B.E.

Ch 6: Entrepreneurial Scenario
GOVERNMENT INITIATIVES TO FOSTER ENTREPRENEURSHIP
Initiatives taken by the Government of India to strengthen entrepreneurship in India are as under:

1. Make in India : Businesses from across the globe, and not merely the Americas, consider Make in India as a
breakthrough policy of the new India. The‘Make in India’ programme was launched in September 2014 soon after the
Modi Government came to power. As a national programme, the Make in India initiatives is aimed at transforming India
into a global manufacturing hub, and contained a raft of proposals to attract investments from both local and foreign
corporate houses in 25 key areas it has identified, such as: (a) Automobiles (b) Chemicals (c) Information Technology (d)
Pharmaceuticals (e) Textiles (f) Aviation (g) Leather (h) Tourism (i) Hospitality (j) Wellness (k) Railways (l) Infrastructure
With this scheme, the government has increased the FDI limit in various industries to attract foreign investment and
participation It has established an investor facilitation centre to assist foreign businesses locate partners and sites, while
a slew of measures have been initiated for domestic companies, which were revealed after Modi Government unveiled
the ‘Stand Up India’ initiative in his Independence Day address in 2015.

2. Stand Up India : The Stand up India scheme aims at promoting entrepreneurship among women and scheduled
castes and tribes. The scheme is anchored by Department of Financial Services (DFS), Ministry of Finance, Government
of IndiaStand-Up India Scheme facilitates bank loans between Rs 10 lakh and Rs 1 Crore to at least one Scheduled Caste
(SC) or Scheduled Tribe (ST) borrower and at least one woman borrower per bank branch for setting up a Greenfield
enterprise. This enterprise may be in manufacturing, services or the trading sector. In case of non-individual enterprises
at least 51% of the shareholding and controlling stake should be held by either an SC/ST or woman entrepreneur.

Eligibility :

• SC/ST and/or woman entrepreneurs, above 18 years of age.

• Loans under the scheme are available for only green field project. Green field signifies, in this context, the first time
venture of the beneficiary in the manufacturing or services or trading sector.

• In case of non-individual enterprises, 51% of the shareholding and controlling stake should be held by either SC/ST
and/or Women Entrepreneur

. • Borrower should not be in default to any bank/financial institution. Loan details

• Nature of Loan - Composite loan (inclusive of term loan and working capital) between 10 lakh and upto 100 lakh.

• Purpose of Loan - For setting up a new enterprise in manufacturing, trading or services sector by SC/ST/Women
entrepreneur.

• Size of Loan - Composite loan of 75% of the project cost inclusive of term loan and working capital. The stipulation of
the loan being expected to cover 75% of the project cost would not apply if the borrower’s contribution along with
convergence support from any other schemes exceeds 25% of the project cost.

• Interest Rate - The rate of interest would be lowest applicable rate of the bank for that category (rating category) not
to exceed (base rate (MCLR) + 3%+ tenor premium).

• Security - Besides primary security, the loan may be secured by collateral security or guarantee of Credit Guarantee
Fund Scheme for Stand-Up India Loans (CGFSIL) as decided by the banks.

• Repayment - The loan is repayable in 7 years with a maximum moratorium period of 18 months.
• Working Capital - For withdrawal of Working capital upto 10 lakh, the same may be sanctioned by way of overdraft.
Rupay debit card to be issued for convenience of the borrower. Working capital limit above 10 lakh to be sanctioned by
way of Cash Credit limit

• Margin Money - The Scheme envisages 25% margin money which can be provided in convergence with eligible Central
/ State schemes. While such schemes can be drawn upon for availing admissible subsidies or for meeting margin money
requirements, in all cases, the borrower shall be required to bring in minimum of 10% of the project cost as own
contribution.

3. Startup India: Startup India Scheme is an initiative by the Government of India for generation of employment and
wealth creation. The goal of Startup India is the development and innovation of products and services and increasing
the employment rate in India. Benefits of Start-up India Scheme is Simplification of Work, Finance support, Government
tenders, Networking opportunities. Startup India was launched by Prime Minister Shri. Narendra Modi on 16th January
2016.

Benefits of Startup India:

(a) Financial benefits - Most of the start-ups are patent based. It means they produce or provide unique goods or
services. In order to register their patents, they have to incur a heavy cost which is known as the Patent Cost. Under this
scheme, the government provides 80% rebate on the patent costs. Moreover, the process of patent registration and
related is faster for them. Also, the government pays the fees of the facilitator to obtain the patent.

(b) Income Tax Benefits - Start-ups enjoy a good amount of benefits under the Income Tax head. The government
exempts their 3 years income tax post the incorporation year. But they can avail it only after getting a certificate from
the Inter-Ministerial Board. Also, they can claim exemption from tax on Capital Gains if they invest money in specified
funds.

(c) Registration Benefits - Everyone believes that incorporation and registration of business are far more difficult than
running it. It is because of the long and complex steps of registration. Under the Start-up India scheme, an application is
there to facilitate registration. A single meeting is arranged to at the Start-up India hub. Also, there is a single doubt and
problem-solving window for them.

