New Delhi: Software entrepreneur Niyati Chander, 30, ran into gender bias fairly early in her career. A Bengaluru-based management graduate, she had set up a software enterprise, an MSME, with eight employees in June 2020. "I wanted to be in control of where I'm going in life," she said.

From investors and government officials to real-estate agents and even friends and former colleagues, Chander found that she was not being taken seriously. "People assume you don't know what you want. When we were looking for office space, the emails from the landlord would go to my male co-founder though it was made clear that I am the main founder--it was assumed that the final call would be his," she said, "The networking platforms are dominated by men and there are none for start-ups run by women. Your skills, education, age are analysed more closely [than for men]."

Women business-owners could potentially create 150-170 million jobs in India by 2030, as per a 2019 report, 'Powering The Economy With Her: Women Entrepreneurship In India', published jointly by Google and Bain & Company, a Boston-based consulting firm.

Female entrepreneurship is particularly critical for India because it catalyses women's participation in the labour force, at a time when India's Female Labour Force Participation Rate (FLFPR) is at a historic low, having fallen to 17.5% in 2017-18. Only 7% of working-age women in India have paid jobs currently, as per a recent report in The Economist.

Yet, only seven of 100 entrepreneurs in India are women and of them nearly half (49.9%) get into business out of necessity rather than aspiration, says a November 2020 report of the Initiative for What Works to Advance Women and Girls in the Economy (IWWAGE), a gender research and advocacy organisation.

Globally, India ranks third among countries reporting gender gaps in business--only 33% of the early-stage entrepreneurs in India are women, as per 'Financial Inclusion for Woman-Owned Micro, Small & Medium Enterprises (MSMEs) in India', an August 2019 report of the International Finance Corporation (IFC). India also ranks 70th among 77 countries covered in the Female Entrepreneurship Index, as per the IWWAGE report.

"Globally, it [female entrepreneurship] is a tool of empowerment since it helps the entrepreneur take decisions, lead, manage and develop skills in production and even personal leadership," said Sona Mitra, principal economist at IWWAGE. Running a business also allows women greater independence, financial and otherwise, in their personal lives, said Mitali Nikore, founder, Nikore Associates, a policy and research group.

Why then are Indian women poorly represented in business? We interviewed women who run a range of enterprises, from consultancies to grocery shops and found that they are obstructed by gender bias every step of the way, by institutions and society at large.

In a two-part story, we explore in detail factors that inhibit women's participation in businesses. In this, the first, we look at the biggest hurdle: access to finance. In the second part, we will focus on the other issues that hold back women entrepreneurs--the absence of support networks, skewed social norms and restricted mobility--and collate suggestions from experts on how best to tackle these problems.

Every woman entrepreneur we interviewed complained of loan applications being either rejected or delayed by institutions. This bias has already been established by studies--over 70% of the total finance requirement of women entrepreneurs in the country is unmet, as per the 2019 IFC report. The few government schemes that aim to promote female entrepreneurship are either not visible enough or are tied up in red tape, we were told.

Women-run MSMEs hit worst by pandemic

Total early-stage Entrepreneurial Activity (TEA) rate is the percentage of working-age adults in a population who are either nascent entrepreneurs or owner-managers of new businesses. In India, the female TEA rate in comparison to male TEA rate fell from 79.6% to 62.1% between 2018 and 2019, as per Women Entrepreneurs as Powerhouse of Recovery, a 2020 IWWAGE report. This was despite a government push for the MSME sector in 2018.

Up to 95% of all MSMEs in India are micro-businesses and for women this percentage is even higher--98% of women-led MSMEs are in the micro category, as per the 2019 IFC report. And these were the vulnerable businesses that folded up first in the pandemic-led crisis, as we explain.

There are approximately 63 million micro, small and medium enterprises (MSMEs) in India, and women run about 8 million. MSMEs are critical to India's economy--they are the second biggest employers after agriculture and contribute to over 30% of the GDP.

The 2019 Google-Bain report estimated that women owned 13.5-15.7 million or 20% of all enterprises. An earlier estimate, the Sixth Economic Census (2013-14) calculated that women owned 13.76% of enterprises in India. Among MSMEs, these figures improve for women but only by a small percentage: Of the 63.3 million MSMEs in India, 60.8 million (96%) were proprietary concerns and of these men ran 79.6% of enterprises and women, 20.4%, according the 2019-20 annual report of the MSME ministry.

