India has the third largest entrepreneurship ecosystem in the world and is also ranked third in terms of number of new firms created from the year 2014 to 2018, according to the Economic Survey 2019-20 tabled in Parliament by Finance Minister Nirmala Sitharaman.
The number of new firms created saw an 80 per cent increase from 70,000 in 2014 to 1,24,000 in 2018, it said. It also noted that grassroot entrepreneurship, creation of firms at district level, is pivotal for improving economy, wealth creation in the country. A 10 per cent rise in registration of new firms in a district yields a 1.8 per cent increase in Gross Domestic District Product, it observed.
India’s new economic structure, according to the survey, is evident in the form of majority of these new firms coming up in the services sector as opposed to the manufacturing and agriculture or infrastructure. It said that the pattern of new firms creation is not restricted to any specific region/geography in India. For agriculture, states like Manipur, Meghalaya, Madhya Pradesh, Assam, Tripura and Orissa were observed to have the highest entrepreneurial activity.
Establishments in North East are more likely to be private enterprises in food business such as organic produce farms and tea plantations while a majority of the establishments in Madhya Pradesh and Orissa are farmer producer companies, designed as hybrids between cooperative societies and private limited companies that organise farmers into a collective to improve their bargaining strength in markets.
For manufacturing sector, the highest number of new firms registered were in Gujarat, Meghalaya, Puducherry, Punjab and Rajasthan. It was also found that states which had the most flexible labour laws/policies witnessed an increase in the entrepreneurial activity. West Bengal, Kerala, Assam, Jharkhand and Bihar with inflexible labour laws witnessed the lowest entrepreneurial activity. In the services sector, the highest number of new firms creation were seen in Delhi, Mizoram, Uttar Pradesh, Kerala, Andaman and Nicobar and Haryana spanning diverse industries such as trading, financial services, tourism and hospitality services, retailing and even religious missions. The highest number of new enterprises in the infrastructure sector were seen in states of Jharkand, Arunachal Pradesh, Himachal Pradesh, Mizoram, Jammu and Kashmir and Bihar.
Companies registration in manufacturing sector
For manufacturing sector, the highest number of new firms registered were in Gujarat, Meghalaya, Puducherry, Punjab and Rajasthan. It was also found that states which had the most flexible labour laws/policies witnessed an increase in the entrepreneurial activity. West Bengal, Kerala, Assam, Jharkhand and Bihar with inflexible labour laws witnessed the lowest entrepreneurial activity
New companies creation in services sector
In the services sector, the highest number of new firms creation were seen in Delhi, Mizoram, Uttar Pradesh, Kerala, Andaman and Nicobar and Haryana spanning diverse industries such as trading, financial services, tourism and hospitality services, retailing and religious missions. The highest number of new enterprises in the infrastructure sector were seen Jharkand, Mizoram, Jammu & Kashmir etc.