(d) Government Tenders - Everyone seeks to acquire Government tenders because of high payments and large projects.
But it is not easy to acquire the government tenders. Under this scheme, the start-ups get priority in getting government
tenders. Also, they are not required to have any prior experience.

(e) Huge Networking Opportunities - Networking Opportunities means the opportunity to meet with various startup
stakeholders at a particular place and time. The government provides this opportunity by conducting 2 startups fests
annually (both at domestic as well as the international level). Startup India scheme also provides Intellectual Property
awareness workshop and awareness

Registration of the Start-up can be done only from following types of companies:

 Partnership Firm
 Limited Liability Partnership Firm
 Private Limited Company.

4. Skill India: The contents on National Skill Development Corporation to be included at the end of the contents
covered under the aforesaid point. National Skill Development Corporation National Skill Development Corporation
(NSDC) is a not-for-profit public limited company incorporated on July 31, 2008 under section 25 of the Companies Act,
1956 (corresponding to section 8 of the Companies Act, 2013). NSDC was set up by Ministry of Finance as Public Private
Partnership (PPP) model. The Government of India through Ministry of Skill Development & Entrepreneurship (MSDE)
holds 49% of the share capital of NSDC, while the private sector has the balance 51% of the share capital. NSDC aims to
promote skill development by catalyzing creation of large, quality and for-profit vocational institutions. Further, the
organisation provides funding to build scalable and profitable vocational training initiatives. Its mandate is also to enable
support system which focuses on quality assurance, information systems and train the trainer academies either directly
or through partnerships. NSDC acts as a catalyst in skill development by providing funding to enterprises, companies and
organizations that provide skill training. It also develops appropriate models to enhance, support and coordinate private
sector initiatives. The differentiated focus on 21 sectors under NSDC’s purview and its understanding of their viability
will make every sector attractive to private investment.

The details of various schemes and initiatives are provided below-

(a) Pradhan Mantri Kaushal Kendra : Vocational training needs to be made aspirational to transform India into the skill
capital of the world. In line with the same, Ministry of Skill Development and Entrepreneurship ( MSDE ) intends to
establish visible and aspirational Model Training Centres ( MTCs ) in every district of the country. NSDC is the
implementation agency for the project. The model training centres envisage to:

• Create benchmark institutions that demonstrate aspirational value for competencybased skill development training. •
Focus on elements of quality, sustainability and Connection with stakeholders in skills delivery process. • Transform
from a Mandate-driven footloose model to a sustainable institutional model.

Funding Support :

Capital Expenditure NSDC will provide a concessional secured loan funding per centre, up to 75% of the project
investment, to cover expenditure only related to:

• Training infrastructure including purchase of plant, machinery & equipment

• Training aid and other associated items

• Civil work including setting up prefabricated structures and retrofit existing structures

Operations Support

The sustainability of the centres will be assured against dedicated training numbers under Pradhan Mantri Kaushal Vikas
Yojna (PMKVY) or its successor schemes (any other scheme under MSDE or NSDC). Each PMKK will be assured a training
mandate for three years, under the PMKVY scheme, as per common norms, subject to capacity and utilization of the
centre.

(b) International Skill Training : A country’s ability and potential for growth is determined by the size of its youth
population. Youth today need to be harnessed, motivated, skilled and streamlined to bring rapid progress for a country.
India has the relative advantage at present over other countries in terms of distribution of youth population even when
compared to large, fast growing Asian economies such as China and Indonesia, the two major countries other than India
which determine the demographic features of Asia.

Skill Development and Entrepreneurship: Policy

Recognizing the imperative need for skill development, National Skill Development Policy was formulated in 2009. Given
the vast paradigm shift in the skilling and entrepreneurship ecosystem in the country and the experience gained through
implementation of various skill development programmes, a need was felt to revisit the existing policy to align the
policy framework with the emerging trends in the national and international milieu. Accordingly, Government framed
the National Policy for Skill Development and Entrepreneurship 2015. The primary objective of this policy was to meet
the challenge of skilling at scale with speed, standard (quality) and sustainability.

Pre-Departure Orientation Training (PDOT):

Given the need to orient potential migrant workers with regards to language, culture, do's and don'ts in the destination
country, the emigration process and welfare measuresPDOT program has been launched. Ministry of External Affairs
(MEA) in collaboration with Ministry of Skill Development and Entrepreneurship (MSDE) is conducting the PDOT
program. NSDC is the implementing agency for this program. A longer variant of PDOT i.e. 160 hours was offered at all
IISCs which consisted of country orientation, language and digital literacy. A shorter variant of PDOT program i.e. 1 Day
(ongoing) is offered to all migrant workers who are likely to depart soon and register for the training through registered
recruitment agents. PDOT program is delivered by trainers who have undergone Training of Trainers (ToT) program
organized by MEA. So far, 52 trainers from existing IISCs and NSDC Training Partners have undergone the PDOT (ToT).

c) Technical Intern Training Program : The program promotes international collaboration through the transfer of skills,
technology, and knowledge among the participating countries thereby, contributing towards the human resource
development. It offers training to the workers for a specific period (3 – 5 years) in Japan’s industrial society. The
objective is to ensure that the most competent youth is selected and sent to Japan to participate in TITP. Ministry of Skill
Development & Entrepreneurship (MSDE), Government of India and the Ministry of Justice, Ministry of Foreign Affairs
and Ministry of Health, Labour and Welfare of Japan signed a Memorandum of Cooperation initiating the Technical
Intern Training Program (TITP) in India in October 2017.

