Business Environment By me

8/12/2019 Business Environment By me..

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BUSINESS ENVIRONMENT PROJECT

TOPIC-

Business Environment and Entrepreneurship

SUBMITTED TO-

Ms! "an#ha$ %upta

SUBMITTED B&-

Raveesh Jasu'a

()*BBS*+,.

Ni/hi$ Mano#ha

()*BBS*+,(


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Acknowledgement

We would like to acknowledge our teacher Ms.

Aanchal gupta, our parents and friends for

their constant support and guidelines because

of which this project has been successful.

Raveesh Jasuja

0!""#!$%&'

(ikhil Manocha

0!""#!$%&0


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Introdu#tion

It is e0treme$4 important 1or entrepreneurs to understand the :usinessenvironment i!e! the :ureau#rati# set up8 2ro5th prospe#ts8 po$iti#a$ sta:i$it48

'udi#iar4 e11e#tiveness et# in their re2ion o1 :usiness! This arti#$e 1o#uses on

India 1rom this perspe#tive and 5i$$ provide an overvie5 o1 some pertinent

1a#tors!

In the $ast 1e5 4ears8 India has #onsistent$4 re2istered impressive %DP

2ro5th rates and is touted to :e one o1 the $ar2est e#onomies o1 the 5or$d in

the #omin2 de#ades!

"part 1rom providin2 a poo$ o1 5e$$ trained and hi2h s/i$$ed 5or/ 1or#e8

India a$so houses a ;( mi$$ion stron2 midd$e #$ass 5hi#h #ommands a

1ormida:$e spendin2 po5er!

The in#reasin2 a11$uen#e < it has the 1ourth $ar2est :i$$ionaire popu$ation in

the 5or$d < ma/es it even more attra#tive as a hi2h end produ#ts and $u0ur4

2oods mar/et! In addition8 than/s to a vi:rant demo#ra#48 it has en'o4ed

re$ative$4 hi2her sta:i$it4 than other re2ions in its nei2h:orhood! =rom an

entrepreneur>s perspe#tive8 :ureau#rati# issues $i/e #ompan4 re2istrationperiod8 paper 5or/8 $i#ensin2 issues and ta0 and other in#entives a$so

assume importan#e!

The pro#edures 1or in#orporation o1 a #ompan4 in India $isted :rie1$4 #an :e

1ound here! It ta/es a:out ,, steps and on an avera2e a:out ; da4s 1or

in#orporation in India! To #ir#umvent #ertain :ureau#rati# pro#edures8 sin2$e

5indo5 #$earan#es are a$so avai$a:$e 1or #ertain industries! The pro#edures

are not ver4 di11erent 1or 1orei2n #iti?ens $oo/in2 to esta:$ish :usiness in

India! 7o5ever8 there mi2ht :e a #ap on the amount o1 >1orei2n investment>

in #ertain se#tors!

"s a mar/et8 India>s spendin2 po5er ma/es it easi$4 one o1 the most

$u#rative "sian mar/ets and even 2$o:a$$4 it remains an attra#tive mar/et! It

has on$4 re#ent$4 'oined the >tri$$ion do$$ar %DP> #$u:! 7o5ever8 i1 PPP


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@pur#hasin2 po5er parit4A is #onsidered it has :een a mem:er o1 this #$u: 1or

a $on2 time no5! Its 2ro5th rate has :een hoverin2 at around )!; over the

past 1e5 4ears and man4 se#tors o1 the e#onom4 are no5 openin2 up!

This openin2 up o1 se#tors traditiona$$4 o##upied :4 2overnment o5nedmonopo$ies has #reated a void 5hi#h #an :e 1i$$ed :4 entrepreneurs! Man4

se#tors $i/e retai$8 in1rastru#ture8 :an/in28 insuran#e et# are no5 :ein2 hot$4

pursued! "part 1rom these se#tors8 opportunities a$so e0ist 1or sma$$ to

medium entrepreneurs operatin2 in a ni#he!

The Indian 'udi#iar4 has an unimpressive re#ord o1 $a5 en1or#ement!

Contra#t en1or#ement and $e2a$ re#ourse is usua$$4 #um:ersome and the

pro#edures are $on2 5inded and p$a2ued :4 red tape and #orruption!

"$thou2h po$iti#a$ 5i$$ is :ein2 2arnered to over#ome these issues and set up#ourts e0#$usive$4 #aterin2 to #onsumer #on#erns and :usiness issues it ma4

:e $on2 :e1ore these set ups :e#ome 1un#tiona$!

Entrepreneurs 5ou$d :e advised to redu#e their re$ian#e on #ontra#ts i1

dama2es 1rom vio$ation are e0pe#ted to :e ver4 hi2h! "s 1ar as inte$$e#tua$

propert4 is #on#erned8 the s#ope o1 re#o2nition o1 patents is restri#ted! Thus8

entrepreneurs ma4 have to use other $e2a$ resour#es to prote#t their

innovation! On the :ri2hter side8 the $iti2ation #osts < insuran#e and $ia:i$it4

#osts < in India are e0treme$4 $o5 as #onsumer #ourts do not usua$$4 a5ard

ridi#u$ous dama2es there:4 redu#in2 the >#ost o1 doin2 :usiness>!

Entrepreneurs a$so need to :e a5are o1 the vast $in2ua$ and #u$tura$ diversit4

in India 5hi#h one needs to :e a5are o1 in order to e0pand!

Various #omparative studies on :usiness re2u$ations in India8 as 5e$$as in other #ountries are a$so uite revea$in2!,. hi$e these studiesre#o2ni?e India6s #omparative advanta2e in human resour#es8 s/i$$s8demo2raphi# pro1i$e and 2ro5in2 domesti# demand8 India 1ares

poor$4 vis-F-vis its :usiness environment! =or instan#e8 in the GDoin2Business H(()6 report @See Bo0 !,A8 5hi#h is pu:$ished :4 or$dBan/ and the Internationa$ =inan#e Corporation8 India ran/s ,H(thout o1 ,+) #ountries < even :ehind #ountries su#h as The Ma$dives@(thA8 Pa/istan @+thA8 Sri 3an/a @,(,stA8 Ban2$adesh @,(+thA8and Nepa$ @,,,thA! The OECD dra1t report on re2u$ator4 1rame5or/in mar/et 1or 2oods and servi#es p$a#es India :ehind various


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#ountries8 in#$udin2 Chi$e and Bra?i$!,;( The %$o:a$ CompetitivenessReport H((+-() o1 the or$d E#onomi# =orum p$a#es India in the)th position amon2 ,, #ountries!,;, C$ear$48 there appears to :e need 1orua$itative improvement in the :usiness 1a#i$itation environment!

Ease o1 Startin2 and Operatin2 Business

Di11i#u$t4 and de$a4s in meetin2 various 2overnment reuirementssu#h as re2istration o1 #ompan48 o:tainin2 $i#en#es and re2isterin2

propert4 sti$$ #on1ront entrepreneurs! The or$d Ban/ report8 GDoin2Business in South "sia H((+6 sa4s that8 it ta/es ; da4s @in Mum:aiAto ;H da4s @in Ne5 De$hiA to start a :usiness in India! The o11i#ia$#osts o1 startin2 a :usiness are hi2h and the pro#ess uite #omp$e08invo$vin2 no $ess than , pro#edures!,;) " $ar2e num:er o1 separatere2istrations < Ta0 "##ount Num:er @T"NA8 Permanent "##ount Num:er@P"NA8 Va$ue "dded Ta0 @V"TA8 Emp$o4ees Provident =und Or2ani?ation

@EP=OA8 Emp$o4ees State Insuran#e Corporation @ESICA8 amon2 others


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5ater and se5era2e #onne#tions8 and so on! Even in states 5here theSin2$e indo5 S4stem has :een put in p$a#e8 most entrepreneursdo not 1ind them satis1a#tor4 Gthere is a sin2$e 5indo5 :ut man4venti$ators68 as an entrepreneur 1rom 74dera:ad apt$4 put it!,( ":out;( o1 the entrepreneurs intervie5ed #$aimed to have pro:$ems 5hi$eapp$4in2 1or and o:tainin2 various #$earan#es and $i#en#es! 7o5ever8the per#eption re2ardin2 $i#en#es has 2radua$$4 improved over the4ears!

)orruption "$most ( o1 the entrepreneurs intervie5ed said the41a#ed #orruption at some time durin2 their entrepreneuria$ 'ourne45hi$e dea$in2 5ith 2overnmenta$ pro#edures and o11i#ia$s! That is aver4 distur:in2 statisti#.

*nitiatives Alread+ nderwa+-M)A-%/ One o1 the /e4re1ormsunderta/en to ease the pro#ess o1 startin2 a :usiness in India in#$udesMC"-H,8 the e-2overnan#e pro'e#t o1 the Ministr4 o1 Compan4 "11airsaims to 1u$$4 automate pro#esses o1 #omp$ian#e and en1or#ement! Theo:'e#tive o1 this initiative is to ma/e servi#es su#h as re2istration o1#ompanies transparent! The /e4 :ene1its o1 this pro'e#t are e0pe#ted toin#$ude on$ine in#orporation o1 #ompanies simp$i14in2 the pro#esseso1 1i$in2 o1 1orms and returns re2istration as 5e$$ as veri1i#ation

o1 #har2es 1rom an4 $o#ation inspe#tion o1 pu:$i# do#uments o1#ompanies and esta:$ishin2 a #entra$i?ed data:ase repositor4 o1#ompanies!

