A STUDY ON
SUSTAINABILITY
AND
SCALABILITY
OF MSMES FORMED UNDER THE
YEAR OF
ENTERPRISES
INITIATIVE

 

1 
 
 Directorate of Industries and Commerce
Government of Kerala

A STUDY ON
SUSTAINABILITY
AND
SCALABILITY
OF MSMEs FORMED UNDER

YEAR OF ENTERPRISES
INITIATIVE

Submitted by

CENTRE FOR MANAGEMENT DEVELOPMENT

(An Autonomous Institution Under the Govt. of Kerala)

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 TABLE OF CONTENTS

LIST OF ABBREVIATIONS 4
LIST OF TABLES 6
LIST OF FIGURES 7

1 Introduction 10
2 Methodology 20
3 Overview of the ‘Year of Enterprises’ Initiative 36

4
Stakeholder Perspectives on Enterprise 57
Development in Kerala

5 Entrepreneurial Landscape in Kerala: Survey Findings 66

Sustainability, Market Competitiveness,
6
Operational Efficiency and Scalability of Enterprises 103
7 Study Highlights and Actionable Insights 120
8
Strategic Recommendations for Enterprise 141
Development

9 Conclusion 162

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 LIST OF ABBREVIATIONS

ABBREVIATIONS DEFINITION

CRZ Coastal Regulatory Zones

CVP Customer Value Proposition

CD ratio Credit Deposit Ratio

CMD Centre for Management Development

CVP Customer Value Proposition

DRP District Resource Persons

DLGRC District Level Grievance Redressal Committee

DIC Directorate of Industries and Commerce

ED Clubs Entrepreneurship Development Clubs

ESA Eco-Sensitive Areas

ESS Entrepreneur Support Scheme

EDE Entreprenuer Development Executives

ESG Environment and Social Governance

FGD Focus Group Discussion

FSSAI Food Safety and Standards Authority of India

GDP Gross and Domestic Product

GoK Government of Kerala

GOT General Orientation Trainings

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KSSIA Kerala State Small Industries Association

KII Key Informant Interview

KSPCB Kerala State Pollution Control Board

KFC Kerala Financial Corporation

KSWDC Kerala State Women’s Development Corporation

KSIDC Kerala State Industrial Development Corporation

LSGI Local Self Government Institutions

MSME Micro and Small Enterprises

MIS Management Information System

NRK Non-Resident Keralite

NOC Non-objection Certificate

OECD Organisation for EconomicCooperation Development

PSU Public Sector Undertakings

PIE Private Industrial Estate

PMEGP Prime Minister’s Employment Generation Program

SME Small and Medium Enterprises

SC Scheduled Caste

ST Scheduled Tribe

SDF Standard Design Factories

SPMU State Project Management Unit

SLGRC State Level Grievance Redressal Committee

SOP Standard Operating Procedure

TRP Taluk Resource Person

YOE Year of Enterprises

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 LIST OF TABLES

CHAPTER 1
Table 1.1: Key Systems Introduced under YOE 13
Table 1. 2: Campaigns as part of YOE 16
Table 2.1: Indicators of Economic Sustainability 21
Table 2.2: Indicators of Environment Sustainability 22
Table 2.3: Indicators of Social Sustainability 23
Table 2.4: Indicators of Market Competitiveness 26
Table 2.5: Indicators of Operational Efficiency 27
Table 2.6: Dimensions and Indicators of Scalability 29
Table 2.7: Zones and Districts of Data Collection 31
Table 3.1: District-wise Status of Udyam Registration 41
Table 3.2: Departments/Agencies Providing Subsidies/Support 46
Table 3.3: Type of Challenges 52
Table 4.1: District-wise Status of EDEs 61
Table 5.1: Type of Ownership 68
Table 5.2 : Contextual Factors Descriptive Statistics 75
Table 5.3: Credit sources 80
Table 5.4: Reasons for not Availing Loans 80
Table 5.5: Brand Recognition Status 86
Table 5.6: Personal Outcomes Descriptive Statistics 100
Table 6.1: Economic Sustainability Status 103
Table 6.2: Environmental Sustainability Status 104
Table 6.3: Social Sustainability Status 107
Table 6.4: Overall Sustainability Status 107
Table 6.5: Market Competitiveness Status 110
Table 6.6: Operational efficiency Status 111
Table 6.7: Customer Value Propostion 112
Table 6.8: Business Attributes 113
Table 6.9: Change Capacity 115
Table 6.10: Market Analysis 116
Table 6.11: Overall Scalability 118

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 LIST OF FIGURES

LIST OF FIGURES
Fig 2.1: Scale Measuring Economic Sustainability 22
Fig 2.2: Scale Measuring Environmental Sustainability 23
Fig 2.3: Scale Measuring Social Sustainability 24
Fig 2.5: Total Closed/Not Available Enterprises Across Districts 32
Fig 3.1: District wise Enterprises 36
Fig 3.2: Business sub sectors 37
Fig 3.3: Gender wise Entrepreneurs 37
Fig 3.4: Qualification of Entrepreneurs 38
Fig 3.5: Social Category of Entrepreneurs 38
Fig 3.6: Licences Required 39
Fig 3.7: Licences Required and Licences obtained 39
Fig 3.8: Udyam Registration 40
Fig 3.9: Quality certification 41
Fig 3.10: Investment and Financing Challenges 42
Fig 3.11: Finance Required and Finance Obtained 42
Fig 3.12: MSME loan Availed 42
Fig 3.13: Reason for not availing MSME loan 43
Fig 3.14: Male and female-owned enterprises 43
Fig 3.15: Subsidies / Benefits 44
Fig 3.16: Total subsidy amount received 44
Fig 3.17: Assistance Received From Department / Agency 44
Fig 3.18: Subsidies received by male-owned enterprises 45
Fig 3.19: Subsidies received by female-owned enterprises 47
Fig 3.20: Assistance received by male entrepreneurs from Departments/Agency 47
Fig 3.21: Assistance received by female entrepreneurs from Departments/Agency 47
Fig 3.22: Assistance Received by SC entrepreneurs From Departments/ Agencies 47
Fig 3.23: Assistance Received by ST entrepreneurs From Departments/ Agencies 48
Fig 3.24: Suitable Scheme 48
Fig 3.25: Scheme Availed 49
Fig 3.26: Social Sustainability 49
Fig 3.27: Employment Generated by Male and Female Entrepreneurs 50
Fig 3.28: Participation in Exhibitions 50
Fig 3.29: Functional Status 51
Fig 3.30: Detailed Functional Status 51
Fig 3.31: Challenges Faced 52

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Fig 3.32: Reasons for closure 53
Fig 3.33: Plan to Revive 53
Fig 3.34: Type of Assistance from Department 53
Fig 3.35: Assistance From Department 54
Fig 3.36: Number of MSME established 54
Fig 3.37: Employment generated newly 55
Fig 3.38: Investment (Rs in Crore) in MSME sector in Kerala 55
Fig 5.1: Profile of the respondent- Gender 66
Fig 5.2: Social category 66
Fig 5.3: Age distribution 66
Fig 5.4: Educational Qualification 67
Fig 5.5: Prior Work Experience 67
Fig 5.6: Place of Residence 68
Fig 5.7: Sector of Operation 69
Fig 5.8: Manufacturing:Subsectors 69
Fig 5.9: Services : subsector 70
Fig 5.10: Sector of Enterprise 71
Fig 5.11: Product / Services Selection 72
Fig 5.12: Udyam Registration Status 72
Fig 5.13: Reasons for not availing Udyam registration 72
Fig 5.14: GST Registration Status 73
Fig 5.15: Reasons for not having GST registration 73
Fig 5.16: Motivational Factors to start the enterprise 74
Fig 5.17: Financial Performance 76
Fig 5.18: Cash Flow challenges 77
Fig 5.19: Monthly Income 77
Fig 5.20: Change in Income 77
Fig 5.21: Profit Reinvestment 78
Fig 5.22: Capital Investment 78
Fig 5.23: Asset Acquisition 78
Fig 5.24: Increase in Net Worth 79
Fig 5.25: Loan Utilisation 79
Fig 5.26: Range of loans availed 79
Fig 5.27: Loan Default Status 80
Fig 5.28: Marketing channels 81
Fig 5.29: Digital Marketing Platforms 81
Fig 5.30: Expansion into New Markets 82
Fig 5.31: Channels of Market Expansion 82
Fig 5.32: Export Status 83
Fig 5.33: Presence of Similar Products 83
Fig 5.34: Product Differentiation Capacity 83
Fig 5.35: Introduction of New Products 84

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Fig 5.36: Development of New Products 84
Fig 5.37: Pricing 84
Fig 5.38: Customer Retention 85
Fig 5.39: Customer Retention Efforts 85
Fig 5.40: Brand Building Efforts 85
Fig 5.41: Sales Growth Rate 86
Fig 5.42: Market Competitiveness 87
Fig 5.43: Assessment of Resource Wastage 87
Fig 5.44: Standard operating Procedures 88
Fig 5.45: Quality Control Measures 88
Fig 5.46: Safety Standards Comparison With Other Market Players 88
Fig 5.47: Rating of supply chain management practises 89
Fig 5.48: Collaboration With Local Suppliers,Vendors and Service Provider 89
Fig 5.49: Utilisation of Technology for Business Operations 90
Fig 5.50: Integration of Technological Advancements into Operational Processes 90
Fig 5.51: Effectiveness of Technology Adoption/ Integration 90
Fig 5.52: Capacity to Meet Increased Demand or Production 91
Fig 5.53: Existence of Business Development Plan 91
Fig 5.54: Plans for Infrastructure and Technology Enhancement 92
Fig 5.55: Plans for Mobilisation of External Finance 92
Fig 5.56: Purpose for External Finance 93
Fig 5.57: External Financing Required 93
Fig 5.58: Market Expansion Plans 94
Fig 5.59: Employment Creation 94
Fig 5.60: Number of jobs created 95
Fig 5.61: Adherence to Industry Standards for Salary/Wages 96
Fig 5.62: Approach to Employee Training and Development 96
Fig 5.63: Workforce Sufficiency 97
Fig 5.64: Inclusive Workforce 97
Fig 5.65: Addressing Social and Environmental Challenges 98
Fig 5.66: Environmental Impact Concerns 98
Fig 5.67: Waste Management 99
Fig 5.67: Waste Management 99
Fig 5.68: Liquid Waste Management 99
Fig 5.69: Participation in Community Development Programs 101
Fig 5.70: Awareness and Benefits Availed 103
Fig 6.1: Economic Sustainability Status 104
Fig 6.2: Environmental Sustainability Status 106
Fig 6.3: Social Sustainability Status 107
Fig 6.4: Integrated Sustainability Framework 107

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 01
Introduction

This chapter offers an overview of the MSME (Micro, Small, and Medium
Enterprises) sector in Kerala and delves into the Year of Enterprises
(YoE) initiative of the Department of Industries and Commerce of
Government of Kerala. Additionally, it outlines the purpose of the study,
setting the stage for further exploration and analysis.

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 1.1 MSME Sector

Micro, Small, and Medium Enterprises (MSMEs) play a significant role in economies
worldwide, constituting approximately 90 % of businesses and contributing to more
than 50 % of total employment. In emerging economies, Small and Medium Enterprises
(SMEs) make a significant contribution, accounting for up to 40 % of the national income,
as measured by Gross Domestic Product (World Bank, 2023). They are vital drivers of job
creation and economic growth, particularly in developing countries. In India, MSMEs form a
dynamic sector, particularly in terms of employment generation. The MSME sector in India
provides jobs to over 100 million people, and it plays a pivotal role in the country’s economic
landscape. This sector contributes significantly, representing 45 % of the manufacturing
output and over 40 % of India’s total exports. With 63.4 million units spread across the
nation, MSMEs make a substantial impact, contributing about 6 % to the manufacturing
GDP and 24.63 % to the GDP generated from service activities (Ministry of Commerce &
Industry, 2020).
The Micro, Small, and Medium Enterprises (MSME) sector plays a pivotal role in the Indian
economy, serving as the second-largest employer and the largest driver of economic
growth. The sector comprises a vast majority of informal micro enterprises, accounting for
over 63 million enterprises. This segment employs 107.6 million workers and significantly
contributes to manufacturing output, exports, and the national GDP. The Economic Survey
of the year 2022 underscores the sector’s importance, highlighting its role in economic,
social, and sustainable development, with MSMEs contributing 45% of total manufacturing
output, 40% of exports, and 30% of the national GDP, making it the second-largest
employer after agriculture. In India, MSMEs are classified based on their investment in
plant and machinery or equipment, as well as their annual turnover. Micro enterprises are
characterised by investments not exceeding INR 1 crore and turnovers less than INR 5
crores. Small enterprises have investments between INR 1 crore and INR 10 crore, with
turnover ranging from INR 5 crores to INR 50 crores. Medium enterprises fall within the
investment range of INR 10 crores to INR 20 crore and have turnovers between INR 50 crore
and INR 100 crore.
MSMEs in Kerala play a crucial role in industrialising rural and underserved areas and offer
employment opportunities to youth and socially disadvantaged groups, including Scheduled
Castes (SC), Scheduled Tribes (ST), women, and persons with disabilities. According to the
MSME Annual Report 2022-23, Kerala hosts 3.523 % of the total MSMEs, with approximately
23.79 lakh units, of which 23.58 lakh are micro-enterprises (MSME, 2022). While the
fragmented nature of available land in Kerala may not be conducive to large-scale industries,
the state government is actively addressing this challenge by utilising such fragmented
land to foster the growth of MSMEs. The excellent connectivity, a robust communication
network, access to highly skilled human resources, and the presence of industrial parks
(including info parks and techno parks) and specialised zones, make it conducive to the
growth of the MSME sector in Kerala State. Over the years, Kerala has made substantial
investments in enhancing connectivity, communication networks, skill development, and
infrastructure, giving it a unique advantage for fostering growth in this sector. As per the
Directorate of Industries & Commerce (DIC) of the Government of Kerala (GoK), there are
approximately 150,000 operational MSME units in the organised sector. Remarkably, 47 %

11
of these MSME units were established in the state over the past five years, underscoring
Kerala’s significant progress in nurturing MSMEs in the recent past, which serve as the
backbone of manufacturing and industrial development in the state (Directorate of Industries
and Commerce, 2023). The State has the highest density of MSMEs in the country, with 69
MSMEs per population of 1000. With the evolving MSME ecosystem and high quality cost-
competitive talent availability, MSME sector in Kerala is ideally positioned to be leveraged
for growth. (Report on Evaluation of Policies and Agencies for Industrial Development in
Kerala, 2019).
However, the MSME sector in Kerala faces several challenges hindering its economic
growth. These obstacles encompass absence of targeted policies and institutional support,
a lack of emphasis on growth and formalisation, infrastructural limitations, limited access to
credit and risk capital, the necessity for improved market linkages, inadequate convergence
between various departments leading to delays in approvals, a general lack of awareness
among the public regarding government schemes and policies, and a notable absence of
support schemes for COVID-affected trade units, especially in the wake of the pandemic’s
aftermath. These challenges collectively impede the sector’s potential for growth and
development. In the light of the aforementioned challenges and with the aim of expanding
the boundaries of the existing industrial ecosystem in the state, Kerala government
designated the fiscal year 2022-23 as ‘Year of Enterprises’. The Directorate of Industries and
Commerce has set itself the ambitious goal of establishing one lakh enterprises in 2022-23.
This initiative was geared towards advancing the developmental goals for the MSME sector
within the State.

1.2 Year of Enterprises (YOE) Initiative in Kerala

1.2.1 Overview of YOE initiative

The genesis of the ‘Year of Enterprises’ initiative involved collaborative brainstorming

sessions and strategic planning efforts, engaging stakeholders from senior policymakers to
district level officials responsible for implementation, to lay the foundation for comprehensive
industrial promotion in Kerala. In the initial stages of planning and strategy formulation
of the initiative, a series of brainstorming sessions and idea-generation meetings took
place involving stakeholders ranging from high-level policymakers to implementation-
level officials. These sessions produced valuable suggestions and inputs, which led to
the decision to begin the initiative by gathering comprehensive information on different
aspects of industrial development and promotion in the state. This consolidated information
would serve as a valuable reference guide for stakeholders operating within the industrial
ecosystem. To gather this data, District Industries Centers were engaged, resulting in
the publication of seven booklets, each focusing on distinct aspects. The Directorate of
Industries and Commerce (DIC) meticulously crafted an extensive strategy for the seamless
implementation of the ‘One Lakh Enterprises’ initiative. This comprehensive strategy was
developed through a series of meetings involving the honourable Minister for Industries

12
& Commerce, the Principal Secretary for Industries Department, and the Chief Secretary.
The overarching concept was formally presented to the Chief Secretary on December 22,
2021, and subsequently to the Chief Minister on December 30, 2021. This strategy unfolds
in a three-phased approach, encompassing activities focused on Capacity Building and
Ecosystem Strengthening, Marketing and Promotional Outreach, and dedicated MSME
Facilitation with a keen emphasis on sustainability.
The ‘Year of Enterprises’ initiative was officially launched on 30th March, 2022 in
Thiruvananthapuram, in an event graced by the esteemed presence of the Honourable Chief
Minister of Kerala. In this significant ceremony, the Chief Minister announced the target of
establishing one lakh enterprises in Kerala for the fiscal year 2022-23 as part of the “Year of
Enterprises” initiative” to foster and support Micro, Small, and Medium-level entrepreneurs
in the state.
The scheme’s primary objectives are multifaceted, first, to kickstart a minimum of 1 lakh
enterprises in Kerala during the fiscal year 2022-23. Secondly, to establish a resilient
ecosystem for enterprise development by fostering collaboration and support from various
Government Departments, Public Sector Undertakings (PSUs), and financial institutions.
Thirdly, to cultivate an entrepreneur-friendly environment aimed at stimulating job creation
within the state. Additionally, the scheme aims to generate at least 3 lakh employment
opportunities in Kerala in the year 2022-23. Lastly, it seeks to bolster the capabilities of
state-level agencies in expediting enterprise growth and development in the state.

1.2.2 Enabling Critical Systems for the ‘Year of

Enterprises’ Initiative

The Year of Enterprises initiative in Kerala has introduced a range of enabling systems
aimed at supporting and fostering MSMEs (Micro, Small, and Medium Enterprises) and
entrepreneurship in Kerala. The table presented below highlights the key systems introduced,
provides brief descriptions of each, and outlines their integral roles in contributing to the
success of the Year of Enterprises initiative. These systems collectively contribute to the
success of Year of Enterprises initiatives by providing comprehensive support, guidance,
and resources to MSMEs and entrepreneurs ultimately fostering economic growth and
entrepreneurship in Kerala.

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 Table 1: Key system Introduce under YOE

Systems Description Roles/Responsibilities

Placement A total of 1,153 professionally ƒ Raise awareness among
of interns in qualified interns were selected and entrepreneurs about the wide
every LSGI deployed across all local bodies. spectrum of available services.
This allocation comprised one intern
ƒ Offering guidance and support in
per Panchayat and one for every 20
areas like licence applications,
wards in Municipalities and Municipal
subsidies, and loans, while
Corporations.
closely collaborating with
various government agencies
and departments.
ƒ Each intern is entrusted with
specific targets pertaining to the
identification and registration
of new enterprises within their
designated local jurisdiction.
Help Desks Functioning across all 1,034 local ƒ Provide assistance to the public
bodies across the state. for industry or enterprise-
related questions every Monday
and Wednesday.
MSME In every District Industries Centre, ƒ Provide entrepreneurs with
Clinics a panel of accomplished experts guidance and advisory services
with a track record of effectively covering a spectrum of domains,
addressing entrepreneurial inquiries including marketing, finance,
and resolving issues across diverse GST, export/import, banking,
domains has been constituted. . licences and approvals, legal
matters, and technical aspects
of their businesses.
Enterprise MSME facilitation centers established ƒ Assist entrepreneurs in
Facilitation within 59 Taluk Industries Offices filing online applications for
Centre throughout the state, staffed by licences and clearances,
qualified Taluk Resource Persons. securing support for various
MSME schemes, resolving
inquiries, and streamlining
communication with various
government departments.
District Call District Resource Persons (DRPs) ƒ Call centres are operational to
Centres have been designated at every enable beneficiaries to access
District Industries Centre to provide the services of the DRPs (District
assistance to individuals utilising the Resource Persons) without the
established help desks. need to physically visit the office.

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 Online Online application portals have been ƒ Simplify the process for
services for set up for all the services of Directorate obtaining licences, permits,
MSMEs of Industries and Commerce financial assistance, industrial
land, subsidy schemes, and
other services.
ƒ Enable online application for
grants for Entrepreneurship
Development (ED) Clubs and the
Kerala State Small Industries
Association (KSSIA).
ƒ Provide online status updates
on applications and clearances.
Grievance Grievances pertaining to industries ƒ Facilitate effective resolution of
Redressal with capital investments up to Rs. 10 complaints
System Crore are addressed by the District
ƒ Resolve any grievance related
Level Grievance Redressal Committee
to licences and clearances for
(DLGRC), presided over by the District
opening or operating enterprises
Collector. Grievances related to
within 30 days.
industries with capital investments
exceeding Rs. 10 Crore fall under the
purview of the State Level Grievance
Redressal Committee (SLGRC), with
the Principal Secretary (Industries)
serving as its chairperson.
Chat with A dedicated facility that includes a ƒ Process the grievance through
Minister WhatsApp contact number where a well-structured system
entrepreneurs can submit their involving district-level resource
grievances and inquiries to the office persons and officers from the
of the Minister for Industries and Industries Department.
Commerce.
ƒ Promptly address and provide
suitable responses to these
grievances and inquiries within
a maximum time frame of 7
business days
Dreamvestor A dynamic initiative aimed at ƒ Support budding talents who
supporting aspiring entrepreneurs possess innovative and unique
ages of 18 to 35 by providing a platform business concepts. Opportunity
to present innovative business to receive financial rewards for
ideas and access financial rewards business ideas that advance to
including grants upto Rs. 5 Lakhs for the final stages of the program
finalist. with grants available of up to Rs.
5 lakhs.

Table 1.1

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To ensure effectiveness of the Year of Enterprises initiative, a comprehensive system of
monitoring committees has been established. At the state level, there is a State Level
Monitoring Committee chaired by the honourable Chief Minister and a State Level Core
Committee led by the Principal Secretary of Industries and Commerce. At the district
level, the District Level Monitoring Committee operates under the guidance of the District
Collector. Furthermore, at the grassroots level, there are Local Body Level Monitoring
Committees, each presided over by the respective President or Chairperson. These
committees play a pivotal role in overseeing the scheme’s progress and facilitating its
successful implementation across various administrative tiers, ensuring that the objectives
of promoting entrepreneurship and supporting enterprises are met efficiently.
Furthermore, a State Project Management Unit (SPMU) functioned within the Directorate
of Industries & Commerce (DIC) in the achievement of the task of “Setting up of One
Lakh Enterprises in Kerala”. Its key functions include facilitating project implementation,
establishing governance structures, and aiding in policy development. Additionally, the
SPMU monitors progress, coordinates training programs, and assists with marketing
efforts.

1.2.3 Campaigns to promote ‘Year of Enterprise Initiative

Following the launching of the initiative, a concerted effort was made to establish an
entrepreneurial ecosystem in the state. This effort was spearheaded by the Industries
Department in collaboration with various line departments and agencies. A series of
decentralised campaigns were initiated, encompassing a range of activities aimed at fostering
entrepreneurship. These activities included General Orientation Training sessions for
prospective entrepreneurs, specialised events for facilitating loans, licences, and subsidies,
as well as marketing events to provide new enterprises with marketing opportunities.
Additionally, there were ongoing efforts to monitor and expedite MSME registrations across
all local bodies.
General Orientation Trainings were conducted in all 1034 local bodies in the state. These one-
day sessions provided aspiring entrepreneurs with an overview of various livelihood options,
entrepreneurial opportunities in manufacturing and services sectors, essential licences and
permits, Udyam and K SWIFT registrations, government initiatives and schemes including
services by Public Sector Undertakings (PSUs), financing sources, and contact details of
local and district-level resource persons. Experiences of successful entrepreneurs were
shared during these sessions.
Loan/License/Subsidy Campaigns were conducted at the local government level to
streamline and expedite loan, licences, and subsidy application processes. Interns conducted
awareness campaigns on various loan and subsidy schemes, and bank representatives
and government officials addressed queries during loan melas. As of 31st August, 2022,
approvals were granted for loans totaling Rs. 14.3 crore, with 2,096 licence applications
approved and over 1,194 subsidy applications processed.
As part of the Marketing Campaign, trade fairs were organised at Taluk headquarters and
prominent local venues, coinciding with regional festivals and locally significant events, to
support marketing activities and empower MSMEs.

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 The Department of Industries and Commerce also hosted ‘Samrambhaka Maha
Sangamam’, an Entrepreneurs Summit to celebrate the accomplishments of the
“Year of Enterprises” initiative. The event drew over 10,000 attendees, including
more than 8,000 new entrepreneurs who launched businesses in the state during
the fiscal year.
The table provides a comprehensive overview of the achievements resulting from
various campaigns undertaken by the Industries Department as part of ‘Year of
Enterprises’

Campaigns Outcomes

General Orientation ƒ Conducted 1159 trainings in 1034 Local bodies

Trainings ƒ Attended by 85160 participants

ƒ Sanctioned 2274 loans worth Rs. 108 Cr, out of 5556

loan applications for Rs. 297 Crore
Loan, License, Subsidy
Melas ƒ Issued 4919 licences of 5917 applications
ƒ Processed 1059 subsidies out of 1219 applications

ƒ Organised 50 Taluk level Marketing Melas across

Marketing Trade Fairs
the State

ƒ Attended by more than 10,000 people, in which more

S a m r a m b h a k a
than 8000 new entrepreneurs who had established
Maha Sangamam –
enterprises in the state during the Financial Year
Entrepreneurs Summit
2022-23
Table 1.2

1.2.4 Schemes supporting ‘Year of Enterprises’ Initiative

In pursuit of nurturing an environment conducive to the inception and expansion of

new enterprises within the State, the Industries and Commerce Department has
diligently crafted and executed a range of schemes and policies. These initiatives
are pivotal in addressing the fundamental need for a structured framework that
promotes and sustains the growth of industries. By implementing these schemes and
policies, the department aims to create an industrial ecosystem where businesses
can thrive, fostering economic development and prosperity in the region.

Kerala Enterprises Loan Scheme

This scheme provides term and working capital loans to MSMEs established after
April 1, 2022, at a 4% interest rate with government interest subvention. It focuses on
empowering women entrepreneurs, ensuring that 50% of beneficiaries are women.
The scheme includes interest subvention for the first five years, with subsidies
available after six months of interest servicing.

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 GeM Portal Registrations for MSMEs
This scheme incentivizes MSMEs to register on the Government e-Marketplace
(GeM) portal by offering a one-time assistance of Rs. 10,000 perenterprise. It
aims to enhance the digital presence and business opportunities for MSMEs by
facilitating their participation in the digital economy.

Entrepreneur Support Scheme (ESS) for Manufacturing Startups

ESS offers financial assistance to MSMEs in manufacturing, providing subsidies
ranging from 15% to 45% of fixed capital investment. The scheme is inclusive,
catering to various investor categories, and does not require a loan from financial
institutions, making it accessible to a broad range of entrepreneurs.

Private Industrial Estate Scheme

Launched in 2022, this scheme encourages the development of private
industrial estates by offering financial support of up to Rs. 3 lakh per acre for
land development. It aims to promote youth employment and expand industrial
opportunities across the state.

Scale-Up Subsidies and the Margin Money Grant to Nano Units

This initiative supports existing enterprises in scaling up their operations,
facilitating their growth from micro to small or medium-sized enterprises.

Industry-University Linkage Scheme

This scheme fosters technological innovation by providing grants to students
of APJ Abdul Kalam Technical University to develop solutions for industrial
challenges. It strengthens the connection between academia and industry,
promoting innovation and practical problem-solving.

One Local Body One Product (OLOP) Scheme

One Local Body One Product (OLOP) Scheme: A collaborative initiative between
the Department of Industries and Commerce and the Department of Local Self
Government, OLOP aims to harness the unique potential of local self-governments
by promoting specific products tailored to local resources. It emphasizes local
entrepreneurship and community empowerment.

Kerala Brand
This initiative focuses on creating a unique identity for Kerala’s products to
enhance their global market presence. The Kerala Brand aims to ensure
product quality and highlight the state’s commitment to sustainable and socially
responsible practices.

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 1.3 Purpose of the study

The ‘Year of Enterprise’ initiative represents one of the most significant campaigns to
promote entrepreneurship in Kerala in recent years. Despite numerous success stories
highlighting its impact, there is a gap in systematic studies that comprehensively capture the
industrial development catalysed by the initiative. Given Kerala’s heavy reliance on MSMEs
for industrial growth, it is crucial to invest in sustaining and scaling these enterprises to
contribute significantly to the local economy. This study aims to provide valuable insights
into the success and challenges of the initiative by analysing the socio-economic profiles of
entrepreneurs, understanding their motivational factors, and evaluating the current status
of enterprises in terms of sustainability and scalability. Additionally, the study seeks to
identify key factors influencing the sustainable performance of these enterprises including
market competativeness and operational efficiency of these enterprises and recommend
strategies to enhance their long-term viability. The study aims to provide valuable insights
for policy-making and future entrepreneurship promotion efforts in Kerala.

19
 02
Methodology

This chapter outlines the rationale for conducting the study, delineates
its objectives, discusses the variables being examined, elucidates the
research design employed, and acknowledges the inherent limitations
of the study.

20
 2.1 Rationale for the study

The study on the sustainability and scalability of enterprises under the ‘Year of Enterprises’
initiative in Kerala is crucial for several reasons. First, it identifies the significant gaps
by offering a systematic analysis of the current status of the enterprises in terms of
sustainability and scalability. This information is crucial for comprehending the factors that
influence the success or failure of these enterprises and for informing policy interventions
aimed at enhancing their long-term viability. Secondly, the study is timely and relevant,
given the importance of entrepreneurship in driving economic growth and development,
particularly in the context of post-pandemic recovery. By identifying the key challenges faced
by entrepreneurs and recommending targeted interventions, the study aims to contribute to
the creation of a more conducive environment for entrepreneurship in Kerala.

2.2 Objectives

a) To profile the basic demographics and characteristics of entrepreneurs under the ‘Year
of Enterprises’ initiative, and to explore the motivational drivers of entrepreneurs and
the contextual
b To evaluate the sustainability of these enterprises, focusing on their potential for long-
term viability and growth..
c) To assess the market competitiveness and operational efficiency of these enterprises,
identifying key factors that contribute to their long-term success.
d) To evaluate the scalability of these enterprises, determining their capacity for expansion
and future growth.
e) To identify and analyse the challenges faced by these enterprises, with the aim of
enhancing their sustainability and scalability.
f) To understand public perception of Kerala’s business environment and its influence on
entrepreneurial activities.
g) To evaluate the overall effectiveness of the ‘Year of Enterprises’ initiative and provide
actionable recommendations for improving enterprise promotion and support.

2.3 Key Variables of the study

Sustainability and scalability are crucial concepts that determine whether a business
can succeed and grow over the long term. Sustainability refers to a business’s ability to
maintain and improve its economic, environmental, and social performance over time. This
means not only making sure the business is profitable but also operating in a way that
protects the environment and supports the community. Achieving sustainability requires
balancing financial stability with responsible practices that ensure future generations can
thrive. Scalability, on the other hand, focuses on a business’s ability to grow and expand
efficiently. A scalable business can increase its output or services without a significant rise
in costs, which enhances profitability and allows it to reach new markets or meet increasing

21
demand. Scalability is essential for businesses that aim to broaden their impact and adapt
to changing market conditions. This often involves adopting new technologies, optimising
processes, and innovating business models.

