, last year. Now she plans to expand operations globally. She hires local workers (90% are women) and has implemented strong safety protocols, runs six-hour shifts, and offers incentives for achieving productivity quotas and for their welfare.

The concerted efforts by government as well as public and private sectors to capacity-build, promote innovation and democratise internet commerce can bring promising results for underprivileged entrepreneurs. Additionally, a nationwide initiative to embed mentoring into institutional frameworks which are touchpoints for SC-ST entrepreneurs can catalyse their growth.

By opening doors and making resources accessible, India can embark on a path towards inclusive prosperity where no individual, regardless of their caste, is left behind.

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