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Sushil Kumar Singh
The business challenges of innovative industries are no less. Market structure, financial problems, regulatory issues, taxation, cyber security and socio-cultural challenges continue to create difficulties. That’s why the question has been arising time and again that why do most of the new small businesses fail in India?
Small scale start-ups with the idea of doing something new have a big role in the national development. The campaign of these innovative industries in India in the last few years has emerged as a symbol of national participation and consciousness. It is worth noting that the ‘Startup India’ scheme was launched five years ago (16 January 2016) with the objective of promoting entrepreneurship. However, since the beginning of economic liberalization in 1991, a great saga of economic transformation can be seen in the country. Such schemes with the aim of promoting small industries have already been a part of India’s economic policy and this period was also a great attempt to give ground and sky to the expansionist thinking of good governance. Good Governance is a popular ideology where socio-economic justice is given importance.
The new concept of good governance that emerged in the last decade of the twentieth century can be seen in India since 1992. Whereas England is the first country in the world which first showed the way of modern good governance. There is a close link between good governance and innovative industry. The concept of New India is also present in it. Not only this, it can also ease the path of self-reliant India. According to the latest report by Hurun India Future Unicorn, Indian innovation companies raised $6.5 billion in investments in the June quarter, with one hundred and sixty six investment deals in innovation units, an increase of two per cent over the January-March period. But on a quarter-on-quarter basis, it is an increase of seventy-one per cent. Significantly, many innovation units have been included in the Unicorn Club. Unicorns are meant to have a valuation of over a billion dollars. It is clear from the report that the growth of such innovative industries in the second quarter of 2021 has been even more spectacular. Statistics show that India ranks fourth in the world in terms of innovative industries, after the US, China and the UK. Such industries loaded with the hope of new jobs are a better venture for developing countries like India.
In the recent past, the government has been claiming to improve the economic situation. There is also talk of increasing exports and foreign investment. It is said that for the first time in history, the highest ever exports have happened in any one quarter. It is worth noting that in the first quarter of the financial year 2021-22, exports of $ 95 billion have been made, which is eighteen percent from the first quarter of 2019-20 and more than forty five percent compared to the financial year 2020-21. Clearly, export growth is indicating that the situation is not the same. But there is also a truth that the situation which has deteriorated earlier, is still not fully back on track. This can also be understood by looking at the condition of the innovative industries. At present, the second wave of the epidemic also wreaked havoc on the innovative industries and the recent situation shows that the innovative industries of the country have also shown their combative potential to a great extent.
During the first wave of the pandemic, in July 2020, FICCI and the Indian Angel Network jointly conducted a survey of 250 innovative industries. The report that came out was disappointing. It was found that twelve percent of the innovative industries in the country had been closed and seventy percent of the business had come to a standstill due to the complete ban. Only twenty-two per cent had enough money left to sustain their companies for three to six months. Of these, thirty percent of the companies said that if the lockdown lasted for a long time, the situation of retrenchment of employees could also be created.
It was also revealed from the same survey that forty-three percent of the innovative industries had cut salaries of their employees by twenty to forty percent within three months of the lockdown. In July 2020, it was just the opposite of what the current investment situation is reflected in the 2021 report. In terms of investment then the position of the innovative industries was greatly affected and it was not irrational to do so. How could these industries survive when the country’s economy was derailed? By the way, the business challenges of innovative industries are no less. Market structure, financial problems, regulatory issues, taxation, cyber security and socio-cultural challenges continue to create difficulties.
That’s why the question has been arising time and again that why do most of the new small businesses fail in India? Talking about the present, in a week in April, 2021, six innovative industries in India got the unicorn title. There has also been a context in the case of these industries that the innovative industries in India tend to focus more on raising money, while their focus on the customer side is weak. While this is the right thing to do in a fundraising competition, it should also not be forgotten that the company’s strength always comes from its customers. Slippery customer base is one of the major reasons for the failure of innovative industries. Last year, a study by the IBM Institute of Business Value and Oxford Economics showed that around ninety percent of new businesses in India close within a few years.
Every planning and implementation of the government and its results are the test of good governance. Putting innovative industries on the same criterion is tantamount to extending good governance. The way for these industries can be eased by promoting simple and easy rules, process and easy working culture. Good governance is a force that gives peace and happiness to all. But the impact of Corona was such that funding to new industries also saw a decline. However, statistics show that even in March 2020, a decline of fifty percent had already been registered. This shows that the idea of investors about innovative industries does not become permanent or its number increases but there is a lack of quality.
If we examine the status of innovative industries in the national capital Delhi, it is found that 1657 new businesses were established here in 2015. By the time of 2018, their number was reduced to just four hundred and twenty and the situation in 2019 was even worse when investors invested money in only one hundred and forty two businesses. Significantly, Bangalore, which is known as the startup capital, has lost business due to Kovid and the city has also lost its place as a stronghold of India’s innovative industries. Now this tag has been given to Gurgaon, Delhi, Noida. However, Bangalore, Mumbai and NCR have completely changed the face of modern India and these cities are known as global hubs of innovative industries. On the other hand, cities like Pune, Hyderabad, Ahmedabad and Kolkata can be counted as emerging centers of these industries. At present, energy is being circulated again in these industries. The farther the corona is, the closer the good governance will be and the more business will gallop.
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