However, measuring how sustainable and scalable a micro-enterprise is can be quite

challenging. Micro-entrepreneurs often lack the resources and tools to gather key metrics
like gross profit margin, return on investment (ROI), or market penetration. These metrics
are critical for understanding the financial health and competitive position of a business,
but many small enterprises may not have the capability to collect and analyse this data
effectively.

Additionally, micro-enterprises often tailor their products or services to meet specific

customer needs, making it difficult to track metrics like Average Transaction Value (ATV)
or Customer Lifetime Value (CLV). These metrics require sophisticated data collection and
analysis methods, which might be beyond the reach of small businesses.

Because of these challenges, there is a strong need for a tailored approach to help micro-
enterprises effectively measure their sustainability and scalability. This approach should be
designed to fit the unique circumstances of small businesses, providing them with the tools
and support they need to overcome data collection barriers. By addressing these challenges
with customised strategies, micro-enterprises can better understand their impact, track
their growth, and ultimately achieve long-term success in a competitive business landscape.

2.3.1 Sustainability

Sustainability of an enterprise refers to its ability to operate in a manner that meets the
needs of the present without compromising the ability of future generations to meet their
own needs. It encompasses three dimensions, including economic, environmental and
social.

1. Economic Sustainability

Economic sustainability is defined as the enterprise’s ability to generate long-term value

while maintaining profitability and financial stability. Economic sustainability is measured
using three indicators: - Profit Making, Increase in Sales Growth and Increase in Income.

Dimension/s Indicators

1. Enterprise’s financial performance- Profit making

2. Increase in Sale growth

Economic
Sustainability
3. Increase in Income

4. No significant Cash flow challenges

Table 2.1 : Indicators of Economic Sustainability

22
The average score of all indicators together gives the economic sustainability score
to evaluate the financial health and growth potential of micro-enterprises. Based on
discussions with industry experts, enterprises scoring between 1-2 are considered
‘Unsustainable’, indicating significant struggles in financial performance, sales growth,
and income increase, necessitating immediate corrective actions to prevent closure. Scores
between 2.1-3 denote an ‘Vulnerable’ status, where the enterprise shows some signs of
sustainability but requires substantial improvements to stabilise its operations. Enterprises
scoring 3.1-4 are deemed ‘Moderately Sustainable’, performing moderately well in terms
of financial stability, sales growth, and income increase, yet still needing improvements
to ensure long-term sustainability. Scores between 4.1-5 indicate the enterprise is ‘Highly
Sustainable’, exhibiting strong financial performance, robust sales growth, and significant
income increases, positioning it well for long-term success.

Unsustainable Vulnerable Moderately Highly

Sustainable Sustainable

1 2 3 4 5
Figure 2.1: Scale Measuring Economic Sustainability

2. Environment Sustainability

Environmental Sustainability focuses on minimising the negative impact of the enterprise’s

operations on the environment. It is assessed based on three indicators: Effective Solid
Waste Management, Effective Liquid Waste Disposal Management, and Concern Regarding
Environmental Impact.

Dimension Indicators

1. Effective Solid Waste Management

Environment
2. Effective Liquid Waste Disposal Management
Sustainability
3. Concern regarding environmental impact

Table 2.2 Indicators of Environment Sustainability

Environmental sustainability is assessed on a five-point scale to evaluate the impact of

a micro-enterprise on the environment. Enterprises scoring between 1-3 are considered
to have ‘Limited Environmental Impact’, indicating deficiencies in effective solid waste
management, liquid waste disposal management, and overall environmental responsibility.
These enterprises show minimal contribution to environmental sustainability and require
significant improvements in their practices to mitigate negative environmental effects.
Enterprises scoring between 3.1-5 are considered to have a ‘Positive Environmental Impact’,
demonstrating success in managing waste effectively and showing a strong concern for
environmental impact. These enterprises actively engage in environmentally responsible
practices, contributing positively to the preservation and sustainability of the environment.

23
 LIMITED POSITIVE
ENVIRONMENTAL ENVIRONMENTAL
IMPACT IMPACT

1 2 3 4 5
Figure 2.2: Scale Measuring Environmental Sustainability

3. Social Sustainability

Social Sustainability involves the enterprise’s commitment to supporting the well-being of

its employees, communities, and society at large. Social sustainability is measured using
seven indicators, including capacity for employment generation, salary/wages according to
industry standards, investment in employee training and development, workforce diversity,
participation in community projects, and personal aspects such as quality of life, status/
acceptance, social skills, and overall well-being.

Dimension Indicators

Capacity for employment generation

Social Salary/wages according to industry standards.

Sustainability
Personal aspects such as quality of life, status/acceptance,
social skills, and overall well-being.

Table 2.3 Indicators of Social Sustainability

Social sustainability is assessed on a five-point scale to evaluate the impact of a micro-

enterprise on its workforce and community. Enterprises scoring between 1-3 are
considered to have ‘Limited Social Impact’, indicating deficiencies in aspects such as
employment generation, wage standards, and personal well-being. These enterprises
show minimal contribution to social sustainability and require significant improvements
in areas such as fair wages, employee training, and community engagement. Enterprises
scoring between 3.1-5 are considered to have ‘Positive Social Impact’, demonstrating
success in social aspects, including employment practices and quality of life for employees.
These enterprises showcase fair wages, robust employee support, and active community
involvement, contributing positively to both their workforce and the surrounding community.

24
 LIMITED POSITIVE
SOCIAL SOCIAL
IMPACT IMPACT

1 2 3 4 5

Figure 2.3: Scale Measuring Social Sustainability

4. Overall Sustainability of micro-enterprises

Sustainability of micro-enterprises encompasses all the three key dimensions: economic,

social, and environmental. However, the relative importance of these dimensions can vary
depending on the specific context of the enterprise. In the context of micro-enterprises
in Kerala, for example, economic sustainability is prioritised due to its critical role in
ensuring financial stability and growth. Social and environmental sustainability, while still
relevant, are weighted less heavily due to the limited scope of social impact and minimal
environmental implications in many micro-enterprises. This contextual approach is taken
to ensure the sustainability assessment accurately reflects the unique operational realities
and challenges faced by micro-enterprises.

Based on discussions with industry experts, the weightage for assessing the sustainability
of micro-enterprises in Kerala has been allocated as follows:
60% Economic Sustainability
20% Social Sustainability
20%
Environmental Sustainability

This weightage reflects the critical importance of economic stability for micro-enter prises,
acknowledging their limited resources and the essential role of financial health in their
survival and growth. Social and environmental sustainability are also considered, but with a
reduced emphasis, recognizing the specific operational constraints and minimal impact in
these areas for many micro-enterprises.

Scoring Procedure of Sustainability of Micro Enterprises

1. Calculate the Average Score for Each Dimension:
ƒ Economic Sustainability: Average score of economic indicators

ƒ Social Sustainability: Average score of social indicators

ƒ Environmental Sustainability: Average score of environmental indicators

25
 2. Apply the Weightage:
ƒ Economic Weighted Score (EcWS) = Average Economic Score * 0.60

ƒ Social Weighted Score (SoWS)= Average Social Score * 0.20

ƒ Environmental Weighted Score (EvWS) = Average Environmental Score * 0.20

3. Aggregate the Weighted Scores:
Sustainability Score= EcWS+SoWS+EvWS
(A standardised scale of 1 to 5 for each indicator under economic, social and environmental
dimensions is used, where 1 represents the lowest performance and 5 represents the
highest performance)
This methodology ensures that the assessment of micro-enterprise sustainability is aligned
with the practical realities of their operations. By focusing predominantly on economic
sustainability, while also considering social and environmental factors, the approach
provides a comprehensive evaluation that reflects the importance of financial stability,
alongside social and environmental responsibilities.

Overall sustainability of micro-enterprises is further assessed on a five-point scale to provide

a comprehensive evaluation of their economic, social, and environmental performance.
Enterprises scoring between 1 and 2 are considered ‘Unsustainable’, indicating very poor
performance across all dimensions and being on the verge of closure. These enterprises face
significant challenges and require immediate corrective actions to prevent failure. Scores
between 2.1 and 3 denote a ‘Vulnerable’ status, where the enterprise is at risk and shows
some signs of sustainability but needs substantial improvements to stabilise its operations
and mitigate potential threats. If vulnerable enterprises do not receive sufficient support,
they may likely fall into the Unsustainable category. Enterprises scoring 3.1 and 4 are
deemed ‘Moderately Sustainable’, performing reasonably well across various sustainability
dimensions but still needing further enhancements to ensure long-term stability. Scores
between 4.1 and 5 indicate that the enterprise is ‘Highly Sustainable’, demonstrating strong
performance in economic, social, and environmental aspects, and is well-positioned for
continued success and growth.

2.3.2 Market Competitiveness

Market competitiveness refers to the ability of a business to succeed and grow in its
industry relative to its competitors. It is measured using five indicators: Product/Service
Differentiation,New Product Development, Deliberate Customer Retention Efforts,
Deliberate Brand Building Efforts, and Perceived Market Competitiveness.

26
 Dimension Indicators

1. Product/Service Differentiation

2. New product development

Market
3. Deliberate customer retention efforts
Competitiveness
4. Deliberate Brand building Efforts

5. Perceived market competitiveness

Table 2.4 Indicators of Market Competitiveness

In the analysis of Market Competitiveness, a Funnel Analysis approach was employed,

utilising five key indicators: Product/Service Differentiation, New Product Development,
Deliberate Customer Retention Efforts, Deliberate Brand Building Efforts, and Perceived
Market Competitiveness. This method systematically filtered through a series of criteria,
starting with the broadest and most critical factors, and progressively narrowing down
to more specific ones. The analysis began with evaluating how enterprises differentiate
their products or services in the market, followed by assessing their efforts in new
product development. From there, the focus shifted to examining deliberate strategies for
customer retention and brand building, both of which are essential for sustaining market
presence. Finally, the analysis culminated in assessing the enterprises' perceived market
competitiveness, providing a comprehensive view of how well-positioned they are within their
respective markets. This funnel approach allowed for a logical and methodical examination
of market competitiveness, revealing the proportion of entities that meet each criterion and
highlighting areas where improvement is needed.

2.3.3 Operational Efficiency

Operational efficiency refers to the ability of an organisation to deliver its products or

services in the most cost-effective manner while maintaining high quality. It involves
optimising processes, reducing waste, and making the best use of available resources. It
is assessed using eight indicators: Minimal Resource Wastage, Presence of Quality Control
Measures, Documentation and Adherence to SOPs, Capacity to Manage Increased Demand,
Comparable Safety Standards, Technology Integration, Efficient Supply Chain Management,
and Workforce Skill Adequacy.

27
 Dimension Indicators

1. Minimal Resource Wastage

2. Presence of quality control measures

3. Documentation and adherence to SOPs

Operational 4. Capacity to Manage Increased Demand.

Efficiency
5. Comparable Safety Standards

6. Technology Integration

7. Efficient supply chain management

8. Workforce Skill Adequacy

Table 2.5 Indicators of Operational Efficiency

In the assessment of Operational Efficiency, a Funnel Analysis was conducted using a
set of key indicators: Minimal Resource Wastage, Presence of Quality Control Measures,
Documentation and Adherence to Standard Operating Procedures (SOPs), Capacity to
Manage Increased Demand, Comparable Safety Standards, Technology Integration, Efficient
Supply Chain Management, and Workforce Skill Adequacy. This analysis began by evaluating
the broadest and most critical factors, such as the minimization of resource wastage and
the presence of quality control measures. It then progressively narrowed down to more
specific indicators, including the documentation and adherence to SOPs, which are crucial
for maintaining consistent operational standards.

Further, the analysis examined the capacity of enterprises to manage increased demand
while maintaining safety standards, highlighting their scalability potential. The integration
of technology and its impact on operational processes was also assessed, followed by an
evaluation of the efficiency of supply chain management. Lastly, the analysis focused on the
adequacy of the workforce’s skills, a critical factor in ensuring operational effectiveness.
This funnel approach provided a structured and logical framework to assess operational
efficiency, revealing how enterprises performed against each criterion and identifying areas
for enhancement to achieve greater operational excellence.

2.3.4 Scalability

The concept of scalability in enterprises refers to the ability of a business to handle and
manage growth efficiently and effectively. Scalability is crucial for firms, especially those
identified as “scalers,” which experience rapid expansion in terms of employment or
turnover.

When we refer to “scalers” as defined by the OECD (Organisation for Economic Co-operation
and Development), we are describing businesses that undergo significant growth in either

28
employment (number of employees) or turnover (revenue) within a relatively short
period. These firms achieve scalability by transforming their operational methods, often
adopting new technologies, business models, or strategies that enable them to expand
rapidly.

Kumar (2010) outlines that scalability of an entity begins by addressing four concepts:
customer value proposition (CVP), business attribute analysis, change capacity, and
market analysis. Understanding CVP is an important determinant of scalability, because
it reveals how the entity is adding value while driving return business. Altering the CVP
can impact the customer base and brand perception. Business attribute analysis reflects
the need for the entity to gain an awareness of what differentiates it from the competitors.
Change capacity can be used to evaluate scalability. Market analysis is crucial in
assessing scalability by understanding market trends, dynamics, and opportunities. In
micro enterprises, considering these aspects, we define scalability as the potential for
high growth in employment or turnover by transforming the way they operate.

Customer Value Business Change Market

Proposition (CVP) Attribute Analysis Capacity Analysis
Focuses on how Emphasizes Assesses the Focuses on
well the business understanding the business’s envaluating the
is meeting unique aspects innovate in external
customer needs that differentiate response to environment
and the business from market dynamics and identifying
creating value competitors and evolving growth
customer opportunities
preferences

In the present study, scalability was evaluated across four essential dimensions to gauge
the potential of enterprises to achieve substantial growth in employment or turnover
throughoperational transformation. These dimensions include business attribute
analysis, customer value proposition (CVP), change capacity, and market analysis.
Business Attribute Analysis focuses on foundational aspects like organisational structure,
resource allocation, and operational efficiency to assess how well these attributes support
scalability and growth without compromising quality. Customer Value Proposition (CVP)
involves creating value for customers through activities such as collecting and evaluating
customer feedback, understanding market dynamics, and implementing initiatives to
build customer loyalty. Change Capacity evaluates an enterprise's adaptability to market
trends, technology, and increased demand, emphasising the importance of perceiving
competitiveness, technology utilisation, workforce skill enhancement, and infrastructure
development. Market Analysis encompasses strategies for market expansion, business
development planning, and future market expansion plans, crucial for understanding
growth potential and enhancing market competitiveness.

29
These dimensions collectively provide insights into factors enabling or hindering firms
from achieving significant growth and transformation, aiding strategic decision-making
to navigate scalability challenges effectively. Each dimension underscores the critical role
of foundational business attributes, customer-centric strategies, adaptive capacities, and
market insights in fostering sustainable expansion and success.

Scalability is the ability of firms to undergo a period of high growth in employment and/or
turnover by transforming the way they operate. Scalability is considered as the amalgamation
of 4 dimensions namely business attribute analysis,customer value proposition (CVP),
change capacity, and market analysis. Business attribute analysis is measured using 3
indicators, customer value proposition (CVP) with 3 indicators, change capacity with 3
indicators and market analysis with 3 indicators respectively,as described in the table below.

Dimension Indicators

1. Market Understanding
Customer Value
2. Collection and evaluation of customerfeedbacks
Proposition
3. Customer loyalty building initiatives

1. Financial Leveraging Capacity

Business Attributes
2. Asset Acquisition
analysis
3. Increase in net worth

1. Perception of ability to compete

Change Capacity 2. Technology Utilisation for business

3. Capacity to Manage Increased Demand.

1. Existence of a business development plan.

Market Analysis 2. Market Expansion

3. Future Market Expansion Plans

Table 2.6 Dimensions and Indicators of Scalability

30
In the analysis of Scalability, a Funnel Analysis approach was employed to systematically
evaluate scalability by assessing four critical dimensions: Business Attribute Analysis,
Customer Value Proposition (CVP), Change Capacity, and Market Analysis. Each dimension
was carefully analysed through a series of filters, with indicators within each dimension
progressively narrowing down the pool of enterprises to those demonstrating the strongest
scalability potential. The Funnel Analysis began with broader criteria that are fundamental
to scalability, and then moved towards more specific and refined indicators. This step-by-
step filtering process allowed for a detailed assessment of how well enterprises perform
across multiple facets of scalability.

In the Customer Value Proposition (CVP) dimension, the funnel analysis began with Market
Understanding, ensuring that enterprises have a solid grasp of their market landscape. It
then progressed to evaluating how well these enterprises collect and evaluate customer
feedback ultimately filtering down to those that implement strong Customer Loyalty Building
Initiatives, a key indicator of sustainable growth.

For the Business Attribute Analysis dimension, the analysis started with assessing Financial
Leveraging Capacity, a critical factor in determining an enterprise’s ability to secure and
manage financial resources. As enterprises passed this initial filter, the analysis then
focused on Asset Acquisition and Increase in Net Worth, further narrowing down to those
that not only secure resources but also effectively utilize them for growth.

The Change Capacity dimension applied a funnel that started with the Perception of Ability
to Compete, a broad measure of confidence and market positioning. This was followed by
the evaluation of Technology Utilisation, which is crucial for modern scalability, and finally,
the Capacity to Manage Increased Demand, which indicates readiness for operational
expansion.

For the Market Analysis dimension, the funnel analysis started with the existence of a
Business Development Plan, a fundamental indicator of strategic planning. It then narrowed
down to enterprises that have actively engaged in Market Expansion and culminated in
evaluating those with articulated Future Market Expansion Plans, identifying enterprises
that are not only growing but also planning for sustained growth.

Through this Funnel Analysis approach, each dimension was meticulously filtered to identify
enterprises that demonstrate strong scalability across multiple indicators, ensuring a
comprehensive understanding of their potential for high growth and transformation. This
method provided a clear pathway for identifying areas of strength and those requiring
further support, ultimately guiding strategic interventions to enhance scalability among
enterprises.

2.4 Research Design

The study employed a mixed-methods approach, combining quantitative and qualitative

research methodologies to obtain a comprehensive understanding of the subject matter.
Both primary and secondary data were utilised in the research process.

31
 2.4.1 Secondary Data Collection
Secondary data was sourced from the Management Information System (MIS) of the
Department of Industries and Commerce. This data was assessed to gain insights into
the profile of enterprises, conduct demographic analyses, identify patterns and to acquire
valuable information on the implementation and outcomes of the initiative under study.

2.4.2 Primary Data Collection

Primary data collection involved gathering both quantitative and qualitative data from
diverse stakeholders, including entrepreneurs, implementing officials, and the general
public. Quantitative data was acquired through surveys conducted among entrepreneurs
and through a general perception survey conducted among the general public. On the other
hand, qualitative data was obtained via key informant interviews with implementing officials
at both district and state levels, as well as through focus group discussions with Enterprise
Development Executives.

2.4.2.1 Quantitative Data: Survey of Entrepreneurs

To understand the perspectives of entrepreneurs, a detailed survey was conducted among

3000 entrepreneurs who established enterprises under the ‘Year of Enterprises’ initiative.
The quantitative survey was conducted using a structured questionnaire, focusing on
demographic information, entrepreneurial motivations, challenges faced, and perceptions
of sustainability and scalability.

A representative sample of 3,000 enterprises was selected from a pool of 100,000 enterprises
initiated under the Year of Enterprises. A stratified random sampling method was used,
dividing the state into three geographical zones—Northern, Central, and Southern—to
ensure balanced representation across regions.

Zone Districts No. of samples

Kasaragod, Kannur, Wayanad,

Northern Kerala 967
Kozhikode, and Malappuram.
Palakkad, Thrissur, Ernakulam,
Central Kerala 1133
Idukki, and Kottayam
Alappuzha, Pathanamthitta, Kollam,
Southern Kerala 900
and Thiruvananthapuram.
Table 2.7 Zones and districts of data collection

From the total of 3000 enterprises, the number of samples chosen from each zone was
proportional to the total number of enterprises in that zone, as given in the table. Therefore,
the sampling ensured equitable representation from all three zones. The samples in each
zone were selected randomly from the list.

32
Structured questionnaires, developed in Malayalam, were used for data collection from
entrepreneurs. Enumerators received training on administering the questionnaire. The
questionnaire was uploaded to the ZOHO application to facilitate convenient and sustainable
data entry. Interviews were conducted in person by trained enumerators, and responses
were recorded directly into ZOHO during the interviews. Before conducting fieldwork,
enumerators contacted Entrepreneurship Development Executives (EDEs) to confirm the
locations of entrepreneurs. Subsequently, entrepreneurs were contacted to confirm their
availability, and interview times were scheduled accordingly. The survey was conducted
between November 2023 and March 2024.

Out of the 3000 sampled enterprises, 780 enterprises were found to be unavailable for
interview, and an additional 54 were closed. Replacements were made for the enterprises
that were unavailable and closed. The replacements were selected based on similar criteria
as the original sample to minimise bias and uphold the quality of the survey data.

Figure 2.5
Total Closed/Not Available Enterprises Across Districts
160 153
143
140

120 118

100
79
80 76
69

60 54
42
40 31

20 16
10 9 8
5 5 7 7
0 1 2 2 2
0
Kannur Idukki Kottayam Malappuram Kollam Palakkad
Ernakulam Wayanad Thiruvananthapuram Kozhikode Alappuzha

2.4.2.2 Quantitative Data: General perception survey

on the Business Friendly Environment
A perception survey on the Business Friendly Environment in Kerala was conducted among
the general public over a span of one month, from January 2024 to February 2024. The
survey aimed to gather insights into individuals’ intentions to start a business, as well as
their positive and negative opinions regarding the business environment in Kerala. A total
of 310 responses were collected using JOT forms distributed across various social media
platforms.
2.4.2.3 Qualitative Data: Key Informant Interviews
(KIIs) and Focus Group Discussion (FGD)
Key Informant Interviews (KIIs) were conducted with key officials, including the Director of
Industries and Commerce Department, state level officials (Deputy Director and Assistant
Director), and district officials of the Industries department. The district officials represented
General Managers from three districts: Kozhikode, Ernakulam, and Thiruvananthapuram.
To ensure comprehensive exploration of project implementation aspects, a structured guide
encompassing key areas was developed for the interviews.

33
A Focus Group Discussion (FGD) was organised with 10 Entrepreneur Development
Executives (EDEs) actively involved in project implementation in the field, making their
insights particularly valuable due to their direct involvement. The FGD, facilitated by a
trained moderator, spanned approximately 2 hours to allow for in-depth discussions and
exploration of perspectives.

2.5 Data Analysis

Quantitative data, both primary and secondary, was analysed using statistical software
IBM SPSS, with descriptive and inferential analysis to identify patterns and relationships.
Qualitative data from KIIs and FGD were transcribed and analysed thematically, using coding
and thematic analysis techniques to identify key themes and patterns.

2.5 Ethical Considerations

Informed consent was obtained from all participants, ensuring confidentiality and anonymity
of their responses. The voice recording of the KII was saved in a protected drive and was
deleted immediately after the transcription process. The study also made sure that there
were no children involved in it.

2.6 Limitations of the study

The few limitations of the present study are acknowledged as below.

1 Reliance of self reported data

The sustainability and scalability of enterprises are measured based on self-reported data
from entrepreneurs. There is a possibility of bias, as respondents may provide information
that is either overly optimistic or inaccurate. There may also be risk of social desirability
bias, wherein entrepreneurs may feel pressure to present their enterprises in a favourable
light, potentially overstating achievements or downplaying challenges.

2 Generalisability of findings

Despite efforts to ensure generalizability by selecting a random sample of entrepreneurs,

there were instances where enterprises were closed or entrepreneurs declined to participate,
or stopped responding in the midway of the survey. As a result, these instances necessitated
the replacement of non-participating entities with the next available sample. This substitution
introduces the potential for selection bias and may affect the representativeness of the final
sample. Thus, while the study aimed to capture a diverse range of perspectives, the inability
to include all initially selected entities could impact the generalizability of the findings to the
broader population of entrepreneurs.

34
 3 Focus on specific indicators

The study has chosen to concentrate on specific indicators or dimensions of sustainability

and scalability within the context of MSMEs. While there may be additional indicators that
could provide valuable insights, the study streamlined its approach to align with practical
constraints and available resources for entrepreneurs. However, this selective focus may
have unintentionally overlooked other important factors that could influence outcomes or
relationships. Therefore, the study’s findings may not fully encapsulate the complexity and
nuances of sustainability and scalability within the MSME sector, potentially limiting the
depth and breadth of the research conclusions.

4 Cross-sectional design

This research design restricts its capacity to infer causality or track changes over time.
Sustainability and scalability, being dynamic variables, are subject to fluctuations and
evolution over time. However, the study only captured these variables at a single point in
time. By employing longitudinal or experimental designs, the research could have yielded
more comprehensive and reliable insights into the relationships between variables, offering
a deeper understanding of how sustainability and scalability evolve over time within the
context of MSMEs.

35
 03
Overview of the ‘Year of
Enterprises’ Initiative

This chapter examines secondary data sourced from the Management

Information System (MIS) database of the Department of Industries and
Commerce to gain insights into the implementation and outcomes of the
Year of Enterprises (YOE) initiative. It provides insights into enterprise
development scenario, presenting a thorough analysis of the initiative’s
effects and associated challenges.

36
The Year of Enterprises (YOE) program had a substantial impact on the state of Kerala.
The initiative resulted in the registration of more than 1.39 lakh enterprises, representing
a remarkable surge in entrepreneurial activity. These enterprises collectively attracted an
impressive investment of Rs. 8421.63 crores, indicating substantial financial backing for
new ventures and business expansion. Moreover, the YOE program played a pivotal role in
job creation, with a total of 3,00,051 jobs generated across various sectors, contributing
significantly to employment opportunities and economic growth in the region. This data
underscores the program’s success in fostering entrepreneurship and driving economic
development in Kerala.

3.1 Profile of enterprises

As per data from the MIS database of the Department of Industries, the Number of enterprises
started under the ‘Year of Enterprises’ initiative is highest in Thiruvananthapuram, closely
followed by Ernakulam, and Thrissur. In contrast, districts like Idukki and Wayanad have
relatively lower participation rates, each contributing less than 3% of the total.
District wise Enterprises

160

140

120

100

80

60

40

20

Kannur Idukki Kottayam Malappuram Kollam Palakkad

Emakulam Wayanad Thiruvananthapuram Kozhikode Alappuzha

Figure 3.1
As shown in Figure 3.2, the most number of businesses were started under the Trade Activity
category, followed by Agro Food, Beverage, Meat/Fish product and Processing, with 37357
units and 21528 units respectively. 13248 units were initiated in the Garments, Textiles,
and Tailoring sector, positioning it as the third most popular category among businesses
launched under the scheme. The next prominent sector - Electrical & Electronics and IT
related services/Products, with 4578 units - exhibits a marked difference in number from
that of the previous sector in rank. There are 10218 Other Service Activities in between the
third and the fourth prominent sectors.
Other sectors with moderate number of enterprises include Personal Care Products and
Services (4163), Automobile Service/Repair (3479), Building Materials/Construction related
activities (3337), Medical/Hospital Equipments (2091), and Wood Products (1369). The
sectors with least number of enterprises are Biotechnology with 24 units, Glass Products
with 116 units, Energy/Renewable Energy sector, with 141 units, and Recycling and Waste
Management sector with 191 units.

37
 Figure 3.2

3.2 Profile of Entrepreneurs

Year of Enterprises initiative has a significant predominance of male entrepreneurs, with

67.6 % males enrolled in the scheme. Female entrepreneurs account for 32.26 % of the
entrepreneurs. While lower than their male counterparts, this substantial percentage
indicates active participation and a strong interest among women in entrepreneurship
within the state. Additionally, 14 entrepreneurs identify as transgender, reflecting increased
participation from this transgender community. A significant majority of the entrepreneurs
have education levels at or below “Plus Two/Pre-Degree” level. Specifically, those with

Gender wise Entrepreneurs

14
0.01% Male
Female
Transgender
45102
32.3%

94698
67.7%

Figure 3.3
38
SSLC education make up 32.08% of the total, while individuals with a Plus Two/Pre-Degree
education constitute 23.69% of the entrepreneurs. Entrepreneurs with a Degree represent
the third largest group at 19.99%. Those with qualifications beyond Plus two and other than
a Degree, such as Diploma holders (6.55 %), Professional Degree holders (3.27 %), and
Post Graduates (3.08 %), collectively make up for more than 12 %. 0.09 % of the total are
Entrepreneurs with a PhD and above.

Qualification of Entrepreneurs

SSLC/10th
Plus Two/Pre Degree
Degree
Below 10th
Diploma
Professional Degree
Post Graduation
Phd and Above

Figure 3.4

While looking into the social category of the entrepreneurs under the program ( Figure
3.5, OBC entrepreneurs constitute the largest proportion comprising 57.79% of the total
entrepreneurs. Entrepreneurs from the General category makeup 28.89% of the total
entrepreneurs. The enrollment of entrepreneurs from Minority communities stands at
8.66%. SC entrepreneurs constitute 4.28% of the total, while ST entrepreneurs represent a
smaller fraction at 0.38%.
Social Category of Enterpreneurs

39 Figure 3.5
 3.3 Registrations and Licences

Majority of enterprises, 81%, initiated under the program, required a licence, while the
remaining 18 % did not.

Licences Required

Figure 3.6
There are 18 types of licences that were required by the enterprises under the ‘Year of
Enterprises’ Scheme. The major Licences that were required for starting enterprises (figure
3.1) include Licences from LSGI, FSSAI Registration/License, KSPCB Consent to Operate,
GST Registration, KSPCB Consent to Establish, Permission for/from Legal Methodology,

40
Figure 3.7
Electrical Inspectorate, consent from Drugs Control Department, NOC from District
Medical Officer, Fire and Rescue Department, Forest Department, Licence from Factories
and Boilers, District Town Planner - Layout Approval, and different Licences from Mining &
Geology.
The licence that was most required was from Local Self Government Institutions (LSGI
Licence) with 106641 applications. Out of this only 90272 licences were obtained. 11977
FSSAI Registrations were obtained by enterprises, while the requirement was for 12649
registrations. Similarly 7561 FSSAI licences were required, while only 3650 licences were
provided to the enterprises. This trend of number of licences obtained falling short of licences
required continues for KSPCB Consents, Legal Metrology, Drugs Control Department, NOC
from District Medical Officers, etc. The trend breaks with GST Registrations for which 3752
Licences were required whereas 4466 licences were obtained by entrepreneurs. Similarly
for the different licences from the Mining and Geology department, the number of licences
obtained exceeded the number that was required. Notably, only 4% of enterprises have filed
K-SWIFT self certification and received acknowledgement receipt while around 96 % did
not.
Udyam Registration

Udyam registration is not a mandatory,

yet highly recommended clearance for
MSMEs (micro, small, and medium
enterprises) as it opens the door to many
government benefits. It helps banks
identify businesses eligible for benefits
and schemes specifically designed for
MSMEs. From the graph , it is evident
that only a few, accounting for 13% of
enterprises, have registered for Udyam
registration, while the majority have not
registered.

Figure 3.8

41
 District Percentage of enterprises Udyam registration

Alappuzha 11.0% 6.58%

Ernakulam 12.1% 9.84%

Idukki 4.0% 2.80%

Kannur 6.8% 8.59%

Kasaragod 3.9% 3.33%

Kollam 5.5% 8.86%

Kottayam 5.2% 5.77%

Kozhikode 7.4% 8.92%

Malappuram 7.2% 9.12%

Palakkad 9.3% 8.94%

Pathanamthitta 3.9% 3.96%

Thiruvananthapuram 11.3% 10.19%

Thrissur 10.0% 10.12%

Wayanad 1.7% 2.97%

Table 3.1
Quality certification is an essential clearance for MSMEs which can improve their product
quality and lead to increased customer satisfaction. When it comes to quality certification
obtained by enterprises, only 15 % have acquired it. The majority of enterprises (85 %) have
not obtained any form of quality certification.