#ingle niue )ompan+ (umber/ "nother idea that needs to :ee0p$ored is the proposa$ o1 a Sin2$e Uniue Compan4 Num:er that ane5 :usiness #an use 1or #ompan48 ta0 and so#ia$ se#urit4 re2istrations!This has a$so :een su22ested :4 the or$d Ban/ Report8 GDoin2 Businessin South "sia H((+!6 On#e su#h a num:er is adopted8 the re$evantre2istration in1ormation #ou$d :e 1or5arded dire#t$4 :4 the re2istr4 o1

#ompanies to the ta0 administration o11i#es8 the EP=O and the ESIC.

Window #+stem: In order to 1a#i$itate the pro#ess o1 o:tainin2#$earan#es8 man4 states have introdu#ed the Gsin2$e 5indo5 #$earan#e6

pro#edure! 7o5ever8 the po5er to a##ord approva$s is sti$$ vested5ith various departments and a2en#ies under their separate statutes


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/no5n 1or their respe#tive :est pra#ti#es @see Bo0 !HA! E0amp$es in#$udeJaipur@1or startin2 :usinessA8 Bhu:anes5ar @1or o:tainin2 #onstru#tion#$earan#esA8 Ban2a$ore @1or o:tainin2 :ui$din2 permitsA and 74dera:ad@1or o:tainin2 $and use approva$s and re2isterin2 propert4A! Maharashtra andKarnata/a have ta/en steps to ease the pro#ess o1 re2isterin2

propert4! hi$e Maharashtra has ta/en steps to $o5er stamp duties8Karnata/a has redu#ed the time ta/en in the mutation and e0e#ution o1sa$e deeds! =urther8 re2ardin2 mode o1 pa4ment o1 stamp dut48 Karnata/ahas dis#ontinued the use o1 stamp paper and ena:$ed pa4ment throu2h

:an/ dra1t! Chennai has a H-hour on$ine #ontainer tra#/in2 s4stem 5hi$eBan2a$ore has an e-pa4ment 2ate5a4 1or #ustom duties! The Mum:aiPort Trust has a$so started an On$ine Port Communit4 S4stem!,+ In 1a#t8the GDoin2 Business in South "sia H((+6 report states that India #an 'ump

;; p$a#es 1rom its #urrent ran/ i1 some o1 the $o#a$ :est pra#ti#es areadopted nation5ide!

Ta0ation

Entrepreneurs a$so 1a#ed pro:$ems re$atin2 to #um:ersome ta0pro#edures as 5e$$ as mu$tip$i#it4 o1 ta0es! "##ordin2 to the or$dBan/-I=C Report8 GDoin2 Business H(()68 India6s ta0 re2ime reuires (separate pa4ments ever4 4ear!,) Co$$e#tion o1 ta0es throu2h di11erent2overnment a2en#ies a$so in#reases the pro:$ems o1 #omp$4in2 5ithta0 re2u$ation! There a$so e0ists a mu$tip$i#it4 o1 ta0es! In addition toservi#e ta08 CENV"T and #ustom duties that are imposed :4 the #entra$2overnment8 state and $o#a$ $eve$s o1 2overnments $ev4 respe#tivestate V"T*sa$es ta08 entertainment ta0 and entr4 ta0!,. "s seen in=i2ure ! :e$o58 H+ o1 entrepreneurs intervie5ed said the4 had1a#ed pro:$ems :e#ause o1 mu$tip$i#it4 o1 ta0es a$one , 1a#ed a

pro:$em 5ith #omp$e0it4 o1 pro#edures a$one and H 1a#ed pro:$ems5ith :oth! In other 5ords8 o1 the entrepreneurs intervie5ed8 i!e!t5o out o1 ever4 three entrepreneurs8 1a#ed di11i#u$ties 5ith re2ard to

some aspe#t o1 ta0ation - the mu$tip$i#it4 o1 ta0es or the #omp$e0it4o1 1i$in2 pro#edures8 or :oth!

2rocess Re-engineering in 3-governance Entrepreneurs5ere a$so o1the opinion that 5hi$e on$ine 1i$in2 o1 ta0es had :een introdu#ed8ta0 #omp$ian#e 5as sti$$ not eas4 sin#e 1orms and pro#edures are


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sti$$ #omp$i#ated! =or instan#e8 an entrepreneur 1rom Ko$/ata saidthat a$most one-third o1 his time 5as spent in doin2 paper5or/ and#omp$4in2 5ith mu$tip$e ta0 reuirements! This #on1irms NKC6s ear$ierre#ommendations that e-2overnan#e initiatives shou$d :e more a:outre-en2ineerin2 2overnment pro#esses rather than on$4 a:out 1ront-end#omputeri?ation

4e+ *nitiatives in 5a6ation/ The introdu#tion o1 Va$ue "dded Ta0@V"TA in "pri$ H((; 5as a si2ni1i#ant measure! ith the V"T s4stemin operation8 it has a$so :een re#ent$4 reported that Indian stateshave8 in prin#ip$e8 a2reed to move to5ards a #ommon #$assi1i#ation o1a$$ mer#handise so$d 5ithin the #ountr4 - the G7armoni?ed S4stem o1

Nomen#$ature6 @7SNA!,+, Current$48 the same produ#t #an :e ta0ed at

di11erent rates a#ross states $eadin2 to pro:$ems o1 #ost un#ertaint41or entrepreneurs! " #ommon #$assi1i#ation o1 a$$ mer#handise so$dthrou2hout the #ountr48 #oup$ed 5ith 1i0ation o1 ta0 rates 1or a$$#$assi1i#ations8 is a move to5ards 2reater uni1ormit4 and there:48$ess #ost un#ertaint4 1or entrepreneurs!,+H " sin2$e 7SN #ode 1or a$$the produ#ts under V"T a#ross the #ountr4 #ou$d a$so he$p statesin ma/in2 operationa$ the Ta0 In1ormation Net5or/ @TINL&SA8 anon$ine net5or/ intended to :rin2 transparen#4 to inter-statetransa#tions

There are a$so state-$eve$ initiatives to he$p entrepreneurs! Maharashtrahas8 1or instan#e8 #omputeri?ed re2istration pro#edures 1or sa$es ta0*V"T8 5hi#h drasti#a$$4 redu#es the time ta/en in 1i$in2 ta0 returns!"nother re1orm measure 5hose 1easi:i$it4 needs to :e e0p$ored isredu#in2 the 1reuen#4 o1 pa4ments :4 entrepreneurs 1rom month$4 toa uarter$4 :asis!,+ The issue o1 #onso$idation o1 ta0 1orms a$so needsto :e e0amined in detai$! =or e0amp$e8 an entrepreneur in S5eden #an1i$e mu$tip$e ta0es < #orporate in#ome ta08 va$ue added ta08 $a:our#ontri:utions as 5e$$ as propert4 ta0 < in a sin2$e 1orm!

3e2a$ S4stem

O1 the entrepreneurs intervie5ed8 said the4 1ind the #urrent $e2a$pro#edures and reuirements to :e either Ge0treme$4 unsatis1a#tor46 orGsome5hat unsatis1a#tor46 @see =i2ure !;A! Their #omp$aints $ar2e$4re$ate to pro#edures o1 $a5 su#h as the s$o5 pa#e o1 en1or#in2 #ontra#ts


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as 5e$$ as the #urrent :an/rupt#4 and $a:our $a5 pro#edures! ,. o1the entrepreneurs intervie5ed said the4 1ee$ #onstrained :4 $a:our $a5s@see =i2ure !,A! "##ordin2 to the or$d Ban/-I=C6s GDoin2 BusinessH(()6 report8 it ta/es on an avera2e8 ,( 4ears to #omp$ete :an/rupt#4

pro#eedin2s in India! =urther8 #$aimants #an e0pe#t to re#over anavera2e o1 $ess than ,,! #ents on the do$$ar! hi$e o11i#ia$ $iuidatorsare appointed to #arr4 out $iuidations8 the pro#edures are o1ten $on2dra5n! "nother $e2a$ issue is that o1 un$imited $ia:i$it4 1or promoters in

partnership #on#erns and proprietorship :usinesses due to the a:sen#eo1 3imited 3ia:i$it4 Partnerships @33PsA as a $e2a$ entit4 in India!

