UNIT 4 ENTREPRENEURSHIP

DEVELOPMENT
Structure
Objectives
Introduction
Entrepreneur andEntrepreneurship
4.2.1 Classification of Entrepreneurs
4.2.2 Essential Qualities of Entrepreneurs
Entrepreneurial Development
4.3.1 Types of Entrepreneurs
Entrepreneurial Management
4.4.1 Essentials of Entrepreneurship
4.4.2 Entrepreneurial Teams (E-Team)
Entrepreneurial Opportunities in Plantation Sector
4.5.1 Diversification in Plantation Sector
4.5.2 Organic Plantation Crops
4.5.3 Venture Technologies
Setting up Enterprises
Let Us Sum Up
Glossary
Check Your Progress: Possible Answers
Suggested Readings

4.0 OBJECTIVES
After studying this unit you should be able to:
define entrepreneur and entrepreneurship;-
identify essential qualities'of entrepreneurship;
formulate entrepreneurial development process;
assess entrepreneurial opportunities in plantation; and
discuss procedures of setting up enterprises.

4.1 INTRODUCTION
Do you know that India is second among all nations in Total Entrepreneurship
Activity as per the Global Entrepreneurship Monitor Report 2002 and that
India is the fifth largest economy in the world (ranking above France, Italy, the
United Kingdom, and Russia) and has the third largest Gross Domestic Product
(GDP) in the entire continent of Asia. It is also the second largest among
emerging nations. The liberalization of the economy in 1990s has paved the
way for huge number of people to become entrepreneurs. This unit on
entrepreneurship will expose you to different enterprises in plantations,
management of enterprises, and spirit of entrepreneurship and to make real
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entrepreneurs in the field of plantation.
An Overview of the
Plantation Sector 4.2 ENTREPRENEURAND ENTREPRENEURSHIP
Entrepreneur: An entrepreneur is an innovative person who maximizes his
profits by following new strategies or venturing into new products or services.
A good entrepreneur is one who is capable of inspiring confidence in people,
and has the ability to motivate them. He undertakes:
introduction of a new quality in a product,
introduction of a new product,
discover freshY demand and fresh source of supply, and
changes in the organisation and management.
An Entrepreneur is a person who has possession over a company, enterprise,
or venture, and assumes significant accountability for the inherent risks and
the outcome. The term is a loanword from French and was first defined by the
Irish economist Richard Cantillon. Entrepreneur in English is a term applied
to the type of personality who is willing to take upon herself or himself a new
venture of enterprise and accepts full responsibility for the outcome. In common
understanding it is taken as describing a dynamic personality. (Wikipedia)
Entrepreneurs perform one or more of the following activities:
Perceive opportunities for profitable investments;
Explore the prospects of starting such a manufacturing enterprise;
Obtain necessary industrial licenses;
Arrange initial capital;
Provide personal guarantees to the financial institutions;
Promise to meet the shortfalls in the capital; and
Supply technical know-how.
Entrepreneurship: Entrepreneurship means "the process of the entrepreneur".
It is an attempt to create value through recognition of business opportunity. It
is basically communicative and management functions to mobilize financial
and material resources.
Entrepreneurship is the practice of starting new organizations or revitalizing
mature organizations particularly new businesses, generally in response to
identified opportunities. (Wikipedia)
The entrepreneurial activity is governed by varying combination of socio-
economic, psychological, cultural and ten other factors: Castelreligion, Family
background, Level of education, Level of perception, Occupational background,
Migratory character, Entry into entrepreneurship, Nature of enterprise,
Investment capacity and Ambition/moderation.
How to Differentiate Entrepreneur and Entrepreneurship?
Entrepreneur Entrepreneurship
Refers to a Person Refers to a Process
=sualiser Vision
Creator Creation
Organiser Organisation
Decision maker Decision
 Entrepreneurship
4.2.1 Classification of Entrepreneurs Development

Entrepreneurs are generally classified based on expertise, business and

motivation levels.
a) Entrepreneurs based on expertise
Technical entrepreneurs: Develop improved quality of goods because of
craftsmanship. The greatest strength of technical entrepreneur is skill in
production technique. Improve goods/servicesby using innovative technology
and concentrate more on production than marketing.

Non-technical entrepreneurs: Not concerned with the technical aspects of

the product produced. Focus more on marketing and distribution strategies
and less on production.

Professional entrepreneurs: Focus more on establishing a business but not

in managing or operating it. Sell out the running business and start another
venture with the sales proceeds. Conceive new ideas to develop alternative
projects.

b) Entrepreneurs based on motivation levels

Pure entrepreneurs: Motivated by psychological and economic rewards.
Undertake an entrepreneurial activity for his personal satisfaction in work,
ego or status.