Quality certification

Figure 3.9

42
 3.4 Investment and Financing Challenges

Total Fixed Capital Total Working

Investment (In Lakhs) Capital (In Lakhs)
545,745.6 295, 040.7

Total Term Total Term Difference

Loan Required Loan Obtained 12,711.8
98, 958.3 86,246.5

Total Working Total Working

Difference
Capital Loan Required Capital Loan Obtained
11,086.0
44.429.6 33,343.7
Figure 3.10
The graph gives a glimpse of the overall investment and Financing Challenges of the Year
of Enterprises Initiative.
During the first year of the Year of Enterprise campaign, enterprises made a total investment
of Rs. 8,407.85 crores (Rs. 5,457 crores of Fixed Capital and Rs. 2,950 crores of Working
Capital).
The enterprises under the Year of Enterprises initiative had a total loan requirement
(including term loan and working capital loan) of 143,387 lakhs. However, they were able
to obtain loans amounting to a total of 119,589 lakhs, representing approximately 83.5%
of the total loan requirement. Specifically, for term loans, enterprises received 87% of the
required amount, while for working capital loans, they obtained only 70% of the required
funds. This observation suggests that enterprises faced more difficulty in obtaining working
capital loans compared to term loans under the Year of Enterprises initiative. The relatively
higher availability of term loans compared to working capital loans implies that there might
be greater ease of accessibility in securing longer-term financing for businesses. However,
the shortfall in working capital financing is critical, as it directly impacts the day-to-day
operations and sustainability of enterprises. Addressing this disparity is essential to ensure
that businesses have the necessary financial resources to thrive and grow over time.
Finance Obtained
Finance Required

Figure 3.11

It’s noteworthy that out of the 22,032 enterprises that required financing, only 15,371 were
able to obtain it, indicating that approximately 60% of the financial requirements were met.
This also highlights that around 40% of enterprises did not receive sufficient financing
during the initial period, underscoring a significant gap in accessing financial support for
business development and operations.
43
 3.5 Credit Availability and Loan Repayment

During the period from 2022 to 2024, while the overall uptake of MSME loans increased
across the state, only 13% of entrepreneurs participating in the Year of Enterprises initiative
took advantage of MSME loans. Surprisingly, more than 70% of these entrepreneurs financed
their ventures using personal resources. Another 20% relied on gold loans to obtain the
required funding, demonstrating alternative financing methods employed by participants.
Interestingly, only 2% were denied loans due to low CIBIL scores or non-feasibility, indicating
a relatively low rate of loan rejections among the participants.

MSME loan Availed

Figure 3.12

Reason for not availing MSME loan

Figure 3.13
44
The trend of entrepreneurs relying on private sources, including potentially non-formal
sources (comprising 4% of financing), highlights potential challenges in accessing formal
financing options. Depending heavily on private sources, particularly informal ones, poses
long-term risks due to high interest rates and less favourable terms. The significant use of
gold loans underscores a preference for asset-backed financing, likely driven by the ease
of access to gold and the cultural practice of storing gold as an emergency asset in Kerala.
This cultural affinity towards using gold as a financial fallback could explain the prevalent
utilisation of gold loans among enterprises in the region.
Male and female-owned enterprises:
Another observation is that 18% of female-owned enterprises have availed loans while only
10% of the male-owned enterprises have utilised MSME loans.
While looking into the loan repayment status of YOE, only 11 % of the MSMEs are able to
ensure proper loan repayment. A vast majority, 89%, of the MSMEs are not able to ensure
proper loan repayment.

Is the unit bank linked now ? Is the unit bank linked now ?
(i.e Currently availed MSME (i.e Currently availed MSME loan
loan from Bank) from Bank)
Male Female

Figure 3.13 Figure 3.14

3.6 Subsidies and support

Subsidies / Benefits

45 Figure 3.15
 Total Subsidy Amount Received
(Rs in Lakh)
31,303.2

When it comes to subsidies, 12% of the total entrepreneurs availed subsidies/benefits from
various government agencies/departments. A total of 313 crore rupees has been released
through various government agencies and departments as subsidies for the enterprises
under ‘Year of Enterprises’. A majority of enterprises did not avail any sort of benefits or
subsidies from departments. It is to be noted that even when just 12% availed subsidies,
a significant amount of 313 crore rupees has been disbursed, suggesting a substantial
investment in industrial development by the government. It’s noteworthy that the majority
of enterprises have not availed any subsidies, indicating potential underutilization of
government support schemes.

Assistance Received From Department / Agency

Among the 24 departments/
agencies selected to provide
support to MSMEs under the
Year of Enterprises initiative in
Kerala, key contributors include
Industries & Commerce,
Kudumbashree, local bodies,
commercial banks, and Khadi
& Village Industries. Certain
agencies, including Small
Industries Development, Kerala
Startup Mission, and National
Small Industries Corporation,
have contributed support to
MSMEs within the initiative,
although their involvement may
be less extensive compared to
the key contributors.
When analysing the subsidies
availed by YOE, the major Figure 3.17
departments providing benefits

or subsidies were Industries and Commerce Department, Kudumbashree Mission,

Local Self Government Institutions, Khadi Board, NORKA, Kerala State Backward
Development Corporation, SC/ST Development Corporations etc.

46
 No of
Departments/Agencies Providing Subsidies/Support
enterprises
Industries and Commerce 6894

Kudumbashree 4207

Local Body 2006

Khadi and Village Industries Board 632

NORKA 430

Kerala State Backward Classes Development Board 300

National Employment Service 262

Fisheries Department 247

Kerala State Women’s Development Corporation 138

Development Corporation for SC and ST 86

SC Development Department 68

Kerala State Minorities Development Finance Corporation 41

NABARD 37

Department of Agriculture Development and Farmers Welfare 35

Dairy Development Department 32

KSIDC 29

State Horticulture Mission 28

Kerala Startup Mission 18

Small Industries Development Bank of India 18

Department for Promotion of Industry and Internal Trade 8

Department of Co-operation 4

National Small Industries Corporation 4

Small Farmers Agri-Business Consortium 2

NAFED 1

Table 3.2

47
 Subsidies/Benefits

Subsidies received by male-owned Subsidies received

enterprises by female-owned enterprises
Figure 3.18 Figure 3.19
Upon further analysis of beneficiaries, it is evident that only 7% of male-owned enterprises
have availed subsidies/benefits, primarily issued by the Industries and Commerce
Department. In contrast, 22% of female-owned enterprises have accessed benefits, with the
majority issued by the Kudumbashree State Mission. This disparity underscores a significant
difference in benefit utilisation between male-owned and female-owned enterprises.
Additionally, it highlights the critical role of the Kudumbashree mission in supporting the
MSME sector in Kerala.
Assistance Received by male and female entrepreneurs From Department / Agencies

Figure 3.20 Figure 3.21

48
This difference in benefit utilisation may be due to factors such as the targeted nature of
project assistance offered by agencies like the Kudumbashree State Mission, which are
likely more accessible or tailored to the needs of female entrepreneurs. Upon further
investigation into agencies offering benefits to SC/ST owned enterprises, Kudumbashree
remains a primary supporter. However, the Industries and Commerce department appears
to have allocated fewer subsidies to various social categories, particularly the vulnerable
ones. The support provided to the ST category by this department for enterprise promotion
is minimal.

Assistance Received by SC and ST entrepreneurs From Departments/ Agencies

Figure 3.23

Figure 3.22

Subsidies/Benefits received by SC and ST category

Under the ‘Year of Enterprises’ program, beneficiaries explored the scope of availing financial
assistance from a total of 62 schemes under State and Central Governments. Among the
most suitable schemes for enterprises are the Prime Minister’s Employment Generation
Program (PMEGP) by the Ministry of MSME, assistance from Rebuild Kerala Initiative,
Mudra Loan from the Ministry of Finance, and other Rural Micro-enterprises schemes.
PMEGP loan is the most prominent of schemes in terms of number of loans availed by the
enterprises, with a total of 4516 beneficiaries.

49
 Suitable Scheme Scheme Availed

Figure 3.24 Figure 3.25

3.7 Social Sustainability

Figure 3.26

In terms of social sustainability, job creation is a crucial aspect as enterprises that

generate employment contribute positively to creating livelihood opportunities and reducing
unemployment and poverty. The data demonstrates that the program has significantly
contributed to social sustainability in Kerala by creating employment opportunities and
promoting gender inclusivity. Specifically, the program has created a total of 3,00,014
employment opportunities. Among these, 1,87,132 positions were filled by male individuals,
1,12,743 by female individuals, and 279 by transgender individuals. This highlights the
program’s impact in fostering gender-inclusive economic development and addressing
social challenges related to unemployment.

50
 Employment Generated by Male Employment Generated by Female
Enterpreneurs Enterpreneurs

Figure 3.27
Analysis of the employment generated by male and female entrepreneurs reveals an
interesting trend in the gender composition of their respective workforce. Among the 209,846
jobs created by male entrepreneurs, approximately 78% are occupied by male employees,
22% by female employees, and the remaining positions by transgender individuals. In
contrast, among the jobs created by female entrepreneurs, around 73% are filled by female
employees, 26% by male employees, and the rest by transgender individuals. This data
suggests that entrepreneurs tend to hire individuals of the same gender, possibly influenced
by factors like familiarity, trust, or specific workforce preferences.

3.8 Marketing
Exhibitions play a vital role in promoting products, yet the data indicates that only 5% of
enterprises have participated in such exhibitions, with the majority, 96%, not having
participated in any exhibitions.

Participation in Exhibitions

Figure 3.28
51
 3.9 Sustainability Assessment
A survey was conducted after one year of the YOE initiative. The information gathered was
recorded in a portal specially developed for this purpose. The survey gathered information
on the operational status of the enterprise, challenges/problems faced, reasons for closure,
plans for revival of non-functional units, assistance required/other special needs.

Functional Status

Figure 3.29

Out of the 139,840 enterprises started under the Year of Enterprise program, only 84% are
functional, while the remaining 15% have shut down or are not functioning now.

Detailed Functional Status

Figure 3.30

52
Based on the updated functional status of the enterprises, 55% of them were performing
well, 24% were performing satisfactorily, 5% were ailing, and the remaining 15% were
defunct.
When examining the 84 % of functional enterprises, it is observed that 14% of them are
currently encountering some issues or challenges, while the remaining 86 % are not facing
any issues.
Challenges Faced

Figure 3.31
Moving on to the challenges enterprises face, they can be categorised into different issues
such as financial problems, human resources, infrastructure, marketing, regulatory, and
technology issues. Among these, the majority of the enterprises, about 42%, face a lack of
access to credit or partial funding availability. Another significant challenge is the inability
to market the products properly due to high competition or absence in the market, with 35%
of enterprises facing this issue. Additionally, 6% of enterprises face infrastructural issues.
Type of Challenges

Issues/challenges %

Finance: Lack of access to credit (including working capital) or partial funding

42.19%
was available.
Human Resource: High cost of labour Non availability of man power.
2.91%
Unavailability of skilled workforce etc.
Infrastructure: High cost Rent of hired space. Inadequate space land,
6.17%
connectivity.
Marketing: Not able to market the products properly. High competition. Limited
or no access to local regional markets, no presence in online markets, branding 35.24%
related issues etc.
Other 7.40%
Promoter got another job 0.04%
Regulatory: Issues pertaining to licenses approvals clearances 3.59%
Technology: Unable to purchase machinery or equipment.High cost of
2.46%
technology or machinery. Lack of awareness about technology available etc.
Table 3.3

53
When examining the 21,414 of closed enterprises, the majority, about 31%, cited inability to
market their products properly due to high competition or absence of market as the reason
for closure. 23% faced a lack of access to credit or partial funding availability. Additionally,
21% shut down due to other reasons.
Reasons for closure

Figure 3.32

Even though 21,414 enterprises had shut down, only 13% of entrepreneurs are ready to
revive their enterprises, while 87% are not ready to revive them.

Plan to Revive

Figure 3.33

Type of Assistance from Department

Figure 3.34
54
When reviving enterprises, most of the entrepreneurs, about 56%, require financial
assistance. While 17% need marketing assistance, only around 7 % require infrastructure
assistance and around 12% of entrepreneurs expect other assistance.

Assistance From Department

Figure 3.35

3.10 Impact of Year of Enterprises Initiative

Number of MSME established

Figure 3.36

A comprehensive overview of the growth and employment trends in the Micro, Small, and
Medium Enterprises (MSME) sector in Kerala from 2016 to 2023, including the number of
MSME units established, the corresponding investment made in crores of rupees, and the
employment opportunities generated during each fiscal year, reveals a consistent pattern
of growth in the number of MSME units established each fiscal year.
While there have been fluctuations in the investment made in the MSME sector over the
years, the overall trend shows that investment remained relatively stable, with occasional
peaks. The fiscal year 2022-23 stands out with a significant increase in investment, indicating
a strong commitment to fostering MSME growth.

55
 Employment generated newly

Figure 3.37
Similarly, the MSME sector in Kerala consistently contributed to employment generation
throughout the period. Notably, in 2022-23, a substantial number of jobs were created,
reaching a peak of 3,00,016 employment opportunities. The dip in new MSME units and
employment in 2020-21 can be attributed to the disruptions caused by the COVID-19
pandemic. However, the sector’s resilience is evident as it quickly rebounded and
surpassed pre-pandemic levels in subsequent years.

Investment (Rs in Crore) in MSME sector in Kerala

Figure 3.38

The year 2022-23 signifies a pivotal moment in the growth of Kerala’s MSME sector,
characterised by a remarkable surge in both the number of units established and the
employment generated. This substantial increase in investment and job creation reflects
a concerted effort to enhance the MSME sector’s impact on the state’s economy. The
notable growth observed is largely attributed to the ‘Year of Enterprises’ initiative, which
aimed to promote MSMEs, facilitate economic recovery post-pandemic, and create more
employment opportunities. The initiative’s impact underscores the critical role of targeted
programs in driving sustainable economic growth and development in the region.

56
 04
Stakeholder
Perspectives
on Enterprise
Development in Kerala
This chapter provides qualitative analysis derived from interviews
with key stakeholders such as the Director, Joint Director, Deputy
Director and General Managers of DIC as well as insights from focus
group discussions hold with Enterprises Development Executives
(EDEs). These insights offer valuable perspectives on the planning,
implementation, and sustainability of the initiative.

57
 4.1 Insights from Key Officials

The perspectives of implementing officials are vital for understanding the sustainability and
scalability of the Year of Enterprises initiative. These officials, including Directors, Joint
Directors, Deputy Directors, General Managers, and Enterprise Development Executives
(EDEs), have firsthand experience addressing operational challenges and can offer valuable
insights into practical hurdles, bottlenecks, and inefficiencies that impact the initiative’s
long-term success. Interviews conducted with key officials from different regions of Kerala—
Kozhikode, Ernakulam, and Thiruvananthapuram—revealed important themes related to
the planning, implementation, and sustainability of the program. The qualitative analysis
of these interviews has been instrumental in distilling the insights and challenges faced
during the initiative’s execution.

4.1.1 Purpose/Objectives of the Year of Enterprise

The “Year of Enterprises” initiative was conceived to address the significant barriers to
enterprise development in Kerala, such as land scarcity, labor issues, licensing complexities,
and challenges in accessing capital. The program aimed to create an ecosystem conducive to
enterprise formation, initially targeting the establishment of 1 lakh enterprises to generate
1 lakh jobs. This ambitious target was later expanded to aim for 3 to 4 lakh employment
opportunities, underscoring the program’s broader goal of transforming Kerala’s
entrepreneurial landscape. By adopting a campaign-mode approach, the initiative sought
to drive a cultural shift towards entrepreneurship, encouraging the creation of enterprises
across the state.

4.1.2 Uniqueness of the YOE Campaign

The “Year of Enterprises” (YOE) initiative introduced a comprehensive and visionary

strategy for sustainable enterprise growth in Kerala. It integrated various components
such as facilitation systems, infrastructure development, MSME insurance, and a data-
driven approach to support entrepreneurs. A key innovation was the deployment of
Enterprise Development Executives (EDEs) at the local body level, enhancing accessibility
and effectiveness by providing grassroots-level support. This was complemented by the
establishment of helpdesks and the organization of Loan Melas at the panchayat level,
which further improved participation. The increased involvement of the Department
of Industries and Commerce (DIC) at the grassroots level facilitated better access to
licensing departments and financial institutions. The initiative’s success was also due
to the convergence between various line departments and local self-government (LSG)
departments, which streamlined processes for obtaining licenses and clearances. The
use of social media and real-time data to promote modern entrepreneurship also played a
critical role in the initiative’s effectiveness, marking a shift towards a more integrated and
dynamic enterprise ecosystem.

58
 4.1.3 Target Fixation

The YOE program set ambitious targets, employing a methodology based on population
statistics to determine district-specific goals. For example, Malappuram, with its high
population, received the highest target. Initially, the program aimed to establish 100,000
enterprises across the state, with specific targets like 14,600 for Thiruvananthapuram.
Although these targets seemed daunting, sustained campaign efforts led to their
achievement. However, population-based targeting proved more effective in some districts
than in districts like Malappuram, where a youthful population did not directly correlate with
enterprise development. In response to challenges in areas like Idukki’s interior localities,
strategies such as reallocating EDEs and promoting group work were adopted. Additionally,
the program sought to include enterprises by collecting loan data from financial institutions
to ensure comprehensive coverage. This approach highlights YOE’s commitment to inclusivity
and its adaptability in achieving set targets despite varying regional challenges.

4.1.4 Social and Economic Outcomes

The Year of Enterprise (YOE) campaign has led to notable social and economic outcomes.
Economically, there was a significant increase in MSME loans, reflecting a surge in
entrepreneurial activity. The loan amount rose from 52,000 crores in 2021-22 to 81,000
crores in the following financial year, with the manufacturing sector showing substantial
growth. This increase contributed to a rise in the Credit-Deposit (CD) ratio, which reached
73%, indicating a growing trend of entrepreneurs accessing loans to establish new
enterprises in Kerala. Socially, the initiative has begun to shift societal attitudes towards
entrepreneurship. Although gradual, there has been a noticeable increase in the acceptance
of entrepreneurship as a viable career option. The presence of EDEs at the grassroots level
has played a crucial role in this shift by making government services more accessible and
fostering trust in the Industries Department. Historically, Kerala’s education system and
societal norms favored employment over entrepreneurship, viewing business as a last
resort. However, the YOE campaign, through its comprehensive industrial development
initiatives, is gradually changing this mindset, leading to a cultural shift towards embracing
entrepreneurship as a legitimate and desirable career path.

4.1.5 Inclusion of Vulnerable Communities

While the YOE program primarily focused on sector development, it also promoted the
inclusion of vulnerable communities such as women, Non-Resident Keralites (NRKs),
ex-servicemen, and SC/ST population. Although the program did not have specific schemes
targeting these groups, it integrated their enterprises into existing development schemes
aimed at their empowerment. The Department’s overarching goal of supporting vulnerable
communities provided a framework for their inclusion within the YOE initiative. However, the
impact on women’s entrepreneurship was limited, with only 32% of the enterprises formed
under the campaign being owned and operated by women. This relatively low participation rate
underscores the need for more targeted efforts to support women entrepreneurs. Although

59
the program facilitated resources, such as Mudra loans, business plan development, and
workshops, these efforts were insufficient to significantly boost women’s participation. To
truly empower women and other marginalized communities in Kerala, more robust support
systems and resources are needed.

4.1.6 Challenges

The implementation of the YOE program, while largely successful, encountered several
challenges. The Director of the Industries Department noted that the program's design
and planning were comprehensive, benefiting from a bottom-up approach and strong
political backing. However, delays in obtaining licenses and establishing convergence
among various departments posed significant challenges. The Department of Industries
and Commerce (DIC) was not the only department involved in enterprise development,
leading to coordination issues. Integrating Enterprise Development Executives (EDEs)
into the program was another challenge. Initially, the department faced difficulties in
recruiting and deploying 1,000 professionals at the grassroots level. There was resistance
from panchayat-level officials, entrepreneurs, and the general public, which hindered
the integration of EDEs. The rapid expansion of field personnel from 10-20 to 1,000 also
required the establishment of a new management system. Furthermore, dropouts among
EDEs contributed to delays, necessitating the recruitment of new personnel. To address
these challenges, the establishment of a dedicated Program Management Unit (PMU) is
recommended. A PMU would provide the necessary structure to manage and coordinate the
EDEs, enabling more efficient follow-ups, problem-solving, and communication between
the state and district levels.

4.1.7 Emphasis on Focus Sectors

Kerala has identified 22 priority sectors based on the state's competitive advantages, such
as geographical location, available resources, and existing expertise. These sectors were
chosen from an investment perspective, rather than solely focusing on Micro, Small, and
Medium Enterprises (MSMEs). Although the YOE initiative targeted the establishment of
MSMEs across all sectors, it did not deliberately prioritize the identified focus sectors. While
some MSMEs may have emerged within these sectors, there is no specific data collected to
assess this aspect, indicating a need for more targeted promotion of MSMEs within these
priority areas.

4.1.8 Convergence Between Departments

The YOE program benefited from extensive convergence with other departments and
organizations, demonstrating strong coordination across governmental bodies. From the
outset, department-level convergence was established, overcoming initial challenges to
ensure smooth operation and effective program implementation. A Grievance Redressal
Mechanism with civil court authority was also established, ensuring prompt application
processing and dispute resolution. Private organizations, including the Kerala Small Scale
Industries Association (KSSIA), were consulted during stakeholder meetings to address
concerns and foster collaboration.

60
the Enterprise Development Executives (EDEs) established connections with various
departments during their field visits, ensuring coordination and support for entrepreneurs.
Additionally, government-level meetings during the Ease of Doing Business campaign led
to the simplification of licenses and certifications, with consultants deployed to address
business obstacles. The introduction of common application forms for all licenses promoted
a streamlined and efficient single-window service approach, enhancing the ease of obtaining
necessary permits for entrepreneurship.

4.1.9 Year of Enterprise Ver 2.0

The second phase of the YOE initiative, Year of Enterprise Ver 2.0, shifts the focus from
target-oriented goals to sustainability, marketing, and import substitution. Unlike the first
phase, which emphasized numerical targets, the new phase prioritizes nurturing existing
enterprises and ensuring their long-term success. Sustainability has emerged as a central
theme, with stakeholders agreeing on the need to reduce closure rates and explore innovative
business areas.
The introduction of geotagging initiatives reflects a commitment to responsible practices and
monitoring of enterprises. Additionally, the program aims to foster an entrepreneur-friendly
ecosystem by continuously disseminating information and encouraging entrepreneurial
mindsets, particularly among students. The recognition of the YOE initiative as a best practice
in the MSME sector highlights its potential to create a thriving entrepreneurial landscape in
Kerala.

The primary objective of the program was not merely to establish new enterprises,
but to foster an entrepreneur friendly ecosystem in kerala. In addition to setting up new
enterprises,the YOE initiative encompassed components for existing enterprises. Moving
forward, addressing the enterprise closure rate will be a key area of focus. YOE 2.0 will
prioritise the Sustainability and scalability of enterprises to ensure their countinued growth
and resilience.

4.3 Insights from Key Implementing Officials

A Focus Group Discussion (FGD) with Enterprise Development Executives (EDE) was
conducted with 10 Enterprise Development Executives as participants on 13th February,
2024, to understand the role of EDEs in the execution of the Year of Enterprises and the
sustainability and scalability of enterprises initiated.
The EDEs, initially recruited as interns and later re-designated, played a critical role in the
implementation of the initiative. A total of 1,153 professionally qualified individuals were
recruited through the Centre for Management Development (CMD) and deployed across
all local bodies—one EDE per Panchayat and one for every 20 wards in Municipalities/
Corporations.
These EDEs received capacity-building training in industrial facilitation to equip them with
the skills needed to assist entrepreneurs. Their responsibilities included raising awareness
about available services, guiding entrepreneurs through the processes of applying for
licenses, subsidies, and loans, and coordinating with various agencies and departments.

61
Each EDE was tasked with specific targets for identifying and registering new enterprises
within their assigned local bodies. Their activities were closely coordinated through the
Industrial Extension Officers at the District Industries Centers (DICs) and Taluk Industries
Centers (TICs).
The table below outlines the number of EDEs recruited per district and their corresponding
targets for identifying and registering new enterprises as part of Year of Enterprises version
1.0.

Sl. No. District No of Interns Target

1 Thiruvananthapuram 86 14,902

2 Kollam 79 11,775

3 Pathanamthitta 61 5,408

4 Alappuzha 86 9,666

5 Kottayam 84 8,834

6 Idukki 56 5,007

7 Ernakulam 113 14,610

8 Thrissur 105 13,533

9 Palakkad 103 12,721

10 Malappuram 122 18,601

11 Kozhikode 90 13,925

12 Wayanad 29 3,687

13 Kannur 94 11,366

14 Kasaragod 45 5,965

Total 1,153 150,000

Table 4.1

4.3.1 Background and Role of EDEs

The Year of Enterprises initiative included the recruitment of 1,153 professionally

qualified interns, who were later re-designated as Enterprise Development Executives
(EDEs). TheseEDEs were strategically deployed across all local bodies in Kerala—one per
Panchayat and onefor every 20 wards in Municipalities/Corporations. Their primary role was
to facilitate the establishment of new enterprises by providing essential support, such as
assisting entrepreneurs with licensing, subsidies, and loan applications. EDEs also played

62
a critical role in raising awareness about available services and coordinating with various
agencies and departments. Their activities were managed by Industrial Extension Officers
at the District Industries Centers (DICs) and Taluk Industries Centers (TICs), ensuring that
each EDE met their assigned targets for identifying and registering new enterprises within
their respective local bodies.

4.3.2 Motivation for Joining as EDEs

The motivations for individuals joining as EDEs were diverse but often centered around the
opportunity to gain practical, grassroots-level experience, which many saw as a valuable
stepping stone towards future management roles. The affiliation with a government
department also provided a sense of job security and prestige. Some EDEs were driven
by personal experiences; for instance, one participant, who had faced challenges as an
entrepreneur, joined with the intention of helping others navigate similar obstacles. This
role allowed EDEs to gain deeper insights into the systemic issues faced by entrepreneurs,
many of which stemmed from a lack of awareness or access to support systems.

4.3.3 Capacity-Building and Training

EDEs underwent a rigorous 5-day training program led by General Managers at the district
level, with oversight by Industries Extension Officers to ensure the training's effectiveness.
The initial training focused on core responsibilities, such as facilitating enterprise formation
and familiarizing EDEs with various industrial schemes. Over the course of the program,
additional training sessions were provided to keep EDEs updated on new government
initiatives and financial schemes essential for enterprise development. However, the training
primarily emphasized the facilitation of new enterprises, with less focus on the ongoing
development and scaling of these businesses. Recognizing this gap, it is recommended that
EDEs receive more specialized, domain-specific training that includes technical support,
mentorship skills, and advanced business development strategies. To ensure continuous
support and effective coordination, the establishment of a Project Management Unit (PMU)
at the state level is suggested. This PMU would oversee the activities of EDEs, provide
ongoing training, and facilitate communication between different levels of the program.

4.3.4 Roles and Activities of EDEs

EDEs were instrumental in addressing the lack of local-level representation from the
industries department. Their presence at the grassroots level enabled them to set up
licensing help desks in local bodies, which significantly benefited entrepreneurs by
streamlining the process of obtaining necessary approvals and documentation. Initially,
EDEs faced challenges in gaining visibility and trust within communities, but over time, they
became a vital resource for local residents, who increasingly sought their assistance. EDEs
also played a crucial role in registering existing MSMEs into the industries department's
database, ensuring these enterprises received the support they needed. Their responsibilities
included facilitating registration on platforms like KSWIFT, connecting entrepreneurs with
financial institutions, and organizing loan and license melas to enhance access to capital and
regulatory compliance. EDEs also worked to build networks among entrepreneurs, using

63
platforms like WhatsApp to keep them informed about relevant schemes and opportunities.
Additionally, EDEs conducted General Orientation Trainings (GOTs) to create awareness
about beneficial schemes and fostered collaboration through regular interactions with
entrepreneurs.

4.3.5 Shift in Role: Towards Entrepreneur and Enterprise Development

As the Year of Enterprises initiative evolves, there is a growing need for EDEs to transition
from their initial focus on facilitating enterprise formation to taking on more advanced roles
in entrepreneur and enterprise development. This shift involves providing more strategic
guidance, helping businesses develop long-term plans, and supporting them in scaling
up and diversifying their operations. To effectively take on these new responsibilities,
EDEs should receive specialized training in areas such as financial management, market
strategies, and technology adoption. Additionally, there should be a continuous support
mechanism at the state level to monitor EDE activities, provide regular training, and ensure
they are equipped to meet the evolving needs of enterprises. This expanded role will not
only enhance the sustainability of enterprises but also contribute to the overall growth of
Kerala's entrepreneurial ecosystem.

4.3.6 Challenges Faced by EDEs

Despite their crucial role, EDEs faced several challenges in their work. Initially, many EDEs
struggled with infrastructure limitations at local bodies, such as the lack of designated
workspaces and computer systems. These challenges were gradually resolved with
support from stakeholders. Another significant challenge was the perception of EDEs as
interns, which affected their acceptance by local officials and the public. This perception
improved after their official designation was changed, leading to a greater recognition of
their role within the government system. Female EDEs, in particular, faced gender-related
challenges, such as difficulties accessing remote areas and building connections with male
entrepreneurs. The allocation of EDEs in urban areas did not always align with population
density, leading to work overload in some regions. Additionally, the dropout rate among
EDEs was a concern, as many left for permanent job offers elsewhere. New EDEs, who
joined after the initial cohort, missed out on foundational training, which posed challenges
in meeting their targets. To address these issues, it is recommended that a standard
resource kit be provided to all EDEs, including essential tools like laptops and mobile
internet access. A comprehensive induction and branding strategy should also be developed
to clearly communicate the role and responsibilities of EDEs to stakeholders and the public.
Additionally, the allocation of EDEs should be reassessed to better match the needs of
different regions, and retention strategies should be enhanced through competitive benefits
and career development opportunities. Continuous training and a mentorship program for
new EDEs are also recommended to ensure they are well-prepared for their roles.

64
 4.3.7 Sustainability of Enterprises

After surpassing the target of establishing 1 lakh enterprises, concerns arose about the
sustainability of these businesses. As part of a sustainability campaign, EDEs revisited
enterprises formed under the Year of Enterprise program to assess their current status. The
reasons for closures, such as financial constraints, marketing challenges, and technological
issues.Were recorded and reported for programatic intervention. While this approach provided
useful insights, it lacked a scientific framework for evaluating the long-term sustainability
and growth potential of these enterprises. To address this gap, it is recommended that
the sustainability campaign adopt a more comprehensive approach. This could include
developing a Sustainability Index to assess the viability of enterprises, implementing regular
monitoring systems to track key performance indicators, and establishing proactive support
mechanisms for struggling businesses. EDEs should also receive advanced training in
enterprise development, including financial management and market strategies, to better
support the enterprises they oversee. Additionally, initiatives to support market expansion
and technological adoption, such as onboarding MSMEs onto e-commerce platforms and
providing digital marketing training, should be introduced to enhance the competitiveness
of these enterprises. By implementing these recommendations, the sustainability campaign
can ensure that the enterprises established under the Year of Enterprise program are not
only sustained but also have the potential to thrive and contribute to the broader economic
development of Kerala.

65
 05
Entrepreneurial
Landscape in
Kerala: Survey Findings

This chapter presents the findings of a survey conducted among 3000

enterprises under the ‘Year of Enterprises’ initiative. This provides
insights into the diverse experiences of entrepreneurs and provides
valuable information to enhance support systems for fostering
entrepreneurship within the state. Furthermore, it explores the
sustainability and scalability aspects of the enterprises under scrutiny,
shedding light on their potential for long-term viability and growth.