#uggested *mprovements Some o1 the $e2a$ re1orms that 5ou$d1a#i$itate a :etter environment 1or Entrepreneurship are as 1o$$o5s

a. Specialized Commercial Courts/ Sin#e the de:t re#over4 tri:una$sin India have 'urisdi#tion to entertain on$4 de:t re$ated issues8a possi:$e re1orm 1or speed4 en1or#ement o1 #ontra#ts 5ou$d :ethe esta:$ishment o1 separate spe#ia$i?ed #ommer#ia$ #ourts8 5hi#h5ou$d dea$ 5ith a$$ t4pes o1 #ommer#ia$ disputes.

b. Undertake Reforms in Bankruptcy Laws/ Dis#ussions are a$sounder5a4 to #han2e India6s :an/rupt#4 $a5s! The dra1t CompaniesBi$$ H((+ is e0pe#ted to simp$i14 ru$es and pro#edures! Esta:$ishmento1 institutions su#h as the Nationa$ Compan4 3a5 Tri:una$ @NC3TA

and Nationa$ Compan4 3a5 "ppe$$ate Tri:una$ @NC"3TA are a$soe0pe#ted to :rin2 a:out improvements in dea$in2 5ith #asesre$atin2 to inso$ven#48 reha:i$itation and $iuidation and 5indin2up pro#eedin2s! RBI6s "dvisor4 %roup on Ban/rupt#4 3a5s has a$sore#ommended the ena#tment o1 a ne5 :an/rupt#4 #ode to dea$ moreui#/$4 5ith $iuidations!c. One Person Company/LLPs/ The dra1t Companies Bi$$ H((+ is a$soe0pe#ted to propose a ne5 entit4 #a$$ed a one-person #ompan4@OPCA that 5ou$d provide individua$ entrepreneurs the 1$e0i:i$it4

and $o5 #ost o1 1ormin2 a proprietorship*partnership #on#ern 5hi$erestri#tin2 their persona$ $ia:i$ities to that o1 a private $imited#ompan4!,+) Simi$ar$48 the 2overnment is a$so e0pe#ted to ena#t a$a5 on 3imited 3ia:i$it4 Partnerships soon!


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In1rastru#tureThe re$ia:i$it4 and avai$a:i$it4 o1 5or$d-#$ass in1rastru#ture servi#es is#riti#a$ 1or the 2ro5th o1 Entrepreneurship! India6s ph4si#a$ in1rastru#ture

< roads*hi2h5a4s8 rai$5a4s8 ports8 airports8 po5er8 te$e#om < is seen asa :ott$ene#/ to the smooth operation o1 a$$ e#onomi# a#tivit4! The hi2htransport and supp$4-#hain #osts that poor in1rastru#ture entai$s aresi2ni1i#ant8 parti#u$ar$4 1or a sma$$ entrepreneur! Enterprises surve4edin the %$o:a$ Competitiveness Report H((+-()8 rated inadeuatein1rastru#ture as Gthe most pro:$emati# 1a#tor6 1or doin2 :usiness inIndia!,)( In this report8 5hi$e India s#ores 5e$$ on Gso1t6 parameters su#h ashi2her edu#ation8 the ru$e o1 $a5 and po$iti#a$ $e2is$ation8 it $osesout on the adeua#4 o1 in1rastru#ture 1a#i$ities! "##ordin2 to anotherre#ent surve48 ( o1 Indian CEOs are 5orried a:out the ua$it4 o1in1rastru#ture in the #ountr4

Availabilit+ of Work #pace "nother #ru#ia$ in1rastru#ture issue1ora ne5 entrepreneur is the avai$a:i$it4 o1 adeuate 5or/ spa#e! Thereare interestin2 di11eren#es :ased on 1ami$4 :a#/2rounds as seen in=i2ure !+ :e$o5! "mon2 1irst 2eneration entrepreneurs8 on$4 ,;reported a$read4 havin2 5or/ spa#e at the start-up sta2e! " ma'orit4o1 se#ond 2eneration entrepreneurs in the same :usiness @.Aa$read4 had 5or/ spa#e to start operations! 7o5ever8 this 1i2uredips si2ni1i#ant$4 1or se#ond 2eneration entrepreneurs8 5ho pursue adi11erent :usiness @A!

"nother pattern o:served is that $easin2 o1 5or/ spa#e is more

preva$ent amon2 1irst 2eneration and se#ond 2eneration entrepreneurspursuin2 a :usiness di11erent 1rom that o1 their 1ami$4! O1 the1irst 2eneration entrepreneurs8 H. $eased 5or/ spa#e #ompared to,+ amon2 se#ond 2eneration entrepreneurs in a di11erent :usiness!

#ome Recent *nitiatives/ Sin#e inadeuate in1rastru#ture is seen asa #riti#a$ :ott$ene#/ to e#onomi# 2ro5th8 the 2overnment has 2iven


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hi2h priorit4 to ua$it4 in1rastru#ture deve$opment8 in#orporatin2various de$iver4 me#hanisms su#h as PPPs @see Bo0 !A! The tota$investment in in1rastru#ture in H((-(+ is estimated to :e around ;o1 %DP! The tota$ investment in in1rastru#ture in the E$eventh =ive&ear P$an is pro'e#ted at Rs! H(8 (8 ,. #rore or +!; o1 %DP!,)"mon2 the /e4 in1rastru#ture deve$opment pro'e#ts are the Nationa$7i2h5a4s Deve$opment Pro'e#t @N7DPA8 Pradhan Mantri %ram Sada/&o'ana @PM%S&A8 Nationa$ Maritime Deve$opment Pro2ramme8 Bharat

Nirman 1or rura$ in1rastru#ture8 Ja5ahar$a$ Nehru Nationa$ Ur:anRene5a$ Mission @JNNURMA8 and Inte2rated Deve$opment o1 Sma$$ andMedium To5ns @IDSMTA! "t the same time8 the private se#tor6s share 1orinvestment in in1rastru#ture is e0pe#ted to in#rease 1rom H( to (durin2 the #urrent P$an period!

Entrepreneurship Edu#ation 5ithin India6s 7i2herEdu#ation S4stem

*ntroduction/ "ackground

In the ,..(s8 India e0erted 2reater e11ort to promote and nurtureentrepreneurship! "ttempts at various $eve$s have ta/en p$a#e to dire#t$4 orindire#t$4 promote entrepreneurship! The attempts 1a$$ under three main#ate2ories remova$ o1 state-imposed :arriers 1or startin2 :usinessesavai$a:i$it4 o1 1inan#es edu#ation and nurturin2!=irst8 entrepreneurship has :een en#oura2ed in India :4 s4stemati# attemptsat remova$ o1 state-imposed stru#tura$ and re2u$ator4 road:$o#/s! The2rantin2 o1 $i#enses and po$i#ies on #ontro$s and ta0ation has :een #ited asone o1 the ma'or hurd$es in settin2 up and runnin2 ne5 :usinesses! More

pro2ressive 2overnments have tried to ma/e it easier 1or entrepreneurs to setup :usinesses! The 2ro5th o1 Ban2a$ore and 74dera:ad as hu:s 1or IT#ompanies is a dire#t out#ome o1 2overnment support in the 1orm o1 ta0ho$ida4s 1or start-ups and se#tor-re2ion spe#i1i# sops to start ne5 ventures!

Se#ond8 there are attempts to ma/e 1inan#es avai$a:$e to :usinesses! In the#urrent :an/in2 paradi2m8 it is eas4 1or an esta:$ished :usinessperson to 2et$oans 1or startin2 ne5 ventures or e0pand #urrent :usinesses! 7o5ever8 ane5 entrepreneur 5ishin2 to start a ne5 :usiness 1inds it ver4 di11i#u$t to

pro#ure :asi# 1unds to set up and run a :usiness! The Reserve Ban/ o1 Indiahas ur2ed :an/s to provide 1unds to sma$$ and ne5 :usinesses @IndianE0press8 , De#em:er8 H((HA! The 2overnment o1 India is a$so in#reasin2 its


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e11orts in this dire#tion! The Sma$$ Enterprise Deve$opment Bi$$ o1 H((in#$uded 2uide$ines 1or :an/s and other 2overnment a2en#ies to ensure theeas4 dis:ursement o1 $oans 1or ne5 ventures! Su:seuent$48 the $o5erin2 o1

:orro5in2 rates 1rom the :an/s has a$so made it 5orth the 5hi$e o1entrepreneurs to run pro1ita:$e :usinesses!" third 1orm o1 support is the deve$opment o1 entrepreneuria$ ta$ent inedu#ationa$ institutions! India6s hi2her edu#ation s4stem 2enerates a $ar2enum:er o1 2raduates ever4 4ear! 7o5ever8 its e#onom4 is not in a position toa:sor: the 2raduates passin2 out8 $eadin2 to an in#rease in the edu#atedunemp$o4ed! In re#ent 4ears8 India6s popu$ation has 2ro5n ver4 1ast!Be#ause o1 the histor4 o1 India and its mu$ti-#u$tura$ #omposition8 it seemsimpossi:$e to have a =ami$4 P$annin2 po$i#4 $i/e that o1 China in the near1uture! It is $i/e$4 that India6s popu$ation 5i$$ #ontinue to 2ro58 5hi#h 5i$$#onseuent$4 5orsen the emp$o4ment situation! In India8 most entrepreneurs

5ere sin2$e o5ners8 ni$ emp$o4ees8 and one-person sho5s 5ith $itt$e 2ro5thprospe#ts! The so-#a$$ed entrepreneurs do :usiness main$4 1or se$1-emp$o4ment and are not the rea$ entrepreneurs!In order to #at#h up 5ith the pa#e o1 deve$oped #ountries8 India needs man4entrepreneurs 5i$$in2 to ma/e their :usinesses :i22er! I1 the universit4students 5ith hi2h entrepreneuria$ potentia$s 2et proper trainin28 the4 5i$$have the :est prospe#ts 1or :e#omin2 rea$ entrepreneurs! Entrepreneurshipis a matter that invo$ves ever4onethe 2overnment8 so#iet48 and theedu#ationa$ institutions! I1 Entrepreneurship Edu#ation @EEA in India6shi2her edu#ation s4stem #annot #omp$ete$4 address ma'or o:sta#$es in the

pursuit o1 nationa$ e#onomi# deve$opment and emp$o4ment8 at $east it #ano11er a start