Induced entrepreneurs:Induced to take up an entrepreneurial task due to the

policy measures of the government like assistance, concessions and necessary
overhead facilities to start a venture.

Motivated entrepreneurs: Influenced by the desire for self fulfillment. They

come into being because of the possibility of making and marketing of some
new product for the consumer.

Spontaneous entrepreneurs: Start the business by natural talents. Self

motivation makes them to undertake entrepreneurial activity.

c) Entrepreneurs based on type of business

Business entrepreneurs:Conceive an idea for a new product or service. Utilize
both production and marketing resources to develop a new business opportunity.

Trading entrepreneurs: Undertake trading activities but not concerned with

the manufacturing work. Identify potential markets, stimulate demand for its
product line and creates a desire and interest among buyers.

Industrial entrepreneurs:Essentially manufacturers who identify the potential

needs of the customers and tailors a product or service to meet the marketing
needs.

Corporate entrepreneurs:Demonstrate the skill in organizing and managing

I corporate undertaking. Follow the regulations and requirements of the corporate.

I Agricultural entrepreneurs: Undertake agricultural activities like raising and

marketing of crops, fertilizers and the inputs of agriculture.
An Overview of the
Plantation Sector Check Your Progress 1
Note: a) Use the space below for writing your answers.
b) Compare your answers with those given at the end of the unit.
1) Distinguish between entrepreneur and entrepreneurship.
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2 ) Classify entrepreneursbased on expertise, type of business and motivation
level.
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Based on Expertise Based on Motivation Level Based on Type of Business

4.2.2 Essential qualities of Entrepreneurs

Entrepreneurs need certain basic qualities for successful business activities.
Those qualities are listed below:
Strong desire: Entrepreneurs should have a strong desire to achieve a higher
goal and make their dreams come true.
Consistency: Entrepreneurs should be consistent in decision and follow up.
Not to be deterred by difficulties and problems.
Risk taking: Entrepreneurs should take moderate risk rather than a wild
speculative gamble.
Opportunities analysis: Entrepreneurs should be quick to see and grab
opportunities. Show an innovative turn of mind and convert difficulties into
74 possible opportunities.
Feedback: Entrepreneurs should take immediate feedback on tneir Entrepreneurship
Development
performance. They seek prompt and accurate data even though it is not
favourable.

Planning: Entrepreneurs set a goal for them and make systematic plans to
achieve that goal within a certain time limit.

Positivism/Optimistic: Entrepreneurs should direct his fantasies towards the

accomplishment of worthwhile goals and sets standards of excellence in what

Please check whether you have the essential qualities listed here under and try
to adopt the essential qualities to become a successful entrepreneur.

Traits of entrepreneurs: There are many traits of entrepreneur which can be

listed. A few of them are mentioned below for your understanding.

Self motivation, Time orientation, Risk taking capability, learning from Failure
and mistakes, Decision making skill, empathetically thinking, Family history
and Relationship management.

4.3 ENTREPRENEURIAL DEVELOPMENT

The process of starting a new venture is embodied in the entrepreneurial
development process. The process has four distinct phases.
1) Identification and evaluation of the opportunity
2) Development of the business plan
3) Determination of the required resources
4) Management of enterprises
1) ldentification and Evaluation of the Opportunity: The process by
which an entrepreneur come up with the opportunity for new venture.
Each opportunity must be carefully screened and evaluated. It is important
for the entrepreneur to understand the cause of opportunity. It may be
technological change, market shift, government regulation or competition.
Opportunity analysis focus only on the opportunity but not the entire
venture .
2) Development of the Business Plan: A good business plan must be
developed in order to exploit the defined opportunity. A good business
plan is not only important on developing the opportunity but also essential
in determining the resources required and obtaining these resources and
successfully managing the resulting venture.
3) Determination of the Required Resources: The resources needed for
the opportunity ~ 1 1 2 salso
~ be determined. This process stars with an
appraisal of the entrepreneur's available resources. Any resources that
are critical must then be distinguished from those are just helpful.
4) Management of Enterprises: After resources are identified, the
entrepreneur must employ them through the implementation of the
business plan. Acontrol system must be established so that problem areas
can be carefully monitored.
75
An Overview of the 4.3.1 Types of Entrepreneurship
Plantation Sector

One of the first decisions an entrepreneur faces while starting a new business
is selecting the form of ownership for the new business venture. Understanding
of ownership is very important for better entrepreneurial process. Entrepreneurs
have a wider choice of forms of ownership. The most common forms of
ownership are sole proprietorship, partnership, family ventures and corporation.

a) Sole proprietorship: A business is owned and managed by an individual.