66
A survey conducted among 3000 entrepreneurs participating in the ‘Year of Enterprises’
initiative utilised a structured questionnaire to explore their motivations, challenges, and
perspectives on sustainability and scalability. A stratified random sampling method was
employed to ensure representation from different geographical zones, dividing the state into
Northern, Central, and Southern regions. Through this study, it was aimed we aim to gain
insights into the diverse experiences of entrepreneurs and provide valuable information to
enhance support systems for fostering entrepreneurship within the state.

5.1 Profile of the respondents

The gender composition of the respondents

stands at an interesting 50:50 %. Gender

Social category

Figure 5.1

Upon examining the social background of the respondents,

it was found that approximately 64% belonged to various
OBC communities, while nearly 30% were from the general
category, and 6% represented the SC/ST category..

Figure 5.2

Age distribution

When examining the age distribution, the majority

of entrepreneurs fall within the age range of 26-55,
constituting 87% of the respondents. Specifically, 36% of
these entrepreneurs belong to the 36-45 age bracket.

Figure 5.3
67
 In terms of educational qualifications, the majority of respondents have completed high
school (27%), followed closely by those with higher secondary education (26%). Graduates
make up 24.5% of the respondents. Additionally, over 15% have completed Diploma/ITI
or other vocational education programs, while 7.3% hold postgraduate degrees or higher
qualifications.
Educational Qualification

Figure 5.4

The analysis of prior work experience among the respondents unveiled that approximately
34% had extensive work experience exceeding 5 years. Following this group, individuals with
a moderate experience level of 3-5 years constituted 27% of the respondents. Additionally,
24% reported limited experience ranging from 1 to 2 years, while 15% indicated having no
prior work experience.

Prior Work Experience

Figure 5.5

68
 5.2 Profile of Enterprises

5.2.1 Place of operation

Upon examining the profile of enterprises, it is evident that the majority (72%) are situated
in rural areas, while the remaining 28% are located in urban areas. This distribution
underscores a significant developmental focus on rural areas within the surveyed enterprise
landscape. Place of Residence

Figure 5.6
5.2.2 Type of ownership

Upon analysing the data on the type of ownership of the enterprises, it is evident that the
majority, comprising 87%, are registered as sole proprietorships. Partnership firms account
for 8.49%, and self-help groups/group enterprises make up 2% of the enterprises surveyed.
The remaining enterprises consist of private limited companies, cooperative societies, and
joint ventures. This distribution highlights the prevalent ownership structures observed
within the enterprises established under the program.

Type of Ownership

Type of ownership
Sole Proprietorship 87.19%

Partnership 8.72%

Self-Help Group/Group Enterprise 1.82%

Private Limited Company 1.54%

Cooperative Society 0.36%

Joint Venture 0.36%

Total 100.00%
Table 5.1

69
 5.2.3 Sector of operation
Among the surveyed enterprises, 54% belong to the service sector while 46% are in the
manufacturing sector. The highest number of enterprises within both manufacturing and
service sectors are categorised under the Agro, Food, and Beverage sub-sector. Conversely,
the lowest number of enterprises are found in sectors such as biotechnology, energy,
renewable energy, and artificial intelligence.
Sector of Operation

Figure 5.7

The most prominent sub-sector within Manufacturing, based on the number of units, is
Agro, Food, Beverage, Meat/Fish Products, and Processing, accounting for 43% of the
enterprises. Following closely is the Garments-Textile/Ornaments sector, comprising
13.6% of enterprises.
Manufacturing:Subsectors
Other sectors with a
moderate number of units
include Building and Constr
uction Materials (5.3%),
Electrical & Electronics/IT
products (5.1%), Personal
Care Products/Cosmetics
(4.2%), Paper Products
(3.5%), and Automobile
related Products (3.4%),
among others.
The sectors with the least
prominence in terms
of the number of units
include Organic/Chemical
Fertilisers, Leather Prod
ucts, Handloom Prod ucts,
Glass Products, Drugs and
Pharmaceuticals including
Ayurveda, and Rubber
Figure 5.8

70
Products, each accounting for approximately 0.4% of the units in their respective sectors.
In the service sector, the Agro-Food, Beverage, Meat/Fish Processing businesses lead in the
number of units, accounting for 26.2% of the enterprises. They are followed by Garments
and Textiles, Tailoring,Boutique, and Apparel units, comprising 20.1% of the units.
Other notable sectors include Personal Care, Wellness, Gymnasiums, Martial Arts, as well
as Video/Photo processing and related businesses, each representing around 10% of the
units.

Services subsector

Figure 5.9

Additionally, Electrical & Electronics, IT, Mobile, Hardware units, Construction, Architecture,
and related units, Automobile service and Repair units, Knowledge Services, and Training/
Coaching Centre units have a moderate presence, each constituting roughly 4% to 8% of the
units.
Sectors with the least prominence in terms of the number of units under the service
sector include General Engineering & Precision Engineering units, Recycling and Waste
Management, Biotechnology related Services, AI/Robotics and Related Services, Energy
and Renewable Energy related products, and Services, each accounting for less than 1% of
the units.

71
 5.2.4 Products and Services

Major Products

The enterprises established under the Year of Enterprise program offer a diverse range
of products and services. Some of the major products include Chilli powder (45 units),
Coconut Oil (35 units), Bakery (21 Units), Coriander Powder (21 units), Food Products (18
units), Churidar (17 Units), Pickles (14 Units), Turmeric Powder (12 units) and Paper Bags,
Designer Clothes (11 Units each)

Major Services

The enterprises formed under the Year of Enterprise program offer a diverse range of
services. Some of the major services include Stitching (39 units), Online services (27 units),
Beauty Parlours (23 units), Sales (16 units), Designing (13 units), Tailoring (13 units), Bridal
Makeup (10 units), and Chilly Powder units (11 units).
The data presented in the figure indicates that industries with a higher prevalence of women
owners include agro, food processing, beverages, personal care, and garments. These
sectors demonstrate a significant representation of women entrepreneurs. Conversely,
women-owned enterprises are notably underrepresented in sectors such as renewable
energy, recycling and waste management, and organic fertilisers. This disparity highlights
certain sectors where women’s participation as entrepreneurs is lower compared to others.
Overall, the figure underscores the importance of addressing gender disparities and
promoting greater inclusivity and participation of women across various industry sectors,
fostering a more equitable entrepreneurial landscape.

Sector of Enterprise

Figure 5.10
72
 Selection of Product/services
The data reveals that a majority (64%) of the product or service ventures were initiated
based on personal intuition or gut feeling. This indicates a strong reliance on individual
instincts and entrepreneurial vision in launching these enterprises.
In contrast, a smaller proportion (29%) of ventures were founded based on study or field
reports, suggesting a more research-driven approach to business creation. Additionally,
a minority (7%) of ventures were established based on opinions or insights from others,
highlighting varying sources of influence in entrepreneurial decision-making.
Product / Services Selection

Figure 5.11

5.3 Registration and Licences

5.3.1 Udyam registration and GST registration

Udyam Registration Status Reasons for not availing Udyam registration

Figure 5.12 Figure 5.13

73
 The survey results indicate that the majority of respondents, comprising 80.2%, have
registered with the Udyam portal. In contrast, approximately one-fifth of the respondents,
accounting for 19.8%, reported that they had not registered with the Udyam portal.
Among respondents who did not register with the Udyam portal, a significant majority
(82.3%) cited lack of awareness as the primary reason for not registering. Additionally, 7.1%
of respondents reported facing time constraints, which hindered their ability to complete
the registration process. Another 2.86% mentioned complexities associated with the
registration process as a barrier. Other reasons for not registering included concerns about
conducting the registration online, lack of technical expertise, perceived lack of incentives,
existing registration as MSME or SME, each cited by less than 2% of respondents. A small
proportion (0.48%) noted that Udyam registration was deemed unnecessary in their specific
circumstances.
Among unregistered respondents, approximately 70% cited that they have not obtained GST
registration because they believe it is not required based on their turnover. This perception
poses a challenge, especially in online marketing and sales, GST registration is compulsory.
Consequently, this subset of respondents may be missing out on opportunities for online
marketing through platforms such as Amazon and Flipkart due to their non-compliance
with GST regulations.

GST Registration Status Reasons for not having GST registration

Figure 5.14 Figure 5.15

Upon exploring the reasons for not registering GST, it was revealed that almost three-fourth
(73.07 %) of the enterprises did not require the same based on their turnover. While 5.36 %
enterprises were exempted from GST, 4.44 % did not register for the complexity of process
involved. Almost 17 % of the respondents were not aware of the need for GST registration.

5.4 Motivation for doing Business

The survey findings revealed hat 50% of respondents identified “To achieve a stable source
of income and achieve financial independence” as their primary motivation for starting
their enterprise under the Year of Enterprise campaign. This indicates that the core driving
force behind entrepreneurship among these individuals is indeed economic stability and the
desire for financial independence.
The survey results provide insights into the diverse motivational factors driving
entrepreneurs under the Year of Enterprise campaign. A notable finding is that 23% of
respondents opted for entrepreneurship to turn their hobby or interest into a suitable career

74
 Motivational Factors to start the enterprise
under the “Year of Enterprises” initiative

Figure 5.16

option, highlighting a significant segment of entrepreneurs driven by passion and personal

interests. Additionally, about 10% of respondents mentioned their motivation to contribute
to their community or address social and environmental challenges, indicating a growing
trend of socially conscious entrepreneurship focused on impact beyond financial gains. A
smaller percentage (5%) of respondents cited the desire for more autonomy in their work
choices as a motivating factor for choosing entrepreneurship, underscoring the appeal of
self-directed career paths. Interestingly, only 3% of respondents identified government
initiatives as a motivation factor, suggesting that while government support is appreciated,
it is not a primary driver of entrepreneurial pursuits.

5.5 Contextual factors

The entrepreneurs’ perception about the contextual factors influencing business

sustainability and growth in Kerala was explored in the study. The table below exhibits
their response to different aspects marked using a five point scale. The mean and standard
deviation of the same are given.

75
 Descriptive Statistics

Min Max Mean SD

Availability of financial resources, including access to

bank loans and favourable interest rates, for initiating 1 5 3.07 1.271
and sustaining the business
Government policies, incentives, and subsidies, as
well as compliance requirements related to enterprise 1 5 2.80 1.316
registration and regulations

Fees and taxes applicable to new enterprises 1 5 2.72 1.213

Opportunities in the Market and Competitive

1 5 2.95 1.143
Environment

Availability of skilled workforce and talent 1 5 3.19 1.215

Physical infrastructure (Land space, utilities,

1 5 3.28 1.145
transportation)

Availability of technology, machinery etc 1 5 3.33 1.144

Availability of Professional Services (e.g., Tax

1 5 2.53 1.256
Consultants, Accountants, Lawyers etc)
Access to affordable professional services for new
product development and protecting intellectual 1 5 2.67 1.165
property rights
Availability of Technological Support from Universities,
Research Centers, and Government Research & 1 5 2.43 1.247
Development Institutions
Support from Local business associations, chambers
1 5 2.55 1.247
of commerce, and other networking opportunities

Availability of mentors for guidance 1 5 2.69 1.338

Support from District Industrial Centres 1 5 2.81 1.234

Table 5.2
Among the contextual factors influencing entrepreneurship, certain factors such as
‘availability of technology and machinery’, ‘robust physical infrastructure’, ‘presence of a
skilled workforce’, and ‘access to financial resources’ have received moderate mean ratings
in the survey.
Specifically, ‘availability of technology and machinery’ and ‘robust physical infrastructure’
have emerged with the highest ratings among these factors, scoring 3.33 and 3.28 points
respectively.
Entrepreneurs have perceived certain factors such as ‘opportunities in the market
and competitive environment’ (2.95), ‘government policies, incentives, and compliance

76
requirements’ (2.8), ‘fees and taxes applicable to new enterprises’, ‘availability of professional
services’, and ‘access to affordable professional services for new product development and
protecting intellectual property rights’ as slightly supportive. Among these factors, the
lowest mean ratings have been attributed to aspects such as the availability of professional
services (2.53) and support from local business associations like chambers of commerce
(2.55), as perceived by entrepreneurs.
The contextual factors examined exhibit standard deviation values ranging from 1.143 to
1.368, indicating variability in responses and diverse perceptions among respondents. This
variability suggests that while some entrepreneurs perceive certain factors as unsupportive,
reflected in the minimum score of 1, others view the same factors more favourably, evidenced
by the maximum score of 5. These differing perceptions underscore potential disparities in
the business environment, with some facing challenges while others benefit from more
favourable conditions.
The findings highlight that individual experiences and perspectives vary across contextual
factors, emphasising the need for targeted interventions to ensure an equitable and inclusive
environment for all businesses. Addressing these disparities can help create a more
supportive and conducive ecosystem for entrepreneurship, ultimately fostering broader
success and growth within the entrepreneurial community.

5.6 Economic Aspects

5.6.1 Performance of enterprise

The survey revealed the current economic status of various enterprises, showing that 38%
of them are at a break-even point where they neither make a profit nor incur losses. Another
36% of enterprises are profitable, but a significant portion of their earnings is reinvested
back into the business, leading to irregular income. It is notable that 14% of enterprises are
achieving regular and stable income, reflecting a level of financial stability and consistent
profitability. However, concerning is the fact that 12% of enterprises are experiencing losses,
indicating significant sustainability challenges.

Financial Performance

Figure 5.17
77
 5.6.2 Cash flow challenges

While probing about the cash flow challenges faced by the entrepreneurs, it was noted
that around 35% of the enterprises rarely experience or never experience any sort of cash
crunch. 37 % occasionally experienced cash flow challenges. Around 25% of the enterprises
are experiencing cash flow challenges frequently or on a daily basis.
Cash Flow challenges

Figure 5.18

5.6.3 Monthly Income from Enterprise

The analysis of monthly income among enterprises reveals a varied distribution:

approximately 5% of enterprises report no monthly income, while 29% earn below Rs. 10,000
per month. A significant portion (32%) falls within the income range of Rs. 10,000 to Rs.
25,000 monthly, and only 15% achieve a monthly income exceeding Rs. 50,000. Moreover,
the majority of enterprises (61%) earn below Rs. 25,000 per month.Around 5 % reported no
Monthly income at present due to various reasons.

Monthly Income

Figure 5.19
Upon examining the income changes experienced by entrepreneurs after establishing their
enterprises, the survey findings reveal a mixed pattern. 48% of the enterprises had a slight
increase in their income suggesting. 10% enterprises shared that they have a significant
increase in their income. Around 35% reported that they do not have any change or are
experiencing a slight decrease in their income. 7% reported a significant decrease in their
income.

78
 Change in Income

Figure 5.20
5.6.4 Reinvestment of Profits
Around 30% of enterprises reinvest 10-20% of their profit back into the business. 10% of
enterprises reinvest 20-30% and 12% of enterprises reinvest more than 30%. It is important
to note that around 20% are not sure about their reinvestment rate or they have not calculated
their reinvestment rate.
Profit Reinvestment

Figure 5.21
5.6.5 Capital Investment

The survey revealed diverse initial investment levels among enterprises, with notable
findings including 38% of enterprises investing between 3 lakhs and 10 lakhs rupees, 25%
investing more than 10 lakhs rupees, and 11% investing in the range of Rs 25,000 to Rs
50,000.
Capital Investment

79 Figure 5.22
 5.6.6 Asset Acquisition

It is notable that 42% of the enterprises were able to acquire assets through their business
activities.
Asset Acquisition

Figure 5.23

5.6.7 Net worth

When surveyed about the growth in the net worth of their enterprises, a substantial portion
of respondents (29%) indicated they have not calculated their net worth and are thus
unaware of their net worth changes. Among those who provided responses, 33.5% reported
a modest increase in net worth of less than 10%, while 9% noted growth ranging from 20%
to 30%. Additionally, 6% reported a significant growth of more than 30%.

Increase in Net Worth

Figure 5.24

5.7 Credit Usage

5.7.1 Credit Availing status Loan Utilisation

In terms of loan utilisation, 69% of enterprises have taken

loans. There is a notable preference for government-
linked credit sources among the surveyed enterprises
with 52% obtaining loans from public sector banks and
19% from state government institutions such as KFC,
KSWDC, KSIDC, and others. 11% have sourced loans
from alternative sources.

Figure 5.25
80
 Table 5.3

Table 5.4
31% of the enterprises surveyed did not take loans to start their enterprises. The reasons
for not availing loans were explored, revealing that 61% of these enterprises had sufficient
internal capital. Additionally, 11% cited high interest rates as a deterrent to loan utilisation,
while 5% applied for loans but did not have them sanctioned.

5.7.2 Credit amount

44% of the enterprises have taken loans ranging from 1 lakh to 5 lakhs rupees, while 30%
have taken loans between 5 lakhs and 10 lakhs rupees. Additionally, 10% of enterprises
have secured loan amounts exceeding 20 lakh rupees.

Range of loans availed

Figure 5.26
81
 5.7.3 Loan default

Among entrepreneurs, 77% demonstrate regular loan repayment, indicating strong

adherence to repayment schedules. However, 23% of enterprises face challenges with loan
repayment.
Loan Default Status

Figure 5.27

5.8 Market Competitiveness

5.8.1 Promotion

Marketing plays a crucial role in determining the success and visibility of products, with
different mediums offering distinct advantages and considerations. Among enterprises
established under the Year of Enterprise program, various marketing approaches are
observed: half of them opt for marketing through their own or nearby shops, 25% engage
in door-to-door or direct selling, 11% prefer distribution channels, while 10% utilise social
media platforms. Additionally, a smaller percentage (3.5%) sell products through online
market platforms.

Marketing channels

Figure 5.28

82
Despite opportunities presented by government-sponsored Marketing Melas or Trade Fairs,
the data shows that a significant majority (80%) of enterprises have not participated in such
events. Within this group, 20% attribute non-participation to a lack of awareness regarding
these government-sponsored opportunities. Conversely, only 21% of enterprises have taken
advantage of Marketing Melas or Trade Fairs supported by the government to showcase
their products directly to customers.

Digital Marketing Platforms

Figure 5.29
The data reveals that 29% of enterprises are not utilising any social media or digital
marketing platforms for reaching a broader audience. Among those using social media
platforms, the majority prefer WhatsApp (29%), followed by Instagram (21%), and Facebook
(20%). Notably, only a small fraction (approximately 0.98%) of enterprises are leveraging
digital platforms like Amazon to reach a wider audience.

5.8.2 Target Markets

Roughly 24% of entrepreneurs expanded their operations into new markets since inception,
while 76% did not. Among those expanded, approximately 40% entered markets in different
cities, districts, states, or countries; 28% introduced new products or services; 20% targeted
new customer groups or demographics; 7% tailored products/services to meet specific
customer demands; and 5% expanded sales through online presence and e-commerce
platforms.

Expansion into New Markets

Figure 5.30
83
 Channels of Market Expansion

Figure 5.31
Export Status
Approximately 10% of respondents
indicated that their products were
exported to international markets,
while 90% did not engage in
international exports.

5.8.3 Product Differentiation Figure 5.32

The survey findings show a varied perception among respondents regarding the uniqueness
of their products/services in the market. A majority (42%) believe there are a significant
number of similar products/services available, while 41% acknowledge the presence of
similar offerings but in limited quantities. A small percentage (3.5%) expressed uncertainty
about this aspect. Interestingly, 13% of respondents are confident that their products/
services have no direct competitors in the market.

Presence of Similar Products

Figure 5.33
84
Among the respondents who indicated that there are similar products or services in the
market (83% of respondents), it was explored whether their own product/service could be
differentiated from others. The findings revealed that a majority (65%) believe it is possible
to differentiate their products from similar ones, while 35% believe differentiation is not
feasible.
Product Differentiation Capacity

Figure 5.34
Further investigation into product introduction practices among enterprises revealed varied
approaches. The majority (58%) indicated that they introduce new products occasionally
in response to customer demand. On the other hand, 23% of enterprises reported never
introducing new products, while 19% actively introduce new products frequently based on
regular customer feedback.

Introduction of New Products

Figure 5.35
Development of New Products
Upon exploration, it was found that a significant
proportion of respondents have developed new
products or services since inception. More
than a quarter (25%) introduced more than 5
new products or services, demonstrating a
high level of innovation and diversification.
Additionally, nearly 20% introduced 3-5 new
products or services, indicating ongoing efforts
to expand their offerings. The majority (55%)
introduced 1-2 new products or services,
highlighting a focus on selective innovation to Figure 5.36
meet market demands.

85
 5.8.4 Pricing
Inquiring about the pricing of their products compared to similar products in the market,
respondents provided varied responses. The majority (58%) indicated that their product’s
price was similar to competitors. About 18% reported slightly lower prices, while 13.35%
mentioned slightly higher prices. Additionally, 6.44% noted significantly lower prices, and
5% described their prices as significantly higher than competitors.
Pricing

Figure 5.37
5.8.5 Customer retention

Customer retention is a crucial aspect of business success, as loyal customers serve as

effective advocates for products and services. From the provided data, it is evident that a
majority (69%) of enterprises are actively making efforts to retain their existing customers.

Customer Retention

Figure 5.38
Among the enterprises that actively make deliberate efforts to retain their existing customers,
various strategies are employed to foster loyalty and satisfaction. The data reveals that 40%
of these enterprises prioritise personalised communication and service. 30 % of these
enterprises offer exclusive incentives such as special offers and customer loyalty programs.

Customer Retention Efforts

Figure 5.39
86
5.8.6 Branding

Branding plays a crucial role in enabling customers to easily identify and differentiate
products, particularly in markets with numerous offerings from various enterprises. The
data reveals that approximately half of the enterprises are confident that their products are
recognized by customers through their brand names. However, a significant portion (31%) of
entrepreneurs express concerns that their customers do not associate their products with
any specific brand name, potentially hindering market presence and customer recognition.
Additionally, 14% of enterprises do not have a distinct brand name, which could further
impact their ability to establish a strong identity.
Brand Recognition Status

Table 5.5

Brand Building Efforts

Figure 5.40

In exploring the deliberate efforts taken by enterprises to establish brand names and
awareness, the data reveals a range of commitment levels among respondents. A notable
percentage (34%) are making efforts toward branding, with 33% exerting substantial efforts.
Additionally, 27% of enterprises are making moderate efforts, while a smaller percentage
(4%) are actively working to establish a strong brand presence.

5.8.7 Sales growth

Upon exploring the rate of growth in sales among enterprises, a significant proportion
of entrepreneurs (half of the respondents) reported experiencing a slight increase in
sales. Additionally, 14.7% noted a significant increase in sales, while 23% indicated sales
stagnation. Conversely, 10% of respondents reported a slight decrease in sales, with roughly
4% experiencing a significant decrease.

87
 Sales Growth Rate

Figure 5.41

5.8.8 Perceived competitiveness

Enterprises that undertake comprehensive marketing and branding efforts are better
positioned to compete with other products and endure in the market. Analysis of the data
indicates that a significant portion of entrepreneurs recognize this importance. Specifically,
30% of entrepreneurs strongly agree that they can effectively compete with other products
in the market and sustain their presence in the future. Additionally, 33% express agreement
with this notion, while another 33% are neutral in their agreement. However, it is notable
that a small proportion of entrepreneurs (approximately 4%) express uncertainty or doubt
regarding their ability to compete and survive in the market in the future.

Market Competitiveness

Figure 5.42

88
 5.9 Operational efficiency

5.9.1 Production and Quality Assurance

Assessment of Resource Wastage Standard operating Procedures

Figure 5.43 Figure 5.44

In exploring resource wastage in production or services, approximately half of respondents
reported low levels of resource wastage, while 15-16% indicated high levels of wastage.
Additionally, about 7% expressed uncertainty or lack of awareness regarding resource
wastage in their processes.
Regarding standard operating procedures (SOP), less than 72% of enterprises responded
that they were following SOPs, while 29% indicated that they were not following any SOPs.
Quality Control Measures

Figure 5.45
When probed about quality control measures, approximately 58% of respondents indicated
that they have some sort of quality control system in place. Less than 13% were unaware of
their quality control measures, and 30% reported not having any quality control measures
in place.

89
 Out of the 58% of respondents who reported having quality control measures in place, a
majority (more than 74%) indicated that they conduct regular quality checks at different
stages of production. Additionally, 11.37% ensure there is a dedicated person to oversee
quality issues, while 10% follow Agmark, ISI/BIS procedures, and 4.2% opt for third-party
quality checks.
Safety Standards Comparison With Other Market Players

Figure 5.46
When analysing the safety standards of each enterprise compared to industry norms, it was
found that 44% of enterprises adhere to similar industry standards. Approximately 40-45%
of enterprises uphold high industry standards, while only a few enterprises follow lower
industry standards. Moreover, 4% of enterprises are unaware of safety standards compared
to industry trends.

5.9.2 Supply Chain Management

When assessing the efficiency of supply chain management, a significant portion of

entrepreneurs (50%) responded with a neutral opinion. Approximately 14% of enterprises
expressed confidence in having highly effective supply chain management, while 15-16%
indicated that their supply chain is ineffective.
Rating of supply chain management practices

Figure 5.47
Exploring the extent of collaboration with local suppliers and vendors for enterprise
operations revealed varying levels of engagement among entrepreneurs. The majority
(31.24%) indicated that they never collaborated with local suppliers and vendors. 25%
reported rarely using the services of local suppliers, while 19% did so occasionally. A smaller
percentage (14%) frequently utilised services from local suppliers, and 11% always sourced
supplies from local markets.

90
 Collaboration With Local Suppliers,Vendors and Service Providers

Figure 5.48
5.9.3 Technology Integration

Utilisation of Technology for Business Operations

Figure 5.49
Technology integration is a critical aspect for effective business management and
coordination across departments. Analysis of the data reveals varied levels of technology
adoption among enterprises. Specifically, 20% of enterprises always use technology for
business accounting and communication with suppliers and customers. Additionally,
11% use technology very often for these purposes, while 18% rarely use technology in
these areas. A significant portion (29%) of enterprises reported never using technology
for business accounting and communication with suppliers and customers.

Integration of Technological Advancements into Operational Processes

Figure 5.50
91
 Approximately 48% of enterprises integrated new technological advancements to enhance
production processes or improve service delivery in the past year, while the remainder (52%)
did not adopt any new technologies during this period.

Effectiveness of Technology Adoption/ Integration

Figure 5.51
Of the enterprises that integrated technology (48% of the total), various degrees of
improvement were reported across different business aspects. Specifically, 12% cited
significant improvement in production efficiency, service quality, inventory management,
customer engagement, cost reduction, data analysis, and decision-making due to
technology adoption. Additionally, 22% reported significant improvement, 20% reported
slight improvement, and nearly 40% reported moderate improvement in these areas. Only
5% indicated that technology adoption had not contributed to any improvements.

5.9.4 Perceived ability to manage increased demand

When examining the ability of enterprises to manage increased demand and production
flexibility, the data reveals varying capacities. Specifically, 25% of enterprises have limited
ability to increase production, while 32% possess moderate capacity. Additionally, 23%
exhibit good ability to manage increased demand, while approximately 9% are unable to
increase production under any circumstances.

Capacity to Meet Increased Demand or Production

Figure 5.52

92
 5.10 Business Development Plan

Existence of Business Development Plan

Figure 5.53
When asked about the presence of a business development plan, the survey revealed diverse
responses among entrepreneurs. Specifically, only 16% indicated having a well-defined plan,
while a majority (32%) acknowledged having a plan that required improvement. Another
25% reported having informally prepared business development plans, and 28% stated that
they did not have any business plan.
When probed about the plans for infrastructure and technology enhancement, it was found
that nearly 65 percent of entrepreneurs do have plans to enhance their existing infrastructure
and technology utilisation.

Plans for Infrastructure and Technology Enhancement

Figure 5.54
93
Upon exploring intentions to mobilise external financing or investments to support
enterprise growth, a significant majority of respondents (approximately 69%) indicated that
they do not have plans to pursue external financing. In contrast, around 31% of respondents
expressed intentions to seek external financing or investments to support the growth of
their enterprises.

Plans for Mobilisation of External Finance

Figure 5.55
Upon exploring the purposes for which respondents intended to source external investments,
more than one-third (35%) cited expansion of their operations as the primary objective.
This was followed by 22% seeking investment for product and service development. Other
important areas for business growth, such as infrastructure development, marketing and
advertising, and technology and innovation, were cited by 9% to 12% of respondents each.
A small percentage (2%) indicated debt repayment as their intended use of external funds.

Purpose for External Finance

Figure 5.56

94
From the data, it is clear that the majority of respondents (48%) required investments in the range
of Rs. 1 lakh to 5 lakhs, which was the most common funding requirement. Additionally, 18.24%
needed loan amounts of Rs. 10 lakhs or more, while close to 20% sought investments between
Rs. 5 lakhs and 10 lakhs. Interestingly, a notable percentage (roughly 9%) of entrepreneurs
required investments exceeding Rs. 20 lakhs, which was higher than those seeking investments
between Rs. 10 lakhs and Rs. 20 lakhs (approximately 6%).
External Financing Required

Figure 5.57

Moreover, more than half of the enterprises (56%) expressed interest in expanding into new
geographical markets or customer segments in the future, while the remaining 44% are not
considering such expansion.

Market Expansion Plans

Figure 5.58

5.11 Social Sustainability

5.11.1 Capacity to create employment

It is evident that more than half of the enterprises (53.7%) have been able to create jobs within
their enterprise since its establishment, contributing positively to the creation of livelihood
opportunities and potentially reducing unemployment and poverty.

95
 The remaining enterprises did not report job creation within their operations.

Employment Creation

Figure 5.59
A notable observation from the data is that many enterprises are able to create jobs
and provide salaries that are on par with industry standards. Approximately half of the
enterprises can create 1-2 jobs per enterprise, while 30% of the enterprises can create
about 3-5 jobs. Only a small percentage of enterprises can create 20 or more jobs per
enterprise, suggesting that the majority of enterprises are relatively small in size and may
have limited capacity to employ larger numbers of workers.

Number of Jobs Created

Figure 5.60

96
 5.11.2 Salary/wages

On average, about 60% of the enterprises formed under the Year of Enterprise program provide
salaries or wages according to industry standards. Additionally, over 10% of the enterprises
provide salaries higher than industry standards. However, a smaller percentage, around
5%, provide salaries that are less than industry standards. It is notable that approximately
a quarter of the enterprises are not aware of the industry standards for wages or salaries.

Adherence to Industry Standards for Salary/Wages

Figure 5.61

5.11.3 Training and Development

From the data presented, it is evident that many enterprises may not fully appreciate the
importance of employee training and development for organisational growth. Only a small
percentage, approximately 6%, are investing in comprehensive training and development
initiatives, while about 35% are making minimal investments in training. Surprisingly, more
than half of the enterprises are not providing any training or development programs at all.

Approach to Employee Training and Development

Figure 5.62
97
Conversely, a majority of entrepreneurs express confidence in the skills of their workforce,
with over half indicating that these skills are sufficient for the sustainability and growth
of their enterprises. About one-third of respondents believe these skills are moderately
sufficient, while approximately 10% feel that the skills of their workforce are not adequate
for sustaining and growing their enterprise.

Workforce Sufficiency

Figure 5.63

5.11.4 Workforce Diversity

From the data, it is evident that a significant portion of enterprises have not actively considered
gender diversity within their workforce, with 33% indicating they have not thought about this
aspect. However, 27% of the entrepreneurs deliberately ensure gender diversity, indicating
an awareness of its importance. It is concerning that about 19% of entrepreneurs believe
that only a certain gender or ethnicity works better, suggesting a potential bias in hiring
practices.