3ntrepreneur, 3ntrepreneurship, and

3ntrepreneurship 3ducation

The #ore o1 EE amon2 the edu#ationa$ institutions is entrepreneur trainin2!The 1o$$o5in2 5ords are usua$$4 as#ri:ed to an entrepreneur innovation

@Kir?ner8 ,.+ S#humpeter8 ,. Bo$ton8 !K!8 ,.) Timmons8 ,.+)Amoderated ris/-ta/in2 @Timmons8 ,.+) 34ns/e48 H((HA a$ertness @Kir?ner8,.+A de#ision-ma/in2 and responsi:i$ities- see/in2 @Bro#/haus and7or5it?8 ,.) Sutton8 ,.; e$sh and hite8 ,.),A am:ition8 desire 1orindependen#e8 responsi:i$it4 and se$1-#on1iden#e @%orman8 7an$on8 andKin28 ,..+ Timmons8 ,.+) Se0ton8 ,.)( Dun/e$:er2 and Cooper8 ,.)HA


15/41

need 1or po5er @Dun/e$:er2 and Cooper8 ,.)HA and persona$ va$ueorientation @%asse8 ,.++ Timmons8 ,.+)A!=or the purpose o1 this stud48 5e de1ine an entrepreneur as an individua$5ho esta:$ishes and mana2es a :usiness 1or pro1it and 2ro5th! Bein2 anentrepreneur8 he*she is perhaps des#ri:ed as a mi0 o1 these attri:utes8a$thou2h it is di11i#u$t to identi14 5hi#h trait is stron2er8 in 5hat situation itis stron2er8 et#!Entrepreneurship is a mu$ti-1a#eted phenomenon! De1initions o1entrepreneurship 1o#us on di11erent aspe#ts o1 the phenomenon @Davidson8H((A and ori2inate 1rom di11erent dis#ip$ines! Shane and Ven/ataraman@H(((A used the 5ord hod2e-pod2e to des#ri:e the situation o1 #urrentstudies on entrepreneurship!Entrepreneurs do entrepreneurship! =rom the de1inition o1 an entrepreneur85e #an see that entrepreneurship is more than the mere #reation o1 :usiness!

It is a d4nami# pro#ess o1 vision8 #han2e8 and #reation! It reuires anapp$i#ation o1 ener24 and passion to5ards the #reation and imp$ementationo1 ne5 ideas and #reative so$utions!

Current Status C!allen"es and Lessons

)urrent #tatus

Courses in entrepreneurship are the #ore a#tivit4 o1 EE in India! Over ,((

di11erent departments o1 universities o11er #ourses in entrepreneurship! =or

instan#e8 NMIMS #ondu#ts a t5o-4ear8 1u$$time pro2ram on 1ami$4 :usiness

mana2ement! Most o1 the #ourses #over the $e2a$ and mana2eria$ aspe#ts o1

entrepreneurship! But the motivationa$ aspe#t tau2ht at NMIMS is eua$$4

important8 sin#e it #reates an aspiration and improves #on1iden#e $eve$s! This

pro2ram has euipped students 5ith the s/i$$s8 /no5$ed2e8 and mind-set to

run their 1ami$4 :usiness! ISB in 74dera:ad a11i$iated to non-pro1it

or2ani?ation adh5ani =oundation @#ommitted to promotin2

entrepreneurshipA8 o11ers entrepreneuria$ and in#u:ation assistan#e! ISB has

/no5$ed2ea:$e instru#tors euipped 5ith :usiness e0perien#e!

In India8 man4 entrepreneurship #enters have :een 1ounded to #oordinate the

:road arra4 o1 a#tivities8 pro2rams8 and resour#es 5ithin the edu#ationa$

institutions! =or e0amp$e8 the NS Ra2havan Center 1or Entrepreneuria$


16/41

3earnin2 in IIM Ban2a$ore @NSRCE3IIMBA #arries out internationa$

#o$$a:oration pro'e#ts! The %$o:a$ Entrepreneurship Monitor @%EMA Pro'e#t

5ith the 3ondon Business S#hoo$8 the E5in2 Marion Kau1mann =oundation8

and Ba:son Co$$e2e has :een a ma'or pro'e#t 1or the $ast three 4ears! In the

#ase o1 IIM Ca$#utta8 a#tivities on innovation and entrepreneurship are morepra#ti#a$ and driven :4 students8 a$on2 5ith the 1a#u$t4 advisors! The IIMC6s

entrepreneurship #e$$ ho$ds one o1 the :i22est :usiness p$an #ontest in "sia8

iHIideas to imp$ementation 5ith &a$e Universit46s &a$e Entrepreneuria$

So#iet4 @&ESA!

These partnerships and #enters are a$so happenin2 in the te#hni#a$ s#hoo$s as

mu#h as in the :usiness s#hoo$s! The nota:$e names in#$ude the Te#hno$o24

Business In#u:ation Unit De$hi8 the SIDBI Innovation and In#u:ation

Centre in IIT Kanpur8 and the So#iet4 1or Innovation and Deve$opment

@SIDA at the India Institute o1 S#ien#e Ban2a$ore8 one o1 the o$dest #enters in

India! In 1a#t SID-IIS#6s nota:$e a#hievement is a pro'e#t #a$$ed SUTR"--

Sustaina:$e Trans1ormation o1 Rura$ "reas--5hi#h uses non-edi:$e oi$s 1rom

indi2enous neem trees as a su:stitute 1or 1ue$ 2eneration! Man4 ideas are

1o#used on so$vin2 the pro:$ems o1 rura$ povert48 sin#e innovation is

2ettin2 #ompassionate8 too!

The Entrepreneurship Deve$opment Pro2ram @EDPA in India has a $on2histor4! It is desi2ned to he$p an individua$ in stren2thenin2 his*her

entrepreneuria$ motivation and in a#uirin2 s/i$$s and #apa:i$ities ne#essar4

1or p$a4in2 his*her entrepreneuria$ ro$e e11e#tive$4!

In the ear$4 ,.(s8 an idea #a$$ed the Industria$ Campai2n too/ shape8

en$ar2in2 itse$1 throu2h the 4ears to :e#ome a #ountr45ide movement

present$4 /no5n as the EDP! Entrepreneurship deve$opment and sma$$-s#a$e

industries are inter-re$ated! Most provin#es have Sma$$ Industries Servi#e

Institutes that provide EDPs! The trainees are provided 5ith 1inan#ia$support to start their :usinesses! The4 a$so re#eive e0emptions 1rom ta0es

and are prote#ted 1rom undue #ompetition 1rom :i2 :usiness! " variet4 o1

trade asso#iations8 in addition to the Nationa$ Sma$$ Industries Corporation

and Sma$$ S#a$e Deve$opment Or2ani?ation8 promote and $o::4 1or sma$$

:usiness interests!


17/41

C!allen"es for ## in $ndia)ultural barriers

Entrepreneurship #an deve$op on$4 in a so#iet4 in 5hi#h #u$tura$ norms

permit varia:i$it4 in the #hoi#e o1 paths o1 $i1e! Un1ortunate$48 the Indian

#u$ture #onsists o1 a net5or/ o1 :ene1its that in man4 5a4s run #ounter to

entrepreneurship @3eo Pau$ Dana8 H(((A! =or e0amp$e8 Indians :e$ieve that

:ein2 passive and #ontent 5ith the status uo is hea$thier 1or the inner sou$

than strivin2 to improve one6s situation! The4 :e$ieve that pea#e o1 mind #an

:e a#hieved 1rom spiritua$ #a$m rather than 1rom materia$ism! Peop$e in

India are more sensitive to emotiona$ a11init4 in the 5or/p$a#e than to 5or/

and produ#tivit4!

Moreover8 the #aste s4stem has impeded #$ass mo:i$it4 1or #enturies! The

#aste s4stem and its series o1 o:$i2ations rein1or#e the pra#ti#e o1 1o$$o5in2

a 1ami$4 o##upation rather than $aun#hin2 a ne5 venture! "n entrepreneur

needs to 5or/ around the #$o#/ and this has /ept some peop$e a5a4 1rom

their o5n start-ups! "1ter a$$8 #ompared 5ith other #ountries8 1ami$4 $i1e inIndia is more important!

Peop$e8 even toda48 thin/ that ta/in2 up a 'o: is mu#h :etter than ta/in2 a

ris/ and startin2 a venture! I1 a 'o: is ta/en up a1ter #o$$e2e8 the person 5i$$

soon have a #om1orta:$e e0isten#e! The other s#enario #ou$d :e startin2 a

venture a1ter 5or/in2 1or 1our to 1ive 4ears! This reuires a $ot o1

#ommitment and #oura2e to $eave the present 'o:! "s time passes :48 the

ris/-ta/in2 #apa#it4 2oes do5n!

7ifficulties towards #tart-ups

Startin2 a :usiness in India is #ost$4 in terms o1 the time reuired and the

#ost invo$ved! hi$e it ta/es 'ust 1ive da4s to start a :usiness in the United

States and 'ust t5o da4s in "ustra$ia8 in India it ta/es as $on2 as ). da4s!

hat rea$$4 hurts is that even in nei2h:ors Pa/istan8 Nepa$8 and Ban2$adesh8


18/41

it ta/es 'ust H8 H,8 and ; da4s respe#tive$4 to do so! The reason 1or su#h

de$a4 is :ureau#rati#--too man4 ru$es and re2u$ations8 and too mu#h

paper5or/ @"shish %upta8 H((A! On avera2e8 it 5ou$d #ost an entrepreneur

near$4 ha$1 o1 his*her tota$ in#ome @.!; o1 the 2ross nationa$ in#ome per#apitaA to set up a :usiness8 5hi#h is ,(( times more than 5hat is needed to

set up a :usiness in the United States! "2ain poorer #ousins Bhutan8

Pa/istan8 and Sri 3an/a are :etter o11!

