The Indian Environment for Entrepreneurship and Small Business Development

India is touted as a new entrepreneurship powerhouse and the next Asian miracle. There have been some successful and many unsuccessful attempts to promote entrepreneurship and small business development in India. There are also some well-founded rationales as well as a number of misinformed and ill guided viewpoints about the friendliness of environment to support entrepreneurship and small business growth in the country. This paper examines various indicators related to entrepreneurship in India and analyzes factors affecting India’s entrepreneurial performance. Specifically, we provide a detailed assessment of the Indian environment for entrepreneurship in terms of various dimensions provided by the Organization for Economic Co-operation and Development (OECD framework. The dimensions include regulatory framework, market conditions, access to finance, R&D and technology related factors, physical infrastructures, entrepreneurial capabilities and entrepreneurial culture. We provide a detail treatment of various forms of financing from the standpoint of small business development such as bank loans, IPO market, venture capital, microfinance, remittances inflow, domestic savings and informal investments. We also compare India with its neighboring country, China and major global economies in terms of many of these dimensions. Also examined in the paper is the effect of the recent global financial crisis on India’s performance in supporting entrepreneurship and small business development. Analyzed in the paper is also how the lack of trickledown effect and an emergence of oligarchic capitalism are affecting entrepreneurship and small business development