ENTREPRENEURSHIP EDUCATION AND
TRAINING IN INDIA:
An Assessment of SME Training Needs against Current
Practices
Jay Mitra
University of Essex, UK
Mathew J. Manimala
Indian Institute of Management Bangalore, India
‘AC 21 International Forum:
Global Education: Universities in the 21 Century’
University of Warwick
4-6 July, 2006
Structure of Presentation
• Background – push and pull factors
• SMEs in India
• Entrepreneurship and SME Training Infrastructure
• SME Training Survey
• A Novel International Scheme
• Some Concluding Observations
Background: Push and Pull Factors Nom inal GDP Growth in India (US D billion)
Glo b al GD P R an kin g at PPP (U S D b illio n )
782.8
673.4
464.9
10,871
510.2
6,436
422
386.1
322.8
3,583
1994
1996
1998
Source: DB Research
2000
2002
2004e
US A
2005f
8.3
6.7
4.8
6.6
6.7
6.9
5.8
5
4.4
4.1
5.0
2.7
4.9
7.7
6.4
6.6
6.1
6.0
6.0
5.7
4.0
4.8
5.9
R ea l G D P G ro w th
Indus trial P ro duc tion
2.6
D omes tic D e ma nd
Source: DB Research
1997
1998
1999
2000
2001
Source: Nasscom, 2005 and various
2002
2003
2004e
Japan
India
2,279
G erm any
Source: World Bank
Growth Trends in Key Econom ic Indicators (% )
9.1
6.7
6.1
China
3,096
2005f
• One of the worlds fastest
growing economies over the
last decade
• Consistent growth in
production and domestic
demand
• Currently ranked 4th in a PPP
comparison
Driven by the services sector…
100%
Changing composition of India’s GDP
G ro w th in K e y S ervic es S eg m en ts
80%
1950s -1970s
60%
1980s
1990s
Includes19.8
IT-ITES
13.6
12.7
11.9
13.5
9.3
40%
4.8
5.9
7.3
6.5
7.2
4.8
6.7 6.1
4.2
20%
0%
FY80
FY90
Agriculture
Source: Citigroup
•
•
FY02
Industry
FY05E
Services
T r ad e
Ho te ls
Ban k in g
C o m m u n icatio n
Bu s in e s s
s e r vice s
Source: IMF
Over the last decade the Indian economy has transitioned from an agrarian economy
to a predominantly service based economy
Key services sectors – Personal services, trade, hotels, banking, communications
and business services. The highest growth was in:
– Business services
4.2% to 19.8%
– Communications
6.7 % to 13.6%
– Banking
7.2 % to 12.7 %
India’s growing participation in international trade
C o m p o s itio n o f E x p o rts ^
F Y 2 0 0 3 -0 4
1 0 0 % = 9 1 b illio n
• Total earnings from
No n-fa c to r
S e rv c ie s
30%
O the rs
3%
P e tro le um
pro duc ts
4%
Agric ulture a nd
a llie d pro duc ts
8%
M a nufa c ture d
go o ds
52%
O re s a nd
mine ra ls
3%
^ In c lu d e s re c p ts fo r tra d e in fa c to r s e rv ic e s
Source: RBI, NASSCOM Analysis
I n d ia 's F o reig n Trad e I n d ex
333
•
2 05
1 62
10 0
108
199 0-91
1 993 -94
19 95-9 6
Source: RBI, NASSCOM Analysis
22 6
181
foreign trade in FY 2003-04 exceeded
USD 91 billion
– Exports of manufactured goods
accounted for more than half
– Receipts from trade in non-factor
services (Tourism,
transportation, IT-ITES, etc.)
