Entrepreneurship globally have played a pivotal role in the sustainable economic growth
Jammu & Kashmir with its diverse geographic, agro-climatic and topographic features faces unique economic challenges. The problems have been further compounded with two decades of political violence & heavy militarization, which has created a crisis situation in our economy. What we have currently is a pretty weak economy, with many structural bottlenecks, with a high dependence on aid. JK has nearly one million unemployed youth. This wide-spread & chronic unemployment among the youth poses serious social & health risks. Most of the young people rely on govt. for employment & a microscopic minority who are able to get govt. jobs usually work on meager wages in terrible conditions. This widespread reliance on govt. jobs gives rise to other economic issues like inertia, lack of innovation & wastage of public money.
As rightly identified by policy makers & experts, we need an Entrepreneurial Revolution, to tackle all these issues. Entrepreneurship globally have played a pivotal role in the sustainable economic growth of developed, emerging & less developed economies. Innovative entrepreneurship alone ensures that these economies sustain growth through sustainable access to resources, knowledge, markets, and low-carbon industrialization. Youth entrepreneurship can lead to sustainable economic growth & create huge employment opportunities. Entrepreneurship provides knowledge based goods & services; this is the lifeblood of a modern economic system. it is only through entrepreneurship that we can build a prosperous society which delivers opportunity to all.
Though state government has made some efforts to stimulate & promote entrepreneurship, but the efforts are in bits & pieces. state has focused on some of the elements of entrepreneurship ecosystem but the overall government approach is atomistic, & lackadaisical. Government policy fails to take an integrated view of the entrepreneurship environment. Currently economists talk of an entrepreneurship ecosystem as an effective means to stimulate economic growth. Entrepreneurship ecosystem consists of hundreds of specific elements that, for convenience, we group into six general domains: a conducive culture, enabling policies and leadership, availability of appropriate finance, quality human capital, venture-friendly markets for products, and a range of institutional and infrastructural supports( Daniel Isenberg, founder and director at Babson Global’s new Entrepreneurship Ecosystem Project – BEEP).
When we take a look at the prevalent cultural norms in Kashmir, we find out that it is extremely business/entrepreneurship averse. Their is a deep cultural bias against operating a business or failure of the venture. Government Jobs are considered safe & only means of earning decent wages. Entrepreneurship ecosystem approach underscores the need to fight this cultural bias appropriately by adopting a multi-pronged approach. We need to widely share & promote success stories of entrepreneurs. It is perhaps due to this cultural bias that we see a regional disparity in businesses in the state of Jammu & Kashmir. A case in point to further highlight the regional disparity, let us take the example of pharmaceutical industry. The Pharmaceutical industry in India is the world’s third-largest in terms of volume. According to Department of Pharmaceuticals of the Indian Ministry of Chemicals and Fertilizers, the total turnover of India’s pharmaceuticals industry between 2008 and September 2009 was US$21.04 billion. While the domestic market was worth US$12.26 billion. The industry is expected to grow at 10 to 14% rate for the next many years. So the outlook is very positive & this sector is Promising & offers numerous entrepreneurship business opportunities. Small & Medium Enterprise (SME) in particular can do the magic for our state. Along with Himachal Pradesh, Uttrakhand, and Jharkhand, J&K is a tax free state for pharmaceuticals industry. Himachal Pradesh & Uttrakhand have effectively reaped the benefits of this tax holiday & have emerged as a favorite business destinations for hundreds & thousands of pharma companies. The J&K state government too offers many attractive incentives for pharma companies like capital investment incentive which includes 100 per cent central excise refund facility, 100 per cent income tax holiday for 10 years, three per cent interest subsidy on working capital and free insurance cover on plant and building. As a result of this attractive package, many companies have set up their businesses in J&K, but yes this shows a regional pattern. As per the data available on the J&K drug & food control organization website, till date allopathic drug manufacturing licenses have been issued to 88 companies, out of which only six are based in Srinagar. Out of these six, only three are currently operational. Rest 82 companies are based in Jammu, mostly having manufacturing units in the industrial estates of Gangyal & Bari Brahmana.
