Entrepreneurs, Investors Must Shed Fear of Failure

Context: What we need is the big idea breakthrough that will propel the economy. Investors in India should provide space for unconventional ventures and mark out risk funds.

Challenges to India as an Investment Destination

• Failure of Foreign Direct Investments (FDI): Even after a considerable rise in the FDI inflows from $190-$284 billion between 2014-2019, it has not provided remarkable outcomes.

• It is reckoned that FDI accounts for 7-8% of investments and thus is not a major factor in driving growth.
• Nevertheless, it has been recognised as necessary and the higher, the better.

• Unsatisfactory Domestic Investments through Savings: For a higher growth trajectory, the savings need to be around 40 per cent.

• While the savings rate ranged between 31.6% in 2014-15 and 30.1 % in 2017-18 (RBI Annual Report, 2019), the investment rate was around 30 per cent in this period.

• Unimaginative and Unmotivated Entrepreneurs: 

• Entrepreneurs in India are not imaginative and bold enough. They are not taking risks with big ideas. 
• Focussed on demand and not innovation: Many of them are looking for local issues and solutions in light of their demand.

•  None of them has the prospect of growing big, or even of creating a demand where it did not exist before.
• For E.g. Indian start-ups have been overly focussed towards Internet Entertainment sector due to its high domestic demand.
• When Amazon, Google, Facebook, Twitter began, they were small ideas and no one could have predicted their phenomenal expansion. But they were utterly unconventional.

• Feared Venture Capitalists: They are investing only in those firms which seem to be directed towards demand, in fear of risks and not in any unconventional idea.
• Government’s lack of focus on human capital: The government has been creating basic infrastructures like roads and houses but it is not creating schools, hospitals, stadia and libraries. 

Way Forward:

• Find the untapped market:

• Boosting cultural activities: Private sector should take up this challenge in villages and towns by tapping local talent and showcasing talent discovered in different parts of the country.
• Need to create consumption patterns along with that of buying the latest mobile phones, cars, houses, household accessories.

• Big idea breakthroughs: The investors in India should provide space for unconventional ventures and mark out risk funds. 

• Individual imagination: The big break needs to come from individual imagination and the willingness of investors to support the unconventional venture. 
• Much can be done in the traditional sectors of agriculture, manufacturing and services.

• Give up the fear of failure: Both the entrepreneurs and investors in India must shed diffidence and step out to go the untrodden way.