Doin2 :usiness in India is an e0treme$4 di11i#u$t proposition @"shish %upta8

H((A! The a:sen#e o1 an appropriate entrepreneuria$ #$imate8 the $a#/ o1

reuired in1rastru#ture 1a#i$ities8 and the $a#/ o1 a##ess to re$evant

te#hno$o24 hinder rapid industria$ deve$opment! Most o1 the time8 the Indian

entrepreneurs have to ta#/$e e$e#tri#it48 transportation8 5ater8 and $i#ensin2pro:$ems!

*ncomplete 3ntrepreneurship 3ducation

" surve4 done :4 the Entrepreneurship Deve$opment Institute8 India @EDIIA

in H(( sho5s that 4oun2 peop$e are a1raid to start their o5n :usiness

:e#ause the4 are not #on1ident8 not #apa:$e8 and $a#/ /no5$ed2e in startin2 a

:usiness! Man4 peop$e have the opportunit4 to #han2e 'o:s or :e#ome an

entrepreneur i1 the4 are proper$4 trained! The students in India are notsatis1ied 5ith the hands-on support o1 their universit4 in the 1oundin2

pro#ess!

The EE in the hi2her edu#ation s4stem shou$d8 there1ore8 satis14 the need 1or

entrepreneurship :4 se$e#tin2 motivatin2 trainin2 supportin2!

Un1ortunate$48 the present EE in India 'ust #on#entrates on re$ated #ourses!

Moreover8 the so-#a$$ed entrepreneurship #ourses are simi$ar to the 2enera$

:usiness #ourses! But 2enera$ :usiness mana2ement edu#ation has no

si2ni1i#ant in1$uen#e on entrepreneuria$ propensit4 @7osta2er and De#/er,...A! The 1indin2s o1 a surve4 on :usiness o5ners in India su22est that

mana2ement edu#ation is not an important driver o1 entrepreneuria$ attitudes

@%upta ,..HA! There is a demand 1or edu#ation pro2rams spe#i1i#a$$4

desi2ned to e0pand students6 /no5$ed2e and e0perien#e in entrepreneurship!


19/41

The #ontents and tea#hin2 methods have to :e di11erentiated :et5een

entrepreneurship and traditiona$ :usiness #ourses!

Besides o11erin2 the #ourses in entrepreneurship8 some edu#ationa$

institutions a$so or2ani?e entrepreneurship re$ated a#tivities! But thesea#tivities are not mu#h di11erent 1rom ea#h other and are not supportive o1

their edu#ationa$ pro2rams! =or e0amp$e8 a$most ever4 IIM has its o5n

in#u:ator8 :ut those in#u:ators are main$4 desi2ned 1or outside

entrepreneurs!

Lessons Learned

8essons from the 372

"$thou2h the EDP is main$4 desi2ned 1or se$1-emp$o4ed peop$e8 some

$essons ma4 a$so :e $earned 1rom Indian and Chinese universities! Sin#e not

ever4one has the potentia$ to :e#ome an entrepreneur8 the proper

identi1i#ation and se$e#tion o1 potentia$ entrepreneurs is the 1irst step in the

EDP! Those 5ith hi2h entrepreneuria$ potentia$s are se$e#ted throu2h

parti#u$ar$4 desi2ned pro#edures! Tests8 2roup dis#ussions8 and intervie5s

ma4 :e used in the se$e#tion o1 entrepreneurs! Empiri#a$ 1indin2s indi#ate

that the #onvi#tion to start up a ne5 venture is to some e0tent a uestion o1

persona$it4 stru#ture and attitude to5ards entrepreneurship @Bro#/haus and7or5it? ,.) Shaver and S#ott ,.., 3Qth'e and =ran/e H((,A!

=or se$e#ted #andidates8 deve$opment o1 a#hievement motives is essentia$ in

the EDP! " motivation deve$opment pro2ram ma4 #reate se$1-a5areness and

se$1-#on1iden#e amon2 the parti#ipants and ena:$e them to thin/ positive$4

and rea$isti#a$$4! ithout a#hievement motivation trainin28 entrepreneurship

edu#ation :e#omes an ordinar4 e0e#utive deve$opment edu#ation! Care1u$$4

desi2ned pro2rams 5i$$ :e o11ered :ased on the situation o1 the trainees!

"1ter the proper trainin2 o1 the se$e#ted #andidates8 essentia$ me#hanisms

su#h as 1inan#ia$ assistan#e 5i$$ :e o11ered to he$p them su##eed! 3i/e5ise8

the EE tea#hin2 sta11 shou$d a$so :e se$e#ted #are1u$$4! In theor48 a $e#turer

o1 entrepreneurship edu#ation8 1irst o1 a$$8 must :e a su##ess1u$ or

e0perien#ed entrepreneur! " ua$i1ied EE tea#her shou$d a$so have some


20/41

entrepreneuria$ pra#ti#es espe#ia$$4 in ris/ ta/in2 and opportunit4 per#eivin2

as 5e$$ as entrepreneuria$ ua$ities su#h as 2ood #ommuni#ations s/i$$s!

Other5ise8 tea#hin2 ua$it4 #annot :e 2uaranteed! " pro2ram in spe#ia$i?ed

trainin2 and pro1essiona$ deve$opment in entrepreneurship 5i$$ :e needed!

In 1a#t8 EE needs a 2roup o1 tea#hers 5ho have di11erent :a#/2rounds and

e0pertise! " va$ua:$e e0perien#e 1or the EDP in India is its tea#hers*trainers

5ho are ua$i1ied and 5ho #ome 1rom di11erent universities8 industries8

2overnment a2en#ies8 et#! Those tea#hers*trainers are 5e$$ or2ani?ed :4 the

trainin2 institutes!

8essons from the 33 in )hina

In the $ate ,..(s8 the Chinese 2overnment started to pa4 attention to the

deve$opment o1 sma$$ and medium si?ed enterprises @SMEsA! Some resear#h

has :een done on this topi#! "n MB" edu#ation is #urrent$4 popu$ar in

China! Some MB" $e#turers 5ho 5ere trained a:road #ame into #onta#t

5ith EE in the deve$oped #ountries! Ba#/ in China8 the4 tau2ht simi$ar

#ourses in the MB" pro2rams! 3ater8 5ith the in#rease o1 emp$o4ment

pressure on universit4 2raduates8 entrepreneurship edu#ation 2re5 in

popu$arit4 amon2 the under2raduates!

One #an $earn man4 $essons 1rom China6s UEE! The 1irst $esson is the dire#tsupport

o1 the 2overnment! %overnment paid mu#h attention to the UEE in China!

=or e0amp$e8 the $o#a$ and #entra$ 2overnments have 2iven some in#entives

to student entrepreneurs8 e!2! ta0 dedu#tions and other 1orms o1 1inan#ia$

support! The "nnua$ Nationa$ Business P$an Competition 5i$$ :e he$d this

4ear! This #ompetition is or2ani?ed :4 a universit4 @di11erent ea#h 4earA :ut

#o-or2ani?ed :4 the Ministr4 o1 S#ien#e and Te#hno$o24 o1 China and other

re$ated 2overnment or2ani?ations! This #ompetition starts at the universit4$eve$8 and then 2oes on to the provin#ia$ $eve$8 and 1ina$$48 the nationa$ $eve$!

Students 1rom a$most a$$ re$evant universities in China 'oin this #ompetition!

In China8 man4 universities have their o5n in#u:ator 1or the students6 start-

ups! In ea#h #it48 in#u:ators are a$so avai$a:$e to other 4oun2 peop$e! These


21/41

in#u:ators are main$4 set up :4 2overnment or2ani?ations and o11er servi#es

to entrepreneurs at 1avora:$e pri#es! Man4 intermediar4 1irms 1a#i$itate the

entrepreneurs6 a#tivities!

The se#ond $esson is China6s 1avora:$e entrepreneurship environment! In thepast8 4oun2 peop$e sti#/ to their ori2ina$ 'o:s :ut toda48 it is a$read4

#ommon 1or them to move 1rom one 'o: to another! Parents have a$so

:e#ome :road-minded! Un$i/e :e1ore8 the4 no $on2er o:'e#t to their #hi$dren

startin2 their o5n :usiness! Moreover8 parents tr4 to support their #hi$dren

1inan#ia$$48 su#h as providin2 the seed 1und8 and throu2h other means su#h

as sharin2 their :usiness e0perien#es and net5or/! Even i1 their #hi$dren do

not su##eed at 1irst8 the parents sti$$ thin/ it is a 2ood e0perien#e that 5i$$

he$p their #hi$dren in their 1uture #areers! "$$ o1 these 5ou$d #reate demand

1or a 2ood universit4 entrepreneurship edu#ation!

Compared 5ith the Indian entrepreneuria$ #u$ture8 that o1 the Chinese is

2enera$$4 more open to ris/-ta/in2 and advo#ates an entrepreneuria$ spirit!