5. Investment in physical infrastructure: India’s infrastructure development has not kept pace with economic growth
as it continues to be beleaguered by perennial problems. To name a few, these challenges revolve around poor project
management practices, financing and regulation. The rising demand for infrastructure facilities, rapid growth in
urbanisation, bulging of the middle class and an increasing working-age population would engender substantial increase
in infrastructure investments during the next few years. Sustained investment in infrastructure is one of the key
imperatives for turning the “Make in India” vision into reality. Achieving a manufacturing-led transformation would
necessitate addressing the bottlenecks across infrastructure. The Government has started taking initiatives in this
direction and rewards are being witnessed. To start with, public spending on infrastructure such as roads, railways,
irrigation and urban infrastructure has received a significant fillip in the Budget. Many bottlenecks facing infrastructure
projects have been eased, particularly in the area of procedurally complex environmental rules. The execution of
planned infrastructure in a timely and high quality manner would provide the necessary boost to the manufacturing
sector and help India realise her true potential in manufacturing.

Significant pick-up in infrastructure investments can be expected in the coming years given the various initiatives taken
by the Government to address the infrastructure bottlenecks. The Government strategy to increase investment in
infrastructure through a combination of public investment and public private partnership indicates an increased thrust
on the sector. The Government has also emphasized the need for stepping up the scale and scope of private investment
in infrastructure by allowing 100% FDI in some areas of railway infrastructure and by easing of FDI rules in construction.
Development of smart cities is likely to bridge the gap in infrastructure development in the country.

Given the renewed emphasis on infrastructure sector by boosting infrastructure financing coupled with initiatives to
enhance physical infrastructure such as roads, railways, urban infrastructure, the investment in physical infrastructure is
expected to increase sharply. According to D&B’s estimates, physical infrastructure investment is expected to surge to
10.4% of GDP by FY25 from around 7.5% (Estimated) of GDP in FY15. Resolution of policy bottlenecks such as land
acquisition and improvement in demand conditions would also stoke private infrastructure investment.

NEED FOR ENTREPRENEURSHIP IN INDIA

The entrepreneurs are considered ‘change agents’ in the process of industrial and economic development of an
economy. The premium mobile role that entrepreneurs play in promoting industrial and economic development of an
economy is well adduced across the countries. In a sense, entrepreneurs are the ‘spark plugs’ who transform the
economic scene of an economy. The developed countries have more entrepreneurial development as compared to
underdeveloped countries. Thus, the need for entrepreneurs in India may be captured in the following points:

1. Entrepreneurs promote capital formation by mobilising the idle saving of the people.

2. They create immediate and large-scale employment by establishing small- scale enterprises. Thus, they reduce the
unemployment problem in the country, i.e., the root cause of all socioeconomic problems.
3. They promote balanced regional development by establishing small-scale enterprises in rural, remote and less
developed regions.

4. They help reduce the concentration of economic power.

5. They promote the equitable redistribution of wealth, income and even political power in the interest of the country.
6. They encourage effective resource mobilization of capital and skill which might otherwise remain unutilized and idle

7. They, by establishing industries, induce backward and forward linkages which stimulate the process of economic
development in the country.

8. Last but no means the least; they also promote country’s export business, i.e. an important ingredient to economic
development.

BOTTLENECKS IN ENTREPRENEURIAL GROWTH

1. Inefficient time management:

Most entrepreneurs think on infinite time scales, as though they have plenty of time to achieve their goals. Time is the
most valuable resource, yet most entrepreneurial leaders don’t use it effectively. It is very important to analyze the
business flow metrics and identify time-wasting processes. Comparing the performance with industry standards to find
out the problem areas in a major challenge . Leveraging technology tools such as automation and machine learning
wherever possible is very important in contemporary times.

McKinsey & Co. reported that the next era of supply chain management will hinge on autonomous vehicles and a
network of smart programs that can optimize efficiency. Organisational efficiency can be increased by implementing
software solutions that break through bottlenecks and boost productivity.

2. Lack of money: Inadequate funds – Less funding and the resources obtained by these funds -- can hinder expansion.
When it comes to resolving bottlenecks, money matters a lot. It helps in the purchase of a software programs and hire
consultants who reduce the obstacles to growth and profitability. As the company expands, there is a need to scale up
the technology, invest in sales enablement and direct resources to a number of other critical areas. Money is needed to
achieve all of that. Fortunately, there are a number of capital sources out there. In addition to venture capital funding,
one can apply for a loan backed by the Small Business Administration. Loans repaid in less than seven years typically
incur a less than 10 percent interest rate, and these loans can be used to purchase new technology or building your
team with supply chain experts.

