Upasana Taku, who handled finances during the formative stages of MobiKwik was annoyed with the behaviour of auditors, investors and bankers when they avoided having a conversation with her regarding the money matters of the startup. They said they wanted to deal with someone male. This somehow baffled her as female leaders in the banking or finance space are not unusual. Such instances are common with the female entrepreneurs that form just the tip of the iceberg.
India is the world’s third-largest startup ecosystem but puts up a dismal performance when it comes to female entrepreneurship. According to the November 2020 report by IWWAGE (Initiative for What Works to Advance Women and Girls in the Economy) a gender research and advocacy organization, only 7 out of 100 entrepreneurs in India are women and that too nearly half of them get into the business out of necessity rather than passion or aspiration.
Out of 77 countries covered in the female entrepreneurship Index, India ranks 70th. As per the August 2019 report of the International Finance Corporation, India ranks third among countries reporting gender gaps in business. Only 33 percent of the early-stage entrepreneurs are women.
Does that mean Indian female entrepreneurs are incompetent to run a business?
According to a survey by EdelGive Foundation, it found that female entrepreneurship in India are likely to grow upto 90 percent in the next five years provided government schemes supporting such women-led businesses are present. The survey found a meager one percent of the women entrepreneurs surveyed to be aware of the government schemes.
Female entrepreneurs carry the potential to create 150-170 million jobs in India by 2030, as per a joint report from Google and Bain& Company. It is indeed shocking that despite holding such potential with promising statistics we are behind.
Out of 77 countries covered in the female entrepreneurship Index, India ranks 70th.
Hurdles faced by a female entrepreneur in India
Striking balance between family and business
It might not seem a hurdle as people will suggest time management to be a remedy for this. However, married women in India are expected to shoulder responsibilities that leave them juggling between work and family and are not able to spend quality time in developing strategies for business.
Inadequate government initiatives to support women-led SMEs
Though the government has announced a slew of relief measures to help SMEs stay afloat in the pandemic, there were no specific measures to help women entrepreneurs. According to a report from Bain-Google -AWE foundation, 73 percent of women-run businesses are impacted and nearly 20 percent are on the brink of closure.
Numbers are more distressing in terms of revenue as 90 percent of the female entrepreneurs reported a drop in their sales post-lockdown and the recovery seems to be grim for them. As per McKinsey’s analysis, female entrepreneurs had to shut down due to losses more than their male entrepreneurs, with gender bias being the reason.
Female entrepreneurs denied funding and loans
According to IFC (International Finance Corporation) report, 70 percent of the women entrepreneur’s finance requirements are unmet. It was found that even though males and females generated the same profits, the number of loan rejections faced by women was twice that of men.
Is conditioning affecting the entrepreneurial spirit?
Women in India have been conditioned to not interfere in money matters which is the major deterrent for them to seek high-value loans and they end up taking small loans for easy repayment and to be risk-averse. Whereas, banks deny small value loans as they will earn low interest.
What can the government do to uplift female entrepreneurship in India?
In the pandemic where already SMEs are stressed, and aware of the fact that female entrepreneurship has the potential to employ 150-170 million, the government should introduce more relief measures focused on women led-MSMEs, to cushion their business from losses. It should introduce special women loans in banks while mentioning the minimum loan and maximum loan limit, in this way the banks will not be able to deny financial assistance.
To help women balance their family and professional life, the incubators can play a pivotal role in offering women safe and toddler-friendly working spaces.
Due to information asymmetries, most women in India are unaware of the several MSME and startup initiatives. The government should disseminate the right information by channelising incubators.