Only 5% of adult Indians establish own business; rate among lowest in the world, reveals survey

Eleven percent of population in India is engaged in early-stage entrepreneurial activities, and only 5 percent people go on to establish their own business

PTI March 19, 2018 10:00:54 IST
Only 5% of adult Indians establish own business; rate among lowest in the world, reveals survey

Ahmedabad: Eleven percent of adult population in India is engaged in "early-stage entrepreneurial activities", and only five percent of the country's people go on to establish their own business, a survey has found.

This - five percent - is among the lowest rates in the world, while the business discontinuation rate in India is among the highest at 26.4 percent, it says.

The survey was conducted among 3,400 respondents aged between 18 and 64 years to assess the level of entrepreneurial activity.

According to the Global Entrepreneurship Monitor (GEM) India Report 2016-17, prepared by Gandhinagar-based Entrepreneurship Development Institute of India (EDI) and its associates, 11 percent of India's adult population is engaged in "total early-stage entrepreneurial activity (TEA)."

Around 4 percent of the population accounts for "nascent entrepreneurs," who are actively engaged in setting up a business they will own or co-own, the report says.

Only 5 of adult Indians establish own business rate among lowest in the world reveals survey

Representational image. PTI

Another 7 percent are the entrepreneurs who are owner-managers of businesses which are running for less than 3.5 years.

Only 5 percent of adult population in India manages to establish their businesses, which is to say, their businesses survive for longer than 42 months, the report says.

This rate is among the lowest in the world, it adds.

Among the BRICS economies, Brazil has the highest rate of established business ownership (17 percent) and South Africa has the lowest (3 percent). China has a slightly higher rate of 8 percent, while it is 5 percent in both Russia and India, the report says.

Of those engaged in "TEA" in India, more than half have low-growth expectation, as they "did not intend to expand their employee base," the report says, adding that 44 percent expect to hire 1-5 employees over the next five years and only 5 percent plan to hire more than five employees.

At the same time, business discontinuation rate in India is among the highest in the world at 26.4 percent, it says.

Bureaucratic hurdles lead to business discontinuation in 1.3 percent of cases. Seven per cent of businesses fail due to financial issues, 6.5 percent due to personal reasons, 16.9 percent because of the business turning unprofitable and 58.4 percent due to other reasons.

Of those engaged in "TEA", an overwhelming 70.9 percent are in wholesale and retail trade, 12.1 percent in agriculture, mining, manufacturing and transportation, 9.3 percent in health, education, government and social service, 4.5 percent in ICT and finance, and 3.3 per cent in other sectors.

The figures show a sharp decrease in early stage entrepreneurial activity in agriculture, which used to be predominant in the previous year at 42 percent.

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