This form of ownership is by far the most popular. Advantages of this
are, it is simple to create; least costly form of ownership to begin; total
decision making authority; no special legal restrictions and easy to
discontinue. However they are certain disadvantages like unlimited
personal liability, limited skills and capabilities, feelings of Isolation,
limited access to capital, and lack of continuity for the business.

b) Partnership: A partnership is an association of minimum two and

maximum of seven people who co-own a business for the purpose of
making a profit. Advantages of this are: it is easy to establish,
complementary skills, division of profits, larger pool of capital, ability to
attract limited partners and less governmental regulations.

Disadvantages are: it has unlimited liability of at least one partner, capital

accumulation, difficulty in disposing of partnership, lack of continuity
and potential for personality.

General partnership: Partners of a firm share in the management

and profits of the business; have ready access to accounting records
and business affairs of the partnership; enjoys more privacy.

Limited partnership: It is an association formed by one or more

general partners and one or more limited partners. The general partner
or partners manage the operation: The limited partner or partners are
investors only. The general partner manages the partnership without
interference from the limited partner or partners.

c) Family ventures: It is generally locally owned and operated, often by

one person called a sole proprietor. Proprietors may have started their
businesses in an effort to supplement or replace family income.

d) Corporation: Corporate entrepreneurship is the process of encouraging

"innovation" within existing companies through motivated employees
who are supported with company resources. This is classified as:
Administrative entrepreneurship: The firm simply moves a step
beyond formal R&D projects to encourage greater innovation and
commercial development of new inventions.
Opportunistic entrepreneurship: Talented Personnel is given
freedom to pursue opportunities both for the organization and through
external markets.
Acquisitive entrepreneurship: Corporations actively count other-
firms and entrepreneurial start-ups rather than developing ideas
 Initiative entrepreneurship: This type of entrepreneurship takes Entrepreneurship
Development
advantage of other f m ' s ideas.

Incubative entrepreneurship: Whenever new ideas materialise

develop internally or through acquisition.
@ Check Your Progress 2
Note: a) Use the space below for writing your answers.
b) Compare your answers with those given at the end of the unit.
1) Explain entrepreneurship ownership?
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2) Discuss the advantages and disadvantages of sole proprietorship and
partnership?
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4.4 ENTREPRENEURIAL MANAGEMENT

Entrepreneurship is a value creating activity by innovating orland satisfying a
hitherto unsatisfied demand and thus by creating a niche for them. The success
of entrepreneurs depends on the'inirnitable nature of their activities. ~nter~rises
could pertain to both upstream activities such as production as well as
downstream activities such as marketing.
Success of an enterprise: In the current challenging business environment,
entrepreneurship could be viewed as a function of few important parameters
like technology, speciality and uniqueness of the product, business and market
An Overview of the 4.4.1 Essentials of Entrepreneurship
Plantation Sector
In the case of entrepreneurship, it may be very difficult for an individual
however competent and experienced he or she may be, to take up the total
management of the enterprise while pursuing the objective of creating wealth
through exploitation of perceived opportunities.This brings us to the fact that
an 'Entrepreneurial Team' (E-Team) has to be in place right from the startup
stage. This team will have nine characteristics as given below:

Opportunity focused, Creating resource marshalling, the entrepreneurial mind,

E-Team and team locus of control, Extended enterprise management, Creativity,
Communication, Leadership, Develop Education (e.g. Extension).

4.4.2 Entrepreneurial Teams (E-Team)

An effective "Entrepreneurial Team" or E-team (Self Help Group) has to be
established at the startup stage itself of an enterprise. This E-team should have
vision to exploit the opportunities present in the market to create wealth for all
the stakeholders, present and future. It is hence very important to choose the
right persons for the E-team. Each of them should perform a specific key
function as well as contribute to the overall management of the enterprise.
This would call for several attributes like certain educational qualifications,
proven track record in the specific area, personality issues like commitment
and trustworthiness, ability to empathize, communication skills and more
importantly the right attitude to be a team player. Apart from keeping all these
attributes in mind that is essential for every E-team member, it is also very
important to decide on the right size of the team.

E-Team features: E-Team members encompass in them three main features

whch underpinned role models: successful, substantial, and young.

Successful: to be 'acceptable' to the community, exhibited success as being

profitable and having a sound financial structure.

Substantial: to have started a 'survival' business, develop the desire and

motivation to grow the business.

Young: to provide the necessary positive attitude to aspirant entrepreneurs or

striving to grow they should be relatively recent.