3. Too much noise: Building and running a start-up can become too complex when the entrepreneur is trying to cut
through the noise generated through social media, marketing, apps and vendors. It’s enough to make entrepreneurs
think they need to chase down the "next big thing" and clamour for the media limelight. But limelight doesn’t guarantee
success. Many companies that drew huge amounts of press and venture funding have ultimately failed. The better path
is to focus on the work and trust that attention will come. Put out a great product, and be rigorous about clearing ones
path to growth. The accolades will follow, but they matter only if one can scale and thrive sustainably.

4. A small (or nonexistent) network :Being a first-time entrepreneur, with a near-nonexistent industry, developing
contacts is one of the biggest challenges to overcome. A strong network is crucial to a company’s growth. But strong
networks aren’t built through viral campaigns or flashy marketing. They develop over years through resilience,
relationship-building and cultivation of a community around the idea. In Japan and China, sustainable strong networks
are and integral part of the value chain and supply chain To build a supportive network around one’s own business, the
type of reach an entrepreneurship wants to have is critical. Is the brand primarily local? Therafter, a blue print needs to
be put down, roots have to be made, , through partnerships and sponsorships with influencers in the region. If the
entrepreneur wants to have global appeal, there is a need to attend conferences and reach out internationally to learn
how to move into other markets. The entrepreneur must become relevant to the rest of the world.
 5. Growing too much too soon :With the objective of growing production, the problems also compound at the same
rate. Figuring out how to scale requires frequent testing and a willingness to pivot -- the entrepreneur doesn’t want to
miss out on strategic opportunities. For instance, there’s nothing wrong with starting small and growing slowly. It's
better to take that approach than to overinvest in a lackluster strategy. One needs to pay attention and switch gears
when that's needed. When Groupon, a US based start-up started the concept of online couponing in 2008, it was a
tremendous hit. But Groupon focused too much on customer acquisition and not enough on customer retention. So
when the company rushed to scale, it hadn't dealt with its preexisting issues. Within months of filing its IPO in 2011,
Groupon's share price plunged from $20 to $9. As common as these issues are, startup founders are actually the biggest
bottlenecks in their own businesses. They believe they have to do everything themselves, and they try to charge through
problems on their way to growth. Hence, there is a strong need to create strong internal bonds and decentralisation
systems
 B.E. : chp 8 Key Government Institutions
NITI AAYOG
Objectives

• To evolve a shared vision of national development priorities, sectors and strategies with the active involvement of
States.

• To foster cooperative federalism through structured support initiatives and mechanisms with the States on a
continuous basis, recognizing that strong States make a strong nation.

• To develop mechanisms to formulate credible plans at the village level and aggregate these progressively at higher
levels of government.

• To ensure, on areas that are specifically referred to it, that the interests of national security are incorporated in
economic strategy and policy.

• To pay special attention to the sections of our society that may be at risk of not benefiting adequately from economic
progress.

• To design strategic and long term policy and programme frameworks and initiatives, and monitor their progress and
their efficacy. The lessons learnt through monitoring and feedback will be used for making innovative improvements,
including necessary mid-course corrections.

• To provide advice and encourage partnerships between key stakeholders and national and international like-minded
Think tanks, as well as educational and policy research institutions.

• To create a knowledge, innovation and entrepreneurial support system through a collaborative community of national
and international experts, practitioners and other partners.

• To offer a platform for resolution of inter-sectoral and inter¬ departmental issues in order to accelerate the
implementation of the development agenda.

• To maintain a state-of-the-art Resource Centre, be a repository of research on good governance and best practices in
sustainable and equitable development as well as help their dissemination to stake-holders.

• To actively monitor and evaluate the implementation of programmes and initiatives, including the identification of the
needed resources so as to strengthen the probability of success and scope of delivery.

• To focus on technology upgradation and capacity building for implementation of programmes and initiatives.

• To undertake other activities as may be necessary in order to further the execution of the national development
agenda, and the objectives mentioned above.

Features:

NITI Aayog is developing itself as a State-of-the-art Resource Centre, with the necessary resources, knowledge and skills,
that will enable it to act with speed, promote research and innovation, provide strategic policy vision for the
government, and deal with contingent issues. NITI Aayog’s entire gamut of activities can be divided into four main
heads:

1. Design Policy & Programme Framework 3. Monitoring & Evaluation

2. Foster Cooperative Federalism 4. Think Tank and Knowledge & Innovation Hub
The different verticals of NITI provide the requisite coordination and support framework for NITI to carry out its
mandate. The list of verticals is as below:

