Women in India have made significant economic progress over the past few decades, largely simply by joining the workforce. But when it comes to owning a business, progress has been much slower. This is unfortunate, as strong evidence suggests that women business owners can transform local economies and contribute significantly to the global economy.
Of India’s 58.5 million businesses, only 8.05 million (13.76) are women-owned businesses, according to the Indian government. And the vast majority of them are individual businesses that collectively provide direct employment to between 22 and 27 million people, according to the report “Powering the Economy with Her: Women Entrepreneurship in India” (2019) published jointly by Google and Bath & Co.
While the progress of women-owned businesses in India has suffered from the Covid-19 pandemic, there is now a tremendous opportunity for economic growth. India being one of the fastest growing economies in the world. Numerous studies suggest that the success of women is imperative for India’s growth, as it is in every economy in the world.
Additionally, by focusing on women’s economic empowerment and achieving gender equality, India’s GDP could grow by an additional $770 billion by 2025, according to a report by McKinsey, The Power of Parity: Advancing Women’s Equality in India 2018. It is clear that women’s success is imperative for India’s growth, as it is in all economies around the world.
Achieving gender equality, however, will not be easy. Indeed, female business owners in India, like most of their counterparts in the developing world, are hampered by the unpreparedness of businesses to connect and contract with large buyers, in addition to prejudice cultural and gender disparities.
No figure better reflects this reality than the fact that, although almost a third of all private companies in the world are owned by women, these same companies earn less than 1% of what large companies and public buyers spend with suppliers.
To better understand the barriers women entrepreneurs face in India, the US State Department’s Bureau of South and Central Asian Affairs has helped fund research on their status in corporate value chains. and why so few win supply contracts from corporate buyers.
Most business buyers did not know how to implement gender-neutral procurement even if they understood the concept, with 77% wanting training on it.
Business buyers said they would buy more from women-owned businesses if there were government incentives to source from them (52%), equal access to financial services for businesses owned by women (41%) and empowerment of women. owned by companies (38%).
17% of business buyers said they source from women-owned businesses in India, 51% said they don’t, and 32% aren’t sure.
To strengthen business ties, 75% of business buyers recommend women-owned businesses ensure all industry standards are met, 53% said they should register as a supplier preferred and 32% recommended attending procurement events and responding to RFPs.
Gender-neutral sourcing is a proactive supplier diversity and inclusion strategy that closes gender gaps in value chains to increase market access for women-owned businesses. It also impacts business performance in the following ways:
Increases access to a wider variety of high quality suppliers which contributes to higher quality inputs and more competitive pricing over time.
Increases the opportunity to hear new ideas, apply different approaches, and gain access to traditional solutions that meet customer needs.
Improves a company’s reputation with internal and external stakeholders, including employees, corporate clients, shareholders and the community.
As beneficial as it may be for business owners themselves and the communities in which they operate, investing in women-owned businesses also makes financial sense for large organizational buyers. Small changes in the purchasing practices of large organizations, such as inclusive sourcing policies, can have an immense impact on the business and its ability to source the best products and services at the best price, especially from underutilized businesses.
Now is the time for India to focus on empowering women and achieving gender equality to capture the huge economic potential that female business owners can bring to the economy, including job creation.
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