Inclusive Workforce

Figure 5.64
98
 5.11.5 Addressing social and environmental challenges

Addressing Social and

Environmental Challenges
The survey data indicates that a low
percentage (6%) of entrepreneurs
responded positively when asked if
their product or service addresses
social and environmental challenges.
Among those who acknowledged
addressing such challenges, a
significant number reported initiatives
such as avoiding plastic use and
engaging in social impact activities like
skill development and self-defence
classes in rural areas.
Figure 5.65
5.11.6 Concern for environment

From the survey data, it is apparent that approximately 50% of entrepreneurs indicated
that their enterprise has no discernible environmental impact. Conversely, around 34-
35% expressed concerns about the environmental impact, while a smaller percentage of
approximately 12% indicated that they were not concerned about the environmental impact
of their enterprises.
Environmental Impact Concerns

Figure 5.66

5.11.7 Waste Management

The survey data reveals that a majority of enterprises utilise the services of Haritha Karma
Sena for the disposal of solid waste materials, while others rely on unorganised waste
collectors. However, concerning is the finding that approximately 3% of respondents admit
to burning plastic waste on their premises, highlighting a potential environmental concern
regarding waste management practices.

99
 Waste Management

Figure 5.67
When inquiring about liquid waste disposal among enterprises, a significant majority (75%)
reported not generating liquid waste. Among those generating liquid waste, 10% indicated
having specific waste treatment plants within their units. However, others without such
facilities either released the liquid waste onto their own property or into common drainage
systems. Notably, 5% of respondents released liquid waste into common drainage, raising
concerns about the type of waste being discharged and its potential environmental impact.

Liquid Waste Management

Figure 5.68

5.11.8 Participation in community development projects

It’s notable that more than half of the entrepreneurs have not participated in any community
development projects or initiatives since their establishment. About 34% of entrepreneurs
participated 1-10 times per year, while a small percentage (about 1%) participated more
than 10 times in a year.

Participation in Community Development Programs

Figure 5.69
100
 5.12 Personal Outcomes

Descriptive Statistics

N Min Max Mean SD

Quality of life has improved 3000 1 5 3.27 .972

Social status/acceptance has increased 3000 1 5 3.43 .909

Social Skills (eg. leadership, problem solving,

networking, negotiation, adaptability and 3000 1 5 3.45 .964
creativity) has developed
Overall well-being and life satisfaction have
3000 1 5 3.47 .961
improved
Table 5.6
In evaluating the personal outcomes of entrepreneurs participating in the Year of Enterprises
program, key variables such as quality of life, social status, social skills development and
overall well-being were assessed. These variables provide insights into the holistic impact
of entrepreneurship on individuals beyond economic metrics.
The descriptive statistics reveal that, on average, participants reported positive outcomes
across all assessed variables. The mean ratings for quality of life improvement, increased
social status/acceptance, development of social skills, and overall well-being and life
satisfaction ranged from 3.27 to 3.47 on a scale of 1 to 5, indicating moderate to high levels
of agreement with positive personal outcomes associated with entrepreneurship. Standard
deviations ranged from approximately 0.909 to 0.972, indicating slight variability in responses
among participants. Overall, the findings suggest that entrepreneurship has a positive
impact on various aspects of individuals’ lives, contributing to improvements in quality of
life, social status, skills development, and overall well-being among program participants.

5.13 Awareness and benefits availed as part of YOE

Entrepreneurs participating in the Year of Enterprises (YOE) program provided insights

into the usefulness of various services and activities offered. Among the most utilised and
beneficial services reported were support for the GeM Portal and Udyam Registration, which
56% of respondents found helpful. 53% acknowledged the value of support provided by
interns in submitting applications. Furthermore, assistance from Taluk Resource Persons
of Enterprise Facilitation Centres in navigating licences, clearances, securing loans, and
addressing doubts was considered beneficial by 50% of respondents. These findings
underscore the importance of tailored support services in assisting entrepreneurs within
the YOE program to navigate administrative processes and access necessary resources for
business growth and development.

101
 Please rate your awareness and benefits availed of the following schemes/activities
implemented by Industries Department as part of ‘ Year of Enterprises’

Figure 5.70

Conversely, services such as the Margin Money Grant to Nano Units, the Whatsapp facility to
‘Chat with Minister’, and the Grievance Redressal System are less utilised by entrepreneurs
participating in the Year of Enterprises program due to low awareness.
Approximately 10% of respondents found the support from Taluk Resource Persons of
Enterprise Facilitation Centres to be unhelpful after utilising it. Similarly, other services
such as Help Desk Services (8.3%), Support by Interns (8.8%), and the Entrepreneur Support
Scheme for Manufacturing Start-ups (8%) were also identified as unuseful by a notable
percentage of respondents.
The services that the most number of entrepreneurs were aware of but never utilized include
Support for Export Promotion (30%), Marketing support through Trade Fairs (28%), and the
Entrepreneur Support Scheme for Manufacturing Start-Ups (26%).

102
 06
Sustainability, Market
Competitiveness,
Operational Efficiency and
Scalability of Enterprises
The Year of Enterprises (YOE) initiative has played a pivotal role in
fostering the growth of a diverse range of enterprises, significantly
contributing to economic development and promoting entrepreneurship
across Kerala. This chapter delves into the sustainability, market
competitiveness, operational efficiency, and scalability of enterprises
established under the YOE program, with a focus on their long-term
viability and potential for expansion. Drawing on comprehensive survey
findings, the chapter provides an in-depth analysis of the factors
influencing the sustainability and scalability of the enterprises formed
under the Year of Enterprises (YOE) initiative.

103
 6.1 Sustainability of enterprises

Sustainability of an enterprise refers to its ability to operate in a manner that meets the
needs of the present without compromising the ability of future generations to meet their
own needs. It encompasses three dimensions, namely economic sustainability, environ-
mental sustainability, and social sustainability (Lozano, R., 2008). Economic sustainability
pertains to the enterprise’s ability to generate long-term value while maintaining profitabil-
ity and financial stability. Environmental Sustainability focuses on minimising the negative
impact of the enterprise’s operations on the environment. Social sustainability involves the
enterprise’s commitment to supporting the well-being of its employees, communities, and
society at large.

6.1.1 Economic sustainability

Economic sustainability pertains to the enterprise’s ability to generate long-term value
while maintaining profitability and financial stability.
Economic Sustainability
Number Percent
status

Highly Sustainable 324 10.81%

Moderately Sustainable 1866 62.22%

Vulnerable 273 24.80%

Unsustainable 63 2.18%

Grand Total 3000 100.00%

Table 6.1

Unsustainable Vulnerable Moderately Highly

Sustainable Sustainable
2.18 % 24.80 % 62.22 % 10.81 %

1 2 3 4 5

Figure 6.1

104
The results of the economic sustainability assessment of micro-enterprises show a
varied distribution of sustainability levels. A substantial majority, 62.22%, are classified as
‘Moderately Sustainable’, indicating that while these enterprises are performing reasonably
well, they still need improvements to ensure long-term stability and growth. Only 10.81% of
the enterprises are categorised as ‘Sustainable’, suggesting that a relatively small portion
has achieved high economic performance and stability. This highlights the challenges faced
by many micro-enterprises in reaching a robust level of sustainability. Additionally, 24.80%
of enterprises are deemed ‘Vulnerable’, showing some signs of sustainability but requiring
significant improvements to avoid potential failure. Without adequate support, these
vulnerable enterprises could move into the unsustainable category. The ‘unsustainable’
category accounts for just 2.18% of the enterprises, which is consistent with expectations
from a self-reported assessment, though this small percentage still represents a critical
concern. Overall, the data underscores that while many enterprises manage to maintain
some level of economic performance, a significant portion remains at risk, highlighting the
need for targeted support to improve their sustainability and growth prospects.

6.1.2 Environmental Sustainability

Environmental Sustainability focuses on minimising the negative impact of the enterprise’s

operations on the environment. This involves practices such as minimising waste generation,
implementing eco-friendly technologies and processes etc.
Environmental sustainability involves assessing the impact of enterprise operations on
the environment through indicators such as Effective Solid Waste Management, Effective
Liquid Waste Disposal, and Concern Regarding Environmental Impact. Effective Solid Waste
Management refers to the ability of enterprises to manage solid waste efficiently, ensuring
proper disposal or recycling. Effective Liquid Waste Disposal assesses how enterprises
handle liquid waste, either through treatment plants or responsible disposal methods.
Concern Regarding Environmental Impact measures the level of awareness and proactive
attitudes toward environmental responsibility among enterprises. These indicators
collectively reflect the enterprise’s commitment to minimising negative environmental
impacts and promoting sustainable practices.

Environmental Sustainability Status Number Percent

Positive Environmental Impact 2352 78.47%

Limited Environmental Impact 648 21.53%

Grand Total 3000 100.00%

Table 6.2

LIMITED POSITIVE
ENVIRONMENTAL ENVIRONMENTAL
IMPACT IMPACT
Figure 6.2
21.53 % 78.47 %

105 1 2 3 4 5
 The results of the environmental sustainability assessment of 3,000 micro-enterprises
show that a substantial majority, 78.47%, are classified as having a ‘Positive Environmental
Impact’. This indicates that most micro-enterprises are successfully managing their
environmental responsibilities, such as effective solid and liquid waste management, and
demonstrating a strong concern for their environmental impact. This reflects a positive trend
towards environmental sustainability within the sector. However, 21.53% of the enterprises
are categorized as having a ‘Limited Environmental Impact’. These enterprises need to
improve their environmental practices to enhance their sustainability. While the majority are
performing well, this significant minority highlights the need for ongoing efforts and targeted
interventions to ensure all micro-enterprises adopt effective environmental practices.
Overall, the data suggests that most micro-enterprises are contributing positively to
environmental sustainability, which is encouraging, but there is still room for improvement.
Environmental sustainability often receives less attention in the context of industrial
development in the state. It is frequently considered in isolation, whereas it should be
integrated as a core component of industrial planning and development. The majority of
surveyed enterprises demonstrate effective solid waste management practices, indicating
a significant level of proficiency in this area. A considerable portion of enterprises also
excel in liquid waste disposal management or produce no liquid waste at all, showcasing
efforts toward reducing environmental impact. Interestingly, the overall concern regarding
environmental impact among enterprises drops drastically, revealing a potential disparity
between practical environmental actions and perceived environmental responsibility.
The high percentage of enterprises practising effective solid and liquid waste management
reflects a positive trend toward environmental sustainability within the surveyed group. The
lower percentage of enterprises expressing concern about environmental impact suggests
that while many businesses are implementing sustainable practices, not all may fully
recognize or acknowledge their broader environmental responsibilities.
There is a need for enhanced communication and awareness campaigns to bridge the
gap between environmental actions and perceptions. Encouraging businesses to align
their practical efforts with a greater understanding of environmental impact can promote
more holistic environmental stewardship. Enterprises should prioritise comprehensive
environmental management strategies that encompass both solid and liquid waste
management practices to further reduce their ecological footprint. Enterprises should
promote sustainable procurement practices, reduce waste through recycling and reuse
initiatives, and transition to renewable energy sources. Pollution prevention measures and
investment in green technologies are essential, as is engaging stakeholders and complying
with regulations. Policymakers and industry stakeholders can leverage these insights to
develop targeted initiatives aimed at fostering a culture of environmental responsibility and
sustainability within the business community.
In summary, while many enterprises exhibit commendable efforts in environmental
sustainability through waste management practices, addressing the disconnect between
actions and perceptions can drive broader adoption of environmentally responsible practices
across the business landscape. As Kerala is a state prone to natural and environmental
hazards, the state as well as the enterprises should be mindful of the potential harm to the
environment out of enterprise activities and take measures to address the same.

106
 6.1.3 Social Sustainability

Social sustainability is a fundamental aspect of enterprise development that encompasses

the commitment to enhance the well-being of employees, communities, and society at large.
This concept is evaluated through a range of key indicators that reflect the enterprise’s
impact on social factors and its engagement in community development. First, the capacity
for employment generation assesses the enterprise’s ability to create job opportunities
and contribute to reducing unemployment. Second, salary and wages according to
industry standards demonstrate the enterprise’s fairness in compensating employees and
adherence to industry norms. Third, investment in employee training and development
highlights the enterprise’s commitment to enhancing employee skills and capabilities
through training initiatives. Fourth, workforce diversity evaluates inclusivity and diversity
efforts, ensuring fair representation across genders, ethnicities, and backgrounds. Fifth,
participation in community projects reflects the enterprise’s involvement in community
development initiatives. Lastly, personal aspects such as quality of life, social status, social
skills development, and overall well-being measure the impact of enterprise activities
on improving individual well-being and social conditions. Indicators namely employment
generation capacity, practice of giving fair salary, investment in employee training and
workforce diversity are directly related to the well-being of employees/labour force. The
other indicators, participation in community development and personal outcomes (quality
of life, status/social acceptance and overall well-being) are more of community-focused
indicators. These indicators collectively gauge the enterprise’s contribution to social
sustainability by promoting employment, fair compensation, skill development, diversity,
community engagement, and overall enhancement of personal and social well-being.
Social sustainability was assessed on a five-point scale to evaluate the impact of a micro-
enterprise on its workforce and community. Enterprises scoring between 1-3 were
considered to have ‘Limited Social Impact’, indicating deficiencies in aspects such as
employment generation, wage standards, and personal well-being. The social sustainability
assessment reveals a balanced distribution of impacts among micro-enterprises involved
in the Year of Enterprises initiative. Out of a total of 3,000 enterprises evaluated, 1,502
(50.09%) demonstrated a Positive Social Impact, indicating effective employment practices,
adherence to industry wage standards, and active community engagement. Conversely,
1,498 enterprises (49.82%) were classified as having a Limited Social Impact. This group
reflects a need for significant improvements in areas such as fair compensation, employee
training, and community involvement.

LIMITED POSITIVE
SOCIAL SOCIAL
IMPACT IMPACT
49 % 51 %

1 2 3 4 5

Figure 6.3

107
 Social Sustainability Status Number Percent

Positive Social Impact 1502 50.09%

Limited Social Impact 1498 49.82%

Grand Total 1102 100.00%

Table 6.3

6.1.4 Integrated Sustainability Framework

Economic
Sustainability

Social Environmental
Sustainability Sustainability

Figure 6.4
The Integrated Sustainability Framework provides a comprehensive approach to sustain-
ability by incorporating social, economic, and environmental considerations into enterprise
operations.

Overall Sustainability status Number Percent

Highly Sustainable 125 4.16%

Moderately Sustainable 2064 68.8%

Vulnerable 775 25.8%

Unsustainable 36 1.2%

Grand Total 3000 100.00%

Table 6.4
The overall sustainability assessment reveals that 68.8% of enterprises are classified
as ‘Moderately Sustainable.’ These enterprises are performing reasonably well across
economic, social, and environmental dimensions but require further improvements to
ensure long-term stability and growth. Only 4.16% of enterprises are categorised as ‘Highly

108
Sustainable,’ indicating that only a small portion has achieved high performance and
stability across all dimensions. This highlights the challenges many micro-enterprises face
in reaching exemplary levels of sustainability.
With 25.8% of enterprises classified as ‘Vulnerable,’ a significant portion of the micro-
enterprises is at risk. These enterprises show some signs of sustainability but need
substantial improvements to stabilise their operations and avoid potential failure. Without
adequate support, these vulnerable enterprises may fall into the ‘Unsustainable’ category.
The 1.2% of enterprises classified as ‘Unsustainable’ are performing poorly across all
dimensions and are on the verge of closure. While this is a small percentage, it remains a
critical concern.
Overall, the data suggests that while many enterprises maintain some level of sustainability, a
significant portion remains at risk, and only a small fraction achieves high sustainability. This
underscores the need for targeted support and interventions to enhance the sustainability
and growth prospects of micro-enterprises.
The results show that a relatively small percentage of enterprises meet the comprehensive
criteria of sustainability, encompassing social, economic, and environmental dimensions
simultaneously. However, the true narrative is not about the specific percentage of
sustainable enterprises; it is about recognizing that sustainability is the essential path
forward for enterprises aiming to thrive in the Year of Livelihoods.
Sustainability is not merely a goal but a transformative vision that requires enterprises
to integrate responsible business practices that balance profitability with purpose,
environmental preservation with community well-being, and long-term viability with
societal impact. In the face of a rapidly changing economic and environmental landscape,
sustainability emerges as the guiding principle that aligns businesses with the needs of our
time.
The call to action is clear: enterprises must recognize sustainability as an imperative for
their survival and success. By committing to sustainability, enterprises dedicate themselves
to:

Balancing Prosperity with Purpose: Integrating economic success with social

responsibility to foster equitable growth that benefits all stakeholders.

Minimising Environmental Impact: Adopting practices that reduce carbon footprints,

conserve natural resources, and promote ecological resilience.

Prioritising Social Welfare: Investing in workforce development, diversity, inclusion,

and community engagement to create positive societal impacts.

Ensuring Long-term Viability: Aligning business strategies with sustainable practices

to safeguard the ability of future generations to thrive.

109
 The journey towards sustainability requires collaboration among businesses, governments,
civil society, and consumers. It demands innovative approaches, transformative leadership,
and collective responsibility. As we embark on this path, enterprises in the Year of
Livelihoods have a unique opportunity to drive meaningful change, contribute to sustainable
development goals, and shape a future that is prosperous, equitable, and environmentally
sound.
In conclusion, sustainability represents a fundamental shift in mindset and action that is key to
enterprise resilience and relevance in an interconnected world. By embracing sustainability,
enterprises can drive meaningful change, contribute to sustainable development goals, and
shape a future where business success aligns with positive societal and environmental
impact. Sustainability is not just a trend; it is a strategic imperative for enterprises to thrive
and harmonise economic progress with social and environmental well-being.

6.2 Market Competitiveness and Operational

Efficiency of micro enterprises Business

The success of micro enterprises is largely influenced by two critical dimensions: market
competitiveness and operational efficiency. Market competitiveness refers to how well
enterprises can position themselves within the market, distinguishing their products
or services from those of competitors while adapting to evolving market conditions. This
capability is crucial for sustaining growth and ensuring long-term viability. Key factors that
determine market competitiveness include the ability to differentiate products or services,
the development of new offerings, strategic efforts to retain customers, and deliberate
brand-building initiatives.
Operational efficiency, on the other hand, focuses on how effectively enterprises manage
their internal processes to optimise performance and productivity. Efficient operations
are fundamental to reducing costs, improving product quality, and enhancing customer
satisfaction, all of which are vital for maintaining a competitive edge. Key variables in
evaluating operational efficiency include the presence of robust quality control measures,
adherence to standard operating procedures (SOPs), the ability to scale operations to meet
increased demand, maintaining high safety standards, minimising resource wastage,
integrating technology effectively, ensuring efficient supply chain management, and
fostering workforce skill adequacy.
This section explores the current landscape of market competitiveness and operational
efficiency among micro enterprises, examining how these factors interact to influence
overall business performance. By understanding and improving these dimensions, micro
enterprises can better position themselves for success in an increasingly challenging
market environment.

6.2.1 Market Competitiveness and Adaptability

Out of the enterprises surveyed, 67.21% identified the ability to differentiate products or
services as crucial for maintaining market relevance. Among these enterprises, 55.49%
were involved in new product development. Additionally, 40.6% of those with differentiation
capabilities employed deliberate customer retention strategies. However, only 23% were
actively investing in brand-building efforts. Overall, approximately 23% of the surveyed
enterprises exhibited positive indicators related to market competitiveness and adaptability.

110
 Percentage of
Dimension/s Indicators
enterprises

Product/Service Differentiation (67.21%)

M a r k e t New product development (55.49%)

Competitiveness and
Adaptability Deliberate customer retention efforts (40.6%) 22.61 %

Deliberate Brand building Efforts (23%)

Perceived market competitiveness (22.61%)

Table 6.5

The data reveals that while a significant portion of surveyed enterprises perceive themselves
as having a competitive edge in terms of product/service differentiation, fewer are successful
in retaining customers, and even fewer effectively implement branding efforts. This suggests
that while many businesses can offer unique products or services, they struggle to maintain
customer loyalty and effectively communicate their brand identity.
Marketing challenges are evident among these enterprises, hindering efforts to effectively
promote offerings and maintain a competitive edge. Successful product differentiation is
undermined by difficulties in customer retention and brand building. These marketing
obstacles pose barriers to sustained competitiveness and adaptability in dynamic market
environments.
Investment in targeted marketing strategies and customer relationship management
is crucial for improving customer retention and enhancing brand visibility. Enterprises
should prioritise enhancing adaptability to evolving market conditions through innovation
and strategic brand positioning. By addressing these marketing challenges and focusing
on customer-centric strategies, enterprises can strengthen their market presence and
competitiveness over the long term.

6.2.2 Operational Efficiency

While a significant portion, 57.49%, of the surveyed enterprises reported having quality
control measures in place, only 48.31% of those had documented and adhered to SOPs.
Among these, only 43.14% demonstrated the capacity to manage increased demand and
maintain comparable safety standards. Furthermore, merely one-third of these enterprises
(30.69%) reported minimal resource wastage. When considering technology integration,
only 17.4% of enterprises had integrated technology into their production processes within
the last year. Among these, only a small %age (8.44%) reported efficient supply chain
management and demonstrated workforce skill adequacy (8.17%).

111
 Percentage of
Dimension/s Indicators
enterprises

Presence of quality control measures (57.49%)

Documentation and adherence to SOPs (48.31%)

Capacity to Manage Increased Demand (44.15%)

Comparable Safety Standards(43.14%)

Operational Efficiency 22.61 %

Minimal Resource Wastage (30.69%)

Technology Integration (17.4%)

Efficient supply chain management (8.44%)

Workforce Skill Adequacy (8.17%)

Table 6.6
Many enterprises have established quality control measures and documented standard
operating procedures (SOPs), yet they encounter challenges in managing increased demand
and minimising resource wastage. Low adoption rates of technology and workforce skill
inadequacies further underscore operational inefficiencies within these organisations.
These operational challenges contribute to resource wastage and pose obstacles to
scalability and competitiveness. To address these issues, technology adoption and workforce
development are critical for enhancing operational effectiveness and efficiency. The adoption
of technology and automation can optimise operational processes and improve efficiency
across the supply chain. Meanwhile, investment in workforce training and development is
essential to bridge skill gaps and elevate operational performance.
This analysis highlights the significant opportunities for improving operational efficiency
across various aspects of business operations. By focusing on technology integration and
workforce skill enhancement, enterprises can unlock greater efficiency and competitiveness
in today's evolving business landscape

6.3 Scalability of enterprises

Scalability in enterprises refers to the ability of a business to efficiently manage and sustain
growth, particularly in terms of employment or revenue expansion. This concept is vital for
"scalers," businesses that experience rapid growth by adopting new technologies, business
models, or strategies. Scalability is assessed across four key dimensions: customer value
proposition (CVP), business attribute analysis, change capacity, and market analysis.
CVP focuses on adding value for customers and building loyalty, while business attribute

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 analysis examines the organizational structure and resource management essential
for growth. Change capacity evaluates how well a business adapts to market trends,
technology, and increased demand, and market analysis looks at strategies for expansion
and competitiveness. Together, these dimensions help determine an enterprise's potential
for significant growth and guide strategic decisions to overcome scalability challenges.

6.3.1 Customer Value Proposition

Customer Value Proposition (CVP) refers to the unique combination of benefits and value
that a company offers to its customers, distinguishing it from competitors and meeting the
needs and preferences of its target market. As businesses seek to expand and grow, their
ability to effectively communicate and deliver a compelling CVP becomes instrumental in
driving customer acquisition, retention, and loyalty. Collection and evaluation of customer
feedback, Market Understanding and Customer loyalty building initiatives are the indicators
used to measure this dimension. As per these indicators, 53.5 % of enterprises have proved
to have the potential for scalability in terms of CPV.

Dimension Indicator Percentage

Collection and evaluation of customer

76.5
feedbacks
Customer Value
Market Understanding 65.6
Proposition

Customer loyalty building initiatives 53.5

Table 6.7

Actively collecting and analysing customer feedback is an important aspect of CVP. Around
77% of the YOE enterprises engage in collection and evaluation of customer feedback in
some form or the other. This indicates a strong commitment to understanding customer
preferences and needs, which is fundamental for refining and enhancing the customer
value proposition (CVP).
Market understanding serves as the cornerstone of developing and updating Customer Value
Proposition (CVP). Though a majority of enterprises engage in collection and evaluation of
feedback, only 65% have a comprehensive market understanding. This suggests that while
data is being gathered, there may be opportunities to improve the analysis and interpretation
of this information to drive strategic decisions related to the CVP.
Increasing the customer base and loyalty are critical components of the customer value
proposition (CVP). Despite engaging in feedback collection and evaluation and having
a market understanding, only 53.5% of the enterprise make deliberate efforts to retain
existing customers. This implies that a substantial proportion of enterprises recognize the
importance of retaining existing customers, which is crucial for sustaining business growth
and profitability.

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 Overall, as per these indicators, 53.5 % of enterprises have proved to have the potential for
scalability in terms of CVP.
The high percentage of enterprises collecting and evaluating customer feedback indicates
a proactive approach to refining the CVP. However, despite this effort, the slightly lower
percentage with comprehensive market understanding suggests that there may be gaps
in how this feedback is used to inform strategic decisions. The fact that only 53.5% of
enterprises focus on customer loyalty initiatives, despite strong feedback collection and
market understanding, points to a potential area for improvement in sustaining long-term
customer relationships.
The substantial engagement in feedback collection reflects a positive attitude towards
enhancing the CVP, which is crucial for acquiring and retaining customers. The gap between
feedback collection and market understanding suggests that enterprises may benefit from
improving their ability to analyse and apply feedback to refine their CVP effectively. The
relatively lower percentage of enterprises focused on customer loyalty indicates a need
for more deliberate strategies to enhance customer retention, which is vital for long-term
business growth and scalability.
Overall, about 53.5% of enterprises exhibit strong potential for scalability in terms of CVP,
indicating a significant opportunity for improvement in customer retention and loyalty-
building practices.

6.3.2 Business Attributes

Business attribute analysis includes specific qualities, characteristics, or metrics that

define various aspects of a business and its operational framework. When analysing the
scalability of an enterprise, certain business attributes play crucial roles. It is measured
using indicators like financial leveraging capacity, asset
Financial leveraging capacity capacity, which refers to an enterprise’s ability to utilise
borrowed funds for investment, shows that 53% of enterprises are effectively managing
loans and ensuring repayments without defaulting. This demonstrates their proficiency in
handling debt and accessing capital for growth.
In terms of asset acquisition, only 29.70% of enterprises with financial leveraging capacity
successfully acquired assets. This indicates that despite having access to financing, a lower
proportion of enterprises effectively utilise these funds for acquiring essential assets crucial
for operational expansion and market reach.
Furthermore, only 22.70% of enterprises that have both financial leveraging capacity
and asset acquisition were able to increase their net worth. This reflects a challenge in
translating financial resources and asset acquisition into tangible improvements in overall
business value and financial health.

Dimension Indicator Percentage

Financial Leveraging Capacity 53.13

B u s i n e s s
Asset Acquisition 29.70
Attributes
Increase in net worth 22.70

Table 6.8
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 The analysis of financial leveraging capacity reveals that 53% of enterprises effectively
manage loans and ensure repayment, highlighting their adeptness at utilising borrowed
funds for business investment. This indicates that these enterprises are proficient in
handling debt and have access to necessary financing, which is crucial for supporting their
growth initiatives.
However, the data also shows a significant gap in asset acquisition. Despite having financial
leveraging capacity, only 22% of these enterprises successfully acquire assets. This suggests
that many enterprises struggle to fully leverage their financial resources for acquiring
essential assets, which are critical for scaling operations, expanding market reach, and
enhancing production capabilities.
Furthermore, among enterprises with both financial leveraging capacity and successful asset
acquisition, only 10% were able to increase their net worth. This low percentage underscores
the challenges businesses face in converting financial resources and asset acquisition into
tangible improvements in overall financial health and value creation. It indicates that while
enterprises may have the means to invest, translating these investments into substantial
increases in net worth remains a significant challenge.
Overall, these findings emphasise the need for enterprises to enhance strategic planning
and align their financial leveraging capacity with targeted asset acquisition and value
creation efforts. Investing in financial management and capacity-building initiatives can
help bridge the gap between accessing funds and effectively deploying them for growth.
Additionally, exploring external financing options and fostering partnerships with financial
institutions can support business expansion and scalability.
In summary, addressing the critical link between financial leveraging capacity, asset
acquisition, and value creation is essential for improving scalability and long-term
sustainability. Enterprises should focus on strategic planning, operational efficiency, and
leveraging external financing to achieve their growth ambitions and ensure long-term
success.

6.3.3 Change Capacity

Change capacity is pivotal for enterprise scalability, enabling adaptability to changes in

market dynamics, enhancing innovation, and facilitating seamless expansion into new
opportunities and markets. The key indicators of change capacity involve perception of
ability to compete, technology utilisation, plans to improve infrastructure and technology
and skill updation of workforce.
63.7% of enterprises believe they possess the capability to compete effectively in the market.
This perception is crucial as it influences strategic decisions, driving growth and investment
in innovation.
Despite the high perception of market competitiveness, only 35.5% of enterprises actively
integrate technology into their operations. Effective technology utilisation is critical
for automation, efficiency, and scalability, but there is a notable gap between perceived
competitiveness and actual technology adoption.

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 Only 33.2% of enterprises report having the capacity to manage increased demand. This
indicates that, while many enterprises perceive themselves as competitive, they face
challenges in scaling up operations efficiently in response to higher demand.

Dimension Indicator Percentage

Perception of ability to compete 63.7

Change Capacity Technology Utilisation for business 35.5

Capacity to Manage Increased

33.2
Demand.
Table 6.9
The findings reveal a gap between enterprises’ perceptions of their competitive abilities and
their actual capabilities in technology adoption and managing growth. Although a majority of
enterprises view themselves as competitive, only a fraction effectively integrates technology
into their operations. This disconnect suggests that perception alone may not translate into
practical scalability without corresponding investments in technology.
Moreover, the limited capacity to manage increased demand highlights a significant area for
improvement. Even with a strong perception of competitiveness, many enterprises lack the
necessary infrastructure, processes, or resources to scale efficiently in response to market
opportunities.
To enhance scalability, enterprises should align their perception of competitiveness with
actionable strategies that include broader technology adoption, infrastructure investments,
and workforce skill development. Strategic investments in technology and infrastructure
are vital for supporting scalable growth and operational efficiency.
In summary, addressing the gaps in technology adoption, workforce skill development, and
infrastructure investment is crucial for improving change capacity. Enterprises need to
bridge the disconnect between perception and reality by implementing actionable initiatives
to enhance scalability, competitiveness, and adaptability in dynamic market environments.