The evolution of the processing or marketing activity has followed the

community based approach of the development program. A three-tier approach
has been put in place. Farmers from about 12 to 15villages formed a cooperative
Society (CPS) for processinglmarketing.The produce procured by the E-team
(SHG) is purchased by the Cooperative Society and dispatched to the processing
units. At the village level, the E-team oversees the entire operation of
procurement, grading, drying and post-harvest handling of the farm produce.
 Entrepreneurship
Development

Backward
integration

Fig. 4.1: Coffee Entrepreneurship Model

.Source: IIPM, 2207

I@ ~ h e c k~ o u Progress
r 3
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Note: a) Use the space below for writing your answer.

b) Compare your answer with those given at the end of the unit
I) Discuss E-Teams and its relevance to plantation sector.

4.5 ENTREPRENEURIAL OPPORTUNITIES IN

PLANTATION SECTOR
Plantation sector in India can be classified into pre-WTO era and post-WTO
era. Pre-WTO era was basically production based system where customer
purchased whateveraas produced. However, post WTO-era is basically market
based production system where customer has more choices. So, there is a need
to produce quality, safe, and cost-effective plantation products at the village
level. As it was mentioned in entrepreneurial management, formation of teams
at different level is very important for entrepreneurial activities. Some of the
possible entrepreneurial opportunities through E-teams are as follews.

4.5.1 Diversification in plantation sector

Diversification is a very important component of entrepreneurial activities in
plantation sector. Diversification increases the employment opportunities,
An Overview of the optimum use of resources and profitability. (A study was conducted by 1lPM
Plantation Sector
on "Decision making pattern of Coffee Mixed Farming System" in Thandikudi
region of Tamil Nadu. The result highlights the profitability of diversification
in coffee sector. We should explore the opportunities of diversification in
other plantation crops. Table 4.1 highlights the income from individual crops,
and Table 4.2 further elaborates the potential of coffee based mixed farming
in generating employment opportunity within the family and at the village
level. For eg., introduction of a sixth component of mixed farming fetched
an annual higher labour requirement of 1520 man days as compared to other
combinations.
Table 4.1: Operational Cost and Net Return of Coffee based Mixed Farming

Table 4.2: Employment Potential mder Different Crop Combination

Beans + Lab Lab

f
7. Coffee + Orange + Banana + Cardamom 605
8. Coffee + Orange + Banana + Beans 464
9. Coffee + Orange + Banana + Lab Lab 1217
Tf coffee based mixed farming capitalizes on profitable growth opportunities
in its przsent situation, there is no urgency to pursue diversification. But, when
considering coffee as an example if growth opportunities in coffee sector start
diminishing, diversificationis usually the most viable option for reviving coffee
business. Coffee based mixed farming system adds to generating employment
opportunities with in farm families and at the village level.

Mixed fanning sector should gradually diversify its farming with short duration
high value commodities, vegetables, livestock, non-farming entrepreneurs
activities, value addition, process based unit, etc., to minimizethe risk. Production
of vegetables and livestock products has increased remarkably high income Entrepreneurship
Development
due to awareness and prediction skill on market demand. Authentic reports
suggests that diversification in favour of varied enterprises was more
pronounced as a successful parameter than very high diversification in single
enterprises under crisis situations.
4) Check Your Progress 4
Note: a) Use the space below for writing your answer.
b) Compare your answer with that given at the end of the unit.
1 ) Indicate the crop combination which gives highest net returns and
annual man days?
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4.5.2 Organic plantation crops
Organic products come under speciality or niche product category. Customers
are ready to pay premium price for the above products. Entrepreneurs can
identify the potential organic growing areas, certify, brand and market. This
section will help you to understand importance of organic market, certification,
branding, etc. Organic farm produce enjoys a good demand in European Union
(EU) market and according to research, exports amount to 53 per cent of the
organic food produced in India. This is considerably high when compared to
percentage of agricultural products exported (6-7 per cent).
Organic farming in India: According to the International Fund for
Agriculture and Development (IFAD), about 2.5 million hectares of land
was under organic farming in India in 2004. Further, there are over 15,000
certified organic farms in India. Therefore, India is one of the most
important suppliers of organic food to the developed nations.
Organic food in India: Organic food products in India are priced about
20-30 per cent higher than non-organic food products. Rs. 100 crore was
allocated during the Tenth Five Year Plan for promoting sustainable
agriculture in India. Organic food production costs are higher in the
developed countries as organic farming is labour intensive and labour is
costly in these countries. In India where labour is abundant and is relatively
cheap, organic farming is seen as a good cost effective solution to the
increasing costs involved in chemical farming.
Organic market: Health benefits of organic food are yet to be proved
but consumers are willing to pay higher premium. Many farmers in India
are shifting to organic farming due to the domestic and international
demand for organic food. Stringent standards for non-organic food in
European and US markets have led its to rejection. In India, more demand
is for organic marmalade, organic strawberry, organic tea, organic honey,
organic cashew butter and various organic flours.
An Overview of the 4.5.3 Venture technologies
Plantation Sector

Traditionally, more importance was given only for main economic products.
For example, incase of rubber, rubber latex was the economic product. However,
additional income can be generated from rubber seeds, rubber honey, pineapple
which is grown as intercrop during immature period.