1. Agriculture 3. Women & Child Development

2. Health 4. Governance & Research

5. HRD 15. Science & Tech

6. Skill Development & Employment 16. State Coordination & Decentralized Planning
(SC&DP)
7. Rural Development
17. Social Justice & Empowerment
8. Sustainable Development Goals
18. Land & Water Resources
9. Energy
19. Data management & Analysis
10. Managing Urbanization
20. Public-Private Partnerships
11. Industry
21. Project Appraisal and Management Division (PAMD)
12. Infrastructure
22. Development Monitoring and Evaluation Office
13. Financial Resources
23. National Institute of Labour Economics Research
14. Natural Resources & Environment and Development (NILERD)

Sustainable Action For Transforming Human Capital (SATH): ‘SATH’ the programme for Sustainable Action for
Transforming Human Capital (SATH) focuses on two main sectors — Education and Health and to build three ‘Role
Model’ States. After an elaborate selection process based on the Challenge Method, three States namely, Jharkhand,
Madhya Pradesh and Odisha, were selected for the project. The program is being implemented in these States along
with knowledge partners Boston Consulting Group (BCG) & Piramal Foundation for Education Leadership (PFEL)
consortium with NITI Aayog as a facilitator and coordinator in the process. The project is being implemented in three
phases over a period of 30 months, coming to an end in 2020. The two phases of the project have been completed. It is
now in the third phase of implementation, which will last for 18 months.

Major achievements under the project SATH-Education include:

• In depth field diagnosis of districts and schools of Jharkhand, Odisha, and Madhya Pradesh.

• State transformation roadmaps released for all the three States, which contain quarterly milestones committed for
each initiative.

• Critical interventions including school mergers, remediation program, training, monitoring teacher recruitment/
rationalization, institutional reorganization at district and state level and proper utilization of MIS are in execution mode
since January, 2018.

Progress of the project is being monitored through a National Steering Group (NSG) and Central Project Monitoring Unit
(CPMU) at national level and State Project Monitoring Unit (SPMU) at State level.

MINISTRY OF CORPORATE AFFAIRS

The Ministry is primarily concerned with administration of the Companies Act 2013, the Companies Act 1956, the
Limited Liability Partnership Act, 2008 & other allied Acts and rules & regulations framed there-under mainly for
regulating the functioning of the corporate sector in accordance with law. The Ministry is also responsible for
administering the Competition Act, 2002 to prevent practices having adverse effect on competition, to promote and
sustain competition in markets, to protect the interests of consumers through the commission set up under the Act.
Besides, it exercises supervision over the three professional bodies, namely, Institute of Chartered Accountants of
India(ICAI), Institute of Company Secretaries of India(ICSI) and the Institute of Cost Accountants of India (ICAI) which are
constituted under three separate Acts of the Parliament for proper and orderly growth of the professions concerned.
The Ministry also has the responsibility of carrying out the functions of the Central Government relating to
administration of Partnership Act, 1932, the Companies (Donations to National Funds) Act, 1951 and Societies
Registration Act, 1980.

The affiliated offices of Ministry of Corporate Affairs are as under:

(i) Serious Fraud Investigation Office : The Government in the backdrop of major failure of nonbanking financial
institutions, phenomenon of vanishing companies, plantation companies and the recent stock market scam had decided
to set up Serious Fraud Investigation Office (SFIO), a multi-disciplinary organization to investigate corporate frauds. The
Organization has been established and it has started functioning since 1st October, 2003.

(ii) Competition Commission of India : The Competition Commission of India (CCI) was established under the
Competition Act, 2002 for the administration, implementation and enforcement of the Act, and was duly constituted in
March 2009. The following are the objectives of the Commission.

1. To prevent practices having adverse effect on competition

2. To promote and sustain competition in markets.

3. To protect the interests of consumers and

4. To ensure freedom of trade

Consequent upon a challenge to certain provisions of the Act and the observations of the Hon'ble Supreme Court, the
Act was amended by the Competition (Amendment) Act, 2007. The Monopolies and Restrictive Trade Practices Act,
1969 [MRTP Act] repealed and is replaced by the Competition Act, 2002, with effect from 01st September, 2009
[Notification Dated 28th August, 2009].

(iii) Indian Institute Of Corporate Affairs: IICA has been established by the Indian Ministry of Corporate Affairs for
capacity building and training in various subjects and matters relevant to corporate regulation and governance such as
corporate and competition law, accounting and auditing issues, compliance management, corporate governance,
business sustainability through environmental sensitivity and social responsibility, e-Governance and enforcement etc.
One of the Wings of IICA, the ICLS Academy, has the responsibility for conducting the Induction & Advanced Training for
probationary Officers (POs) belonging to the Indian Corporate Law Service recruited through the Common Exam of Civil
Services Examination conducted by UPSC. The Institute has been designed with an eye on the future to provide a
platform for dialogue, interaction and partnership between governments, corporate, investors, civil society,
professionals, academicians and other stake holders in the emerging 21st century.