6.3.4 Market Analysis

In the context of understanding the potential for scalability of enterprises, the dimension of
Market Analysis focuses on evaluating the organisation's market expansion strategies and
future growth plans. The indicators within the dimensions are current market expansion
status, existence of business development plan and future market expansion plans.
Approximately 23.5% of enterprises have developed formal business development plans.
These plans are crucial as they provide a strategic roadmap for market expansion, guiding
decision-making and resource allocation to achieve growth objectives. 19.7% of enterprises
have successfully expanded their market base since their establishment. Effective market
expansion initiatives are vital for increasing revenue, broadening the customer base, and
enhancing overall market presence. Only 18.5% of enterprises with business development
plans and market expansion efforts have articulated specific future plans for further market
expansion. This indicates that while some enterprises have established strategies for
growth, fewer have clear, formalised plans for ongoing market expansion.
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 Dimension Indicator Percentage

Existence of a business development

23.5
plan
Market Analysis Market Expansion 19.7

Future Market Expansion Plans 18.5

Table 6.10

The findings indicate a nuanced scenario in enterprise market analysis. While a significant
number of enterprises have established formal business development plans and achieved
some level of market expansion, the proportion with clear, future-oriented market expansion
plans is relatively low. This disparity reveals several critical insights. The low percentage
of enterprises with well-defined future market expansion plans points to a deficiency in
proactive strategic planning. While some businesses have formal growth strategies, many
are not extending their planning to future opportunities, potentially impeding long-term
growth and competitive positioning. The absence of comprehensive future market expansion
plans underscores a broader need for more forward-thinking and strategic planning. While
formal business development plans provide foundational direction, their effectiveness is
diminished without specific, actionable plans for future growth, which are essential for
adapting to evolving market conditions. The findings highlight the crucial role of ongoing
market analysis and strategic planning. Enterprises that continuously evaluate market
opportunities and formulate actionable strategies are better equipped to seize growth
opportunities and maintain competitiveness.
The gaps identified in strategic planning and future market expansion planning suggest that
enterprises need to enhance their scalability and resilience. A focus on developing clear,
forward-looking market expansion plans and fostering a culture of strategic planning and
market analysis is vital for navigating market complexities and achieving sustained growth.
In summary, the gaps in strategic planning and market analysis emphasise the importance
of forward-looking strategies for capturing growth opportunities and sustaining
competitiveness. Enterprises that invest in detailed future market expansion plans and
continuous market assessment are likely to improve their scalability and adaptability in
dynamic market environments.
In summary, addressing the observed gaps in strategic planning and market analysis is
critical for enterprises to capitalise on growth opportunities and sustain competitiveness.
Emphasising the importance of formal business development plans and proactive market
expansion strategies can enhance enterprises' scalability and resilience in evolving market
landscapes.

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 6.3.5 Comprehensive Scalability Analysis

The study examined scalability across four critical dimensions: business attribute analysis,
customer value proposition, change capacity, and market analysis. The findings reveal the
challenges and opportunities enterprises face in achieving comprehensive scalability.

1 Business Attribute Analysis

Around 22 % of enterprises exhibit strong business attribute analysis, indicating challenges

in leveraging financial leveraging capacity, asset acquisition, net worth increase, and
external financing.

2 Customer Value Proposition

Approximately 53.5% of enterprises demonstrate potential for scalability in terms of offering

unique value propositions to customers, although improvements in customer feedback
evaluation and loyalty initiatives are needed.

3 Change Capacity

Merely 33.2% of enterprises exhibit strong change capacity, encompassing competitiveness

perception, technology utilisation, workforce skill updation, demand management, and
infrastructure/technology enhancement.

4 Market Analysis

Around 18.5% of enterprises show strong market analysis capabilities, including market
expansion, business development planning, and future growth strategies.

5 Overall Scalability
Ultimately, only 5.08 % of surveyed enterprises demonstrate scalability across all four
dimensions, reflecting the stringent criteria applied to evaluate comprehensive scalability.

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 Dimension Percentage

Business Attribute Analysis 22.7

Customer Value Proposition 53.5

Change Capacity 33.2

Market Analysis 18.5

Scalability 5.08
Table 6.11
The findings underscore critical areas where enterprises need improvement to enhance
scalability, including financial leveraging, customer feedback analysis, technology utilisation,
and market expansion. Achieving comprehensive scalability requires addressing multiple
dimensions simultaneously, highlighting the complexity of operational transformation.
Enterprises should prioritise enhancing business attribute analysis, customer value
proposition, change capacity, and market analysis to foster scalable business models.
Investing in workforce skills, technology integration, and strategic market planning is
essential for enhancing scalability and growth potential. Encouraging knowledge sharing
and innovation can help enterprises address scalability challenges and capitalise on growth
opportunities.
In conclusion, the study underscores the imperative for enterprises to enhance scalability
across critical dimensions to achieve sustainable growth and competitiveness. Addressing
gaps in business operations, customer engagement, innovation capacity, and market
strategy is essential for building resilient and scalable business models in dynamic market
environments.

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 07
Study Highlights and
Actionable Insights

This chapter presents the key findings of the study on enterprise

sustainability and scalability, delivering a comprehensive analysis
across various dimensions. The findings offer valuable insights into the
current landscape of enterprise capabilities for achieving sustainable
and scalable growth. These insights are supported by detailed analysis,
observations, judgments, and implications, guiding enterprises in
refining their strategies for long-term success and development.

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 7.1 General Findings on Entreprise Landscape

7.1.1 Profile of Enterprises

Gender: Under Year of Enterprises, 68% of enterprises formed were male-owned, while
33% were female-owned. This outpaces the national trend, where only 20.44% of MSMEs
were owned by women according to the MSME Annual Report 2023. However, while
female representation in business ownership appears better in Kerala, there’s still room
for improvement to ensure more equitable opportunities for women entrepreneurs.
Ownership Type: In the YOE campaign, 80% of participating enterprises were proprietary
concerns, mirroring the national trend where proprietary concerns constitute 95.98% of
all MSMEs according to the MSME Annual Report 2023. This highlights the widespread
prevalence of small-scale businesses owned and managed by individuals nationwide.
Social Category: In Kerala, 58% of enterprises are owned by individuals belonging to the
Other Backward Classes (OBC), while Scheduled Caste (SC) members own only 8.6%,
and Scheduled Tribe (ST) members own just 0.38%. Despite Scheduled Tribes comprising
1.45% of Kerala’s total population, their representation in enterprise ownership remains
significantly lower than their population proportion. While the representation of OBC
(96%) and SC (94%) members in enterprise ownership is somewhat closer to their
population proportions, there is a notable disparity (26%) for Scheduled Tribes (ST),
indicating a substantial gap in business ownership demographics in Kerala. National
statistics from the MSME Annual Report 2023 reveal that OBCs own the majority of
MSMEs in India at 49.72 %, while SC and ST owners account for 12.45 % and 4.10 %,
respectively.
Geographical spread: Number of enterprises is highest in Thiruvananthapuram, closely
followed by Ernakulam, and Thrissur. In contrast, districts like Idukki and Wayanad have
relatively lower participation rates.
Prominent Sectors: The Year of Enterprises (YOE) campaign primarily saw businesses
emerging in traditional trade sectors such as Agro Food, Beverage, Meat/Fish product
processing, Garments, Textiles, Tailoring, Electrical & Electronics, and IT-related services/
products. Conversely, sectors like Biotechnology, Glass Products, Energy/Renewable
Energy, and Recycling and Waste Management had fewer enterprises established. The
Kerala State Government’s Industrial Policy 2023 highlights 22 focus sectors, which
include innovative areas like Aerospace and Defence, Recycling and Waste Management,
Renewable Energy, and Biotechnology, alongside traditional sectors like Ayurveda and
Food technologies. However, the MSMEs promoted under YOE predominantly gravitate
toward established sectors, revealing a notable gap in representation in innovative fields
like Renewable Energy and Biotechnology, suggesting a disconnect between state-
identified focus areas and entrepreneurial sectoral preferences.

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7.2 Registrations and Certifications

Udyam Registration : The government’s initiative to streamline MSME registration

through ‘Udyam Registration’ comes with no associated costs, aiming to facilitate
business operations and align with updated MSME definitions. This registration offers
MSMEs access to a range of benefits, including participation in government schemes
like the Credit Guarantee Scheme and the Public Procurement Policy. Moreover,
registered MSMEs gain advantages such as eligibility for priority sector lending and
enhanced competitiveness in government tenders. However, despite these incentives,
only a mere 13% of enterprises have embraced Udyam Registration, suggesting that
a significant portion of MSMEs are yet to seize this opportunity. Around 1% reported
previous registration as MSME or SME. The primary reasons for not opting for Udyam
registration include lack of awareness among respondents, followed by time constraints
and complexity of the registration process. Other notable factors cited include concerns
about online registration process, insufficient technical expertise, absence of incentives
and the perception that Udyam registration is unnecessary.
GST Certification : 70% of the enterprises do not have GST registration. It is noteworthy
that 4466 enterprises have registered for GST, surpassing the 3752 enterprises that
actually require it. However, there remains a substantial number of businesses without
GST registration, which restricts their ability to engage in online selling on platforms like
Amazon and Flipkart, where GST registration is mandatory for participation. Investigating
the reasons for the absence of GST registration reveals that almost three-quarters of
enterprises considered it unnecessary based on their turnover. Additionally, a smaller
percentage were exempt from GST requirements. Some enterprises refrained from
registration due to the perceived complexity of the process, while others were simply
unaware of the necessity for GST registration.6.3 Enterprise Initiation

7.3 Enterprise initiation

Motivation for starting business: Enterprise initiation is primarily motivated by the

pursuit of a stable source of income and financial independence. Another significant
factor driving entrepreneurship is the desire to turn personal hobbies or interests into
viable career options. Additionally, a notable portion of entrepreneurs are motivated by
a sense of social responsibility, seeking to contribute to their community or address
social and environmental challenges. Some entrepreneurs are also driven by the desire
for more autonomy in their work choice. Surprisingly, government initiatives are cited
as a motivating factor by only a small portion of respondents, suggesting that while
appreciated, they are not the primary drivers of entrepreneurship under the Year of
Enterprises campaign.
Initial Product Selection:The majority of the products or services, 64%, were initiated
based on personal intuition or gut feeling. Meanwhile, 29% relied on study or field reports,
with 7% being influenced by the opinions of others. The distribution of how products
or services are initiated highlights the importance of knowledge and information in
entrepreneurial decision-making. While personal intuition plays a significant role for
a majority of entrepreneurs, relying solely on intuition may overlook valuable insights

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 from research, data, and the experiences of others. Accessing and analysing relevant
information from studies, market research, and feedback from peers or experts can
provide valuable insights that complement and refine personal intuition, enhancing the
overall decision-making process for entrepreneurs.

7.4 Contextual Factors

The entrepreneurs’ perceptions regarding the contextual factors influencing business
sustainability and growth in Kerala were thoroughly investigated in this study. The survey
reveals that several contextual factors play critical roles in shaping entrepreneurial
experiences in Kerala:
Financial Resources and Government Policies: Entrepreneurs highlighted the moderate
availability of financial resources and government policies as influential factors. However,
there are significant variations in perceptions. This variance in responses with regard to
financial resources suggests that while some entrepreneurs perceive a minimum level of
financial support, others view the situation more favourably. This disparity underscores
potential challenges in equitable access to financial resources among businesses, with
certain entities possibly facing more significant hurdles than others. The response
towards government policies and incentives reflects a nuanced perception among
entrepreneurs. While some respondents view these measures positively and may benefit
from supportive policies and incentives, others may perceive them less favourably due to
regulatory complexities or perceived limitations. Despite this variability, it is noteworthy
that government support and subsidies emerge as positive factors in the business
environment of Kerala.

Market Opportunities and Infrastructure: Kerala's physical infrastructure and

technological resources are perceived as moderately supportive for entrepreneurial
activities. Notably, the availability of technology and machinery and robust physical
infrastructure received the highest ratings among surveyed factors. This suggests that
adequate infrastructure and technological support are perceived as relatively favourable
by entrepreneurs.
Skilled Workforce and Support Services: While skilled workforce availability is
acknowledged, certain services like professional support and access to affordable
professional services received lower ratings, indicating areas for improvement.

Professional Services: Entrepreneurs perceive the availability of professional services

(e.g., tax consultants, accountants, lawyers) and access to affordable services for new
product development and intellectual property protection as not very conducive. This
indicates potential challenges in accessing essential expertise and support for business
operations and innovation.
Local Business Associations and Networking: The level of support from local business
associations, chambers of commerce, and networking opportunities in Kerala is rated
comparatively lower. This suggests a need for stronger engagement and collaboration
within the business community to foster networking and collective growth.

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 Technological Support and Mentorship: The availability of technological support from
universities, research centres, and government R&D institutions is perceived as lacking,
which could impact innovation and technology adoption in enterprises. Additionally,
the availability of mentors for guidance is considered not very supportive, highlighting
potential gaps in mentorship opportunities for aspiring entrepreneurs.

The variability in responses of entrepreneurs with regard to various contextual factors

underscores disparities in perceptions among entrepreneurs. It is crucial to recognize
and address these disparities through targeted interventions tailored to specific needs
and challenges faced by entrepreneurs in Kerala’s business landscapes. By implementing
targeted strategies and policy reforms, stakeholders can cultivate a more supportive and
inclusive ecosystem conducive to sustained entrepreneurship, ultimately driving broader
economic growth and prosperity.

7.5 Economic Aspects and Credit Sourcing

Investment: The initial capital investment rates among enterprises in Kerala depict a
diverse landscape, highlighting distinct levels of financial commitment across businesses.
A significant portion (38%) invested between 3 lakhs and 10 lakhs rupees, suggesting a
moderate scale of operations and a moderate level of financial investment. Additionally,
25% invested more than 10 lakhs rupees, indicating a substantial financial commitment,
possibly indicative of larger-scale operations or ventures with higher capital intensity.
In the fiscal year 2022-23, MSMEs (Micro, Small, and Medium Enterprises) in Kerala
collectively invested a significant amount totaling 8407.856 crores. This substantial
investment indicates a strong economic activity and growth potential within the MSME
sector in Kerala during the period. Such investments are crucial for driving employment,
fostering innovation, and contributing to the overall economic development of the region.
Credit Sources : In our study, we found that 69% of enterprises obtained loans for
their formation, with a notable preference for financing from public sector banks (52%)
and state government institutions like KFC, KSWDC, and KSIDC (19%). This trend
underscores a strong inclination towards government-linked credit sources among
enterprises.

Rationale for non availing loans: In examining the financing behaviours of enterprises,
our study uncovered noteworthy insights. The primary reason cited by those who did
not seek investment loans was sufficient internal capital, while other factors included
limited access to alternate finance, concerns about high interest rates, rejection
of loan applications due to CIBIL scores or banking complexities. Additionally, a
significant portion of entrepreneurs who bypassed MSME loans financed their ventures
independently, with some opting for gold loans (20%) to meet financial needs. Only a
minimal percentage (2%) encountered loan denials due to low CIBIL scores or infeasibility
concerns. These findings highlight the critical need to address financing barriers and
improve loan accessibility for aspiring entrepreneurs. Enhancing access to diverse
financing options and streamlining lending processes can empower economic growth
and support small business development. It's essential to tackle challenges like interest
rates, loan rejections, and banking procedures, while also addressing factors such as
CIBIL scores and feasibility concerns to facilitate entrepreneurial success. Taking out

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 loans at the outset enables businesses to secure additional funds for growth and expansion,
accelerating opportunities and preserving cash flow for daily operations. Successful loan
repayment builds a positive credit history, enhancing creditworthiness for future financing.
Diversifying sources of capital through loans reduces reliance on a single funding source,
bolstering resilience in the face of economic challenges.

Loan repayment: It is noteworthy that a significant 77% of entrepreneurs maintain

regularity in their loan repayments, indicating a strong repayment culture within the
majority of enterprises that have utilised loans. This positive trend underscores the
financial discipline and viability of these businesses. However, it’s essential to address
the remaining 23% of enterprises who face challenges in meeting their loan repayment
obligations. Understanding the reasons behind their difficulties and providing targeted
support and resources could help improve their financial stability and mitigate potential
risks to their businesses.

Subsidies: 12% of entrepreneurs accessed benefits from government agencies,

amounting to a substantial disbursement of 313 crore rupees through various channels
under the ‘Year of Enterprises’ initiative. This indicates a significant government
investment in industrial development. However, the majority of enterprises did not avail
any subsidies, suggesting potential underutilization of government support schemes.

Government departments and schemes: Among the 24 selected departments/agencies

offering support, Industries & Commerce, Kudumbashree, local bodies, commercial
banks, and Khadi & Village Industries were the main contributors, while Small Industries
Development, Kerala Startup Mission, and National Small Industries Corporation offered
comparatively less support. Analysing the subsidies/financial benefits accessed by ‘Year
of Enterprises’ beneficiaries, key departments providing benefits included Industries and
Commerce, Kudumbashree Mission, Local Bodies, Khadi board, NORKA, Kerala State
Backward Development Board, and SC/ST Development Board. These entrepreneurs
explored a range of enterprise promotion schemes under the State/CEntral Government,
with schemes like ‘PMEGP’, ‘Rebuild Kerala Initiative’, and ‘Mudra Loan’ being most
suitable. PMEGP loans were particularly prominent, with 4516 beneficiaries, followed
by other schemes that provided project assistance for Rural Micro Enterprises scheme.
However, some schemes, such as the ‘WE Mission Scheme’ by KSIDC and ‘Startup India
scheme’, were less suitable for enterprises under the program. Notably, Kudumbashree
remained a major agency providing support to SC/ST owned enterprises, while the
Industries and Commerce department’s support to vulnerable social categories,
especially ST-owned enterprises, was minimal. This underscores potential areas for
improvement in ensuring equitable access to government support across all social
categories.

7.6 Performance of enterprises

Financial Performance and reinvestment: Only 14% generate regular and stable
income from their enterprise, reflecting a degree of financial stability. Another 36% are
profitable, yet they reinvest a significant portion of their earnings back into the business,
resulting in irregular income. 37% enterprises operate at a break-even point, neither
making profit nor incurring losses, and 12% of enterprises are incurring losses. Among

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 enterprises that choose to reinvest, approximately 42% allocate more than 10% of their profits
back into the business. Notably, around 20% either haven’t calculated their reinvestment
rate or are unsure about it, indicating a potential focus on day-to-day operations rather than
expansion efforts. Findings indicate that a significant

Financial Performance and reinvestment: Only 14% generate regular and stable income
from their enterprise, reflecting a degree of financial stability. Another 36% are profitable,
yet they reinvest a significant portion of their earnings back into the business, resulting in
irregular income. 37% enterprises operate at a break-even point, neither making profit
nor incurring losses, and 12% of enterprises are incurring losses. Among enterprises
that choose to reinvest, approximately 42% allocate more than 10% of their profits back
into the business. Notably, around 20% either haven’t calculated their reinvestment rate
or are unsure about it, indicating a potential focus on day-to-day operations rather than
expansion efforts. Findings indicate that a significant portion of enterprises (36%) prioritise
reinvestment over immediate profit, potentially impacting income stability. The break-
even status of 37% of enterprises suggests a need for strategies to enhance profitability
and sustainability. Enterprises that prioritise reinvestment demonstrate a commitment
to growth and expansion, albeit at the cost of stable income. The findings highlight the
financial diversity and challenges faced by enterprises in achieving profitability and stability.
Strategies focusing on income stability, profit maximisation, and efficient reinvestment
could benefit a majority of enterprises. Providing financial literacy and planning support to
enterprises can facilitate informed decision-making about reinvestment and profitability.
Developing tailored financial products and support mechanisms can assist enterprises in
managing and optimising their financial performance.

Income Generation: 29% of entrepreneurs are earning an average monthly income below
Rs. 10,000/-, while 32% fall within the range of Rs. 10,000/- to Rs.. 25,000/-. Only 15% of
enterprises manage to achieve a monthly income exceeding Rs. 50,000/-.Around 5% of
enterprises aren’t generating any income at all. Meanwhile, this distribution indicates that a
portion of entrepreneurs face significant financial challenges, unable to generate substantial
income from their enterprises. The majority (61%) of enterprises earn below Rs. 25,000 per
month, highlighting widespread challenges in achieving substantial income levels among
entrepreneurs and underscoring the financial constraints faced by a significant portion of
this group. This distribution necessitates additional support or strategies to bolster income-
generating capabilities. The data indicates a clear need for targeted interventions to address
income disparities and enhance the financial sustainability of enterprises, particularly those
earning below Rs. 25,000 per month. Specific support measures aimed at improving income
levels and business viability are essential. Moreover, the limited proportion of enterprises
achieving higher income levels signals challenges in scaling businesses effectively, requiring
implementation of income augmentation strategies tailored to smaller businesses. These
findings underscore the urgent need to address income disparities and financial challenges
among entrepreneurs, with a focus on strengthening income-generating capabilities to
drive overall sustainability, economic empowerment, and job creation within this sector.
Targeted interventions and support mechanisms are crucial for enabling entrepreneurs to
overcome financial barriers and achieve sustainable business success.

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 Change in income : Examining income changes post-establishment of enterprises, it’s
notable that 48% experienced a slight increase, indicating modest improvements in income
levels. This prevalent trend suggests that many enterprises struggle to achieve significant
income growth. Additionally, 10% reported a significant increase in income, highlighting
notable successes for a minority of enterprises. Conversely, around 35% reported no change
or a slight decrease in income, signifying challenges in maintaining or growing income
levels. Moreover, 7% reported a significant decrease in income, indicating heightened
concern over their financial situation. The findings suggest a mixed scenario of income
changes among enterprises, with a substantial portion experiencing modest improvements
but a notable percentage facing stagnation or decline in income. These findings underscore
the importance of implementing measures to support income growth and stability among
entrepreneurs, ensuring the sustainability of their enterprises. The data underscores the
need for targeted interventions to support income growth and sustainability, particularly
for enterprises experiencing challenges in maintaining or increasing their income levels.
Enterprises reporting significant decreases in income require urgent attention and support
to address financial distress and stabilise their operations.the business. Notably, around
20% either haven’t calculated their reinvestment rate or are unsure about it, indicating a
potential focus on day-to-day operations rather than expansion efforts. Findings indicate
that a significant portion of enterprises (36%) prioritise reinvestment over immediate
profit, potentially impacting income stability. The break-even status of 37% of enterprises
suggests a need for strategies to enhance profitability and sustainability. Enterprises that
prioritise reinvestment demonstrate a commitment to growth and expansion, albeit at the
cost of stable income. The findings highlight the financial diversity and challenges faced by
enterprises in achieving profitability and stability. Strategies focusing on income stability,
profit maximisation, and efficient reinvestment could benefit a majority of enterprises.
Providing financial literacy and planning support to enterprises can facilitate informed
decision-making about reinvestment and profitability. Developing tailored financial products
and support mechanisms can assist enterprises in managing and optimising their financial
performance.

Cash flow challenges: Around one third of enterprises (35%) rarely or never experience
cash flow crunches. Another 37% occasionally face such challenges, indicating periodic
difficulties in managing cash flow. However, 25% of enterprises experience cash flow
challenges daily, suggesting ongoing struggles in sustaining their day-to-day operations.
This subset likely faces significant hurdles in managing expenses and maintaining liquidity,
which could impact their ability to operate effectively and achieve financial stability. The
high proportion of enterprises facing daily cash flow challenges underscores the urgent
need for interventions to address financial constraints. Daily struggles with cash flow can
severely impact businesses, hindering their ability to function effectively and meet financial
obligations. Addressing cash flow challenges is crucial for enhancing the overall financial
health and stability of enterprises. Targeted support in financial management can contribute
to the resilience and growth of enterprises within the entrepreneurial ecosystem.

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 7.7 Marketing

Selling: Approximately half of enterprises opt to market their products through their
own shops or nearby outlets, leveraging the convenience and accessibility of physical
storefronts. 25% prefer door-to-door or direct selling, emphasising personal interaction
with customers. A smaller proportion, around 11%, choose to sell their products through
distributors, tapping into existing distribution networks. Surprisingly, only 10% utilise
social media platforms for marketing, despite the potential for wider reach and audience
engagement offered by digital channels. Additionally, a mere 3.5% of enterprises sell their
products through online market platforms, suggesting limited adoption of e-commerce.
The predominant use of physical storefronts and direct selling underscores the significance
of traditional marketing channels in the entrepreneurial landscape. Despite the potential
benefits of digital marketing, adoption rates for online platforms remain relatively low, with
only a fraction of enterprises utilising social media (10%) or online market platforms (3.5%)
for product promotion. Encouraging greater adoption of digital marketing tools, providing
e-commerce training, and fostering collaboration with online marketplaces can empower
enterprises to diversify their selling strategies, reach new markets, and enhance overall
competitiveness in the entrepreneurial landscape.

Sales Growth: Majority of entrepreneurs, comprising half of the respondents, reported

experiencing slight growth. Additionally, 14.7% noted a significant increase in sales,
indicating notable successes for a subset of enterprises. However, 23% noted stagnation
in sales, suggesting a plateau in growth for a significant portion of respondents. On the
other hand, 10% reported a slight decrease in sales, while roughly 4% reported a significant
decrease. These findings highlight the diverse sales performance among enterprises, with
some experiencing growth, others facing stagnation, and a minority encountering declines
in sales. The prevalence of slight sales growth among a majority of entrepreneurs suggests
overall positive momentum in business performance. However, the significant percentage
experiencing stagnation or decline underscores challenges in sustaining growth and
achieving consistent sales performance.
Market Expansion : A quarter of entrepreneurs have expanded their operations into new
markets since inception, while the remaining 75% have not. Various reasons emerged
when exploring how they expanded their business. The majority of respondents (about 40%)
entered markets in different cities, districts or states, aiming to broaden their geographical
reach. For 28% of respondents, the expansion was driven by the introduction of new products
or services, indicating a focus on diversification. Another 20% entered into new customer
groups or demographics, demonstrating a strategic shift in targeting. Additionally, 7%
of entrepreneurs tailored their products/services to meet specific customer demands,
showing an adaptive approach to market needs. Furthermore, 5.41% expanded their sales
by establishing an online presence and utilizing e-commerce platforms, leveraging digital
channels for growth. When asked about exporting products to international markets, roughly
10% responded affirmatively, while the majority, 90%, did not engage in international trade.
The findings indicate a mixed landscape of market expansion strategies among
entrepreneurs. While a significant portion (40%) focused on geographical expansion
to different cities, districts, or states to broaden their reach, others prioritised product
diversification (28%) and targeted new customer groups or demographics (20%). Additionally,

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 a smaller percentage (7%) adopted an adaptive approach by tailoring products or services
to meet specific customer demands. The data also highlights a growing interest in digital
transformation, with approximately 5.41% leveraging e-commerce platforms to expand their
sales. Implementing effective expansion strategies can unlock new opportunities, enhance
market reach, and diversify revenue streams for entrepreneurs. Targeted interventions
and support mechanisms are essential to empower entrepreneurs in navigating market
complexities and seizing growth opportunities.

Social Media marketing : 29% of enterprises are not leveraging any social media or
digital marketing platforms to extend their reach to a wider audience. Among those that
do utilise digital channels, the majority prefer social media platforms such as WhatsApp
(29%), Instagram (21%), and Facebook (20%). However, it’s worth noting that only a small
fraction, approximately 0.98%, are tapping into digital platforms like Amazon and Flipkart
to access a broader customer base. While platforms like Amazon offer unparalleled access
to a vast customer pool and streamlined e-commerce infrastructure, their utilisation may
necessitate additional resources and expertise to navigate effectively. The data underscores
a gap in the adoption of advanced digital marketing strategies among enterprises. The data
suggests a hesitation or lack of readiness among enterprises to explore more advanced
digital marketing avenues, such as e-commerce platforms. While social media channels
like WhatsApp, Instagram, and Facebook offer effective communication tools, tapping
into e-commerce platforms like Amazon and Flipkart requires additional resources and
expertise. The findings highlight the importance of advancing digital marketing strategies
among enterprises to capitalise on the evolving digital landscape.

Participation in Trade Fairs/Exhibitions : Trade Fairs/Exhibitions are widely recognized

for their role in product promotion, yet the data presents a stark reality: only a mere 5% of
enterprises have participated in such events, leaving a significant majority (95%) who have
not taken part in Trade Fairs organised by the Industries and Commerce Department. The
data highlights a significant gap in leveraging trade fairs and exhibitions as a marketing
strategy among enterprises. The low participation rate in trade fairs may indicate several
factors, including lack of awareness about opportunities, perceived barriers to participation
such as costs or logistical challenges, or competing priorities for resource allocation.

Customer Retention : Majority (69%) of enterprises actively undertake deliberate efforts

to retain their existing customers, recognizing the value of customer loyalty. Among these
enterprises, various strategies are employed to foster loyalty and satisfaction. Notably, 40%
of the enterprises prioritise personalised communication and service, aiming to build strong
relationships with their customer base. Additionally, 30% of the enterprises offer exclusive
incentives such as special offers and customer loyalty programs, providing added value to
their loyal customers and incentivizing repeat purchases. These strategies underscore a
proactive approach to customer retention, reflecting a commitment to delivering exceptional
experiences and nurturing long-term relationships with customers.
Brand presence : Branding plays a critical role in enabling customers to easily identify and
differentiate products, especially in a competitive market landscape. Approximately half of
the enterprises are confident that their products are being recognized by customers through
their brand names. However, a significant portion, comprising 31% of entrepreneurs, express
concerns that their customers do not associate their products with any specific brand
name. Moreover, the data indicates that 14% of enterprises do not have a distinct brand

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 name, which could potentially hinder their ability to establish a strong market presence
and foster customer recognition. It’s noteworthy that only a few enterprises are not aware
of their brand recognition status. The significant number of enterprises that perceive a lack
of customer association with their brand names, suggesting opportunities to strengthen
brand visibility and recognition strategies. The presence of enterprises without distinct
brand names indicates a need for focused efforts to develop and promote unique brand
identities.

Brand building : When exploring deliberate efforts taken by enterprises to establish

a brand name and brand awareness for their products/services, a substantial portion,
comprising 67% is making efforts to a great extent. The high percentage of enterprises
prioritising brand building signifies a proactive approach to establishing market identity
and fostering customer engagement. Additionally, 27% of enterprises are taking moderate
efforts, indicating a varied approach to brand building. However, only a small percentage is
actively engaged in deliberate efforts to establish a brand name. These findings underscore
the importance of proactive branding strategies in establishing a strong market presence
and enhancing customer recognition.

Pricing : The data on product pricing reveals that the majority of enterprises (55%) price
their products or services similarly to others in the market. This suggests a competitive
pricing strategy aimed at aligning with industry standards and customer expectations.
Approximately 20% of enterprises price their offerings slightly lower, indicating an effort to
enhance accessibility and broaden their customer base by offering more affordable options.
However, a smaller proportion (8%) prices their products higher than similar offerings,
potentially driven by higher production costs or a lack of awareness about market rates.
Competitive pricing strategies are essential for maintaining market relevance and appealing
to target customers. Enterprises that adopt lower pricing strategies are likely aiming to
capture market share and drive sales volume. However, enterprises with higher pricing
may need to reassess their pricing strategies to optimise competitiveness and market
acceptance.
Product Differentiation: The data on product differentiation indicates that a substantial
proportion of respondents (42%) perceive a high level of competition with numerous similar
products or services in the market. Additionally, 41% acknowledge the presence of similar
offerings. A notable finding is that 13.44% of respondents believe their products or services
have no direct competitors in the market. The prevalence of perceived competition highlights
the challenges enterprises face in distinguishing their offerings within crowded markets.
Acknowledgment of similar offerings by respondents also suggests awareness of market
dynamics and competitor landscapes. The recognition of market saturation by a significant
proportion of respondents necessitates strategic approaches to product positioning and value
proposition development. The belief among a minority that their products or services lack
direct competitors underscores niche market opportunities or unique value propositions.
Among respondents who acknowledged the presence of similar products or services (83%),
a majority (65%) expressed confidence in their ability to differentiate their offerings. This
confidence suggests a perceived advantage in unique selling propositions (USPs) or strategic
positioning within competitive markets. Conversely, 35% of respondents identified product
differentiation as a challenge, highlighting potential barriers to establishing distinctive
market positions. Challenges expressed by this significant minority highlight the need for
tailored support and strategic guidance to overcome barriers to differentiation.

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 New product development : The data on new product development reveals varying levels
of innovation and responsiveness to customer feedback among enterprises. A significant
portion (58%) introduces new products occasionally, indicating a proactive approach to
product evolution and market adaptation. Additionally, 19% of enterprises demonstrate a
high degree of responsiveness by frequently introducing new products based on regular
customer feedback. However, 23% of enterprises report never introducing new products,
suggesting potential stagnation or limited innovation within this subset. The findings highlight
a spectrum of innovation behaviours among enterprises, ranging from proactive adaptation
to infrequent or stagnant product development. Enterprises that introduce new products
occasionally show a willingness to evolve and meet changing market demands. Conversely,
the absence of new product introductions by 23% of enterprises may indicate missed
opportunities for growth and competitive advantage. Enterprises demonstrating frequent
or occasional new product introductions exhibit strategic flexibility and responsiveness to
customer needs, enhancing market relevance and competitiveness. Conversely, enterprises
that never introduce new products may face challenges in meeting evolving customer
expectations and sustaining business growth.