Rubber
Rubber seed oil: India is an importer of edible oil and hence the focus is non-
edible oil like Jatropha, Rubber seed oil, Karanja, Mahua for the production of
bio-diesel. Bio-diesel is a renewal fuel made by transesterification of any edible
or on-edible oil. It has many environmental benefits, is harmless and
completely biodegradable.

Nutraceuticals from rubber pollen: Rubber pollen contain greatest amount

of protein and vitamins C, D, E, K. This pollen can be used to retard hardening
of the arteries.

Tea
India is producing mainly black tea and to some extent green tea. In recent
times, tea has been promoted as health drink in the market. There is a scope for
entrepreneurial activities in manufacturing white tea, Yellow tea and red tea.
Tea harvested during a particular season gives unique flavour and taste. For
example, spring tea harvested during March and April give bright colour and
floral scent. Entrepreneurs can form groups (E-Teams), Pool the teas, adopt
community processing, brand and market. Technical aspects of these types of
teas are given below.

Red Tea or Oolong Tea: Less Fermented tea (114th of normal fermentation),
between black and green tea and has more medicinal value.

White Tea: Withered teas with white hairy growth. Only withering and drying
process is done. Least processed teas contain high polyphenol antioxidants.

Yellow Tea: Fermentation up to yellowing of the leaves till the infusion turn
bright yellow. Geographical factors have influence on these teas.

Tea Based on Plucking

Spring tea or First flush: Bushes will be generally delicate during winter
season (March-April) with green and glazed shoots and tea with clear
bright and floral scent.
Summer Tea or Seasoned Flush made from succulent leaves and
sparkling of silvery buds in the summer season (May-June) and tea has
mellowed and muscatel flavour.
Coffee
Speciality products are gaining more prominence. Speciality coffees are estate
coffee, varietals coffee, high grown coffee and monsoon coffee. Different
aspects of specialty coffees are given below.

Varietial coffees: Unique varieties like Kent, Agaro and Cloccie possess good
inherent quality coffee. Berries from such varieties can be grown based on
market demand.
Monsoon coffee: Coffee beans are kept in godowns open to the sea breeze to Entrepreneurship
act on or cure them for at least six months, mainly in Mangalore. This is chiefly Development
meant for the European market.

High Grown coffee: Coffees with dense beans grown at higher elevation above
1000 MSL give high quality coffee with dense beans. It has unique flavour
with acidity due to slower development of beans.
a Check Your Progress 6
Note: a) Use the space below for writing your answer.
b) Compare your answer with those given at the end of the unit.
1) Indicate the Entrepreneurial opportunities in plantations.
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4.6 SETTING UP ENTERPRISES

The following are the steps involved in setting up of an enterprise:
1) Incorporation
2) Licensing
3) Registration
4) Source of funds
5) Regulation of enterprises
1) Incorporation
The law under which a company is incorporated in India is the Companies Act
1956. which extends to the whole of India.
The company becomes a legal entity from the date it is granted a certificate
of incorporation, which is a one-page document.
The documents required to be presented to the Registrar include a printed
copy of the Memorandum of Association and Articles of Association
(charter and bylaws) signed by each subscriber.
The certificate of incorporation is given after the required documents are
presented along with the requisite fee, to the Registrar of Companies (at
the concerned regional office where the registered office is set-up) for
registration and the Registrar is satisfied that all other requirements have
been complied with.
The time taken for incorporation of a company is usually one to three
months after the proposed name of the company is approved by the
Registrar of Companies.
An Overview of the For such approval, a formal application has to be made because the law
Plantation Sector requires that a company will not be registered with any undesirable name
or any name identical with an existing company. This formality can be
done at the same time as the memorandum and articles of association are
drafted, and can be completed within a month.
Registrars of Companies appointed under the Companies Act covering the
various States and Union Territories, are vested with the primary duty of
registering companies floated in the respective areas and States and the Union
Territoriesensuring that such companies comply with the statutory requirements
under the Act. Their offices function as registry of records relating to the
companies registered with them.