SECURITIES AND EXCHANGE BOARD OF INDIA

Securities and Exchange Board of India (SEBI) is a statutory regulatory body entrusted with the responsibility to regulate
the Indian capital markets. It monitors and regulates the securities market and protects the interests of the investors by
enforcing certain rules and regulations. SEBI was founded on April 12, 1992, under the SEBI Act, 1992. Headquartered in
Mumbai, India, SEBI has regional offices in New Delhi, Chennai, Kolkata and Ahmadabad along with other local regional
offices across prominent cities in India. The objective of SEBI is to ensure that the Indian capital market works in a
systematic manner and provide investors with a transparent environment for their investment. To put it simply, the
primary reason for setting up SEBI was to prevent malpractices in the capital market of India and promote the
development of the capital markets. The Preamble of the Securities and Exchange Board of India describes the basic
functions of the Securities and Exchange Board of India as: “...to protect the interests of investors in securities and to
promote the development of, and to regulate the securities market and for matters connected therewith or
incidental thereto.
Functions of SEBI

The functions and powers of SEBI have been listed in the SEBI Act,1992. SEBI caters to the needs of three parties
operating in the Indian Capital Market. These three participants are mentioned below:

• Issuers of the Securities : Companies that issue securities are listed on the stock exchange. They issue shares to raise
funds. SEBI ensures that the issuance of Initial Public Offerings (IPOs) and Follow-up Public Offers (FPOs) can take place
in a healthy and transparent way.

• Protects the Interests of Traders & Investors : It is a fact that the capital markets are functioning just because the
traders exist. SEBI is responsible for safeguarding their interests and ensuring that the investors do not become victims
of any stock market fraud or manipulation.

• Financial Intermediaries : SEBI acts as a mediator in the stock market to ensure that all the market transactions take
place in a secure and smooth manner. It monitors every activity of the financial intermediaries, such as broker, sub-
broker, NBFCs, etc

Powers of SEBI: Securities and Exchange Board of India has the following three powers:

Quasi-Judicial : With this authority, SEBI can conduct hearings and pass ruling judgements in cases of unethical and
fraudulent trade practices. This ensures transparency, fairness, accountability and reliability in the capital market. SEBI
PACL case is an example of this power.

Quasi-Legislative : Powers under this segment allow SEBI to draft rules and regulations for the protection of the interests
of the investor. One such regulation is SEBI LODR (Listing Obligation and Disclosure Requirements). It aims at
consolidating and streamlining the provisions of existing listing agreements for several segments of the financial market
like equity shares. This type of regulation formulated by SEBI aims to keep any malpractice and fraudulent trading
activates at bay.

Quasi-Executive : SEBI is authorised to file a case against anyone who violates its rules and regulation. It is empowered
to inspect account books and other documents as well if it finds traces of any suspicious activity.

RESERVE BANK OF INDIA (RBI)

The Reserve Bank of India was established on April 1, 1935 in accordance with the provisions of the Reserve Bank of
India Act, 1934. The Central Office of the Reserve Bank was initially established in Calcutta but was permanently moved
to Mumbai in 1937. The Central Office is where the Governor sits and where policies are formulated. Though originally
privately owned, since nationalisation in 1949, the Reserve Bank is fully owned by the Government of India. The
Preamble of the Reserve Bank of India describes the basic functions of the Reserve Bank as:

"to regulate the issue of Bank notes and keeping of reserves with a view to securing monetary stability in India and
generally to operate the currency and credit system of the country to its advantage; to have a modern monetary
policy framework to meet the challenge of an increasingly complex economy, to maintain price stability while keeping
in mind the objective of growth."

Main Functions of RBI

Monetary Authority:

• Formulates, implements and monitors the monetary policy.

• Objective: maintaining price stability while keeping in mind the objective of growth.
Regulator and supervisor of the financial system:

• Prescribes broad parameters of banking operations within which the country's banking and financial system functions.
• Objective: maintain public confidence in the system, protect depositors' interest and provide cost-effective banking
services to the public.

Manager of Foreign Exchange:

• Manages the Foreign Exchange Management Act, 1999.

• Objective: to facilitate external trade and payment and promote orderly development and maintenance of foreign
exchange market in India.

Issuer of currency:

• Issues and exchanges or destroys currency and coins not fit for circulation.

• Objective: to give the public adequate quantity of supplies of currency notes and coins and in good quality.

Developmental role:

• Performs a wide range of promotional functions to support national objectives.

Regulator and Supervisor of Payment and Settlement Systems:

• Introduces and upgrades safe and efficient modes of payment systems in the country to meet the requirements of the
public at large.

• Objective: maintain public confidence in payment and settlement system

Related Functions:

• Banker to the Government: performs merchant banking function for the central and the state governments; also acts
as their banker.

• Banker to banks: maintains banking accounts of all scheduled banks.

Other Significant Facts:

• Has 27 regional offices, most of them in state capitals and 04 Sub-offices.

• Deposit Insurance and Credit Guarantee Corporation of India (DICGC), Bharatiya Reserve Bank Note Mudran Private
Limited (BRBNMPL), Reserve Bank Information Technology Private Limited (ReBIT), Indian Financial Technology and
Allied Services (IFTAS) are fully owned subsidiaries of Reserve Bank of India.

