India is one of the best places globally to start a business currently and placed second among 49 countries, according to the new Global Entrepreneurship Monitor (GEM) 2023/2024 Report, launched this week. The insights are based on a survey carried out with experts in India where they were asked to assess the country on 13 Entrepreneurship Framework Conditions (EFCs). 

These assessments are the basis for an economy’s National Entrepreneurship Context Index (NECI) score and rank, and generated by the University of Glasgow Adam Smith Business School. India is one of only three GEM countries in which all EFCs were assessed as more than sufficient (alongside the Netherlands and the United Arab Emirates).

Scores high

India’s strong performance is supported by high scores on framework conditions such as ‘social and cultural norms’ in support of entrepreneurship and ‘entrepreneurship education at the school and post-school level’. It is one of just five countries where experts assess both social support for women entrepreneurs and their resource access as satisfactory or better.

Sreevas Sahasranamam, professor at the University of Glasgow Adam Smith Business School and co-author of the global GEM report, said: “This is an encouraging trend that reflects highly of initiatives such as Atal Tinkering Lab in schools, stress on design mindsets and innovation in the New Education Policy 2020, and cultural mainstreaming of entrepreneurship through popular TV shows like Shark Tank which has made ‘royalty’ and ‘USP’ dinner-table conversations. Last year, under India’s G20 presidency, a dedicated engagement group for startups called Startup20 was launched, which also gave major impetus to entrepreneurship by bringing together global stakeholders.”

Improves ranking

India has improved its ranking from fourth to second over the last year. Sunil Shukla, National Team Leader of the GEM India Team and Director-General of the Entrepreneurship Development Institute of India (EDII), Ahmedabad, said India has seen a quantum jump in NECI from the 16th position in 2021 to fourth in 2022, to second in 2023. “With impressive and growing ecosystem enablers, youth aspirations and their confidence, India’s entrepreneurial landscape looks upbeat,” he added.

‘Making a difference in the world’ is a popular motivation among Indian entrepreneurs, agreed by more than four out of five. Three out of four entrepreneurs said they had started a business to continue a family tradition. It is, however, worrying that a proportion of the entrepreneurs also said that their choice was owing to jobs being scarce. This number is equally high or more in other emerging markets and Eastern European countries, reflecting the larger global economic slowdown.

Flags lack of jobs

Coupled with this trend of entrepreneurship driven by a lack of jobs, we are also seeing that nearly 70 per cent of Indian entrepreneurship is in consumer services such as retailing, hotels and restaurants, and personal services. It fares among the lowest globally in the proportion of entrepreneurs (2.3 per cent) in business services such as information technology and professional services. Growth expectations are also muted among entrepreneurs, with less than one in 10, expecting to employ at least six more people over the next five years.

Higher margins needed

Sahasranamam added: “More impetus and support is needed to build business service entrepreneurs in India. Business services tend to have higher margins, greater potential for scaling and have greater barrier to entry compared to consumer services. With policy and ecosystem support to starting new ventures having improved over the years, now more attention is needed on supporting the growth and scale-up of these startups”.

The Global Entrepreneurship Monitor is the largest single study of entrepreneurial activity in the world which started in 1999. It is the only global research source that collects data on entrepreneurship directly from individual entrepreneurs. In 2023, it surveyed over 1,36,000 individuals as part of the Adult Population Survey, including over 3,000 in India and over 2,000 experts as part of the National Expert Survey in 49 countries.