accounted for nearly 30%
Indian foreign trade index has tripled
over the last decade
– Exports have grown by 180%
– Imports have grown by 175%
1 99 7-98
19 99-0 0
200 1-02
2 003 -04
…
Background: Push and Pull Factors
•
Rise in literacy levels (65% in 2001-18% in 1951)
•
‘High birth and low death rate’
•
Capital shortage v abundant labour (growing unemployment, growing economy but
jobless growth & decline in labour sensitivity of production)
•
Annual growth rate of 8% (from 6% in 1980s) = 30m work opps v 35 m added to
work force
•
Educated mass v unemployment
•
Frontline technology sectors but regional imbalances
•
Stagnation of employment in agriculture (fall in employment elasticity from 0.70 to
0.01 between 1983 and 93-94)
•
Public sector job losses – disinvestment in PSUs
•
Sickness in Indian industry
SME Performance: India Data
SSIs IN INDIA
Estimated No. of Units
3.57 Million
Employment
19.96 Million
Share in Industrial Value Added
39%
Share in Total Exports
Direct
45%
Overall
34%
Total Number of Items Produced
Over 8000
Number of Reserved Items
675
Source: www.smallindustryindia.com/ssiindia/statistics/economic -2003-4
SME Performance: India Data (contd.)
Year
No. of units
Production
(million nos.) (Billion Rs. )
Employment
(Million nos.)
Exports
(Billion Rs.)
1993-94
2.38
2416.48
13.93
253.07
1994-95
2.57
2988.86
14.65
290.68
1995-96
2.65
3626.56
15.26
364.70
1996-97
2.80
4118.58
16.00
392.70
1997-98
2.94
4626.41
16.72
444.42
1998-99
3.08
5206.50
17.15
489.79
1999-00
3.21
5728.87
17.85
542.00
2000-01
3.37
6454.96
18.56
599.78
SME Performance: World Data
(GEM)
• World average: 96% of new start-ups are small
• India average: 98% of new startups are small
• Level of Entrepreneurial Activity in India:
Growing from 8.97% (year 2000), to 11.55%
(2001), to 17.88% (2002)
(Vibrancy due to Liberalization & Privatization)
Vulnerabilities of New Start-ups
• US data: Two-thirds of all new ventures
perish in the first 5 years
• Liability of newness/Liability of smallness
• GEM/Traditional Indian business wisdom
(42 months/1000 days)
• New ventures need special help
SME Development in India:
Agencies & Programmes
• SME development less effective than in
developed countries
• SME Focus since Independence (Industrial
Policy Resolution of 1956)
• Pioneering status among developing countries
• Early start and variety of programmes
Agencies for SME
Development in India
• Government of India
• State/Provincial Governments
• Financial Institutions
• Academic and Training Institutions
• Industry Associations
• NGOs and Consultants
Institutions under the
Government of India
• Institutions/Activities under the
Ministry of Small Scale Industries
(DC-SSI/SIDO)
• Institutions/Activities under the
Department of Science and
Technology (DST/NSTEDB)
Development Commissioner (SSI) and Small Industries
Development Organization (SIDO): Structure
DC (SSI)/SIDO
SISI (30)
RTCs (4)
Branch
SISI (28)
FTSs (7)
Autonomous Bodies
TR/TDI (9)
CFTI (2)
PPDC (6)
SCXs (61)
ESTC
NSIC
SIDBI
KVIC
Training
Institutes
Note: Abbreviations expanded in subsequent slides
IDEMI
CDGI
FFDC
SIDO Structure: Expanded Listing
• Small Industries Service Institutes (30)
• Branch SISIs (28)
• Subcontract Exchanges for Ancillary Development (SCXs) – 61 (Mostly
with SISIs and Branch SISIs, some with Industry Associations
• Regional Testing Centres (RTCs) – 4
• Field Testing Stations (FTSs)
SIDO Structure – Autonomous Bodies
– Tool Rooms (TRs)/Tool
Design Institutes (TDIs) – 9
– Fragrance & Flavour
Development Centre (FFDC)
– Central Footwear Training
Institutes (CFTIs) – 2
– Centre for the Development
of Glass Industry (CDGI)
– Product & Process
Development Centres
(PPDCs) – 6
– National Small Industries
Corporation (NSIC)
– Electronics Service &
Training Centre (ESTC)