2) Licensing
The new Industrial Policy has done away with pre-investment approvals for
industries except in a few specified sectors (which include Alcoholic drinks,
sugar and Animal FatsIoiI). M e d i u d a r g e units exempted from licensing
requirement need to file only an Industrial Entrepreneur's Memorandum with
the Secretariat for Industrial Approvals (SIA) in the Ministry of Industry at
New Delhi. Units not covered by the exemption from industrial licensing have
to apply to the SIA for a licenselletter of intent.

In the new industrialpolicy, the Government hasprepared a list of industries

for which industrial licensing is compulsory. For setting up a unit for the
manufachre of any item listed in this list all entrepreneurs have to necessarily
obtain an industrial license irrespective of the category to which they belong
and the investments involved.

For setting up a unit for the manufacture of any other items or any substantial
expansion in its manufacture (provided its manufacture is permissible for the
category to which the entrepreneur belongs) the entrepreneur has to submit a
"Industrial Entrepreneurs Memorandum' in the prescribed form in requisite
number of copies to Ministry of Industry, Government of India.

List for manufacture of small scale sector

Ice Cream , Pickles and Chutneys, Vinegar, Rice Milling, Dal Milling, Bread,
Biscuits, Pastry, Confectionery (excluding Chocolates, Toffees and Chewing
Gums), Rapeseed oil except solvent extracted (other than cases of state Agro-
co-operative and Growers Cooperatives, Sesame oillexcept solvent extract,
Groundnut oil except solvent extracted, Sweetened Cashewnut products,
Poultry feed except in pellet form, Ground and processed spices other than
Spice Oil and also Resin Spices, Tapioca sago, Tapioca flour, Synthetics syrups.

3) Registration
Small Scale and ancillary units (i.e. undertaking with investment in plant and
in machinery of less than Rs. 60 lakh and Rs. 75 lakh respectively, should seek
registration with the Director of Industries of the concerned State Government.
In the case of small scale units that undertake to export at least 30 per cent of
the annual production by the end of the third year from the date of
commencement of commercial production, the limit of investment in fixed
assets in plant and machinery has been fixed at Rs.75 lakh.
4) Source of funds Entrepreneurship
Development
An enterprise in India has access to varions types of short term and long term
financing. Short term financing mainly for working capital purposes, is usually
provided by the commercial banks as a mix of cash credit and bills discounting
facilities.

The main sources of long term debt are development finance by the all India
and state financial institutions, who lend mainly for investment in priority
sector, and debentures (cumulative and non-cumulative), which is a capital
market instrument. A debt-equity norm of 1.5:1 is generally acceptable. A
minimum level of promoter's contribution is also required, which is non-
transferable during a lock-in period of 5 years. Medium term finance for non
priority sectors is also provided by commercial banks who also participate
with the financial institutions in financing priority sector projects. Foreign
currency loans may also be accessed through lines of credit available to banks
and financial institutions. Direct access to overseas lenders is regulated under
foreign exchange controls. Foreign currency requirements are often met through
supplier's credit or through loans from the foreign collaborator. Venture capital
finance is not available extensively. A few units, mostly in the public sector,
have been set up which provide equitylloan support to companies entering
high-technologyhigh-risk areas. The total amount of capital available through
this route to date is insignificant. The Government of India have issued
guidelines for venture capital companies.

Industrial Development Banks (National)

Industrial Development Bank of India (IDBI)
Industrial Finance Corporation of India (IFCI)
Industrial Credit and Investment Corp. of India (ICICI)
Small Industries Development Bank of India (SlDBI)
Industrial Reconstruction Bank of India ( IRBI)
Shipping Credit and Investment Company of India (SCICI)
Specialized Financial Institutions:
Technology Development and Information Company of India Limited

Risk Capital and Technology Finance Corporation Limited (RCTC)

Tourism Finance Coi~orationof India (TFCI)
Investment Institutions:
Unit Trust of Indid (UTJ)
General Inburance Corporation of India ( GIC)
Life In\urancc Corporation of l n d ~ a(LICI)
State Corporations:
Statc Industrial Developrnent Corporations
State Finance Corporations

8.5
An Overview of the The National Bank for Agriculture and Rural Development (NABARD):
Plantation Sector
The National Bank for Agriculture and Rural Development (NABARD) in
keeping with its role as an apex institution in the organised rural credit structure,
provides refinance facilities to various financial intermediaries. NABARD
devises suitable policies and operational arrangements, from time to time, in
order to vitalize the rural credit delivery system and to augment the flow of
credit for rural development.
NABARD provides finance for seasonal agricultural operations.
Refinance assistance to Regional Rural Banks for enabling them to
conduct their various activities including assistance under minor irrigation,
grant of loans under IRDP, dairy development, farm mechanisation, etc.
In so far as commercial banks are concerned, NABARD provides only
refinance against the term loans issued by them under schematic landing
for agriculture and for certain specific non-agricultural purposes as
commercial banks are expected to meet their short-term requirements
out of their own resources.
5) Regulation of Enterprises
There is a marked change in government policy and attitude towards regulation
of industry and business which has resulted in substantive deregulation and
simplification of procedures, both for setting up and operating a business.