7.8 Employment

Employment generation : The data on employment generation under the Year of Enterprise
program reveals significant job creation impact, with approximately 3 lakh employment
opportunities generated. However, there is a notable gender disparity in the distribution of
these opportunities, with a higher proportion (62%) of male employees compared to female
employees (38%). This disparity underscores existing gender gaps in employment outcomes
within the Year of Enterprise campaign. The observed gender gap in employment highlights
persistent challenges related to gender equality and inclusion in economic opportunities.
The majority of employment opportunities created by the YOE program are filled by male
workers, reflecting imbalances in workforce participation and access to entrepreneurial
initiatives. The disproportionate representation of male employees suggests systemic
barriers and disparities that limit women’s participation in entrepreneurship and job
creation initiatives. Addressing gender disparities in employment generated by the Year
of Enterprise program is essential for fostering inclusive economic growth and social
development.

Gender preference of employment : The employment data from male-owned and female-
owned enterprises reveals a notable gender preference in hiring practices. Among jobs
generated by male-owned enterprises, approximately 78% of positions were filled by male
employees. Similarly, within female-owned enterprises, about 73% of jobs were occupied
by female employees. This disparity suggests a gender bias in employment patterns within
the entrepreneurial landscape. The observed gender preferences in employment highlight
persistent challenges related to gender equality and representation in the workforce.
Male-owned enterprises tend to hire predominantly male workers, while female-owned
enterprises exhibit a similar trend with female employees. This phenomenon reflects
underlying gender biases and preferences in hiring practices.

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 Workforce diversity : The data reveals notable trends in gender diversity considerations
within enterprises, indicating varying levels of awareness and preferences regarding
workforce composition. A majority of enterprises (27%) reported not considering gender
diversity in their workforce, reflecting a potential oversight or lack of deliberate inclusion
strategies. Additionally, 19% of enterprises expressed a preference for specific genders
in certain job roles, highlighting a gender-based approach to staffing within the MSME
sector. The observed lack of consideration for gender diversity and the preference for
specific genders in job roles underscore persistent challenges related to inclusivity and
equal opportunity in employment. The data suggests a need for increased awareness and
proactive measures to promote gender diversity and inclusivity within enterprises. The
preference for specific genders in certain job roles may perpetuate gender stereotypes and
limit opportunities for individuals based on their gender identity.

7.9 Operational Efficiency

Resource utilisation and SOP : The data on resource utilisation and Standard Operating
Procedures (SOPs) sheds light on varying levels of resource management practices within
enterprises. Half of the respondents indicated low levels of resource wastage, while
approximately 15-16% reported high levels of wastage. Surprisingly, about 7% were unaware
of the extent of resource wastage in their processes. The relatively high percentage (72%)
of enterprises following Standard Operating Procedures (SOPs) suggests a correlation with
perceived lower levels of resource wastage. The findings highlight a significant proportion
of enterprises actively implementing SOPs, which may contribute to more efficient resource
utilisation and reduced wastage. However, the presence of respondents unaware of their
resource wastage levels underscores potential gaps in monitoring and evaluation practices.

Quality Control : Quality control is a crucial aspect of ensuring the reliability and consistency
of products or services. The data on quality control practices among enterprises reveals
both positive trends and areas for improvement. Approximately 58% of enterprises have
implemented some form of quality control system, indicating a significant proportion
actively monitoring product/service quality. Among those with quality control measures, the
majority (74%) conduct regular quality checks at various production stages, demonstrating
a proactive approach to maintaining quality standards. However, only a small percentage
(11.37%) ensure quality through dedicated personnel or adherence to recognized quality
standards like Agmark or ISI/BIS procedures. Despite these efforts, formal quality
certification is obtained by only 15% of MSMEs, suggesting that while internal quality control
measures are prevalent, formal certification remains limited. The findings highlight a
considerable gap in formal quality certification among MSMEs, despite a notable proportion
implementing internal quality control measures. Additionally, around 40% of enterprises do
not have any quality control measures in place, with some citing unawareness as a reason.
This underscores varying levels of quality management practices and awareness within the
MSME sector.

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 Collaboration with local suppliers and vendors: Approximately 50% of enterprises have
either never collaborated with local suppliers and vendors or rarely utilised their services.
However, a notable proportion, comprising 25% of enterprises, relied on supplies sourced
from local markets.

Technology Integration : The study emphasises the critical role of technology integration
in optimising business operations and fostering efficiency across departments. However,
concerning trends emerge regarding the adoption of basic technology tools among enterprises
in Kerala. Approximately 40% of enterprises either never or rarely utilise basic technology
such as computers, the internet, or email for essential business tasks like accounting and
communication with stakeholders. This indicates a significant gap in leveraging digital
tools to enhance productivity and competitiveness. In an era where technology is ubiquitous
and transformative, this lack of adoption represents a significant missed opportunity for
businesses to leverage digital tools for improved productivity and competitiveness. On a
more positive note, nearly half of the enterprises (48%) have taken steps to integrate new
technological advancements within the past year to enhance their production processes or
improve service delivery. Among these adopters, a notable proportion reported significant
improvements across various aspects of their business, including production efficiency,
service quality, inventory management, customer engagement, cost reduction, data
analysis, and decision-making.

7.10 Personal Outcomes in Entrepreneurship

The evaluation of personal outcomes among entrepreneurs participating in the Year

of Enterprises (YOE) program provides valuable insights into the holistic impact of
entrepreneurship on individuals, extending beyond economic measures. Participants
reported generally positive outcomes across key variables, including quality of life
improvement, increased social status/acceptance, development of social skills, and overall
well-being and life satisfaction. These findings underscore the transformative impact of
entrepreneurship on various aspects of individuals' lives. Specifically, the YOE program has
contributed to improvements in quality of life, heightened social status and acceptance,
development of essential social skills, and overall well-being and life satisfaction among
participants. To further maximise the positive impact of entrepreneurship programs like YOE,
continued holistic support, tailored skill development initiatives, and ongoing monitoring
and evaluation processes are recommended. By fostering positive changes in individuals'
lives, entrepreneurship programs contribute to inclusive economic growth and societal
well-being, empowering entrepreneurs and communities alike. Efforts to enhance and
optimise such programs will continue to yield significant positive outcomes for participants
and contribute to a thriving entrepreneurial ecosystem.

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7.11 Effectiveness of Year of Enterprises

Entrepreneurs participating in the Year of Enterprises (YOE) program provided valuable

insights into the usefulness and awareness of various services and activities offered. These
findings shed light on the effectiveness and areas for improvement within the program.
Among the most utilised and beneficial services reported were support for the GeM Portal
and Udyam Registration, with 56% of respondents finding them helpful. Additionally,
support provided by interns in submitting applications (53%) and assistance from Taluk
Resource Persons of Enterprise Facilitation Centres (50%) were acknowledged as valuable
for navigating administrative processes and accessing necessary resources. Conversely,
certain services such as the Margin Money Grant to Nano Units, Whatsapp facility to ‘Chat
with Minister’, and Grievance Redressal System are less utilised due to low awareness among
entrepreneurs. This highlights the importance of improving outreach and communication to
enhance service uptake.
A notable percentage of respondents (10%) found the support from Taluk Resource Persons
of Enterprise Facilitation Centres to be unhelpful after utilising it. Similarly, Help Desk
Services (8.3%), Support by Interns (8.8%), and the Entrepreneur Support Scheme for
Manufacturing Start-ups (8%) were identified as not useful by some participants, suggesting
areas for service improvement and feedback incorporation.

Entrepreneurs participating in the Year of Enterprises (YOE) program provided valuable

insights into the usefulness and awareness of various services and activities offered. These
findings shed light on the effectiveness and areas for improvement within the program.
Among the most utilised and beneficial services reported were support for the GeM Portal
and Udyam Registration, with 56% of respondents finding them helpful. Additionally,
support provided by interns in submitting applications (53%) and assistance from Taluk
Resource Persons of Enterprise Facilitation Centres (50%) were acknowledged as valuable
for navigating administrative processes and accessing necessary resources. Conversely,
certain services such as the Margin Money Grant to Nano Units, Whatsapp facility to ‘Chat
with Minister’, and Grievance Redressal System are less utilised due to low awareness among
entrepreneurs. This highlights the importance of improving outreach and communication to
enhance service uptake.
A notable percentage of respondents (10%) found the support from Taluk Resource Persons
of Enterprise Facilitation Centres to be unhelpful after utilising it. Similarly, Help Desk
Services (8.3%), Support by Interns (8.8%), and the Entrepreneur Support Scheme for
Manufacturing Start-ups (8%) were identified as not useful by some participants, suggesting
areas for service improvement and feedback incorporation.
The study reveals notable awareness among entrepreneurs regarding specific services
offered by the Year of Enterprises (YOE) program, despite a low utilisation rate.
Understanding the reasons behind this discrepancy is crucial for optimising service delivery
and enhancing program effectiveness. A significant percentage of entrepreneurs (30% for
Support for Export Promotion, 28% for Marketing support through Trade Fairs, and 26% for
Entrepreneur Support Scheme for Manufacturing Start-Ups) are aware of these services but
have not utilised them. This suggests a gap between awareness and actual engagement,

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 highlighting potential barriers or challenges faced by entrepreneurs in accessing these
services. Addressing the gap between awareness and utilisation of services within the Year of
Enterprises program is essential for maximising its impact on entrepreneurial development
in Kerala.

7.12 Market Competitiveness and Adaptability

While the initial indicators of product/service differentiation are promising, the overall
market competitiveness of enterprises is undermined by weak customer retention and
brand-building efforts. Approximately 67% of surveyed enterprises reported a positive
perception of their ability to differentiate their products or services in the market. Out of
which, 55.49% of enterprises actively engaged in developing new products or services
to meet market demands. Among these, only 40.6% of enterprises implemented
deliberate efforts to retain customers, reflecting a decline from the initial perception
of product/service differentiation. A mere 22.61% of enterprises engaged in deliberate
brand-building efforts, indicating a significant gap in brand identity and market
positioning. Overall, only 22.61% of enterprises perceived themselves as competitive in
the market, a marked reduction from the earlier positive indicators.
While many enterprises believe they have successfully differentiated their products or
services, their efforts to retain customers and build a strong brand are considerably
weaker. This indicates a potential disconnect between product innovation and the broader
market strategy, particularly in customer engagement and brand development. The
lower percentages in customer retention and brand-building efforts highlight significant
areas where enterprises are struggling, which could undermine their long-term market
competitiveness and adaptability.
The gap between product/service differentiation and customer retention suggests
that while enterprises may offer unique products or services, they are not effectively
maintaining customer loyalty. This could lead to challenges in sustaining their market
position over time. The low level of brand-building efforts indicates that many enterprises
are not investing adequately in establishing a strong market identity. Without a clear and
recognizable brand, even differentiated products or services may fail to attract and retain
customers consistently.

Marketing Challenges : The findings suggest that enterprises face significant marketing
challenges, particularly in retaining customers and building a brand. These challenges
could be due to a lack of strategic marketing initiatives or limited resources dedicated to
customer relationship management and brand positioning.

Need for Strategic Focus : To enhance market competitiveness and adaptability,

enterprises must adopt a more strategic focus on customer retention and brand-building.
This could involve investing in targeted marketing strategies, developing a strong brand
identity, and fostering customer loyalty through personalised engagement and consistent
communication.

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 Long-Term Competitiveness: For sustained competitiveness, enterprises need to move
beyond just differentiating their products or services. They must build and maintain strong
customer relationships and invest in brand development. By doing so, they can create a
more resilient market position and better adapt to changing market conditions.

7.13 Operational Efficiency

The findings reveal significant gaps in operational efficiency across many enterprises, driven
by inadequate process management, limited technology use, and workforce skill deficiencies.
A significant portion, 57.49%, of enterprises reported having quality control measures in
place, but only 48.31% had documented and adhered to Standard Operating Procedures
(SOPs). Among the enterprises, 43.14% showed the capacity to manage increased demand
while maintaining comparable safety standards. Minimal resource wastage was reported
by 30.69% of the enterprises, indicating inefficiencies in resource management. Out of
which, only 17.4% of enterprises integrated technology into their production processes
within the last year. Eventually, a small percentage, 8.44%, reported efficient supply chain
management, and 8.17% demonstrated workforce skill adequacy.
The low percentage of enterprises displaying positive operational efficiency indicates
widespread inefficiencies in managing internal processes, resources, and technology
adoption. While a significant number of enterprises have quality control measures, the lack
of adherence to SOPs suggests inconsistencies in maintaining operational standards, which
can lead to inefficiencies and safety risks. The limited capacity to manage increased demand
and maintain safety standards highlights potential vulnerabilities in scaling operations
without compromising quality or safety.
The findings suggest that many enterprises may be operating with outdated processes,
limited technological integration, and inadequate workforce skills, all of which contribute
to operational inefficiencies. The disconnect between having quality control measures and
effectively adhering to SOPs implies a gap in process management, where enterprises
might have the necessary protocols but lack the discipline or resources to implement them
consistently. The low adoption of technology and automation points to a significant barrier
to achieving operational efficiency, as modern tools and systems that could streamline
operations and reduce costs are not being utilised effectively.

Operational Challenges: The results indicate that many enterprises face substantial
operational challenges, particularly in areas like process standardisation, resource
management, and technology integration. These challenges hinder their ability to
operate efficiently and scale effectively.
Need for Technology Adoption: The low rate of technology integration underscores the
need for enterprises to invest in modern technologies that can automate and optimise
various aspects of their operations, from production to supply chain management.
Workforce Development: The findings highlight the importance of workforce
development in improving operational efficiency. Enterprises must invest in training
and upskilling their employees to ensure that they have the competencies required to
manage advanced technologies and adhere to operational standards.

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 Scalability Concerns: The limited capacity to manage increased demand without
compromising safety or quality suggests that many enterprises are not prepared for
growth. Enhancing operational efficiency is critical to ensuring that these enterprises
can scale successfully without facing operational bottlenecks or quality issues.

7.14 Sustainability of Enterprises

The assessment of sustainability among micro-enterprises reveals significant areas for

improvement across economic, environmental, and social dimensions. While there are
positive trends, particularly in environmental sustainability, the overall picture suggests
that many enterprises are still at risk.

7.14.1 Economic Sustainability

The economic sustainability assessment of micro-enterprises reveals that 62.22% of them

are categorised as ‘Moderately Sustainable.’ This indicates that while these enterprises are
relatively stable, they still require improvements to achieve long-term economic viability.
Only 10.81% are classified as ‘Highly Sustainable,’ highlighting the challenges in achieving
high economic performance. A significant portion, 24.80%, are deemed ‘Vulnerable,’ showing
that they are at risk of economic instability, and 2.18% are categorised as ‘Unsustainable,’
indicating critical financial concerns.
The majority of micro-enterprises exhibit moderate economic sustainability, indicating a
need for targeted support to enhance their financial stability and long-term viability. The low
percentage of highly sustainable enterprises underscores the difficulty in achieving robust
economic performance in this sector. However, the large number of enterprises classified
as vulnerable indicates that many businesses are operating on the edge of financial
sustainability. Without intervention, these enterprises risk falling into unsustainability,
which could lead to closures and economic downturns in their communities.
The data suggests that economic sustainability remains a significant challenge for many
micro-enterprises. Enhancing financial literacy, access to capital, and strategic planning
are critical for moving enterprises from moderate to high sustainability levels. Targeted
support is essential to prevent vulnerable enterprises from becoming unsustainable.

7.14.2 Environmental Sustainability

Environmental sustainability is strong among the surveyed enterprises, with 78.47% having
a ‘Positive Environmental Impact.’ This suggests effective management of solid and liquid
waste and a strong concern for environmental responsibilities. However, 21.53% have a
‘Limited Environmental Impact,’ indicating a need for improvement in their environmental
practices.
The high percentage of enterprises with positive environmental impact suggests a growing
awareness and implementation of eco-friendly practices. However, the existence of
enterprises with limited environmental impact indicates that not all businesses have fully

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 integrated sustainability into their operations. Despite positive environmental trends, the gap
between action and perception suggests that some enterprises may not fully recognize the
importance of environmental responsibility. This disconnect could hinder further progress
in environmental sustainability unless addressed through education and policy initiatives.
While many enterprises have embraced environmentally sustainable practices, there is
a need for continued education and incentives to bridge the gap between awareness and
action. Integrating environmental considerations into core business strategies can help
enterprises improve their sustainability impact.

7.14.3 Social Sustainability

Social sustainability assessment shows a balanced distribution, with 50.09% of enterprises

demonstrating a ‘Positive Social Impact,’ which includes effective employment practices,
fair compensation, and active community engagement. Conversely, 49.82% are classified
as having a ‘Limited Social Impact,’ indicating deficiencies in areas such as employment
generation, wage standards, and community involvement.
The nearly even split between enterprises with positive and limited social impact suggests
a disparity in how businesses contribute to social well-being. While many enterprises are
making strides in social sustainability, a significant portion still needs to improve their
practices related to employment, fair wages, and community engagement. The close
division between positive and limited social impact enterprises reflects the challenges in
achieving broad-based social sustainability. Enterprises that do not prioritise social impact
may struggle to build a loyal workforce or community support, which are crucial for long-
term success.
The mixed results in social sustainability indicate that while some enterprises are making
positive contributions, others are lagging. This suggests a need for policies and programs
that encourage fair labour practices, workforce development, and community engagement
as part of the broader sustainability agenda.

7.14.4 Comprehensive Sustainability Assessment:

The overall sustainability assessment highlights that 68.8% of enterprises are ‘Moderately
Sustainable,’ performing reasonably well across economic, social, and environmental
dimensions. However, only 4.16% are ‘Highly Sustainable,’ and 25.8% are ‘Vulnerable,’
requiring significant improvements to avoid failure. A small percentage, 1.2%, are
‘Unsustainable,’ facing severe challenges across all sustainability dimensions. The relatively
small percentage of highly sustainable enterprises underscores the need for integrated
strategies that address all aspects of sustainability, ensuring that businesses not only
survive but thrive in the long term.

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 7.15 Scalability of Enterprises

7.15.1 Customer Value Proposition (CVP):

The analysis reveals that 53.5% of enterprises demonstrate potential for scalability in terms
of offering a strong customer value proposition. While 76.5% of these enterprises engage
in the collection and evaluation of customer feedback, only 65.6% have a comprehensive
understanding of the market, and an even smaller percentage (53.5%) make deliberate
efforts to retain existing customers.
While a majority of enterprises are actively collecting customer feedback, there is a notable
gap in market understanding and customer retention efforts. This indicates that many
businesses may be gathering data without fully leveraging it to enhance their customer
value proposition, which is critical for scalability.

7.15.2 Business Attributes:

Among the surveyed enterprises, 53.13% exhibited a robust capacity for financial leveraging,
suggesting their ability to manage debt and secure funding. However, only 29.7% successfully
acquired assets, and a mere 22.7% reported an increase in net worth, indicating challenges
in converting financial resources into tangible growth and value creation.
The low percentage of enterprises that have successfully acquired assets and increased
their net worth suggests that many businesses struggle to translate financial capabilities
into tangible 138 growth. This gap highlights the need for better strategic planning and
resource allocation to enhance business attributes essential for scalability.

7.15.3 Change Capacity:

The perception of competitiveness is relatively high, with 63.7% of enterprises believing they
can compete effectively in the market. Despite this, only 35.5% have integrated technology into
their operations, and just 33.2% believe they can manage increased demand, highlighting a
disconnect between perceived competitiveness and actual capacity for growth.
The discrepancy between perceived competitiveness and actual technology adoption and
capacity to manage demand suggests that enterprises may overestimate their readiness for
growth. This insight points to the need for more realistic assessments and targeted investments
in technology and infrastructure to support scalable operations.

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 7.15.4 Market Analysis:

A minority of enterprises have developed formal business development plans (23.5%),

expanded their market base (19.7%), or articulated future market expansion strategies
(18.5%). This suggests that most enterprises lack proactive strategic planning, which is
crucial for sustained growth and competitiveness.
The lack of formal business development plans and market expansion strategies among
most enterprises underscores a significant gap in strategic planning. Without clear direction
and proactive strategies, enterprises are less likely to capitalise on growth opportunities
and sustain long-term success.

7.15.5 Overall Scalability:

Ultimately, only 5.08% of the surveyed enterprises demonstrate scalability across all four
dimensions (business attribute analysis, customer value proposition, change capacity,
and market analysis). This indicates that comprehensive scalability is rare and difficult to
achieve among the enterprises studied.
The findings suggest that scalability is a complex and multifaceted challenge for micro-
enterprises. While many businesses show potential in specific areas, such as customer
value proposition or financial leveraging, few can effectively combine these strengths across
all dimensions needed for scalable growth. The low prevalence of formal business plans
and market 139 expansion strategies indicates that many enterprises operate without a
clear roadmap for growth.
This lack of strategic foresight likely contributes to the low overall scalability observed,
as businesses may miss opportunities or fail to adapt to changing market conditions. The
disconnect between perceived competitiveness and actual readiness for growth highlights
the importance of aligning business perceptions with reality. Investments in technology,
workforce development, and infrastructure are crucial for bridging this gap and enabling
scalable operations.
The study emphasises the necessity of a holistic approach to scalability, integrating
strong business attributes, a compelling customer value proposition, effective change
management, and proactive market analysis. Scalability requires excellence across these
dimensions, rather than success in isolated areas. Scalability should be considered a
strategic imperative for long-term success and competitive advantage. This requires
improving internal operations and customer engagement while also focusing on external
market expansion and innovation. In conclusion, while some micro-enterprises show
potential in specific areas, the overall low rate of comprehensive scalability highlights the
need for a more strategic and integrated approach to growth.

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 08
Strategic
Recommendations
for Enterprise
Development

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 8.1 Strategic Programmes for Targeted
Enterprise Sustainability and Scalability
8.1.1 Support for ‘Highly Sustainable Enterprises’
Recommendation: Implement a comprehensive program to enhance innovation, market
expansion, leadership, technology adoption, and sustainability benchmarking.

Sustainable Growth and Expansion Programme: Launch a Sustainable Growth and

Expansion Program with grants, subsidies, and low-interest loans to drive innovation
and entry into emerging industries.
Export Readiness Program: Implement an Export Readiness Program offering tailored
training on international trade standards and marketing strategies for global market
entry.
International Market Expansion: Offer International Market Expansion Grants to
support participation in trade fairs and developing new market connections.
Technology Adoption Hubs: Create Technology Adoption Hubs in key regions for advanced
technologies such as AI, automation, and eco-friendly solutions, with Technological
Innovation Subsidies.
Sustainability Innovation R&D Hubs: Set up Sustainability Innovation R&D Hubs with
universities and industry experts to develop sustainable technologies and business
models. Provide R&D Grants for sustainability-driven research projects.
Sustainability Benchmarking Initiative: Launch a Sustainability Benchmarking Initiative
with annual reporting and a Sustainability Performance Index to reward top performers
and share best practices.

8.1.2 Enhance Sustainability of ‘Moderately Sustainable Enterprises’

Recommendation: Launch a program to improve financial literacy, business development,

access to capital, and sector-specific training for moderately sustainable enterprises.

Financial Literacy and Strategic Planning: Implement financial literacy and strategic
planning workshops to help enterprises manage cash flows and reinvest profits.
Targeted Business Development: Provide one-on-one business advisory services to
identify growth opportunities and improve operational efficiency.
Affordable Credit Access: Establish a credit access scheme offering working capital
loans and debt restructuring for stability and long-term viability.
Sector-Specific Training: Deliver industry-specific training in key sectors like
agribusiness, eco-tourism, and services to enhance resilience and competitiveness.

8.1.3 Stabilize ‘Vulnerable Enterprises’ and Recover ‘Unsustainable Enterprises’

Recommendation: Initiate a Stabilization and Growth Programme focused on financial
stabilization, environmental practices, social impact, and operational improvements to
support vulnerable enterprises and move them toward sustainability.

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 Financial Stabilisation: Provide financial support through debt relief, working
capital loans, and micro-grants to stabilize operations. Implement financial
restructuring schemes to reduce debt and improve cash flow management.
Operational Efficiency and Business Improvement: Offer business advisory
services to streamline operations, optimize resources, and adopt best practices
for sustainability.
Targeted Mentorship and Incubation: Create a mentorship network where
experienced business leaders guide vulnerable enterprises, with access to
dedicated incubators for ongoing support.
Social Impact Improvement: Launch employee training programs to improve
workforce development and encourage fair wage policies and social responsibility
projects.
Environmental Sustainability Enhancement: Introduce a green practices initiative
to help vulnerable enterprises adopt eco-friendly technologies and improve waste
management.

Recommendation: Launch a Recovery Programme with critical interventions to prevent

closures and promote long-term sustainability for unsustainable micro-enterprises.

Operational Restructuring and Financial Management Support/Dedicated

Recovery Fund/ Mentorship and Guidance Program: Provide one-on-one
consulting services to assist in restructuring business operations and improving
financial management practices. Focus on optimizing resource allocation,
cutting unnecessary costs, and rebuilding financial stability.Establish a support
fund offering emergency financial assistance, including grants, working capital
loans, and debt relief, to prevent immediate closures and foster recovery. Create
a specialized mentorship program where experienced business leaders guide
unsustainable enterprises through recovery, providing expertise in operational
efficiency, financial planning, and market adaptation.

8.1.4 Scaling-Up Programme for ‘Scalable Enterprises’

Recommendation: Launch a Scaling-Up Program to support scalable enterprises, focusing

on customer value, financial leverage, technology integration, and market expansion.

Enhance Customer Value Proposition (CVP): Provide access to advanced market

research tools for enhanced customer feedback analysis and product offerings.
Support Financial Leverage and Asset Acquisition: Launch a Financial Leverage
Expansion Fund with low-interest loans for capital investments, and a Business
Asset Acquisition Grant for expanding operations.
Strengthen Change Capacity and Technological Integration: Establish Technology
Innovation Hubs for advanced technology adoption and offer infrastructure
development incentives to help enterprises scale efficiently.
Facilitate Market Expansion and Strategic Growth Planning: Offer Business
Development Grants for creating growth strategies and an International Market
Expansion Program to support global market participation.

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8.1.5 Comprehensive Programme for Inclusive Entrepreneurship Development

Recommendation: Launch an Inclusive Entrepreneurship Development Program promoting

entrepreneurship among women, SC/ST communities, and districts with lower participation,
while encouraging skill development.

Launch targeted initiatives for women entrepreneurs with financial incentives,

mentorship, and skill development.
Develop tailored financial assistance and networking platforms for SC/ST entrepreneurs,
offering grants, subsidies, and loans.
Establish enterprise zones in districts with lower participation and provide targeted
training and mentorship programs.
Launch outreach campaigns for Udyam and GST registration, offering step-by-step
guidance and digital support.
Implement specialized workshops and collaboration with educational institutions for
aspiring entrepreneurs, fostering a culture of innovation.

8.1.6 Sector-Specific Incentives and Support Programs

Recommendation: Implement Sector-specific interventions and targeted incentives.
Support programs to foster enterprise development in innovative sectors like
Biotechnology, Renewable Energy, and Recycling and Waste Management, and promote
import substitution through domestic production initiatives.
Sector-Specific Incubators: Develop sector-specific incubators and accelerators
providing specialised support, including funding, mentorship, and access to state-of-
the-art facilities. Encourage the adoption of import substitution strategies in these
sectors to reduce dependency on imports and promote self-reliance.
Industry Collaboration: Facilitate collaboration between MSMEs and large industries to
drive innovation. Organise workshops and seminars to educate potential entrepreneurs
about opportunities in innovative sectors.
Distribution System for MSMEs: Strengthen the distribution systems for MSMEs by
establishing strategic partnerships with distribution networks, providing logistical
support, and promoting e-commerce platform adoption to enhance market reach.

8.1.7 Promote Data-Driven Decision-Making in product/service selection

Recommendation: Facilitate entrepreneurs to incorporate data, research, and market

insights into their product/service selection process.

Provide workshops and resources that educate entrepreneurs on the importance of

market research and data analysis in making informed business decisions.
District/Taluk Industrial Centres shall provide dedicated support and personalised
consultation services to entrepreneurs through experienced business analysts and
market researchers who can provide tailored guidance on selection of right products/
service.

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 8.1.8 Promote Digital Marketing and E-Commerce
Adoption and foster Collaboration with Online Marketplaces

Recommendation: Launch a Digital Marketing and E-Commerce Training Program and

establish partnerships with major e-commerce platforms to promote MSME products.

Digital Literacy Workshops: Conduct workshops and training sessions focused

on the basics of digital marketing, including social media management, online
advertising, and content creation. These workshops should aim to increase
awareness and proficiency in utilising digital tools for business growth. . Conduct
regular workshops focused on the basics of digital marketing, including the
effective use of platforms like WhatsApp, Instagram, and Facebook. Emphasise
content creation, engagement strategies, and analytics to help entrepreneurs
understand and maximise the benefits of these tools.
E-Commerce Platform Training: Provide specialised training on how to set up
and manage online stores on popular e-commerce platforms such as Amazon,
Flipkart, and local e-commerce websites. This training should cover everything
from product listing and pricing to logistics and customer service. Offer advanced
courses that cover topics such as SEO, Google Ads, and email marketing. Provide
practical, hands-on training to ensure entrepreneurs can apply these strategies
effectively.
Collaborative Programs with E-Commerce Giants: DIC shall partner Partner
with major e-commerce platforms like Amazon, Flipkart, Snapdeal, Meesho,
Mynthra etc to create dedicated programs for Kerala-based enterprises. These
programs could include features like priority listing, promotional discounts, and
tailored support services to help local businesses thrive online.
Local Online Marketplace Development: Encourage the development of regional
online marketplaces that cater specifically to Kerala’s products. This can include
platforms that highlight local artisans, agricultural products, and traditional
crafts, creating a niche market that appeals to a broader audience.
Marketing and Promotional Campaigns: Work with online marketplaces to run
marketing campaigns that spotlight Kerala-based businesses. This can involve
collaborative advertising, feature sections on platforms, and social media
promotions to increase visibility and sales.
Technical Support and Consultancy: Establish a technical support team or
consultancy service within YOE initiative to assist enterprises in digital marketing
and e-commerce.

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 8.1.9 Market Competitiveness support

Recommendation: Competitiveness Strategy Workshops and Consultations

Conduct workshops to educate entrepreneurs on effective market competitiveness

strategies, including competitive analysis, value proposition development, and
dynamic market positioning
Consultation Services: Offer one-on-one consultations with experts to help
enterprises assess their current pricing strategies, identify opportunities for
optimization, and align pricing with market dynamics and customer preferences.
Provide access to market research data and insights to assist enterprises
in understanding market trends, competitive benchmarks, and customer
perceptions.
Conduct workshops to educate entrepreneurs on effective pricing strategies,
including competitive analysis, value-based pricing, and dynamic pricing models.

8.1.10 Improving Access to Skilled Workforce and Support Services

Recommendation: Address gaps in availability of professional services and improve access

to affordable professional services.

Collaborate with educational institutions (Engineering Colleges, Poly Techniques,

ITIs etc) to align curriculum with industry demands and foster skill development.
Develop programs to increase the availability and affordability of professional
services.

8.2 Enhancing Financial Access and Support for MSMEs

8.2.1 Promote Awareness and Access to Financial Resources

Recommendation: Increase awareness about existing credit schemes and incentives

available for MSMEs, and introduce sector-specific financial support mechanisms to
encourage entrepreneurship in strategic areas.

