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Social Entrepreneurship in India

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Social Entrepreneurship in India Social Entrepreneurship in India Unveiling the unlimited opportunities This report is created and published by: swissnex India l Consulate General of Switzerland #26 Rest House Crescent Road, Bangalore, India 560001 Tel.: +91 80 4941 2000 To download this report, visit: www.swissnexindia.org To order copies of this report, send an email to: [email protected] Content partners: Collaborative Community (www.collaborativec.in) Date of publishing: June 2015 Designed and printed in India swissnex India connects Switzerland and India in the fields of science, education, art and innovation. An initiative of the Swiss State Secretariat for Education and Research and Innovation (SERI) in association with the Swiss Federal Department of Foreign Affairs, swissnex India is part of the Consulate General of Switzerland in Bangalore (www.swissnexindia.org). Table of Contents EXECUTIVE SUMMARY 3 1 INTRODUCTION 4 2 CONTEXTUALIZING INDIA 5 2.1 Socio-Cultural Background 5 2.2 Economic Background and Its Impact 6 3 UNDERSTANDING INDIA’S 4 ZONES 8 3.1 North India 8 3.2 West India 9 3.3 East India 11 3.4 South India 12 4 SOCIAL INNOVATION & ENTREPRENEURSHIP IN INDIA 14 4.1 Education 15 4.2 Agriculture 18 4.3 Healthcare 20 4.4 Renewable Energy 23 4.5 Manufacturing 25 4.6 Skills Development 26 5 CHALLENGES FOR SWISS ENTREPRENEURS 28 5.1 Diversity 28 5.2 Cultural Differences 28 5.3 Local Processes and Routines 31 5.4 Finding the Right People & Building a Network 31 5.5 Underestimating the Existing Ecosystem 32 6 OPPORTUNITIES FOR SWISS STAKEHOLDERS 33 6.1 Swiss Entrepreneurs 34 6.2 Swiss Impact Investors 35 6.3 Swiss Institutions 35 6.4 Swiss Businesses 36 7 SUPPORT ECOSYSTEM 37 7.1 Funds 37 7.2 Incubators/ Accelerators 38 7.3 Network & Communities 39 7.4 Co-Working Spaces/ Innovation Driven Spaces 39 7.5 Corporate Sector/ CSR 40 7.6 Institutions 41 8 LEGAL SET-UP 42 8.1 Non-Profit or Public Charitable Organization 42 8.2 The For-Profit Social Enterprise 43 8.3 The Hybrid Model 43 9 COST OF LAUNCHING IN INDIA 44 10 CONCLUSION + OUTLOOK 45 11 DIRECTORY 46 Growing a Social BusinessThe country’s widespread poverty and strong population ingrowth provide India countless opportunities for Swiss entrepreneurs pursuing innovative solutions to social problems. Number363 of people million living below the poverty line in 2011-12; that’s 29.5% of India’s population Key areas of action Healthcare Education and Poverty line Medical devices; skills training IT systems; water Digital solutions; basic Level of daily spending under and sanitation infrastructure; teacher which people are considered poor infrastructure; education; affordable rural clinics private schools 32 rupees ($0.5) In rural areas 47 rupees ($0.7) In urban areas Booming working-age A population B C Number of 15- to 64-year-olds 959 million 849 million Agriculture Manufacturing Support for organic Technological support 711 million and sustainable for local manufacturers; farming; low-cost machinery; cement agricultural solutions technology Renewable energy Off-grid solar devices for lighting and cooking; microgrids for rural communities 2005 2015 2025 Rural vs. urban World’s largest youth population % of the total population of Number of 10- to 24-year-olds in 2014 1.25 billion in 2013 Urban 32% USA Pakistan 65 million 59 million Rural 68% India 356 million China Indonesia 269 million 67 million 33% 16% 55% 31% Population without Schools without Employment in Underweight electricity in rural functional girls’ agriculture, which children under five areas in 2012, toilets in 2013; accounts for only years old in compared to 6% in that’s 173,601 14% of India’s GDP 2009-2013 urban areas schools in India in 2013-2014 Read the full CTI Startup report 4 on social entrepreneurship at www.swissnexindia.org EXECUTIVE SUMMARY Opportunities for social entrepreneurs and other social stakeholders from Switzerland in India are countless. Overall it can be said, that the huge number of people, the relative low cost of establishing a company, the vibrant social enterprise ecosystem and India’s challenges with poverty are main reasons for Swiss social stakeholders to focus on the Indian market. In addition, India’s social entrepreneurship ecosystem is one of the most sophisticated in the world, giving multiple possibilities to connect with local partners, to learn and to pursue innovative solutions to one of India’s numerous social challenges in the fields of education, agriculture, healthcare, renewable energy, manufacturing and skills development. India is a very diverse and complex country and requires time to immerse into and understand the Indian way of thinking. To be successful in India, a strong support system of local and international partners is required. The report explains different support categories and provides the reader with a detailed list of the most important support institutions. The report outlines India’s social impact scenario, and is intended to give the reader a succinct overview of this sector, as well as areas of opportunity and challenges. 