Rural women entrepreneurs: Overcoming economic & social adversities
This article is authored by Neha Juneja, co-founder and CEO, IndiaP2P.
Rural women entrepreneurs in India are emerging as a powerful force for change, transforming not only their lives but also their communities. Often from marginalised sections of society, face significant challenges—social, economic, and cultural—but are steadily overcoming these hurdles to establish successful micro, small, and medium enterprises (MSMEs). Their stories reflect resilience, innovation, and an evolving entrepreneurial landscape that is critical for the country’s economic growth. It is a positive trend that bears a significant impact on India's economic future.
India is home to over 20% of MSMEs owned by women, a large portion of which are based in rural areas. The exact number stands at approximately 8.05 million women-owned MSMEs. These enterprises contribute to employment generation, particularly for other women, and play a pivotal role in local economies by offering products and services tailored to the needs of rural markets. Despite these achievements, the growth rate of women-owned MSMEs remains uneven due to persistent challenges, particularly access to finance and support infrastructure. Between 2019 and 2022, the number of women-owned MSMEs has grown at an annual rate of approximately 18-20%, which is promising, but there's still much ground to cover. As more rural women break into entrepreneurship, it becomes clear that supporting their ventures could help unlock enormous economic potential and positive societal change.
One of the key challenges is rooted in social norms that have traditionally relegated women to household duties. In most households, women are still expected to prioritise family obligations over their professional ambitions, leaving little time or energy to build and run businesses. Gender biases often make it difficult for women to secure land, resources, or partnerships that would enable them to expand their ventures. Moreover, rural women often face resistance from family members who may be hesitant about their participation in economic activities which usually lie outside of home. Some women entrepreneurs have overcome this by framing their businesses as extensions of traditional roles—such as agricultural production, tailoring, or food processing. This strategy has allowed them to gain family and community support while gradually building a business identity. Fortunately, the advent of digital sales and marketing tools have enabled such 'homepreneurs'.
Women who have successfully launched and scaled their businesses have often done so by creating a delicate balance between tradition and modernity. They show a strong sense of resilience and determination, with many operating under the radar in informal economies. By taking small, manageable steps, they have overcome deeply embedded social adversities.
Access to finance remains one of the biggest obstacles faced by women entrepreneurs in rural India. Women-led MSMEs are more likely to face rejection from traditional banking institutions due to the perceived risks associated with lending to them. Collateral requirements, lack of formal education, and limited credit histories have all contributed to this problem. In some cases, banks even ask women to get 'no objection certificates' from male family members when availing a loan - highlighting the patriarchy that exists in even the most modern and advanced of lending institutions.
According to the International Finance Corporation (IFC), the credit gap for women-owned enterprises in India is estimated at a staggering $158 billion, reflecting the significant need for financial inclusion and targeted lending solutions. The demand for loans among women-owned MSMEs has been growing, especially after the Covid-19 pandemic, which further highlighted the importance of building resilient, women-led businesses. As more women enter entrepreneurship, their need for accessible credit will continue to rise. Many women entrepreneurs prefer small-ticket loans with simple, transparent repayment terms, which can help them grow their businesses incrementally without overwhelming financial pressure.
Microfinance has played a transformative role in enabling women entrepreneurs in rural India to overcome financial barriers. Institutions like Self Help Groups (SHGs), microfinance institutions (MFIs), and Non-Banking Financial Companies (NBFCs) have provided critical support by offering loans, savings programmes, and financial literacy training. Microfinance services are often designed to cater specifically to rural women, ensuring they have the necessary capital to start or expand businesses. The Grameen model of microfinance, initiated in Bangladesh and adopted by several Indian institutions, has proven particularly successful. In this model, women borrowers form groups, providing mutual support and accountability. This has allowed women to access finance without collateral, and the group-based lending approach has demonstrated high repayment rates, thus easing banks' and MFIs’ concerns about lending to women entrepreneurs.
In addition to microfinance, newer lending institutions are emerging and growing that enable credit for women outside of the SHG structure.
Despite the growing number of women-owned MSMEs, India’s female labour force participation rate remains low, hovering around 20%. This is in stark contrast to global averages, signaling a need for policy interventions and a cultural shift that promotes women’s employment and entrepreneurship. There are also stark regional differences in women’s participation in the workforce and MSMEs across India. For instance, northern states like Uttar Pradesh and Bihar have some of the lowest female labour force participation rates, with less than 10% of women engaged in formal employment. In contrast, states like Tamil Nadu, Kerala, and Maharashtra have relatively higher rates of female entrepreneurship and workforce participation, largely due to better access to education, infrastructure, and supportive government schemes.
Rural women entrepreneurs face additional challenges due to these regional disparities. In some areas, cultural restrictions on women’s mobility limit their ability to engage in business activities, while in others, poor access to markets and infrastructure creates barriers. Nevertheless, women entrepreneurs in regions with lower participation rates are showing great resilience by tapping into microfinance and forming strong community networks to overcome these obstacles.
When women become entrepreneurs, they bring others along with them. Research shows that women-led businesses tend to employ more women, creating a ripple effect that can lift entire communities out of poverty. Encouraging women’s participation in entrepreneurship is therefore not just a matter of individual empowerment—it is a crucial component of sustainable development. As these women continue to thrive, they will undoubtedly play a crucial role in shaping India’s economic future.
This article is authored by Neha Juneja, co-founder and CEO, IndiaP2P.
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