Entrepreneurs are respe#ted in Chinese so#iet4! The modern private :usiness

has a histor4 o1 on$4 a:out H( 4ears in China the 4oun2 entrepreneurs

usua$$4 have no 1ami$4 :usiness :a#/2round8 5hi#h means there are a :i22er

num:er o1 peop$e 5ho are the 1irst in the 1ami$4 to esta:$ish a :usiness!

Conclusions and Su""estions

Entrepreneurship edu#ation 1or the edu#ated 4oun2 peop$e has a histor4 o1

on$4 severa$ 4ears8 :ut it has a$read4 deve$oped 1ast! Emp$o4ment pressure

has made EE in India6s hi2her edu#ation s4stem a:so$ute$4 important8 :ut

the #u$tura$ :arriers and the di11i#u$ties to5ards start-ups prevent EE 1rom

:ein2 su##ess1u$! The 1o$$o5in2 are re#ommended 1or the deve$opment o1

EE in India6s hi2her edu#ation s4stem

1ostering 3ntrepreneurship )ulture

The 1ormation o1 an entrepreneurship #u$ture is the prereuisite o1 a

su##ess1u$ EE in India6s hi2her edu#ation s4stem! Students and 1a#u$t4

mem:ers 5i$$ parti#ipate in EE more a#tive$4 on$4 i1 the 5ho$e so#iet4

advo#ates entrepreneurship and ris/-ta/in28 and entrepreneurs are respe#ted!


22/41

The 1ormation o1 an entrepreneurship #u$ture #an :e done throu2h a host o1

interventions $i/e the use o1 media8 the #reation o1 $iterature 1or in#u$#atin2

entrepreneuria$ va$ues8 do#umentation o1 #ases8 su##ess stories8 video 1i$ms8

and :ehaviora$ e0er#ises8 et#! Sin#e the 1ormation o1 an entrepreneurship

#u$ture a#ts in a##ordan#e 5ith the deve$opment o1 the nationa$ e#onom48 it5i$$ :e a $on2 and hard pro#ess in India!

)reating an 3ntrepreneurship 3nvironment

In India8 a$thou2h man4 :usiness re2u$ations 5ere removed durin2 the

,..(s8 man4 o1 the o$d :ureau#rats remain! The improvement o1

in1rastru#ture in India 5i$$ ta/e a $on2 time :e#ause o1 its $ess deve$oped

e#onom4! But at $east the state po$i#ies @:oth #entra$ and state 2overnmentsA

#an :e made more entrepreneurship 1riend$4! =or e0amp$e8 the sin2$e5indo5 s#heme needs to :e imp$emented! ith the deepenin2 o1 re1orm8 a

1avora:$e entrepreneurship environment 5i$$ :e 1ormed8 and this in turn 5i$$

:ene1it EE in the hi2her edu#ation s4stem!

Refining 5echniues of 3ntrepreneurship 3ducation

Entrepreneurship edu#ation is di11erent 1rom a t4pi#a$ :usiness edu#ation!

Business entr4 is a 1undamenta$$4 di11erent a#tivit4 1rom mana2in2 a

:usiness! EE must address the euivo#a$ nature o1 :usiness entr4! To thisend8 the EE must in#$ude s/i$$-:ui$din2 #ourses in ne2otiation8 $eadership8

ne5 produ#t deve$opment8 #reative thin/in2 and e0posure to te#hno$o24

innovation! Other areas identi1ied as important 1or EE in#$ude an a5areness

o1 entrepreneur #areer options sour#es o1 venture #apita$ idea prote#tion

am:i2uit4 to$eran#e! These are #hara#teristi#s that de1ine the entrepreneuria$

persona$it4 1rom 5hi#h one dra5s 5hen 1a#ed 5ith the #ha$$en2es asso#iated

5ith ea#h sta2e o1 venture deve$opment! The 1o$$o5in2 $earnin2 too$s are

use1u$ in EE :usiness p$ans student :usiness start-ups #onsu$tation 5ith

pra#ti#in2 entrepreneurs #omputer simu$ations :ehaviora$ simu$ations

intervie5s 5ith entrepreneurs8 environmenta$ s#ans $ive #ases 1ie$d trips8

and the use o1 video and 1i$ms!

Di11erent edu#ationa$ institutions have di11erent situations a su##ess1u$

mode$ in one institution ma4 not :e avai$a:$e in other institutions! EE in the


23/41

di11erent institutions ma4 have #hara#teristi#s pe#u$iar to ea#h institution8

:ut some /e4 e$ements must :e #onsidered #ompu$sor4! Student se$e#tion is

the 1irst step8 and then those se$e#ted students need to :e motivated! "1ter

the motivation phase8 the4 shou$d :e 2iven spe#ia$ entrepreneurship trainin2!

"nd 1ina$$48 students have to :e provided 5ith proper and adeuate support!

"t present8 :esides the spe#ia$ entrepreneurship trainin28 EE in Indian

edu#ationa$ institutions a$so needs to insti$$ #ertain :asi# ideas in doin2

:usiness! =or instan#e8 in doin2 :usiness8 :ein2 pun#tua$ is ver4 important!

Universit4 students need to :e reminded o1 the importan#e o1 this :asi# trait!

Reasons for t!e lack of entrepreneurs!ip in $ndia

8ack of funding/

Is $a#/ o1 1undin2 that mu#h o1 a :i2 dea$ rea$$4 9 The #ost to do a

te#hno$o24 startup has 2one do5n drasti#a$$4! Redu#ed hard5are #osts8

:and5idth #osts have dropped8 #$oud #omputin2 and open sour#e

te#hno$o2ies ma/e it rea$$4 #heap to $aun#h a te#hno$o24 startup! Un$ess 4ou

are $aun#hin2 a #apita$ intensive :usiness8 5h4 shou$d 4ou rea$$4 need

outside 1undin2 1or doin2 a startup 9

3oo/ at the Com:inator4 mode$ < ;/ < ,(K per startup8 5hi#h is $itera$$4

peanuts i1 4ou need to survive in Si$i#on Va$$e4! h4 #ant Indian

entrepreneurs :e #heap in a simi$ar 5a4 9 h4 not :ootstrap 9

(o 3cos+stem/

I1 4ou 5ou$d have made this ar2ument ; 4ears :a#/8 I6d pro:a:$4 have

a2reed! But over the $ast 1e5 4ears8 the startup e#os4stem has improved :4

$eaps and :ounds! VC6s have entered the Indian mar/et8 events and

#on1eren#es are he$pin2 the startup #ommunit4 to net5or/ and #onver2e8 B-

p$an #ompetitions on various #ampuses are raisin2 a5areness8 an a#tive and

vi:rant #ommunit4 is 1ormin2 around entrepreneurship!

"ureaucratic red-tape/

hi$e I a2ree that some thin2s in this aspe#t are not as smooth as in other

#ountries! 7o5ever8 most o1 the entrepreneurs I ta$/ed to did not #ite this as

a ma'or hindran#e as part o1 their entrepreneuria$ 'ourne4! 7ire a #hartered


24/41

a##ountant and he 5i$$ ta/e #are o1 ma'orit4 o1 the initia$ pro#ess o1

in#orporation8 ta0ation and other $e2a$ities!

(o 2roduct )ompanies/

I 1or one dont rea$$4 :u4 into this ar2ument! hi$e I a2ree that produ#t

#ompanies ma4 o11er $on2 term sustainen#e va$ue @5hi$e #urrent outsour#in2

1o#used servi#es #ompanies are simp$4 :ene1itin2 1rom the #ost advanta2eA8

:ut then entrepreneurship is sti$$ entrepreneurship < :e it a servi#es or a

produ#t #ompan4!

Be$o5 are some o1 the reasons that I persona$$4 thin/ have a stron2 impa#t

on entrepreneurship in India

Revamping 3ducation/

I1 4ou $oo/ at the su##ess o1 Si$i#on Va$$e48 one o1 the /e4 1a#tors that 5asinstrumenta$ in shapin2 it 5as Stan1ord UC Ber/e$e4! Ditto is the #ase

5ith Israe$6s Te#hnion! I stron2$4 :e$ieve that edu#ation8 innovation and

entrepreneurship 2o hand in hand < espe#ia$$4 te#hno$o24 innovation! hi$e

the IIT6s have immense$4 su##ess1u$ a$umni8 the IIT6s have not :een a:$e to

#reate a 1erti$e hot:ed o1 innovation entrepreneurship in their o5n

:a#/4ard!

"t the same time8 5e need to en#oura2e out o1 the :o0 thin/in2 as part o1

our edu#ation s4stem! Rote $earnin2 #an on$4 2et us so 1ar! e need to rampup #ourse5or/ so that student s/i$$s remain in s4n# 5ith the rest o1 the

mar/et! hen Stan1ord and other universities are tea#hin2 iPhone and

=a#e:oo/ app re$ated #ourses8 tea#hin2 Co:o$ =ortran to Indian students

5ou$d :e stupid in toda46s a2e! Students shou$d :e en#oura2ed to #onsider

entrepreneurship as a via:$e #areer option! I :e$ieve this to :e the sin2$e

:i22est 1a#tor that #ou$d 1oster entrepreneurship in India! &oun2 #o$$e2e

2raduates are at an a2e 5hen their inherent ris/ is at the $east to :e#omin2 an

entrepreneur! Edu#atin2 them ear$4 enou2h 5ou$d a$so 2ive them amp$e

time to shape up their s/i$$s and e0perien#e that #an prepare them 1or theirentrepreneuria$ 'ourne4! e a$so shou$d ma/e it eas4 and a##epta:$e 1or

students to ta/e sa::ati#a$s 1rom their de2ree #ourse5or/! Current$48 this i1

1ro5ned upon in Indian so#iet4 5e shou$d tr4 to ma/e peop$e more

a##eptin2 o1 it!