Conduct outreach programs and workshops to educate MSMEs with financial

literacy and government-backed credit schemes and subsidy programs.
Offer workshops and training sessions on financial management, including credit
management and loan eligibility.
Collaborate with industry associations and chambers of commerce to disseminate
information about credit sources and eligibility criteria.
Expand financial support programs tailored to diverse business needs, particularly
focusing on micro and small enterprises.

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 Offer Sector-Specific Incentives: Offer Sector-Specific financial and non-financial
Incentives, and organise workshops and training sessions on sector-specific
interventions and sector-focused financial products.
Financial Literacy and Sector-Specific Incentives: Offer workshops and training
sessions on financial management, credit management, and sector-specific
incentives. Collaborate with industry associations and chambers of commerce
to disseminate information about credit sources and sector-focused financial
products.
Entrepreneurship Index: Develop an Entrepreneurship Index suitable for Kerala to
assess and rank MSMEs regularly based on financial health, innovation, market
competitiveness, and growth potential. Use the index to guide financial institutions
in providing tailored credit solutions to high-potential enterprises.

8.2.2 Diversify Credit Options and Strengthen Credit

Guarantee Mechanisms

Recommendations: Expand access to diverse credit sources beyond traditional MSME

loans, public sector banks, and government institutions.
Recommendations: Strengthen credit guarantee mechanisms to mitigate risk for lenders
and encourage MSME lending.

Encourage private sector banks and non-banking financial institutions (NBFCs) to

offer tailored financing solutions for MSMEs.
Facilitate partnerships between MSMEs and fintech companies to provide
innovative credit options.
Expand coverage and accessibility of credit guarantee schemes to incentivize
banks and financial institutions to extend loans to MSMEs.
Enhance collaboration between government agencies and credit guarantee funds
to support MSMEs with limited collateral or credit history.

8.2.3 Streamline Loan Application and Approval Processes

Recommendations: Simplify loan application processes and enhance transparency in

loan approval criteria.

Organise discussions with the State Level Bankers Committee (SLBC) to simplify
the MSME loan application process.
Develop user-friendly online platforms for loan applications and status tracking.
Standardise loan approval criteria and provide clear guidelines to minimise
rejections based on credit scores or feasibility concerns.

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 8.2.4 Develop and Promote Short-Term Credit Facilities, Customised
Financial Products and Emergency Financial Assistance Fund

Recommendations: Develop and promote short-term credit facilities and collaborate with
financial institutions to develop customised financial products.

Short-Term Credit Facilities:

Collaborate with financial institutions to create revolving credit lines and
microloans specifically designed for MSMEs.
Streamline the application and approval processes for short-term credit,
including online platforms and reduced documentation requirements.
Customised Financial Products:
Work with banks and non-banking financial institutions to design loan products
with flexible repayment terms and competitive interest rates for reinvestment
purposes.
Explore grant and subsidy programs that incentivize enterprises to reinvest
profits into innovation and expansion.

Recommendation: Establish an Emergency Financial Assistance Fund

Emergency Grants and Subsidies: Create an emergency financial assistance fund

that provides grants or subsidies to businesses experiencing significant income
decline to stabilise operations and prevent closures during critical periods.
Financial Counseling and Support: Offer financial counselling services to
enterprises facing financial distress. Expert advisors can help businesses
restructure their finances, negotiate with creditors, and develop recovery plans.

8.3 Recommendations for Sustainability and Scalability of enterprises

8.3.1 Financial Health and Stability Enhancement

Recommendation: Promote a culture of financial planning among enterprises and introduce

health check-ups for MSMEs, including an index/scorecard to monitor their financial
stability and operational efficiency.

MSME Health Check-Up: Implement regular financial health check-ups for

MSMEs, offering diagnostic services and consultations to identify areas of
improvement. Develop a scorecard system to monitor their financial stability,
operational efficiency, and growth potential.
Financial Planning Workshops: Conduct workshops on financial planning,
budgeting, and resource management. Encourage enterprises to use simplified
cash flow tools and financial management practices to enhance their stability and
growth.

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 Collaborate with local business associations and financial institutions to
conduct workshops on financial management and budgeting.
Encourage enterprises to create financial goals and budgets to allocate resources
effectively.
Provide mentorship and peer support networks where successful entrepreneurs
can share best practices and insights on financial management.

Recommendation: Improve Financial Management Practices among enterprises

Simplified Cash Flow Tools: Develop and distribute user-friendly cash flow
forecasting tools tailored for micro and small enterprises. These tools should help
in monitoring liquidity and predicting financial risks.
Financial Literacy Programs: Implement comprehensive financial literacy
programs focused on practical aspects of financial management, such as cash
flow management, profit reinvestment, and budgeting.
Strengthen financial management practices to support scalable business
growth by implementing rigorous financial planning processes to support asset
acquisition, net worth increase, and external financing.
Advisory Services: Establish accessible advisory services providing one-on-one
financial planning and risk management guidance, particularly for nano and micro
enterprises.

8.3.2 Profitability and Income Growth Initiatives

Recommendation: Enhance Profitability and Move Enterprises to Profit-Making Status,

and Implement Income Augmentation Programs

Business Advisory Services: Offer business advisory services to help enterprises
identify cost-saving opportunities and revenue-generating strategies.
Innovation and Differentiation: Encourage innovation and product/service
differentiation to capture new market segments and increase profitability.

Recommendation: Implement Income Augmentation Programs

Customised Business Development Services: Provide tailored business advisory/

development services, including strategic planning, market research, growth
strategy, cost-saving opportunities and revenue-generating strategies. Focus
on helping enterprises identify new market opportunities and optimise their
business models for increased revenue.
Revenue Diversification Support: Encourage and facilitate diversification of
revenue streams through training on product innovation, service diversification,
and accessing new customer segments.
Innovation and Differentiation: Encourage innovation and product/service
differentiation to capture new market segments and increase profitability.

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 Continuous Learning and Development: Establish continuous learning platforms
that offer entrepreneurs access to updated market trends, business techniques,
and technological advancements.
Mentorship Programs: Connect entrepreneurs with experienced business leaders
and advisors who can provide guidance on strategic planning, scaling operations,
and navigating financial challenges.

8.3.4 Support Innovation and Product Diversification

Recommendation: Launch an Innovation and Product Diversification Initiative

Innovation Grants and Funding: Provide grants or low-interest loans specifically
for product development and innovation. Encouraging enterprises to innovate
and diversify their product lines can lead to new revenue streams and increased
sales.
Product Development Workshops: Conduct product development clinics/
workshops focused on new product development, innovation techniques, market
trends and market adaptation. These workshops can equip entrepreneurs with
the skills and knowledge to create and market new products effectively.
Collaboration with Research Institutions: Facilitate partnerships between
enterprises and research institutions including nearby Engineering Colleges to
foster innovation. Collaborative projects can lead to the development of cutting-
edge products and solutions that meet market demands and drive sales growth.
Facilitate partnerships with professional associations to provide affordable
services for new product development, intellectual property protection, and
business operations.

8.3.5 Enhancing Technology Adoption and Workforce Development

Recommendation: Promote Technology Adoption

Technology Awareness Campaigns: Conduct awareness campaigns to showcase

successful case studies and demonstrate the impact of technology on business
growth and competitiveness.
Technology Adoption Assistance: Provide guidance and resources for leveraging
technology in product development, such as prototyping tools, digital design
software, and manufacturing technologies.
Access to Technology Resources: Facilitate access to technology resources through
partnerships with IT providers, offering affordable solutions tailored to MSMEs’
needs.
Incentives for Technology Adoption: Introduce incentive schemes to encourage
MSMEs to adopt technology, such as subsidies for purchasing hardware/software
or grants for implementing digital solutions.

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 Recommendation: Enhance Workforce Development and Digital Literacy

Workforce Development: Provide ongoing training and development to empower

employees with skills needed for innovation and adaptability
Skill Development Workshops: Offer skill development workshops focused on
technology integration, covering essential tools like computers, internet usage,
email communication, and accounting software.
Digital Literacy Programs: Launch digital literacy programs to educate
entrepreneurs and employees about the benefits of technology adoption and
basic digital tools.
Recommendation: Foster Collaborative Ecosystems for Innovation

Collaboration with Universities/Engineering Colleges and Research Institutions:

Collaborate with universities/Engineering Colleges and research institutions to
offer mentorship programs tailored to entrepreneurs’ needs and aspirations.
Innovation Hubs and Accelerators: Establish innovation hubs and accelerators that
provide access to technology, research facilities, and mentorship for entrepreneurs.
Mentorship Programs: Facilitate access to mentorship from experienced
professionals in technology and innovation sectors to guide MSMEs through the
adoption and integration of new technologies.

8.3.6 Enhancing Customer Relationship Management

Recommendation: Strengthen Customer Relationship Management and Feedback

Analysis

Customer Feedback Analysis: Invest in systems to gather and analyse customer

feedback, improving offerings based on insights.
Personalised CRM Systems: Facilitate the adoption of simplified CRM systems that
allow enterprises to track and personalise customer interactions. Offer training to
improve customer relationship-building skills.
Loyalty Programs: Develop personalised loyalty initiatives to enhance customer
retention and satisfaction.
• Consumer Preference Understanding: Continuously assess consumer preferences
and behaviour to tailor offerings and marketing strategies.

Recommendation: Develop Strategic Brand Identity and Market Positioning

Brand Development Workshops: Organize workshops and seminars to educate

entrepreneurs on the importance of branding and guide them through the process
of developing a distinct brand identity.
Brand Awareness Campaigns: Launch targeted campaigns to raise awareness
about the significance of branding among enterprises. This can include webinars,
social media promotions, and success stories of businesses that have successfully
built strong brand identities.

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 Brand Identity Support: Provide support to enterprises in developing and refining
their brand identities, including assistance with logo design, packaging, and overall
brand messaging.
Brand Identity and Messaging: Assist enterprises in refining brand identity and
messaging to communicate unique selling points effectively.
Value Proposition Development: Provide guidance on creating compelling value
propositions that highlight unique features, benefits, and customer value.
Continuously refine these propositions based on customer insights and market
dynamics.

8.3.7 Fostering Market Expansion and Innovation

Recommendation: Develop Strategic Business Expansion Plans

Targeted Expansion Strategies: Create strategic business development plans

based on market insights and growth potential.
Geographical Expansion Assistance: Provide grants or low-interest loans for
enterprises expanding to new locations. Offer logistical support and market entry
strategies to help businesses navigate new geographic markets efficiently.
Targeted Customer Group Programs: Develop training and resources to help
businesses identify and reach new customer demographics through market
research, demographic analysis, and customer segmentation strategies.
Export Readiness Programs: Implement programs providing guidance on
international trade regulations, export documentation, and market entry
strategies for global markets. Offer financial incentives or grants to offset initial
exporting costs.
Market Research and Analysis Services: Offer detailed market research and
analysis services to identify new market opportunities and trends, aiding
businesses in making informed decisions and tailoring their strategies for sales
growth.

Recommendation: Support Product Innovation and Market Competitiveness

Product Innovation Support: Offer resources and connections to foster product

innovation, encouraging the development of distinctive offerings.
Export Readiness Programs: Implement programs providing guidance on
international trade regulations, export documentation, and market entry strategies
for global markets. Offer financial incentives or grants to offset initial exporting
costs.
Value Proposition Development: Provide guidance on creating compelling value
propositions that highlight unique features, benefits, and customer value.
Continuously refine these propositions based on customer insights and market
dynamics.

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 Recommendation: Enhance Market Research and Consumer Understanding

Consumer Preference Understanding: Continuously assess consumer preferences

and behaviour to tailor offerings and marketing strategies.
Market Research and Analysis Services: Offer detailed market research and analysis
services to identify new market opportunities and trends, aiding businesses in
making informed decisions and tailoring their strategies for sales growth.

8.3.8 Operational Efficiency Improvement

Recommendation: Optimise operational processes through technology integration and

resource management.

Improving Operational Efficiencies: Encourage the adoption of technology

solutions, including automation and cloud computing, by providing grants or
subsidies for improving operational efficiencies. Offer training programs on how
to integrate these technologies effectively.
Lean and Sustainable Practices: Promote simple ways to cut down waste and
use resources wisely, while considering environmental impacts such as reducing
emissions through energy-efficient processes. Conduct workshops on improving
efficiency by optimising resource use, to save costs. Encourage continuous
improvement in both operations and sustainability efforts, and integrate eco-
friendly practices into product design, manufacturing, and distribution processes.
Workforce Development Programs: Invest in continuous workforce development
through regular training and upskilling initiatives. Foster a culture of innovation
and continuous improvement.

8.3.9 Enhancing Quality Control Practices and Certification,

and enhancing Resource Efficiency and SOP Adoption

Recommendation: Implement capacity building programs and provide assistance to

MSMEs to obtain quality certifications.

Awareness Campaigns: Launch awareness campaigns to educate entrepreneurs

about the importance of quality control and the benefits of formal certification.
Conduct targeted awareness campaigns through seminars, industry forums, and
online platforms to highlight the importance of quality certifications for business
competitiveness. Offer incentives such as preferential access to government
contracts, market recognition, and branding support for certified MSMEs.

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 Capacity Building: Develop training programs and workshops focused on
quality management systems and certification requirements. Offer financial
assistance or subsidies to MSMEs for obtaining quality certifications. Establish
partnerships with quality certification agencies to streamline the certification
process and reduce barriers for MSME. Provide training programs and
workshops on quality management practices, internal quality control, and
certification processes.
Consultancy Services: Offer consultancy services to assist enterprises in
implementing effective quality control systems and preparing for formal
certification. Establish support programs to guide enterprises through the
certification process, including documentation preparation and compliance.
Incentive Schemes: Introduce incentives or subsidies to encourage enterprises
to invest in quality control measures and obtain formal certification.
Training and Capacity Building: Provide training sessions and capacity-building
programs to educate entrepreneurs on effective resource management
techniques and SOP development.
SOP Development Support: Offer guidance and assistance to enterprises in
developing tailored Standard Operating Procedures (SOPs) that streamline
processes and minimise resource wastage.
Best Practices Sharing: Facilitate platforms for enterprises to share best
practices and success stories related to resource efficiency and SOP
implementation.

8.3.10 Establishing Micro Clusters for Sustainable Development

Recommendation: Transform the independent MSMEs in the current setup to Micro Clusters
consisting of approximately 50-75 enterprises closely located and having businesses of
similar interests.

Encourage similar enterprises spread across a region (within a district or a Taluk/

Block) to join micro clusters to share resources such as production facilities,
equipment, and logistical support.
Facilitate collective procurement and bulk purchasing to achieve cost savings and
improve supply chain efficiency.
Create platforms for knowledge sharing, skills development, and collaborative
learning among micro cluster members towards value addition and
professionalising operations.
Develop joint marketing strategies, branding initiatives, and market penetration
activities to enhance market access and reach new customer segments.

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 8.3.11 Establishing Micro Enterprise Parks

Recommendation: Establish Micro Enterprise Parks (MEPs) inspired by the successful

models of Techno Parks and Info Parks, which will serve as specialised hubs to provide
infrastructure, resources, and support services tailored to the needs of micro entrepreneurs
Develop dedicated Micro Enterprise Parks equipped with modern infrastructure, shared
workspaces, production facilities, and common amenities to accommodate micro
enterprises.

Develop dedicated Taluk/Block level Micro Enterprise Parks equipped with

modern infrastructure, shared workspaces, production facilities, and common
amenities to accommodate micro enterprises.
Provide specialised facilities for various sectors, allowing micro entrepreneurs to
access industry-specific equipment, tools, and technologies.
Offer comprehensive business incubation services within MEPs, including
mentorship, coaching, and training programs to support micro entrepreneurs in
launching and growing their businesses.

8.3.12 Enhance Sustainable Procurement Practices

Recommendation: Promote responsible resource management across the supply chain.

Supplier Engagement: Develop guidelines and support programs encouraging

enterprises to partner with suppliers committed to sustainability and ethical
practices.
Life Cycle Analysis: Offer training and resources for conducting life cycle
assessments to identify environmental hotspots and optimise procurement
decisions.
Sustainable Materials: Promote the adoption of eco-friendly materials and
packaging through incentives and awareness campaigns.

8.3.13 Implement Waste Reduction

and Recycling Initiatives

Recommendation: Minimise waste generation and promote efficient use of resources.

Waste Audits: Provide support for conducting waste audits within enterprises to
identify opportunities for waste reduction and recycling.
Circular Economy Initiatives: Launch programs that encourage businesses to
adopt circular economy principles, such as repurposing waste materials and
extending product life cycles.
Employee Training: Develop training programs focused on waste management
best practices to increase employee engagement and participation.

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 8.3.14 Facilitate Transition to Renewable Energy

Recommendation: Reduce carbon emissions and increase ecological resilience.

Energy Audits: Assist enterprises in conducting energy audits to identify areas for
energy efficiency improvements.
Renewable Energy Investments: Create financial incentives and grants to
encourage investment in renewable energy technologies. Tap CSR funds targeting
promotion of Solar Power.
Policy Advocacy: Advocate for state level policies that support the transition to
renewable energy sources, including subsidies and tax incentives.

8.3.15 Promote Investment in Green Technologies

Recommendation: Enhance operational efficiency and reduce environmental impact.

Technology Adoption: Encourage the adoption of energy-efficient technologies

through subsidies, tax breaks, and technical assistance.
Green Infrastructure: Support investments in green building designs and
sustainable infrastructure projects.
Capacity Building: Offer training and support for implementing green technologies
and sustainable practices within enterprises.

8.3.16 Promote MSME Insurance

Recommendation: Raise awareness about the benefits of MSME insurance and the specific
risks it covers, including environmental risks.
Recommendation: Provide incentives or subsidies for MSMEs to opt for insurance coverage,
particularly for those operating in high-risk sectors or regions.

Awareness Campaigns: Conduct targeted outreach programs to inform MSMEs

about insurance options and how they can protect their businesses against
potential risks. Educate MSMEs about the benefits and specific risks covered by
insurance, focusing on areas previously affected by environmental catastrophes
like landslides and floods.
Incentives and Subsidies: Offer financial incentives or subsidies to encourage
MSMEs to obtain insurance coverage, especially for those in high-risk sectors or
disaster prone regions.
Targeted Outreach: Conduct targeted outreach programs to inform MSMEs about
insurance options and how they can protect their businesses against potential
risks.

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 8.3.17 Enhance Fair Compensation Practices

Recommendation: Ensure fair and equitable compensation to foster employee

satisfaction and retention.

Transparent Salary Policies: Implement salary and wage policies aligned with
industry standards to ensure fairness and transparency.
Employee Benefits: Offer comprehensive benefits packages that prioritise
employee well-being and financial security.
Performance-based Incentives: Introduce performance-based incentives to
reward employee contributions and achievements.

8.3.18 Invest in Employee Training and Development

Recommendation: Bridge skill gaps and drive excellence through continuous learning and
development.

Comprehensive Training Programs: Develop tailored training programs to address

specific skill deficiencies and promote ongoing education.
Skill Enhancement Workshops: Conduct workshops and seminars to empower
employees with new skills and competencies.
Leadership Development: Invest in leadership development initiatives to cultivate
talent from within the organisation.

8.3.19 Strengthen Community Engagement

Recommendation: Demonstrate corporate citizenship through active participation in

community development.

Community Partnerships: Forge partnerships with local organisations and

stakeholders to identify community needs and priorities.
Sustainable Development Projects: Invest in sustainable development projects that
align with community interests and values.

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 8.3.20 Promote Gender-Neutral Hiring Practices and
Workforce Diversity and Inclusivity
Recommendation: Promote Gender Diversity and Equal Opportunity Initiatives, and create
inclusive organisational cultures that value differences and promote equal opportunities.

Gender Sensitization for Employers: Offer workshops and training sessions

to entrepreneurs on the importance of diverse hiring practices, and educate
enterprises about the benefits of gender diversity and inclusion in the workforce.
Promoting Diversity in Recruitment: Encourage male-owned enterprises to actively
recruit female employees and vice versa in female-owned enterprises, emphasising
the benefits of diverse teams.
Inclusive Policies: Encourage enterprises to adopt inclusive hiring practices that
prioritise skills and qualifications, promoting equal opportunity for all individuals.

8.4 Recommendations to Enhance Effectiveness of Year of Enterprises

(YOE) Program based on entrepreneurs’ perspectives

8.4.1 Improve Outreach and Communication

Enhance communication channels to ensure entrepreneurs are well-informed

about the full range of available services and benefits under the YOE program.
Increase awareness of available incentives and subsidies through targeted
outreach programs.
Develop targeted outreach strategies to increase awareness of less-utilised
services.
Implement localised interventions based on regional needs assessments.
Provide additional support to underrepresented areas to foster inclusive growth.

8.4.2 Enhance Service Delivery and Accessibility

Conduct feedback sessions with entrepreneurs to identify areas of improvement

for services that were perceived as unhelpful or less effective, such as support
from Taluk Resource Persons, Help Desk Services, Chat with Minister,
Dreamvestor etc.
Implement training and capacity-building programs for Taluk Resource Persons
and EDEs to enhance their effectiveness in supporting entrepreneurs.

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 8.4.3 Bridge the Gap between Awareness and Utilisation

Address barriers or challenges hindering entrepreneurs from utilising specific

services by providing targeted support and guidance.
Develop user-friendly resources and guidelines to facilitate easier access and
utilisation of key services like Export Promotion, Marketing support through
Trade Fairs, and Entrepreneur Support Scheme for Manufacturing Start-Ups.

8.4.4 Enhance Collaboration and Partnership

Foster collaboration with industry associations, trade bodies, and local chambers
of commerce to promote YOE services and encourage participation in relevant
programs.
Establish partnerships with educational institutions and research centres to
leverage their networks and resources for increasing awareness and utilisation
of YOE services.
Organise regular networking events, workshops, and training sessions.
Encourage active participation in local business associations to build a cohesive
entrepreneurial community.

8.4.5 Continuous Monitoring and Evaluation

Implement regular monitoring and evaluation mechanisms to assess the impact

and effectiveness of YOE services.
Use feedback and data analytics to drive continuous improvement and adaptation
of services based on entrepreneurs’ needs and preferences.

8.4.6 Enhancing the Sustainability Campaign

Recommendation: Implement a scientific assessment of sustainability and scalability to

ensure long-term viability of enterprises.

Develop a comprehensive Sustainability and Scalability Index to evaluate various

factors such as financial health, market position, innovation capacity, and
operational efficiency.
Use the Sustainability and Scalability Index to identify potential issues early and
provide targeted support.

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 8.5 Strengthening the Role of EDEs in Entrepreneur and
Enterprise Development
Recommendation: Shift the role of EDEs from enterprise formation facilitation to higher
responsibilities in entrepreneur and enterprise development.

Provide domain-specific training in financial management, market strategies, and

technological adaptation.
Develop a mentorship program where experienced EDEs guide newcomers and
entrepreneurs.
Include technical support mechanisms and advanced business development
strategies in the training modules.
Ensure continuous professional development through workshops and training
sessions.

8.6 Establishing a State-Level Project Management Unit (PMU)

Recommendation: Establish a State-level Project Management Unit (PMU) to oversee and

drive the follow-up initiatives of the Year of Enterprises programme.
Recommendation: development of Grama Panchayat-level grievance redressal mechanisms
and enhancing the involvement of Local Self Government Departments in enterprise
development.

Coordination and Monitoring:

Develop a system for continuous monitoring of EDEs’ activities and performance.
Facilitate regular check-ins and progress reviews with EDEs.

Support and Training:

Provide ongoing training and professional development opportunities for EDEs.
Develop a comprehensive induction and branding strategy for EDEs.
Offer recognition programs to enhance retention.
Provide resources and support to female EDEs to help them build connections
and address business inquiries.

Institutionalizing Systems and Processes

Handholding and Support:Provide support in institutionalising systems and
processes.
Templates and Procedures: Design templates, formats, and procedures for
MSME development activities.
PR, Social Media Support: Provide inputs on social media and PR strategies,
Assist in preparing standardised marketing collateral and their promotion
on social media.

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 Ongoing Campaigns: Create campaigns to showcase MSMEs nationally,
publishing reports, pamphlets, and brochures.
Engagement Framework: Develop a framework for active engagement with
industry associations, MSMEs, and promotion bodies for data-backed policy
making.
Information Collection: Collect information to support MSMEs on various
matters and use surveys for insights.
Opportunity Scouting: Identify opportunities globally and in India for MSMEs and
present them on DIC’s portal.
Government e-Marketplace Campaign: Study gaps and challenges and create a
campaign to onboard MSMEs to the Government e-Marketplace.
Hub and Online Platform:Function as a hub to connect MSMEs with service
providers through an online platform.
District and Sector Profiles: Develop detailed profiles of MSMEs by district and
sector for informed decision-making.

Market Expansion and Technological Support:

Develop initiatives to help MSMEs overcome marketing challenges, such as
onboarding onto major e-commerce platforms with reduced commission
fees.
Provide training and resources for digital marketing and online sales
strategies.
Establish a dedicated research and development wing and facilitate access
to new technologies and innovative solutions to enhance competitiveness
and productivity.

Build Strategic Partnerships:

Collaborate with industry leaders, financial institutions, and academic
organisations to provide comprehensive support to enterprises.
Create a network of partners who can offer mentorship, funding, and
market access.
Strategy Study: Study strategies and institutional mechanisms from other states
or countries supporting MSMEs. Recommend a strategy for supporting MSMEs
in Kerala, considering types of MSMEs, models, sectors, and expected support.
Grama Panchayat Grievance Redressal: Create a grievance redressal
mechanism at the Grama Panchayat level to address and resolve issues
faced by MSMEs. This system should be integrated into the PMU’s broader
monitoring and support framework.
Local Self Government Department Engagement: Collaborate with the Local
Self Government Department to host platforms for enterprise development,
such as local business forums, mentorship programs, and networking
events that align with regional development goals.

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 09
Conclusion

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 9.1 Summary of the report’s key insights and recommendations

This report provides a comprehensive analysis of the entrepreneurial landscape in Kerala,

focusing on the sustainability and scalability of micro, small, and medium enterprises
(MSMEs) established under the Year of Enterprises (YOE) initiative. The findings reveal a
diverse range of insights, highlighting both opportunities and challenges faced by enterprises
in the state. In concluding the report, it is essential to highlight the significant findings from
the study of enterprises formed under the Year of Enterprises (YOE) initiative.
The sustainability assessment paints a mixed picture across economic, environmental, and
social dimensions. Economically, 62.22% of enterprises are categorised as 'Moderately
Sustainable,' indicating that while they are maintaining a certain level of stability, there is
still a need for improvement to achieve long-term financial viability. 10.81% of enterprises
are considered 'Highly Sustainable,' demonstrating robust economic performance and
stability,
78.47% of enterprises demonstrate an environmentally positive impact, showing that
a significant number of enterprises are successfully managing their environmental
responsibilities. However, 21.53% still require improvements in their environmental
practices, indicating that there is room for enhancing sustainability efforts across the sector.
Socially, the data shows a near-even split, with 50.09% of enterprises having a positive
social impact, reflecting effective employment practices and community engagement. The
other half of enterprises, however, struggles with limited social impact, suggesting that
there is a need for stronger initiatives to improve social sustainability, particularly in areas
like fair wages, workforce diversity, and community involvement.
The Integrated Sustainability Framework highlights the importance of a holistic approach
that incorporates social, economic, and environmental considerations into business
practices. The overall assessment indicates that 68.8% of enterprises are classified as
'Moderately Sustainable,' demonstrating a certain level of stability across all dimensions.
However, only 4.16% of enterprises have achieved ‘high sustainability’, high sustainability,
reflecting robust performance in all areas. Meanwhile, a significant 25.8% of enterprises
are categorised as 'Vulnerable,' meaning they are at risk of failure without substantial
improvements, and 1.2% are considered 'Unsustainable,' facing severe challenges across
all dimensions.
These findings underscore the critical need for targeted support and interventions to
enhance the sustainability and growth prospects of micro-enterprises. Sustainability is not
just about ensuring the survival of businesses; it represents a broader, transformative vision
where enterprises integrate responsible practices that balance profitability with purpose,
environmental preservation, and community well-being, while also ensuring long-term
viability.
In a rapidly evolving business landscape, sustainability must be recognized as a core
business imperative. Enterprises must commit to balancing economic success with social
responsibility, minimising their environmental impact, and ensuring their long-term viability
through sustainable practices. Achieving this requires collaboration among businesses,
governments, civil society, and consumers, along with innovative approaches and collective
responsibility. By fully embracing sustainability, enterprises can drive meaningful change,

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 contribute to sustainable development goals, and shape a future where economic success
is harmonised with positive societal and environmental impacts. Sustainability is not just a
passing trend but a strategic necessity for enterprises aiming to thrive and align economic
progress with social and environmental well-being.
Further, the findings reveal that only 22.61% of enterprises perceive themselves as
competitive in the market, highlighting substantial challenges in maintaining long-term
competitiveness. This low percentage indicates that the majority of enterprises struggle
with effectively differentiating their products or services, retaining customers, and building
strong brand identities, which are crucial for sustaining market position in a competitive
environment.
Operational efficiency presents an even more concerning picture, with just 8.17% of
enterprises exhibiting positive indicators. This reflects inefficiencies in crucial areas such
as internal processes, technology adoption, and workforce skills. The low rate of operational
efficiency suggests that many enterprises are unable to optimise their operations, leading
to higher costs, lower productivity, and difficulties in scaling their businesses.
Scalability remains a critical challenge, with only 5.08% of enterprises demonstrating
comprehensive scalability across all four dimensions of analysis. This low percentage
underscores the difficulties enterprises face in growing their operations sustainably,
adapting to market changes, and expanding their market presence effectively. The
challenges in scalability highlight the need for a more strategic and integrated approach to
growth, focusing on enhancing business attributes, customer value propositions, change
capacity, and market analysis.
The Year of Enterprises (YOE) initiative has been instrumental in shaping Kerala’s
entrepreneurial landscape, driving the creation of a wide array of micro, small, and medium
enterprises (MSMEs). While the report highlights key challenges in areas such as market
competitiveness, operational efficiency, sustainability and scalability, it also underscores
the immense potential these enterprises hold. The positive strides in sustainability and the
moderate levels of scalability achieved by a majority of enterprises are promising indicators
of progress. The findings reveal that the journey toward sustainability and scalability is well
underway, with a significant number of enterprises already embracing sustainable practices
and showing prospects of scalability.
Kerala’s entrepreneurial landscape, catalyzed by the Year of Enterprises (YOE) initiative,
has demonstrated both successes and challenges. This report underscores the need for
sustained focus on innovation, collaboration, and responsible business practices, which
will allow enterprises to turn these challenges into opportunities for growth. By adopting
targeted strategies that enhance operational efficiencies, market competitiveness, and
financial stability, Kerala’s micro, small, and medium enterprises (MSMEs) can unlock
new opportunities for sustainable growth. These efforts will also contribute meaningfully
to the state’s broader sustainable development goals, ensuring the long-term success of its
entrepreneurial ecosystem.
Looking forward, the strategic recommendations provided in this report offer a clear
path for building a resilient and inclusive MSME sector. By focusing on financial access,
innovation, market competitiveness, sustainability and scalability, Kerala’s enterprises are
well-positioned to thrive in an increasingly competitive global market. With a concerted
effort from businesses, government, and civil society, these enterprises can become drivers
of meaningful social and economic change, balancing profitability with purpose, while
fostering long-term resilience and growth across the state.
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 TEAM

CA. Dr. Binoy J. Kattadiyil DSc

Director, CMD
Ajith Chacko
Principal Consultant, CMD
Dr. Anoopa Narayanan
Senior Consultant, CMD
Karthika P B
Project Executive, CMD
Aman Zacharia
Research Executive, CMD

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