To deal with the economic crisis caused by the pandemic, the government announced relief measures for MSMEs in 2020. But there were no specific measures to help women entrepreneurs though 73% of women-run businesses were hit badly, and nearly 20% were on the brink of closure, as per an October 2020 Bain-Google-AWE Foundation report. Nano and small set-ups like food and cigarette stalls, with their low scale and low turnover, were the first to wind up. The crisis has also added to a drop in the already low FLFPR.

Both female entrepreneurs and employees have been impacted more than their male counterparts by layoffs and business losses because of gender bias, as per a recent analysis by the McKinsey Global Institute cited in the IWWAGE report. In India, 90% female entrepreneurs reported a significant decrease in their sales revenues post-lockdown. With characteristic low levels of profits and higher rates of unpaid and domestic work, the recovery for women-led MSMEs is also likely to be slower, said the report.

No collateral, no loan

Almost every woman entrepreneur interviewed by IndiaSpend spoke of hardships in accessing institutional finance. The problems related mostly to social attitudes and bias, difficulty in securing collateral-based loans (most women do not own property), and poor awareness or knowledge of financial schemes including those that provide collateral-free financing.

Only 17% of women entrepreneurs interviewed in a survey for the IFC report were aware of the financial schemes rolled out by the government or financial institutions. Even among those who were aware, there was little clarity on the specific features of schemes, their relevance in addressing their challenges and points of access.

Kavneet Sahni, 40, organises cookery events and registered her culinary consultancy as a micro enterprise in 2013. "My vision was that food shows would be the next big thing here, so I quit my job to pursue this dream from the basement of my home," she said. Based in Gurugram, she now manages a team of 10 and clocks a turnover of over Rs 1 crore. But it has been a difficult journey, she said.

"When I started in 2012, banks refused to give me a loan because I didn't have a collateral. I had to use up my personal savings," she said. Given India's gender-skewed inheritance laws, women have, historically, rarely owned property. Thus, they lack the collateral needed to seek start-up loans, as the IWWAGE report showed. An August 2020 judgement of the Supreme Court that granted equal property rights to women seeks to change this scenario.

When asked why they opted out of seeking formal credit for their businesses, about 36% of women entrepreneurs said they preferred to use personal resources, and 25% said they had "limited access to collateral", as per a survey conducted for the 2019 IFC report. There are two significant factors in this, as per the study: First, most women-owned MSMEs--95.6%--are unregistered, which means they cannot access institutional finance. And, even for those that were registered and could--and did--seek credit from financial institutions, the average loan amount sanctioned was only about 68% of the average amount required.

Data show no grounds for this bias, as per the IFC study. Both men and women earned similar average annual profits--men made Rs 2.82 lakh and women Rs 2.68 lakh. But women entrepreneurs who applied for loans faced more than twice the number of rejections (19%) than men (8%). And 70% of the total finance requirement of women entrepreneurs in the country is unmet, as we said.

It was only in 2016, when Sahni secured the sponsorship of a top media house, that a private bank granted her a non-collateral loan. The pandemic hit her businesses badly--she had to close her office for five months and defer salaries. The expectation, she said, was that being a woman she would not be able to deal with the crisis and would shut down the business.

"But I wanted to be resilient and prove we can still handle/manage the company even if unable to grow it in a difficult time like the pandemic," said Sahni. A three-month loan moratorium was announced in March for businesses in the wake of the lockdown and this was later extended to August 31, 2020. "In the first moratorium, we only got relief for two months and in the second, we didn't get any relief. We've been paying our EMIs on time, but the bank denied extensions without citing reasons. We wrote to the bank, even the RBI but there was no response. The government should have announced some relief or special measures for women MSMEs at a time like this," Sahni said.


The pandemic also hit the small business run by Sarita Devi, 40, a vegetable vendor in south Delhi's Okhla Industrial area. She knows nothing about government schemes such as Mudra that could have given her access to a small loan to sustain her micro business. She had to take a loan of Rs 30,000 to pay the rent on her carts and manage home expenses during the lockdown. "We borrowed from a middle-man who came to our neighbourhood and offered loans at a 5% monthly interest," she said.

Longer wait for credit

On average, women have to make 4-5 visits to the bank if they are seeking credit, men need to only visit twice, said the IFC report.

