The Micro, Small, and Medium Enterprises (MSMEs) sector plays a vital role in the socio-economic development of India. It contributes significantly to the country's GDP, economic growth, employment generation and innovation. According to the Ministry of Micro, Small, and Medium Enterprises, the Udyam Registration portal registered 3,16,05,581 MSMEs as of December 4, 2023.

However, women entrepreneurs own around 20.5% of these MSMEs. They face multiple challenges that impede their growth and success in the MSME sector. According to official data, women-owned MSMEs account for about 18.73% of the total employment and 10.22 % of the total turnover generated by the industry. Furthermore, India ranks third-highest in entrepreneurship gender gap globally, with only 33% of the early-stage entrepreneurs being women. Post-COVID pandemic, around 3057 MSMEs led by women entrepreneurs have shut down between July 1, 2020, and February 2, 2023, with Maharashtra (861), Tamil Nadu (468), Gujarat (245), Uttar Pradesh(207), and Rajasthan (180) having the highest number of closures of women-led businesses.

Challenges

1.   Limited access to finance. Women entrepreneurs face limited access to formal finance. They are more likely to encounter higher borrowing costs, receive short-term loans, and provide collateral for a more significant proportion of their loans than their male counterparts. According to a report by the International Finance Corporation (IFC), 80% of women said that personal resources were their preferred method of finance. 55% of women stated that they took loans from moneylenders.

2.   Lack of networking opportunities. Women entrepreneurs experience issues in accessing networking opportunities. They are less integrated into formal and informal networks like business networks, associations, and trade shows. According to a survey analyzing challenges to women entrepreneurs, lack of networking and entrepreneurial skills affected 48% of the respondents. A survey by Google-Brain also found that 45% of urban enterprises fail due to a lack of access to avenues for network development.

3.   Lack of family support and cultural obligation. Family members' moral and emotional support may encourage women to become entrepreneurs or provide psychological help in dealing with business problems. However, in many families in India, it is the opposite. A study by the National Institute of Entrepreneurship and Small Business Development (NIESBUD) found that cultural and societal norms often prevent women from starting and running their businesses. International Finance Corporation (IFC) also found that 53% of women entrepreneurs in India cited social and cultural barriers as a significant challenge to their business growth.

Women are frequently asked to assume the position of primary caregiver, and household tasks must become their priority, making any professional employment secondary. Caregiving duties limit their mobility. A survey by the Indian School of Business (ISB) found that women entrepreneurs in India often face challenges balancing family and business responsibilities.

4.   Gender bias. Due to gender stereotypes and biases, women entrepreneurs often encounter challenges in accessing credit, training, and support services. A study by the National Entrepreneurship Network (NEN) found that 80% of women entrepreneurs in India face gender bias and discrimination. In addition, they may face challenges in negotiating with suppliers, customers, and other stakeholders due to this bias. This limits their ability to compete on an equal footing with male entrepreneurs and hampers their growth and success.

5.   Lack of access to information and resources. Women entrepreneurs in MSMEs also face limited access to information and resources. Many women entrepreneurs lack awareness of available government schemes, industry trends, and business opportunities. They also face challenges in accessing training and development programs that can help them develop the skills and knowledge required to succeed in their businesses. This limits their ability to innovate, compete, and grow their businesses.

6.   Gaps in existing government policies: The schemes do not provide direct financing to women entrepreneurs, and their coverage may not be sufficient for businesses to grow and expand. As per a report by NITI Ayog, around 45% of the central government schemes provide financial support, and 27% provide support in training and skilling ecosystem needs as their primary area of support. Only 3% of state and 4% of central schemes have mentoring or networking as the primary support domain. Market linkage ecosystem as a primary or secondary support domain is only targeted by 18.5% of central and around 7% of state schemes. Only 7% of state schemes target women entrepreneurs exclusively. Another 7.6% of schemes target men and women but have special provisions for women. However, these schemes generally fail to focus on women entrepreneurs. For example, women account for only 6% of the total lending portfolio under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) scheme.

Policy recommendations

To address these challenges, a multifaceted approach must be taken. The scope of the Women Entrepreneurship Platform (WEP) should be broadened to include services like networking, funding, and a marketplace. Television and other media sources should be used for skill development by airing practical business workshops and providing access to tools like accounting softwares, MS Office, AI tools etc. Peer-to-peer training networks should be established in rural areas to empower women with essential business skills, thereby fostering self-sustainability. Additionally, initiatives such as compulsory sensitization training for financial institutions, incentives for gender diversity, and awareness campaigns to address cultural barriers are proposed. Moreover, extending the tenure of loans and simplifying regulatory processes are vital steps to support women entrepreneurs.

By addressing these challenges and implementing these recommendations, we can empower women entrepreneurs in the MSME sector, promote gender equality, and contribute to the socio-economic development of India.

(The writer is an undergraduate student at Christ (Deemed to be) University. Views are personal. She can be contacted at ribhyadhirasaria@gmail.com

References

Decoding government support to women entrepreneurs in India: The anatomy of entrepreneurship support schemes. (2022). In Nit Aayog. https://www.niti.gov.in/sites/default/files/2023-03/Decoding-Government-Support-to-Women-Entrepreneurs-in-India.pdf

More than 3 crore MSMEs registered on Udyam portal. (n.d.). https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1985022

Singh, A., & Chhabra, P. (n.d.). Financial inclusion for Woman-Owned Micro, Small & Medium Enterprises (MSMEs) in India. In International Finance Corporation. https://www.indiaspend.com/uploads/2021/02/20/file_upload-417397.pdf

Soni, S. (2023, February 19). Over 3,000 MSMEs led by women entrepreneurs shut post Covid: Govt data. Financial Express. https://www.financialexpress.com/business/sme-msme-eodb-over-3000-msmes-led-by-women-entrepreneurs-shut-post-covid-govt-data-2986016/

Women entrepreneurs in MSMEs. (n.d.). https://www.pib.gov.in/PressReleasePage.aspx?PRID=2002574#:~:text=These%20women%2Downed%20MSMEs'%20contribution,Udyam%20registered%20MSMEs%20is%2010.22%25.