Another interesting point is that of herbal medicine/ cosmetics sector. The demand for herbal drugs & cosmetics is growing very fast. As per an industry estimate india’s herbal medicine sector had a turnover of more than 1500 cr in the year 2013-2014. Besides this, Herbs hold the key to new drug discovery. Nearly all of the J&K’s herbal wealth is in Kashmir valley. As per an estimate, nearly 570 plant species of medicinal plants found in Kashmir are of huge medicinal importance. Based on these high value plant species, J&K has a huge potential for establishing bio-pharmaceutical industry. It is interesting that many herbal plants that are grown in Kashmir could not be replicated in other parts of the world. The natural corollary should have been that Kashmir valley should have emerged as a hub of herbal extracts, drugs & medicaments but the facts speak otherwise. As per the data available on the website of J&k Drug & Food Control organization, till date 26 licenses have been issued to ISM drug manufacturers, out of which only four are based in Kashmir. No to mention this localization of business on a regional basis is further pushing Kashmir to the back-burner on the pharmaceutical business map.
Entrepreneurship ecosystem concept duly recognizes that State acts as a gate-keeper & regulator to create an enabling environment for the entrepreneurs. Government of J&K has laid down a comprehensive industrial policy. Entrepreneurship has been incentivized on paper. But the ground reality tells a different story. I have a firsthand experience of the system prevalent in Kashmir. There are hundreds of obstacles in the business environment which close off entrepreneurial opportunities to huge swathes of the population, more so to Kashmiri entrepreneurs. For example, an entrepreneur faces numerous bureaucratic hurdles & red-tape. A Kashmiri entrepreneur must incur the extra cost of travel to Jammu to register a business or sort out some incorporation issues( registrar of companies office is in Jammu). Most of the times we have to pay a bribe to conduct government procedure or clearances are either never granted or subjected to unnecessary delay. Most would-be entrepreneurs face restricted options because they lack the connections, status, and resources enjoyed by established businesses and elite families. Women, youth, and non-elite individuals face higher hurdles to growing a business.
Entrepreneurship ecosystem places significant emphasis on institutional & physical infrastructural support. One of the biggest obstacles to the growth of Private businesses/entrepreneurship in Kashmir is poor infrastructure.
The quality human capital challenge is another important issue which our businesses face in Kashmir. People make companies & if we don’t have People to manage important portfolios, businesses will ultimately fail. There is a severe shortage of experienced human resource in Kashmir. Our education system is not fine tuned to meet requirement of our businesses. Solution to this problem lays in skill development through apprenticeship. Govt. can incentivize apprenticeship by supporting local companies adequately.
Another important domain of a sustainable & healthy entrepreneurship ecosystem is finance. Our financial institutions largely speaking show great reluctance in financing new ventures. Whether it is our very own JK Bank or other public or private financial institutions, they have put up difficult barriers to financing in Kashmir. This is surprising since they liberally finance ventures outside Kashmir, but practically refuse to do so in Kashmir. Frankly speaking, venture failure has been virtually criminalized by our current system.
The last critical element of an entrepreneurship ecosystem is that we should have venture friendly markets for products, distribution channels, and entrepreneur networks. Not to mention, we don’t have a system or an effective policy mechanism in place which could ensure efficient market access & a venture friendly market.
It is highly hoped that our policy makers, experts & entrepreneurs come together to build, and nurture an entrepreneurship ecosystem. It is only through an entrepreneurship ecosystem approach that we will be able to sustainably grow our businesses, create jobs, & usher in a new era of prosperity and happiness.
Author is founder & CEO Truevet Animal Nutrition (P) Ltd, a veterinary pharmaceutical company based in Kashmir.