Ashwini Mhetre, 31, a Mumbai-based fashion designer, has been planning a venture employing rural craftspersons but will need to borrow the entire Rs 49 lakh it is likely to cost her. "A government loan seemed the best option for me because it comes collateral-free," she said. She heard of the Chief Minister's Employment Generation Programme (CMEGP) started in August 2019 to help micro and small enterprises, both rural and urban, and offered loans of upto Rs 50 lakh. She applied for the loan and is still waiting for it.

"For six months we kept chasing [officials]. Everything was in place, except that I did not own any property. Even some nationalised banks that claim to give collateral-free loans asked for security. A private bank said, 'We are not into government schemes'," she said.


There are three government loan schemes available for small businesses under the government-run Mudra or Micro Units Development and Refinance Agency Ltd--Shishu, Kishor and Tarun. These offer loans ranging from Rs 50,000 to Rs 10 lakh and of these, women tend to ask for the lowest bracket, Shishu. "Women don't have the confidence to secure high value loans. They find it intimidating. There is social conditioning that tends to undervalue what women do by women themselves. Women are risk averse and hence settle for smaller loans which they think they can repay easily," explained Mitra of IWWAGE.

Banks, on the other hand, hesitate to give these loans because they earn low interests, said Mumbai-based business consultant Shubhadip Das. "Business loans come at 11-14% interest, while Mudra loans are less than 10%," he said.

Women ended up as Mudra's biggest recipients (70%) because the scheme does not require collateral, said an IWWAGE report. "These only allow women to develop nano enterprises at best, given that over 80% of Shishu loan takers are women," said Mitra.

Last year, a revised definition was announced for MSMEs: Both manufacturing and service MSMEs would be seen as one instead of two types of enterprises. Investment in plant and machinery/equipment as well as annual turnover would be seen as a composite criteria, when earlier the annual turnover was not taken into account. Also, for micro enterprises, the investment required would be no more than Rs 1 crore [up from Rs 10 lakh-Rs 25 lakh] and the annual turnover no more than Rs 5 crore. Similarly, for small enterprises, the caps were raised to Rs 10 crore [earlier, Rs 2 crore-Rs 5 crore] and Rs 50 crore turnover, and for medium, to Rs 50 crore investment [earlier, Rs 5 crore-Rs 10 crore] and Rs 250 crore for turnover.

"This is likely to increase the number of firms that fall under the sector's purview and this means more firms will vie for limited resources," said Mitali Nikore. "And for Indian women-owned enterprises, for whom the credit gap was estimated to be $20.52 billion, the situation is likely to worsen due to women's historically low access to land and other collateral."

Government schemes 'not visible, too much red tape'

The Prime Minister Employment Generation Programme (PMEGP) is a flagship programme started in 2008-09 that extends financial assistance to micro enterprises. Women have an extra incentive under the scheme--they only need to deposit 5% of the initial capital compared to the 10% specified for general categories. The number of women benefiting from this scheme was the highest in 2018-19, at 25,399. But this dropped to 12,529 the next year (as per data available till December 31, 2019). In 2018, the Indian government had promised to promote women power in the economy. "There are specific instruments available [within the government] to help women entrepreneurs. Beyond that, an entrepreneur is an entrepreneur," said a former private secretary at the WCD ministry, indicating that the government can only offer limited assistance to businesses.

Archana Garodia-Gupta has been running a costume jewelry business for 30 years and finds that government schemes for business women rarely work because of poor access and red tape. "I've not seen a single penny for women entrepreneur schemes. The only time I got something was an allotment in a women's industrial park in Greater Noida, which I'd helped the Uttar Pradesh government to float back in 1999," said Garodia-Gupta, who is also the former national chair of the MSME committee of the Federation of Indian Chambers of Commerce and Industry and its women's wing. "No bank loans, no subsidies, I started a venture with my own savings. I got a bank loan later as a regular business person, at the normal MSME rate."

There are schemes for women, she said--for example, when women entrepreneurs go abroad for business exhibitions, they are reimbursed upto 80-90% of their costs; men get less: 60-70%. "But the process is so cumbersome. If you want to deliver a scheme, make it available to a woman entrepreneur [through] regular conduits, such as income tax, GST returns, or her regular bank, instead of making some barely visible scheme."

(Editing by Malini Nair.)

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