Case Study

Opportunities and Constraints of Women Owned Very Small Enterprises in India

March 6, 2022

Micro, Small and Medium Enterprises (MSMEs) in India face a variety of challenges that constrain their growth prospects. The challenge in accessing capital from formal financial institutions (FIs) is exacerbated for women entrepreneurs. There are about 15 million women-owned MSMEs in India, over 70 percent of which are manufacturing enterprises. About 90 percent of the women entrepreneurs in India have not availed finance from formal FIs. Further, the COVID-19 pandemic has had disproportionately adverse effects on women entrepreneurs. Interactions with FIs reveal that they hesitate to view WVSEs as an addressable market segment. To identify this untapped opportunity, IFC is releasing a report which lays out the landscape for Women’s Very Small Enterprises (WVSEs) in India and outlines how FIs can better target this segment in a post COVID environment.

There are key barriers that women-led micro and small enterprises face in seeking debt capital from financial institutions. Some of these barriers have their roots in social constructs (lack of collateral, time poverty, lack of ecosystem support etc) while others are intrinsic to financial institutions (lack of understanding of financial profile, credit needs, unconscious gender bias etc). The objective of this report therefore is to identify a sub-segment of WVSEs that can be a potential market segment for lenders.

IFC’s research has revealed that about 18 percent of the 15 million women-owned micro-enterprises in India are WVSEs. Estimated credit demand from these 2.7 million WVSEs is INR 836 billion ($11.4 billion). The report outlines this sub-segment, in terms of enterprise revenue, credit requirements, employee base while identifying the sectors and regions in which WVSEs operate. It also provides product and process design recommendations to FIs along with an action plan for how these WVSEs can be reached.

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