• Has six training establishments- Three, namely, RBI Academy, College of Agricultural

• Banking and Reserve Bank of India Staff College are part of the Reserve Bank.

Others are autonomous, such as, National Institute for Bank Management, Indira Gandhi Institute for Development
Research (IGIDR), Institute for Development and Research in Banking Technology (IDRBT).
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (IBBI)
The Insolvency and Bankruptcy Board of India was established on 1st October, 2016 under the Insolvency and
Bankruptcy Code, 2016 (Code). It is a key pillar of the ecosystem responsible for implementation of the Code that
consolidates and amends the laws relating to reorganization and insolvency resolution of corporate persons,
partnership firms and individuals in a time bound manner for maximization of the value of assets of such persons, to
promote entrepreneurship, availability of credit and balance the interests of all the stakeholders. It is a unique
regulator: regulates a profession as well as processes. It has regulatory oversight over the Insolvency Professionals,
Insolvency Professional Agencies, Insolvency Professional Entities and Information Utilities. It writes and enforces rules
for processes, namely, corporate insolvency resolution, corporate liquidation, individual insolvency resolution and
individual bankruptcy under the Code. It has recently been tasked to promote the development of, and regulate, the
working and practices of, insolvency professionals, insolvency professional agencies and information utilities and other
institutions, in furtherance of the purposes of the Code. It has also been designated as the ‘Authority’ under the
Companies (Registered Valuers and Valuation Rules), 2017 for regulation and development of the profession of valuers
in the country.

NATIONAL COMPANY LAW TRIBUNAL (NCLT)

The Central Government has constituted National Company Law Tribunal (NCLT) under section 408 of the Companies
Act, 2013 (18 of 2013) w.e.f. 01st June 2016. In the first phase the Ministry of Corporate Affairs have set up eleven
Benches, one Principal Bench at New Delhi and ten Benches at New Delhi, Ahmadabad, Allahabad, Bengaluru,
Chandigarh, Chennai, Guahati, Hyderabad, Kolkata and Mumbai. These Benches will be headed by the President and 16
Judicial Members and 09 Technical Members at different locations. National Company Law Tribunal is the outcome of
the Eradi Committee. NCLT was intended to be introduced in the Indian legal system in 2002 under the framework of
Companies Act, 1956 however, due to the litigation with respect to the constitutional validity of NCLT which went for
over 10 years, therefore, it was notified under the Companies Act, 2013. It is a quasi-judicial authority incorporated for
dealing with corporate disputes that are of civil nature arising under the Companies Act. However, a difference could be
witnessed in the powers and functions of NCLT under the previous Companies Act and the 2013 Act. The constitutional
validity of the NCLT and specified allied provisions contained in the Act were re-challenged. Supreme Court had
preserved the constitutional validity of the NCLT, however, specific provisions were rendered as a violation of the
constitutional principles. NCLT works on the lines of a normal Court of law in the country and is obliged to fairly and
without any biases determine the facts of each case and decide with matters in accordance with principles of natural
justice and in the continuance of such decisions, offer conclusions from decisions in the form of orders. The orders so
formed by NCLT could assist in resolving a situation, rectifying a wrong done by any corporate or levying penalties and
costs and might alter the rights, obligations, duties or privileges of the concerned parties. The Tribunal isn’t required to
adhere to the severe rules with respect to appreciation of any evidence or procedural law.

Major Functions of NCLT

1. Registration of Companies: The new Companies Act, 2013 has enabled questioning the legitimacy of companies
because of specific procedural errors during incorporation and registration. NCLT has been empowered in taking several
steps, from cancelling the registration of a company to dissolving any company. The Tribunal could even render the
liability or charge of members to unlimited. With this approach, NCLT can de-register any company in specific situations
when the registration certificate has been obtained by wrongful manner or illegal means under section 7(7) of the
Companies Act, 2013.

2. Transfer of shares: NCLT is also empowered to hear grievances of rejection of companies in transferring shares and
securities and under section 58- 59 of the Act which were at the outset were under the purview of the Company Law
Board. Going back to Companies Act, 1956 the solution available for rejection of transmission or transfer were limited
only to the shares and debentures of a company but as of now the prospect has been raised under the Companies Act,
2013 and the now covers all the securities which are issued by any company.

3. Deposits: The Chapter V of the Act deals with deposits and was notified several times in 2014 and Company Law
Board was the prime authority for taking up the cases under said chapter. Now, such powers under the chapter V of the
Act have been vested with NCLT. The provisions with respect to the deposits under the Companies Act, 2013 were
notified prior to the inception of the NCLT. Unhappy depositors now have a remedy of class actions suits for seeking
remedy for the omissions and acts on part of the company that impacts their rights as depositors.

4. Power to investigate: As per the provision of the Companies Act, 2013 investigation about the affairs of the company
could be ordered with the help of an application of 100 members whereas previously the application of 200 members
was needed for the same. Moreover, if a person who isn’t related to a company and is able to persuade NCLT about the
presence of conditions for ordering an investigation then NCLT has the power for ordering an investigation. An
investigation which is ordered by the NCLT could be conducted within India or anywhere in the world. The provisions
are drafted for offering and seeking help from the courts and investigation agencies and of foreign countries.