25/41


26/41

a1ter the US! The46re de1inite$4 doin2 somethin2 ri2ht! "nd that6s 5hat 5e

shou$d tr4 emu$ate!

Social #ntrepreneurs!ip in $ndia

The ma'or :oost in so#ia$ entrepreneurship 5as 2iven :4 the No:e$ Pri?e

5inner Dr! Mohammad &unus 5hen his :rain-#hi$d %rameen :an/ :e#ame

su##ess1u$ in he$pin2 peop$e $i1t themse$ves out o1 povert4 in rura$

Ban2$adesh :4 providin2 them 5ith #redit 5ithout reuirin2 #o$$atera$!

&unus deve$oped his revo$utionar4 mi#ro-#redit s4stem 5ith the :e$ie1 that it

5ou$d :e a #ost-e11e#tive and s#a$a:$e 5eapon to 1i2ht povert4! It 5as soon

rea$i?ed that pro1its #an :e made a$on2 5ith servin2 the so#iet48 provided

4ou treat pro1its as a means and not the end resu$t!

The impa#t o1 su#h enterprise $ar2e$4 depend on its su##ess1u$imp$ementation to those that need it the most8 those at the Bottom o1 the

P4ramid! "nd o1 #ourse a dis#ussion a:out the BOP 5ou$dn6t :e #omp$ete

5ithout mention o1 India 5here hundreds o1 mi$$ions #riti#a$$4 need a

#ompe$$in2 movement in so#ia$ entrepreneurship to improve their 5e$1are!

There is a natura$ predi$e#tion to5ards rura$ areas as +( o1 the popu$ation

$ives in the hinter$and! Re#ent$48 the rura$ s#enario in the #ountr4 has

emer2ed as a $u#rative option 1or the mainstream e#onom4! Various

or2ani?ations are vie5in2 rura$ areas as potentia$ mar/ets8 resu$tin2 in a

2amut o1 innovative so$utions 5ithin the so#ia$ entrepreneurship spa#e that1o#uses on and emer2es 1rom rura$ areas!

The popu$arit4 o1 SE is 2ro5in2 at a ver4 hi2h pa#e in India even throu2h

the #urrent e#onomi# do5nturn! In the $ast three 4ears more and more 4outh

are deve$opin2 interest in this 1ie$d in#$udin2 those 1rom presti2ious

Stan1ord8 MIT and O01ord! This ne5 evo$vin2 1ie$d has a$so 2ot ear$4

venture #apita$ist interested in 1undin2 5ith man4 see/in2 out su#h

enterprises that ho$d out hu2e potentia$! Ear$ier8 or2ani?ations so$vin2 so#ia$

pro:$ems 5ere o1ten assumed to :e idea$isti#8 phi$anthropi# and $a#/in2:usiness a#umen or the a:i$it4 to :e entrepreneuria$! 7o5ever8 as the so#ia$

se#tor has :een #omin2 in tou#h 5ith the private se#tor8 :oth have :e2un to

rea$i?e that 'ust one approa#h either pure phi$anthropi# or pure #apita$ist is

inadeuate to :ui$d sustaina:$e institutions!


27/41

In re#ent 4ears8 Gnot-1or-pro1it6 has :een pushed to the :a#/ part$4 :e#ause

o1 responsi:$e $enders and so#ia$ enterprises are :ein2 run more $i/e

:usinesses toda4! The 1o#us is on enterprisin2 mi#ro 2roups 5hi#h 5ant to

trans1orm their o5n8 and the #ommunit46s8 #ir#umstan#es :ut #an6t a##ess

an4 1inan#e!

=ast #ompan4 in their Mar#h H(,( $isted top ,( :4 Industr4! "nd 1our o1

the top ,( most innovative #ompanies in India 5ere standa$one so#ia$

enterprises or have so#ia$$4 entrepreneuria$ initiatives!

In India a$one so#ia$ entrepreneurship spa#e has a #ount$ess mi0ture o1

mode$s 5ith a one :i$$ion thin/in2 stru#ture! One :i$$ion thin/in2 reuires

#ost-e11e#tive mode$s invo$vin2 the :ottom o1 the p4ramid! The ma'orit4 o1

these mode$s are s#a$a:$e and rep$i#a:$e!


28/41


29/41

in distress #ities8 ,( 4ears

B"SIL India

Sustaina:$e

$ive$ihoods to therura$ poor and

5omen

Over a mi$$ion

and a ha$1#ustomer

-

Cra1tsBrid2e

" :rid2e :et5een

#ustomers

5or$d5ide and

#ra1ts persons8

desi2ners

N*"

To tap mi$$ion

vi$$a2e peop$e

asso#iated 5ith

the handi#ra1ts

se#tor

"rvind E4e

7ospita$

E$iminatin2

need$ess :$indness

:4 ta/in2 its

servi#es to rura$

India

In $ast 4ear a$one

H!; mi$$ion

patients 5ere

treated and over

$a/h sur2eries

5ere per1ormed

To rep$i#ate it in

a$$ states o1 India

COM"T

Empo5erin2 rura$#iti?ens :4 #reatin2

$o#a$

e#onomies and

ena:$in2 a##ess to

in1ormation and

servi#es

De$iver Citi?enre#ords and

%overnment

:ene1its to over

;(8((( rura$

#iti?ens ever4

da4

+;8((( :4 the end

o1 H(,,

D $i2ht

7i2h ua$it4

so$utions 1or

1ami$ies $ivin2

5ithout re$ia:$e

e$e#tri#it4

,( mi$$ion;( mi$$ion :4

H(,;


30/41

IDE India

Providin2 $on2-

term so$utions to

povert48 hun2er

and ma$nutrition

,. mi$$ion

Endin2 povert4 in

the deve$opin2

5or$d

Ran2Sutra

Sustaina:$e

$ive$ihoods 1or

artisans and

1armers8 :4

#reatin2 top ua$it4

hand-made

produ#ts :ased on

the prin#ip$es o11air trade

"ppro0imate

H;(( artisans

Emp$o4 ;((( :4

H(,;

3i''at Papadomen

Empo5erment

(( 5omen

emp$o4ed

P$ans to emp$o4

((( :4 H(,(

Se$#o So$ar

India

Sustaina:$e ener24

so$utions and

servi#es to under-served househo$ds

and :usinesses!

.;8((( vi$$a2es

#overed

Brin2 do5n the

#ost o1 so$ar

euipment :4+; :4 H(,H

Un$td India

"n2e$ investor and

in#u:ator 1or so#ia$

entrepreneurs

Ea#h o1 the

pro'e#ts has8 on

avera2e8 #reated

,! ne5 'o:s in

the e#onom4

or$d 5here

individua$s ta/e

a#tion to :rin2

a:out positive

so#ia$ #han2e

SKS

Mi#ro1inan#e

Sma$$ $oans

5ithout #o$$atera$s

;! Mi$$ion

Customers

Ta/e Mi#ro

1inan#e to ever4

vi$$a2e


31/41

Suminter

India

Or2ani#s

Internationa$$4

#erti1ied or2ani#

a2ri#u$tura$

produ#e

Premium #rop

pri#e to more

than +(((

1armers

S#a$e this mode$

nationa$$4

Vorte0

En2ineerin2

Rura$ So$ar

Po5ered "TMs+;( "TM

One "TM*

Vi$$a2e i!e

8;(8((( "TMs

The other nota:$e #han2e is the invo$vement o1 mainstream 1inan#ia$

institutions in so#ia$ entrepreneurship! Various venture #apita$ 1irms areinvestin2 in 1or-pro1it entities 5ith so#ia$ o:'e#tives! Interestin2$48

spe#ia$i?ed so#ia$ investors provide #apita$8 net5or/in28 mar/etin2 and

:usiness e0pertise to su#h ventures!

This trend 5as /i#/-started in the area o1 mi#ro1inan#e 5hen Seuoia

Capita$ invested in SKS Mi#ro1inan#e!

So#ia$ venture 1unds measure their investments on so#ia$8 environmenta$ and

the traditiona$ 1inan#ia$ returns! "#umen 1und e0pe#ts to ma/e an impa#t on

mi$$ion peop$e 5ith ever4 investment in a 1ive-4ear time 1rame! The 1undmeasures returns in terms o1 1inan#ia$8 operationa$ @interna$ pro#esses and

s4stemsA and so#ia$ impa#t @out#ome and outputA! Output is num:er o1

peop$e 5ho are impa#ted and out#ome is ho5 it has a11e#ted them! =or

e0amp$e8 i1 ,8((( peop$e have had a##ess to #$ean drin/in2 5ater8 the

investors a$so #he#/ i1 the rate o1 diarrhea has #ome do5n! More heartenin2

is the 1a#t that the mainstream venture #apita$ists are a$so re#o2ni?in2 this as

a :usiness opportunit4! So 1ar8 VCs have invested HH( mi$$ion in ++ so#ia$

:usinesses in India! But there hasn6t :een a sin2$e e0it! In #onventiona$

#ommer#ia$ ventures8 VCs 5or/ 5ith a ho$din2 period o1 -; 4ears! In so#ia$:usinesses8 the ho$din2 period is $on2er t4pi#a$$48 -) 4ears!

