Unlocking Women Entrepreneurship and its Potential in India

Women constitute half the population of India, yet they only contribute to one-third of the country’s labour force. We have seen improvements in social parameters, including female representation in Fortune 500 companies, where 41% stood in 2020 versus 18% in 2009. Women have consistently proven their mettle in undertaking dual responsibilities, especially during the COVID-19 pandemic. Despite an improvement in women’s representation in the western workforce, their full potential has not yet been harnessed in India.?A testament to this statement lies in the struggles that the women workforce undergoes to outshine their male counterparts in the field of entrepreneurship. According to the Sixth Economic Census, only 15% of all enterprises are run by women.?The female labour force participation at the managerial level stands at an abysmal 27%, according to the Global Gender Gap Report, World Economic Forum, 2021.?

?One of the major driving forces behind the dismal rate of women entrepreneurs and female labour force participation in India is the persistent gender gap due to the prevalence of?socio-economic barriers from society, more importantly, from lending institutions. An IFC study called the “Financial Inclusion of Women-owned MSMEs” found that the rejection rate by lending institutions was 19% for women entrepreneurs, compared to 8% for men. Gender stereotypes and negative behavioral attitudes among financial institutions cause a constant hindrance, coupled with deep-rooted patriarchal beliefs. About 79% of women-owned ventures are self-financed. Due to this, almost all the businesses owned by women are bootstrapped and forced to operate on a small-scale, finding it difficult to build or scale up.?The woes of women entrepreneurs are exacerbated by the responsibility of being “good home-makers” and handling the lion's share of the household duties. As per a Forbes report, among first-time parents, women are more likely than men to take time off from work , with 54% opting for a leave from work. It is also known that more women than men have had to drop out of formal employment to tend to the needs of family members. This further deters women from contributing to the economy and taking charge of their income, savings, or even retirement.??

?While improving women’s economic standing can achieve overall women empowerment, positive gender-based interventions and the contribution of women entrepreneurs can add $0.7 trillion by 2025 to the Indian GDP, as per a McKinsey study. Thus, the question arises – How best can we catalyse the pre-existing environment for women entrepreneurship, to achieve empowerment???

?The answer is multifold.??

?Bridging information asymmetry among rural-women entrepreneurs?

?The Landscape Study by EdelGive Foundation found that only 11% of women entrepreneurs surveyed were aware of government schemes and entitlements that they could access. Among the rest, only 1% of all women entrepreneurs surveyed had ever applied for a government benefit. When asked about the reason for such low numbers, lack of information emerged as the primary issue, which has affected their ability to start up and contribute to their own lives, and the economy. Thus, even though programs such as Pradhan Mantri Mudra Yojana, Udyogini Scheme, Cent Kalyani, Annapurna Scheme, and state-specific schemes and programs, among others, exist, access to such schemes via information generation is required to build robust ecosystems for women entrepreneurs.??

?The NFHS, 2019-21 validated the rise in usage of banking services amongst women in India — 77.4 percent of rural women reported having a bank or savings account that they?use, compared to 48.5% in 2015-16 and 10.7% in 2005-06. However, even then, sensitisation of financial and other institutions is the natural progression towards creating a conducive environment for women entrepreneurs. Inculcating positive behavioural attitudes towards women-accessing finance is a sure-shot intervention that would elevate the status of women entrepreneurs in society.??

?Alternate products and gender-specific credit scoring

?Women entrepreneurs are often disadvantaged when being subjected to traditional scoring matrices. Since women have been excluded from policies of inheritance which naturally exclude them from owning property in their names, possessing correct documentation, and thereby, also lacking collateral security to apply for financial assistance. The FinTech revolution, thus, has posed India at the cusp of creating better collateral-free financial products for women entrepreneurs.?The provision of microloans empowers women and gives them the confidence to start businesses independently. Microloans serve as a saviour, especially for women from marginalised society strata who need financial independence and business skills. As a financial instrument, they have proven to be a considerable success in expanding developing economies and furthering women entrepreneurship.??

?Digital and financial literacy

?To empower women to reach leadership roles and accelerate the growth of businesses, financial and digital literacy must be promoted among young girls. Providing women with financial and digital literacy can positively influence their relationship with business finances and their confidence in their ability to handle them. The Landscape Study showed that more than half of women (65%) were able to improve their technical and financial management skills only after taking on leadership roles. Approximately 3/4th of the women entrepreneurs claimed that the upskilling led to better engagement and communication with their clientele. This allows them to analyse and predict future trends for business growth in the virtual sphere, as well as reach a broader customer base.?

An effective corporate and non-profit intervention can significantly contribute to financial and digital literacy among women. In India, many organisations are investing in women and empowering them to become leaders. Multi-national conglomerate Amazon has launched a program called Amazon Saheli to promote locally made products from women entrepreneurs in India. Tech giant Google has also started a program called Google Saathi that aims at educating rural women across 3,00,000 villages in India. Additionally, Procter & Gamble (P&G) India has committed to sourcing US$30 million from women-owned enterprises across India over the next three years. Initiatives like these will not only close the gap between men and women in economic participation but will also inspire the next generation of women to see entrepreneurship as a realistic pursuit.

Embedding education with entrepreneurship

Entrepreneurship is as much about ideas and instincts, as it is about education. While family businesses create an environment that allows the next generation to imbibe the knowledge from close quarters, it is essential to incorporate entrepreneurship into formal education early in life. The overarching goal of an entrepreneurship movement in the country can be achieved by integrating vocational training into academics, as stipulated in the National Education Policy 2020. This is especially important for women in India who, due to traditional factors, have never considered entrepreneurship as a career option.

?Women entrepreneurs have the unique tendency to build and forge long-term relationships, which is a pivotal factor for business growth. The Landscape Study showed that over 80% of the client base of women entrepreneurs cited the owner's behaviour as a motivating factor for their repeated visits and recommendation and stated long-term relationships as being equally influential. This is indicative of the ability of women entrepreneurs to handle clients, without formal training or education. Moreover, companies that encourage women entrepreneurs become representative of their client base and gain better insight into consumer preferences: women worldwide make more than 80% of purchase decisions. ?

?Emancipating women for leadership roles has a positive effect on society as a whole and helps bridge the gender-gap in terms of power and status. The Landscape Study confirmed that the women entrepreneurs showed a strong desire to invest in their children’s education and improve the social status of their families. Given the right tools and access to information, education and confidence via literacy, women entrepreneurs can be equal contributors to the Indian economy and propel an equitable society. Thus, these measures are essential in unlocking the potential of women entrepreneurs in India, to truly be self-reliant.?