Industrial licensing requirement has been dispensed with for most industries.
An automatic approval process has been set up for foreign financial and
technical collaborations in identified high priority industrial sectors as:
Imports and exports are freely allowed except for short negative lists.
Foreign exchange controls have been eased.
Use of foreign brand names is now allowed even for sales in the domestic
market.
Applicability of price and distribution controls is being reduced.
Requirement for clearances for expansion and diversification under
monopoly legislation on basis of size have been removed.
Interest rates have been largely deregulated.
a) Regulatory agencies
The principal regulatory agencies are: The Secretariat of Industrial Approvals
(SIA), Ministry of Commerce, Government of India
The Reserve Bank of India,
Directorate General of Foreign Trade,
The Company Law Board,
The Securities and Exchange Board of India,and
The Stock Exchange authorities.
b) Compulsory legislations Entrepreneurship
Development
Prevention of Food Adulteration Act, 1954: The Act is the basic statute
intended to protect the common consumer against supply of adulterated food
and specifies different standards on various articles of food. The standards are
of minimum quality level intended for ensuring safety in the consumption of
these food items and for safeguarding against harmful impurities, adulteration
etc. The Central Committee for Food Standards under the Directorate General
of Health Services, Ministry of Health and Family Welfare is responsible for
operation of this Act. Provisions of the Act are mandatory and contravention
of the Rules can lead to both fine and imprisonment.
Essential Commodities Act, 1954: A number of Control Orders have been
formulated under the provisions of this Act, main objectives of which are to
regulate manufacture, commerce and distribution of essential commodities
including food Schedules. The Directorate also regulates the price of vanaspati
under the Order. B2(c) Meat Products Control order, 1973.
This Order regulates manufacture, quality and sale of all meat products and is
operated by the Directorage of Marketing and Inspection. B2(d) Milk and Milk
Product Order, 1992
This Order provides for setting up an advisory board to advise the Government
on the production, sale, purchase and distribution of milk powder. Units with
an installed capacity for handling milk of over 10,000 litres per day or milk
products containing milk solids excess of 500 tonnes per year are required to
obtain registration under this order from the Department of Animal Husbandry.
Standards on Weightsand Measures (Packaged Commodities) Rules, 1977
These Rules lay down certain obligatory conditions for all commodities in the
packed form with respect to their quantity declaration. These Rules are operated
by the Directorate of Weights and Measures under the Ministry of Food and
Civil Supplies.

Export (Quality Control and Inspection) Act, 1963: The Export Inspection
Council is responsible for operation of this Act under which a large number of
exportable commodities have been notified for compulsory pre-shipment
inspection.

The quality control and inspection of various export products is administered

through a network of more than fifty offices located around the important
production centers and ports of shipment. In addition, organizations may be
recognized as agencies for inspection andor quality control.

Recently Government have exempted agriculture and food products, fruit

products, fish and fishery products from compulsory pre-shipment inspection,
provided the exporter iids a firm letter from the overseas buyer stating that the
overseas buyer does not want pre-shipment inspection from any official Indian
Inspection Agencies.

Voluntary standards organizations

There are two organizations dealing with the voluntary standardization and
certification systems in food. Bureau of Indian Standards looks after
standardization of processed foods and standardization of raw agricultural
produce falls under the Directorate of Marketing and Inspection.
An Overview of the Bureau of Indian Standards (BIS): The activities of BIS are two fold;
Plantation Sector
formulation of Indian Standards in the processed food sector and their
implementation by promotion and through voluntary and third party
certification system. BIS have on record, standards for most of the processed
foods. These standards in general cover raw materials permitted and their quality
parameters, hygienic conditions under which the product is manufactured and
packaging and labelting requirements. Manufacturers complying with the
standards laid down by BIS can obtain an 'ISI' mark which can be exhibited
on their product packages. BIS has identified certain items like food coloursl
additives, vanaspati and containers for their packing, milk powder and
condensed milk for compulsory certification.