3 “Social entrepreneurship in terms of operation and leadership could be applicable to non- profit organizations as much as for-profit social enterprises although in terms of activities 1. and legal entity they are very different.” Models for social entrepreneurship in India are Social for-profit enterprise, non-profit and hybrid model, which are discussed in detail in the following sections. Introduction In addition to the above-mentioned models, other ways of creating impact in India are through philanthropy and through Corporate Social Responsibiliy. India has been regularly receiving global philanthropic money. Recently there has been a rise in local contributions from wealthy individuals with short and long-term vision. A new breed of high-net-worth individuals from the corporate sector is looking at investing philanthropic money in the form of grants and impact investments. Currently strategic philanthropy in India is still at a nascent stage. The practice of Corporate Social Responsibility (CSR) in India still remains within the philanthropic space, but has moved from institutional building (educational, research and cultural) to community development. With the communities becoming more active and demanding paired with global influences, CSR is becoming more strategic in nature (i.e. getting linked with business than being philanthropic). By discussing a company’s relationship to its stakeholders and integrating CSR into its core operations, the impact needs to go beyond communities and beyond the concept of philanthropy. This opens up big opportunities for the development sector to unlock local capital for not only solving short-term social problems but also investing into long-term social entrepreneurship. With the new Companies Act Bill 2013 every company with either: ● a net worth of INR 500 crore (c.78 milion US$) or ● a turnover of INR 1,000 crore (c.157 milion US$) or ● net profit of INR 5 crore (c.783’350 US$) needs to spend at least 2% of its average net profit for the immediately preceding three financial years on Corporate Social Responsibility (CSR) activities. 4 “India is a complex market and just money is not enough to navigate it. India has a strong impact investor base and in case you want to operate in this country, you would need to 2. have money that is capable to help you navigate contextual challenges. There are trusted forums, investor councils and a Contextualizing strong network of stakeholders involved in the ecosystem.” India Mr. Vineet Rai, Managing Director, Aavishkaar Fund India is a complex and diverse country that can be considered as big as the continent of Europe. In modern times, India can best be understood in two eras: pre-liberalization India and India post-liberalization (i.e. 1991 onwards). While there is cultural unity in India, there is diversity of seasons and vegetation, histories of people, genetics, features and skin color, cuisine, customs and costumes, language and literature, religions and social attitudes and arts. Each region is distinct and evolved and the communities feel proud of their roots. India has two distinct contexts, namely rural and urban, which are essential in understanding the country. Since globalization of Indian economy, distinct patterns have emerged in urban metro cities as compared to smaller cities, towns, villages, rural/ low accessible regions in the country. People in Indian tier 1 metro cities (population of +100’000 inhabitants with an increasing middle, upper-middle and upper economic class) can be benchmarked with major global cities across the world. 2.1 Socio-Cultural Background India is among the world’s oldest civilization that began about 4`500 years ago. Many sources describe it as “Sa Prathama Sanskrati Vishvavara” — the first and the supreme culture in the world. Early on, Indians made significant advances in architecture (Taj Mahal and many other monuments), mathematics (the invention of zero) and medicine (Ayurveda). Today, India is a very diverse country, with more than 1.25 billion people1, 29 states and seven territories2. Each state is much like a Swiss canton and has its separate state policies, taxation rules and plans aligned with the central (federal) government with the exception of certain subjects such as defense/ military. Contrary to the popular belief, there is no official language in India. Though many people speak Hindi in India, 59% of India’s residents speak something other than Hindi. Bengali, Telugu, Marathi, Tamil and English
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