Global Entrepreneurship Monitor (GEM): Business Discontinuation Rate in India (Download PDF)

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Recent survey report on situation of entrepreneurship & business in India has put question mark on ground-level impact of ambitious Start-up India initiative. Survey found that, 11 % of adult population in India is engaged in “early-stage entrepreneurial activities”, & only 5 % of country’s people go on to establish their own business or start-up, which is among lowest rates in world.

Image of Rates of activity in population

Image of Rates of Activity in Population

Image of Rates of activity in population

Business discontinuation in India is among highest in world at 26.4%.

  • Global Entrepreneurship Monitor (GEM) India Report 2016 - 17 by Ahmedabad-based Entrepreneurship Development Institute of India (EDII) was conducted among 3, 400 respondents aged b/w 18 & 64 years to assess level of entrepreneurial activity in country.
  • 4 % of total population accounts for nascent entrepreneurs, who are actively engaged in setting up business they will own & co-own.
  • Only 7 % are entrepreneurs who are owner-managers of business which are running for less than 3.5 years.
  • On total early-stage entrepreneurship (TEA), early stage ventures are expected to hire 1 - 5 employees over next 5 years & only 5 % plan to hire more than 5 employees.

Other Countries

  • Among BRICS economies, Brazil has performed well in this survey.

  • South-American country has highest rate of established business at 7% & South Africa has lowest at 3%.

  • China has higher rate of 8%, while in Russia & India it is 5%.

  • In this year’s Asia’s startup-friendly countries list, India stands at 8th rank behind China & Malaysia because of very fact that it is still poorest country in Asia w/GDP per capita of $1, 710, in 2017 & high unemployment rate.

  • To recall, in 2016’s G20 digital entrepreneurship survey too India was ranked in bottom 10 in group of 20.

Reasons for Unsuccessful Business

  • Bureaucratic & administrative hurdles lead to business discontinuation in 1.3 % of cases.

  • 7 % of businesses fail due to financial issues, 6.5 % due to personal reasons, 16.9 % because of business turning unprofitable & 58.4 % due to other reasons.

  • Startups in India need govt. support to lesson number of failures & revealed that startups success rate is not up to mark in country.

Sectoral Activity

  • Going ahead w/EDII report, of those engaged in TEA, enormous 70.9 % are in wholesale & retail trade, 12.1 % in agriculture, mining, manufacturing & transportation, 9.3 % in health, education, govt. & social service, 4.5 % in ICT & finance, & 3.3 % in other sectors.

  • Above figures show sharp decrease in early stage entrepreneurial activity in agriculture, which used to be strong in prev. year at 42%.

Funding to Startups

  • According to latest report, till date, some 5, 350 startups are recognised in country w/over 40, 000 employees working in these startups.

  • Agency that was designated by Centre to disburse funds to startups has released only Rs. 337 cr. out of Rs. 600 cr. to only 75 start-ups in 2 years.

  • 99 startups are funded since start of this initiative. 8182 startups have got recognition till yet.

- Published/Last Modified on: August 13, 2018

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