Women Entrepreneurs in Small and Medium Enterprises and Their Access to Finance

Abstract

Karnataka figures among the top five industrialised states in India. Karnataka ranks third in the country in women entrepreneurial activity and is home to 103,169 women- owned business enterprises. The total investment on women-owned enterprises totalled $404 million in 2012-13 and created 460,000 jobs. The fourth MSME census shows that four states — Karnataka, Kerala, Tamil Nadu and West Bengal together have 51.9 percent of the country‘s women-owned business indicating South India and especially Karnataka having an excellent ecosystem for women entrepreneurs. (Ratna Prabha 2016).

State has been ranked 1st for a healthy business climate and attracting investments by World Bank‘s Investment Climate Index (Department of Commerce and Industries, Government of Karnataka 2014). It is spearheading the Indian industry, particularly in high-technology industries, electrical and electronics, information and communication technology, biotechnology, and more recently nanotechnology. MSMEs form an important and growing segment of Karnataka‘s industrial sector. Out of the registered MSME units, the share of women enterprises is 29 percent with an investment of 13471.26 million (US $200.85 million) providing employment to 176926 persons. The top seven industrial districts are Bengaluru, Belgaum, Dakshina Kannada, Bellary, Dharwad, Tumkuru District, and Mysore District. According to the 2011 census, women are 49 percent of the state population. In the last decade, women-owned enterprises have more than doubled - three times the number of male-owned firms. Two thirds of the women-owned companies are in manufacturing with highest concentration in textile and garments, food and beverages, job work and general engineering industries. Almost half of all India‘s women-owned tech start-ups are based in Bengaluru. Around 97 percent of the women owned enterprises in Karnataka during 2007-14 are micro enterprises with an average employment of three employees per firm. Majority of the women-owned enterprises in Tier II and Tier III cities have shown poor annual turnover of INR1 million (Dubey 2014). Small and medium enterprises are the backbone of any economy, and industries development being a state subject, the study was limited to the State of Karnataka. The extensive scan of the literature on the development of women owned SMEs highlights the need to support the existing and prospective women entrepreneurs who are presently a small fraction of the SME population. Access to finance is said to be their major constraint at the time of start-up and growth stages. A lot of study on the subject has been carried out world-wide, but there are very few studies on women-owned SMEs in the state of Karnataka. Since most of the research studies have highlighted the challenge of accessing start-up and growth finance, an attempt is made to study the impact of the characteristics of women entrepreneur on access to bank finance which is the primary source of funding to most SMEs in India.