Directorate of Marketing and Inspection (DMI): The DM1 enforces the

Agricultural Produce (Grading and Marking) Act 1937. Under this Act, Grade
Standards are prescribed for agricultural and allied commodities which are
known as 'Agmark' Standards. Grading under the provisions of this Act is
voluntary. Manufactures who comply with standards laid down by DM1 are
allowed to put 'Agmark' labels on their products. (Source: Ministry of Food
Processing).
Q) Check Your Progress 6
Note: a) Use the space below for writing your answer.
b) Compare your answer with those given at the end of the unit.
1) List the procedures in setting up enterprises.
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a
4.7 LET US SUM UP
Entrepreneurs are basically innovative, risk taking persons who try to take
advantage of new technologies. Entrepreneurs are classified based on expertise,
motivation level and type of business. Government support is high for group
approach. Therefore, entrepreneurs should form "E-teams" at village level,
associations at district level and federations in state level. Until now growers
were concentrating only on production and value addition and marketing was
done by middlemenlexternal sources. Middlemen were earning 40 to 50 per
cent of the profit from farm, Entrepreneurial activities with respect to
processing, value addition and marketing will definitely reduce the flow of
money to non-stakeholders (middlemen). Moreover, Entrepreneurial
opportunities are observed in diversification, organic products and venture
88 technologies.
 Entrepreneurship
4.8 GLOSSARY Development

Entrepreneur : Innovative and risk taking person.

Entrepreneurship : Process of the entrepreneur.

Entreprenurial Management : Techniques of managing enterprises.

: Group of people with entrepreneurial

intuition.

CHECK YOUR PROGRESS: POSSIBLE ANSWERS

Check Your Progress 1
1) Entrepreneur Entrepreneurship
Refers to a Person Refers to a Process
Visualiser ' Vision
Creator Creation
Organiser Organisation
Decision maker Decision
2) Based on Expertise Based on Motivation Level Based on Tjpe of Business
Technical entreprises Pure entrepreneur t Business entrepreneur
Non-Technical Induced entrpreneur Trading entrepreneur
entreprises
Professional Spontaneous entreprises Industrial entrepreneur
entreprises Corporate entrepreneur

Check Your Progress 2

1) Different entrepreneurial ownerships are sole proprietorship, partnership;

- family venture and corporation.
2) a) Sole Proprietorship: Business owned and managed by one individual.
.. Advantage:
Simple to create
Total decision making authority.
Disadvantage:
Limited skills and capabilities.
Limited access to capital.
b) Partnership: is an association of two or more people.
Advantage:
Easy to establish
Complementary skills
Disadvantage:
Capital Accumulation
Potential for personality
An Overview of the Check Your Progress 3
Plantation Sector
1) Group of growers with entrepreneurial intuition and called as "E-Team".
Should be established at field level for successful entrepreneurial activities.
E-Teams can be grouped based on functional needs. e.g. for production,
marketing etc..
Check Your Progress 4
1) Net Return - Pepper ( Rs 63,500)
Employment Potential - (Coffee + Orange +Cardamom + Pepper +
Beans+ Lab Lab)- 1520 days. a

Check Your Progress 5

1) Rubber honey
Rubber seeds
Red tea
White tea
Yellow tea
Monsoon Coffee
Estate coffee
Varietal coffee
Check Your Progress 6
1) Incorporation
Licensing
Registration
Sourcing of funds
' Regulation of Enterprises

@ SUGGESTED READINGS
Chakraborti, T, 2003. Introducing Entrepreneurship Development. Modem
Book agency Private limited. Calcutta. pp 3 -37.
Desai, V. 2003. Dynamics of Entrepreneurial Development and Management.
Himalaya Publishing House. Mumbai.
Dhanakumar,V.G. 2006. Production and Operation Managementfor Plantation
and Agri-business. Anmol Publications. pp 107-127.
Hisrich R.D. and P. Michael, 2002, Entrepreneurship. Tata McGraw Hill.
New Delhi. pp 37-42.
Rajagopal, 2001, Agri-business and Entrepreneurship.Anmol Publications Pvt.
Ltd. New Delhi. pp-53-90
S h m a , D.D, S.K, Dhameja. and B.R,Gujar.,1999. Entrepreneurship,Strategic
Management and Globalisation. Rawat Publications. New Delhi. pp 91.
Sridhar, M.K., and M.V, Ravikumar,, 2003. Entrepreneurial Innovativeness
in the Team Formation. Proc of 3"' International Entrepreneurship Forum.
pp 203-205
www.mofpi.com
http:en.wikipedia.org

90
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Unit No. 1 2 3 4
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2) Please give your reactions to the following items based on your reading of the block.

lllustrations Used

3) Any other comments:

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School of Agriculture, IGNOU
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NOTES