Making the journey from job seekers to job creators | Analysis
Encourage education, enable easy access of funds, and nurture a culture of risk-taking for the economy to bloom
As the government tries to tackle the economic slowdown, it must focus on the key challenge of job creation. India’s huge dependence on agriculture — which constitutes 16% of our GDP while supporting two-thirds of our population — will mean an increase in the flow of people looking to increase their incomes towards manufacturing and services jobs.
Sadly, India has already ceded the manufacturing initiative to China. The focus on Make in India and the more recent United States-China trade war may have a marginal positive impact. But the reality is that China is the world’s definitive manufacturing hub, accounting for a quarter of the world’s factory output, with an entrenched ecosystem of component vendors, rich economies of scale, and stability and clarity in land and labour laws. With the Belt and Road initiative gaining ground, it will only consolidate its dominance. India will, thus, need to look at job creation options beyond mass manufacturing.
Through the post-Independence era, India’s entrepreneurial landscape was dominated by a handful of businesses. It was a time of the license quota raj. Product and technology innovation, research and development, and global competitiveness naturally took a back seat. The post-liberalisation era saw the emergence of a new generation of entrepreneurs into freshly-opened-up sectors like telecom, aviation, information technology services, among others. They recognised the importance of a global marketplace, competed with the best in the world, and shaped their businesses and ambitions accordingly.
Cut to the new digital-era entrepreneurs of this decade. Most of these are young first-generation entrepreneurs. These entrepreneurs are fast becoming the new heroes of India’s middle class. Most of our new-age entrepreneurs — unscarred by an earlier generation brought up on shortages — are developing products for a worldwide audience and are not averse to audacious scale-ups that pitchfork them into a global arena. Technology and the spread of the Internet are enabling this at a pace thought unthinkable before. There are already 24 unicorns in India — enterprises valued at over $1 billion. Amid news of bankruptcies, loan defaults, burgeoning non-performing assets, and look-out notices against seasoned industrialists, this young breed is a welcome breath of fresh air.
The core of the new-age start-ups is the availability of funding. This enables young, ambitious and innovative individuals, without the support of family wealth, to compete with large established corporations, scale up, and innovate faster with fewer stakeholders to manage. For this to become mainstream and grow beyond the metros, it will take three enablers: Education, easy access to funding, and nurturing a culture of risk-taking.
To promote and nourish entrepreneurship, many countries invest in entrepreneurship education and actively encourage young people to innovate with a view to solving everyday problems. While entrepreneurship can’t be taught, it needs a robust ecosystem — centres, experienced mentors, legal support for intellectual property development and protection, knowledge of creating business plans, pitching and fundraising. Building these elements into formal curricula will go a long way.
Besides the learning, entrepreneurship education has to penetrate the interiors. According to a study by the analyst firm, Traxcn, since 2015, graduates from two premier institutes, IIT Bombay and IIT Delhi, founded 310 and 277 start-ups respectively. The power of taking this entrepreneurship spirit to smaller towns and traditional undergraduate programmes could help unleash India’s next swarm of unicorns.
Historically, funding has been the critical challenge, but the success of many unicorns has got the attention of the global investor community. This is helping the Indian venture capital system grow, leading to a reasonable availability of funding starting from seed funds, angel investments to venture capital and private equity firms. So, for a young person with a smart workable idea and the confidence to progress it, access to funds may not be a limitation.
Entrepreneurs have a passion to change things with bright ideas and disruptive technologies. This needs an environment encouraging active risk-taking without the fear of failure.
Many of India’s recent unicorns have not just created wealth for their investors but have become huge employment generators. Jobs ranging from warehouse and delivery staff, cab drivers, customer service agents, programmers and content developers. They have scaled up in record time on the back of venture capital funding, technology and quick deployment. Many have acquired a scale that makes them potential world leaders. India already has the third highest numbers of unicorns in the world.
Nurturing entrepreneurship among the youth can be hugely beneficial for the economy, society, and the nation as a whole. In these turbulent times, when nations are transitioning and adapting to globalisation, hope for the youth lies in becoming job creators rather than job seekers.
Lloyd Mathias is an Angel Investor, business and marketing strategist.
The views expressed are personal