1unds )urrentl+ Available

"#umen =und It supports sustaina:$e enterprises providin2 the poor 5ith

#riti#a$ 2oods and servi#es at an a11orda:$e pri#e! Primar4 1o#us on


32/41

hea$th#are8 housin28 5ater8 ener24 and a2ri#u$ture Companies invested in

,H =und si?e ( mi$$ion @appro0A

VenturEast It :ui$ds pro1ita:$e :usinesses that #ater to under-served

mar/ets! =o#uses on meetin2 India6s domesti# needs @primari$4 rura$ and

semi-ur:an mar/etsA :4 :a#/in2 ear$4-sta2e * rapid-2ro5th :usinesses

Companies invested in Over ;( @in#$udin2 H; so#ia$ enterprisesA =und si?e

H;( mi$$ion

Oasis =und It supports enterprises that deve$op innovative so$utions that

provide the poor 5ith :etter a##ess to #riti#a$ 2oods and servi#es! Invests

most$4 euit48 5ith some de:t! Investments 2enera$$4 ran2e :et5een ,

mi$$ion to mi$$ion Companies invested in =und si?e ( mi$$ion @sti$$

raisin2A

Son2 It supports entrepreneurs in hi2h-2ro5th se#tors $i/e edu#ation and

trainin28 a2ri#u$ture and 1ood8 hea$th#are8 1inan#ia$ servi#es8 :asi# uti$ities

@5aste8 5ater8 rura$ te$e#om8 a11orda:$e housin28 et#A that are a$i2ned 5ith

in#$usive 2ro5th Companies invested in None =und si?e ,+ mi$$ion

"avish/aar India Mi#ro Venture Capita$ It #reates sustaina:$e #han2e :4

in#reasin2 e#onomi# a#tivit4 at the :ottom o1 the p4ramid and :oostin2 the

entrepreneuria$ spirit! Investments to date have 1o#used heavi$4 on the rura$

and a2ro te#hno$o24 se#tors Companies invested in ,+ =und si?e Rs ( #rore@appro0 , mi$$ionA

%ra4 Matters Capita$ It invests in the in1ormation8 #ommuni#ation and

te#hno$o24 spa#e to :rid2e the ur:an-rura$ di2ita$ 2ap Companies invested in

=und si?e ,H mi$$ion

E$evar Euit4 II It #reates mar/et-:ased so$utions 1or povert4 eradi#ation!

=o#uses on se#tors $i/e hea$th#are8 edu#ation and in1ormation Companies

invested in , @another t5o in mi#ro-1inan#e venturesA =und si?e ( mi$$ion

@additiona$ 1und-raisin2 onA

The a:ove 1i2ures simp$4 state that there is an estimated ,(( mi$$ion @Rs

(( #roreA #hasin2 dea$s in India6s so#ia$ enterprise spa#e!


33/41


34/41

#ocial 3ntrepreneurship in *ndia ; 2rofitable #ectors

Edu#ation Se#tor 5ith a tra#/ re#ord o1 pro1it The Edu#ation se#tor has

sho5n a mar/ed de2ree o1 1inan#ia$ sta:i$it4 and 2ro5th potentia$! There are

t5o /e4 e$ements! =irst8 the se#tor represents the hi2hest num:er o1 pro1it-

ma/in2 enterprises @)A amon2 others8 and a$so has one o1 the $o5est

num:ers o1 $oss-ma/in2 entities @HA! Se#ond8 the o:servation sa4s that

there is a 2ood 2ro5th potentia$ ) o1 edu#ation enterprises are :rea/in2

even 5hi#h means the num:er o1 pro1it-ma/in2 enterprises in this se#tor

#ou$d in#rease in the #omin2 4ears!

7ea$th Se#tor 5ith $ar2e 2ro5th potentia$ "$thou2h the se#tor #urrent$4

produ#es a ver4 sma$$ num:er o1 pro1it-ma/in2 entities8 it has the $o5est

per#enta2e @,A o1 $oss-ma/in2 enterprises! Most important$48 at +8 the

7ea$th se#tor has the $ar2est se2ment o1 :rea/-even :usinesses! I1*5hen

these enterprises :e2in to turn a pro1it8 the 7ea$th se#tor #ou$d sustain a

mu$titude o1 su##ess1u$8 pro1it-ma/in2 enterprises!

Rura$ Deve$opment Se#tor to 5at#h out 1or 1uture 2ro5th Despite the 1a#tthat the $ar2est num:er o1 so#ia$ enterprises are in this 1ie$d8 it is the :i22est

$oss-ma/in2 se#tor at the moment! 7o5ever8 Rura$ Deve$opment

demonstrated the $ar2est revenue in#reases $ast 4ear8 so there #ou$d :e more

surprises in store!
http://www.pluggd.in/wp-content/uploads/2010/08/Social_Entrepreneurship_Funds.png


35/41

There are more enterprises that are $oss-ma/in2 @A than those earnin2 a

pro1it @H;A! "nd , per#ent o1 enterprises are #urrent$4 :rea/in2 even! I1

4ou $oo/ at the pro1ita:i$it4 :4 measure o1 4ears in operation8 4ou #an

#$ear$4 see that ma/in2 pro1it throu2h so#ia$ enterprise is no eas4 tas/!

It is true that the per#enta2e o1 $oss-ma/in2 enterprises steadi$4 2oes do5n

as the #ompanies 2et o$der! But there is virtua$$4 no disparit4 in the num:ero1 pro1it-ma/in2 entities a#ross a2e #ate2ories! Man4 enterprises stop

ma/in2 $osses as the4 2ro5 o$der :ut do not :e2in to turn a pro1it the4

mere$4 start :rea/in2 even! Surprisin2$48 even a1ter ,, 4ears or more o1

operations8 the per#enta2e o1 pro1it-ma/in2 enterprises is on$4 H+!

So#ia$ entrepreneurship in India is emer2in2 primari$4 :e#ause o1 5hat the

2overnment has not :een a:$e to do! The 2overnment is ver4 /een on

promotin2 so#ia$ entrepreneurship < not ne#essari$4 :4 1undin2 it or :4

advisin2 on it or ena:$in2 it! hat the4 do do8 is not disa:$e it!

=or e0amp$e8 in Mum:ai a$one8 non-pro1it or2ani?ations edu#ate more thanH;(8((( #hi$dren on a dai$4 :asis! The 2overnment has not to$d theseor2ani?ations not to do it! hereas in some #ountries8 5hen someone ta/esit into their o5n hands to start a 1a#i$it4 1or edu#ation or hea$th#are or
http://www.pluggd.in/wp-content/uploads/2010/08/Social_Entrepreneurship_Sectors.png


36/41


37/41

:ene1i#iaries over 1ive 4ears :e2innin2 H((-(+! The Union %overnmentto provide 2rants to SIDBI to au2ment its Port1o$io Ris/ =und and ena:$eit to #reate a Ris/ Capita$ =und! To stren2then the Credit %uarantee =und8the #orpus o1 the 1und is e0pe#ted to :e raised 1rom Rs! ,,). #rore as o1(, "pri$ H(( to Rs! H;(( #rore over a period o1 ; 4ears!

&. 1iscal #upport/ The %overnment is e0pe#ted to e0amine the 1easi:i$it4o1 in#rease in the %enera$ E0#ise E0emption @%EEA $imit and the e0istin2e$i2i:i$it4 $imit 1or %EE a$so #onsider e0tendin2 the time $imit 1or pa4mento1 e0#ise dut4 :4 mi#ro and sma$$ enterprises and e0tendin2 the %EE

:ene1its to sma$$ enterprises on their 2raduation to medium enterprises1or a $imited period!


38/41

Biblio"rap!y

http://www.gaebler.com/Business-Environment-India.htm - "u2ust H8H(,(

http://www.asianscholarship.org/asf/ejourn/articles/zhang_l.pdf -ugust !"# !$%$

http://&nowledge.insead.edu/contents/'urner.cfm - "u2ust H. 8 H(,( http://www.paggu.com/entrepreneurship/nurturing-entrepreneurship-

in-india-entrepreneurship-and-india/- ugust !"# !$%$

References

Bolton# (.). %"*+. ,'he universit sector and technolog transfer in(ane . Brown and 0o 0othwell 1eds2. Entrepreneurship 3

'echnolog: (orld e4periences and policies. 5arlow: 6ongman.

Broc&haus# 0.5. and 7.. 5orwitz. %"*+. ,'he pscholog of the

entrepreneur in 8. e4ton and 0. (. milor 1eds2. 'he art and scienceof entrepreneurship. 9ambridge# ass: Ballinger.

Business 'oda# ;ctober %$# !$$


39/41

Aasse# F. ,Entrepreneurial 9haracteristics and practices: a stud of thednamics of small business organizations and their effectiveness in thedifferent environments. n.p. %"GG.

AE 0eport - India. !$$!. Alobal Entrepreneurship onitor. Business6ine# Entrepreneurship report ran&s India at Co. ! (ednesda# @ul %+#!$$=http://www.blonnet.com/!$$=/$G/%+/stories/!$$=$G%+$!=+$=$$.htm.

,Aetting Boss. Education 'imes# Covember %$# !$$


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