5. Freezing assets of a company: The NCLT isn’t just empowered to freezing the assets of a company for using them at a
later stage when such company comes under investigation or scrutiny, such investigation could also be ordered on the
request of others in specific conditions

6. Converting a public limited company into a private limited company: Sections 13-18 of the Companies Act, 2013 read
with rules control the conversion of a Public limited company into the Private limited company, such conversion needs
an erstwhile confirmation from the NCLT. NCLT has the power under section 459 of the Act, for imposing specific
conditions or restrictions and might subject granting approvals to such conditions.

NATIONAL COMPANY LAW APPELLATE TRIBUNAL (NCLAT)

National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013 for
hearing appeals against the orders of National Company Law Tribunal(s) (NCLT), with effect from 1st June, 2016. NCLAT
is also the Appellate Tribunal for hearing appeals against the orders passed by NCLT(s) under Section 61 of the
Insolvency and Bankruptcy Code, 2016 (IBC), with effect from 1st December, 2016. NCLAT is also the Appellate Tribunal
for hearing appeals against the orders passed by Insolvency and Bankruptcy Board of India under Section 202 and
Section 211 of IBC. NCLAT is also the Appellate Tribunal to hear and dispose of appeals against any direction issued or
decision made or order passed by the Competition Commission of India (CCI) – as per the amendment brought to
Section 410 of the Companies Act, 2013 by Section 172 of the Finance Act, 2017, with effect from 26th May, 2017.

Jurisdiction of NCLAT

The National Company Law Appellate Tribunal is headed by the Chairperson and consists of not more than eleven
members. It is a higher law governing forum than NCLT. The Appellate Tribunal hears appeals filed against the Tribunal
court orders. The appeal can be placed within 45 days from the date on which NCLT announces its decisions. The
Appellate Tribunal court goes through the evidence transferred from the Tribunal, making changes or confirming the
order given by the latter. This process happens within a time span of six months.

Dissatisfaction with Tribunal Orders

If a group or an individual is to be dissatisfied with the orders passed by the Tribunal Court it is obvious to move on to
the next, only, option, that is filing an appeal to the Appellate Court where the decisions of NCLT are reviewed and
checked from the point of law and facts. The Tribunal Court is in charge of finding and gathering evidence while the
Appellate Court decides cases based on the already collected evidence. If the outcome is not satisfactory even then, one
should approach the Supreme Court
 B.E. : chp 7_Business Environment
OVERVIEW OF BUSINESS ENVIRONMENT
Business organization has to interact and transact with its environment. Hence, both the business and environment are
totally interrelated and mutually interdependent. Business environment refers to those aspects of the surroundings
business enterprise, which affect or influence its operations and determine its effectiveness.

According to Keith Davis, “Business environment is the aggregate of all conditions, events and influence that surrounds
and affect it”.

According to Andrews, “The environment of a company as the pattern of all external influences that affect its life and
development”.

The business environment is always changing and is uncertain. It is because of dynamism of environment. As it is already
said that the business environment is the sum of all the factors outside the control of management of a company, the
factor, which are constantly changing, and they carry with them both opportunities and risks or uncertainties which can,
make or mark the future of business. Business environment encompasses all those factors that affect a company’s
operations and includes customers, competitors, stakeholders, suppliers, industry trends, regulations other government
activities, social and economic factors and technological developments. Thus, business environment refers to the
external environment and includes all factors outside the firm, which lead to opportunities and threats of a firm.

FEATURES AND FACTORS INFLUENCING BUSINESS ENVIRONMENT : The main features are:
1. All the external forces : Business Environment includes all the forces, institutions and factors which directly or
indirectly affect the Business Organizations.

2. Specific and general forces : Business environment includes specific forces such as investors, customers, competitors
and suppliers. Non-human or general forces are Social, Legal, Technological, Political, etc. which affect the Business
indirectly.

3. Inter-relation : All the forces and factors of Business Environment are inter-related to each other. For example with
inclination of youth towards western culture, the demand for fast food is increasing.

4. Uncertainty : It is very difficult to predict the changes of Business Environment. As environment is changing very fast
for example in IT, fashion industry frequent and fast changes are taking place.

5. Dynamic : Business environment is highly flexible and keep changing. It is not static or rigid that is why it is essential to
monitor and scan the business environment continuously.

6. Complex : It is very difficult to understand the impact of Business environment on the companies. Although it is easy
to scan the environment but it is very difficult to know how these changes will influence Business decisions. Some-time
change may be minor but it might have large impact. For example, a change in government policy to increase the tax
rate by 5% may affect the income of company by large amount.

7. Relativity : The impact of Business environment may differ from company to company or country to country. For
example, when consumer organisation CES published the report of finding pesticides in cold drinks, resulted in decrease
in sale of cold drinks, on the other hand it increased the sale of juice and other drinks.

TYPES OF ENVIRONMENT TYPES OF ENVIRONMENT