– Institute for Design of
Electrical Measuring
Instruments (IDEMI)
– Small Industries Development
Bank of India (SIDBI)
– Khadi and Village Industries
Corporation (KVIC)
– Training Institutes
Training Institutes Created under SIDO
• National Institute of Small Industry Extension Training
(NISIET)
• National Institute of Entrepreneurship and Small
Business Development (NIESBD)
• Integrated Training Centre for Industries (ITCI)
• Indian Institute of Entrepreneurship (IIE)
• Small Entrepreneurs Promotion & Training Institute
(SEPTI)
• Entrepreneurship Development Institute of India
(EDII)
Agencies under the State Government
• Directorate of Industries, and the District
Industries Centres (DICs) under them
• State Financial Corporations
• State Industrial Development Corporations
(SIDCs)/State Industrial Investment
Corporations (SIICs)
• State Small Industries Development
Corporation (SSIDCs)
Institutions/Activities under the Department of
Science & Technology (DST)
• National Science & Technology
• Entrepreneurship Development Board (NSTEDB)
• Activities under NSTEDB
–
–
–
–
Entrepreneurship Awareness Camp (EAC)
Entrepreneurship Development Programme (EDP)
Entrepreneurship Development Cell (EDC)
Science & Technology Entrepreneurs Park (STEP)
Activities under NSTEDB (contd.)
– Science & Technology Entrepreneurship Development
Projects (STED)
– Faculty Development Programme (FDP)
– Skill Development through Science & Technology (STST)
– Technology Business Incubator (TBI)
– Technology Based EDP (TEDP)
– Open Learning Programme in Entrepreneurship (OLPE)
– Science-Tech Entrepreneur (Magazine)
Achievements of NSTEDB
P ro g ra m m e
E n trep ren eu rsh ip A w a ren ess C a m p (E A C )
C o nd u cted
S tu d ents E xp o sed
E n trep re n eu rsh ip D evelo p m en t P ro g ra m m e (E D P )
C o nd u cted
P erso ns T rained
U nits S et u p
S u ccess
E m p lo ym ent G enerated
E n trep ren eu rsh ip D evelo p m en t C ell (E D C )
E D C ells E stablished
S cien ce & T ech n o lo g y E n trep ren eu rs P a rk (S T E P )
STEPs
U nits S et u p
Jo bs G enerated
S cien ce & T ech n o lo g y E n trep ren eu rsh ip D evelo p m en t S ch em e
(S T E D S )
No. of STEDS
F a cu lty D evelo p m en t P ro g ra m m e (F D P )
C o nd u cted
F acu lty T rained
S k ill D evelo p m en t th ro u g h S cien ce & T ech n o lo g y (S T S T )
N o . o f p eo p le trained
A ch iev em en t
(N o s.)
1018
71260
629
14259
2684
1 8 .8 2 %
1 6 ,6 8 2
30
32
433
3279
13
62
1575
7 0 ,0 0 0
Programmes Outside the
Government System
• Banks & Financial Institutions
• NGOs
• Academic Institutions
• Most of them having links with
government programmes
Academic &Training Institutions:
Three Categories
• Training institutions under the government,
subsequently made autonomous
• Specialized institutes like IITs and IIMs taking up
entrepreneurship development activities
• Universities and Colleges, both public and private
• Strengths and Weaknesses of each system
Activities of Education and Training
Institutions in India
•
•
•
•
•
•
•
•
Pre-start up training
Pre-start up consultancy
Incubation facilities
Post-start up training
Long duration diploma programmes
Conferences, seminars & workshops
Research projects
Journals, newsletters & other publications
Academic Programmes:
Inadequacies
• No degree-awarding programmes
• Limited focus on research and
publications
• Missing culture of educating for longterm impact
Higher Education and Entrepreneurship:
Mistrust and Mismatch
• Sentiments of mistrust: Example from
India
– Comment about the ownership disputes at
Reliance Industries (India’s largest private
sector company)
(“A poor ill-educated man created the billion-dollar
Reliance Industries. Two business graduates from
Stanford and Wharton are busy trying to break it up.
That is education!”)
SME Training Survey
Some Findings
Training Needs of SMEs in India:
Major Findings - 1/7
Perception of Training Need:
– 38%: No need for any training
– 47%: Need for some training
– 15%: SMEs need training
(Mostly medium sized firms)
Priority Areas of Training - 2/7
Directors
Managers
Employees
Marketing – 38%
Finance – 24%
Team skills – 21%
Finance – 27%
Team Skills – 18%
Quality Assurance – 19%
Quality Assurance – 18%
Quality Assurance – 12%
Interpersonal skills- 10%
Leadership skills -18%
Marketing – 10%
Production Management –
8%
Technology Management –
17%
Venture Capital & Funds
Management – 16%
Networking skills – 16%
Selling Skills – 16%
Negotiation skills – 15%
Training Needs of SMEs in India:
Major Findings - 3/7
The most preferred training provider:
–
–
–
–
–
–
Individual trainers and consultants 30%
Training institutes 28%
Consultant organizations 17%
Industry associations 8%
Universities 7%
Others 10%
Training Needs of SMEs in India:
Major Findings - 4/7
Preference of duration and timing:
–
Short duration (2-4 hours) preferably on
week-ends
–
Short on-campus training programmes
Training Needs of SMEs in India:
Major Findings - 5/7
‘Felt-need’ for Training in practice: Training
imparted:
Directors 6%, Managers 3%, and Employees
1%
Actual use of training providers:
Accountants, family members, colleagues in
the industry, technology associates (suppliers
of machines, customers, etc.)
Training Needs of SMEs in India:
Major Findings - 6/7
Serious constraints for SMEs to
undertake training
Gap between “espoused theory” and
“theory-in-use”
(SMEs need training, but not my
unit!)
Training Needs of SMEs in India: Major
Findings - 7/7
Aversion to Training due to:
•
Self-confidence
•
Perceived irrelevance
•
Lack of tangible effects
•
Inability of unwillingness to pay
•
Apprehension of loss of trained employees
•
Internal exigencies
•
•
Genuine constraints
UK
HEIs
SMEs
Institutions
& Agencies
India
China
Information, policy
infrastructure
Collabor
ative
R&D;
Students;
Projects
Training
Business to business
The Learning Loop
The connectivity loop
The Essex Cluster-Based Entrepreneurship Programme
Some Concluding Observations
• Undistinguished in scope of provision but distinctive in structure
of provision
• Confused state of affairs but widely spread and diverse forms
• Wide range of stakeholders but high level of state dependence
• Entrepreneurship training has higher premium than
entrepreneurship education
• Current Status: Attention to Entrepreneurship only at the higher
education level
• Early stage education in entrepreneurial attitudes neglected
• Recognize the dual role of education and focus on its value for
facilitating the general as well as the task environments
Some Concluding Observations
• Need for
– pro-active response to trends
– distinction between entrepreneurship and small
business training
– internationalisation
– Integration with R&D, information search, policy
development
– evaluation
Contacts
• Professor Jay Mitra
• Head of School of
Entrepreneurship and Business
• University of Essex
• Princess Caroline House
• 1 High Street
• Southend-on-Sea
• Essex SS1 1JE
• UK
• Tel: +44(0) 1702 238649
• Fax: +44 (0) 1702 238659
• E-mail: jmitra@essex.ac.uk
• Professor Mathew J Manimala
• Professor of OBand Jamuna
Raghavan Chair of
Entrepreneurship
• Indian Institute of Management,
• Bannerghatta Road Bangalore-76
• India
• Tel: +91-80-26993107
• Fax: +91-80-26584050
• Email: manimala@iimb.ernet.in
•