Rural Industrialization Through Technology-Based Entrepreneurship


In the era of globalization, entrepreneurship development in the rural context is a challenge.  According to the 2011 Census, 68.84% of people are living in rural areas of India. People in rural areas suffer from unemployment, poor infrastructure facilities which may be solved with the development of the rural entrepreneurs. “Rural entrepreneurship can be defined as entrepreneurship emerging at village level which can take place in a variety of fields of endeavour such as business, industry, agriculture and acts as a potent factor for economic development”. But, these rural entrepreneurs are suffering from various problems like fear of risk, lack of finance, illiteracy, and competition from the urban entrepreneurs. Rural entrepreneurs increase the standard of living and purchasing power of the people by offering employment opportunity to the people in villages. This paper is an attempt to understand the problems and challenges for rural entrepreneurship in the context of rural development in India and possible suggestions to overcome the problems.


Entrepreneurs play an important part in economic growth and development. Entrepreneurs are also vital in the process of structural change or industrialization, a process without which development is not possible. Entrepreneurial innovation leads to the reallocation of resources from the traditional (agricultural) sector to the modern (manufacturing) sector.

There is now a growing rediscovery of industrial policy as being necessary to overcome a number of market failures that inhibit entrepreneurial innovation in job creation and low-carbon industrialization. This implies an industrial policy where the relationship between government and entrepreneurs (the private sector) is important.

Lopsided development of the economy is one of the main factors why our nation, as well as the state, is facing severe problems of growth. We still face massive unemployment and extreme poverty at this time of the century. India, as well as Nagaland, is a land of villages. More than 75% of the population lives in villages. Due to the ignorance and not much effort to build up the rural areas, large number of people migrates to the towns and cities in the hope of finding a better prospect. This has ironically led to more dreary problems such as growth of slum areas where people live in unhygienic condition thus leading to the breakout of diseases. Migration has also led population problems in the urban areas. Moreover, agriculture despite being the backbone of the economy, nothing much can be done as lands are limited and people could not depend entirely on farming for many reasons starting from lacklustre government policy and the erratic weather conditions which are making the farmers suffer more. Therefore, the foremost need to change all these for better is to close the gap between the rural and urban disparity. And this can be done by making rural areas i.e. villages, developed from all aspects.

Having said that, the development of the rural areas can be answered by the huge role entrepreneurship can play.

Now, the questions arise as to what rural entrepreneurship is? To put it simply, rural entrepreneurs are those who carry out entrepreneurial activities by establishing industrial and business units in the rural sector of the economy. In other words, establishing industrial and business units in rural areas refers to rural entrepreneurship. In other words, rural entrepreneurship implies entrepreneurship emerging in rural areas. Or, say, rural entrepreneurship implies rural industrialisation. Ultimately, rural entrepreneurship precedes industrialization. Rural industries and business organisations in rural areas generally associated with agriculture and allied activities to agriculture.

According to KVIC (Khadi and Village Industry Commission), “village industries or Rural industry means any industry located in rural areas, population of which does not exceed 10,000 or such other figure which produces any goods or renders any services with or without use of power and in which the fixed capital investment per head of an artisan or a worker does not exceed a thousand rupees”. These are few of the rural-based businesses one can undertake to promote rural entrepreneurship: Agro Based Industries: like sugar industries, jaggery, oil processing from oilseeds, pickles, fruit juice, spices, dairy products etc.

Forest Based Industries: like wood products, bamboo products, honey, coir industry, making eating plates from leaves. Mineral based industry: like stone crushing, cement industries, red oxide making, wall coating powders etc. Textile Industry: like spinning, weaving, colouring, bleaching. Engineering and Services: like agriculture equipment, tractors and pump set repairs etc.

It is quite encouraging that the Government of India in its successive five-year plans has been assigning increasing importance and support for the promotion and development of rural entrepreneurship. But, if the aspiring and existing entrepreneurs have no interest in setting up businesses and units in rural areas than the efforts of the government goes off in vain. People need to understand that entrepreneurship in rural sector provides an answer to a lot of problems in rural India. Indian rural sector is no longer primitive and isolated. Therefore, entrepreneurship in the rural and tribal areas looms large to solve the problems of poverty, unemployment and backwardness of the Indian economy. We can be assured that rural entrepreneurship can be an effective means of accelerating the process of rural development.

There are many rural initiatives we can undertake and simultaneously can benefit the economy enormously. Such as diversification into non-agricultural uses of available resources such as catering for tourists, blacksmithing, carpentry, spinning, etc. as well as diversification into activities other than those solely related to agricultural usage, for example, the use of resources other than land such as water, woodlands, buildings, available skills and local features. There are also entrepreneurial combinations of these resources, for example: tourism, sport and recreation facilities, professional and technical training, retailing and wholesaling, industrial applications (engineering, crafts), servicing (consultancy), value added (products from meat, milk, wood, etc.) and the possibility of off-farm work. Additionally, there are new uses of land that enable a reduction in the intensity of agricultural production, for example, organic production.

It is, no doubt, that the growth and development of rural industries facilitate self-employment, results in wider dispersal of economic and industrial activities and helps in the maximum utilisation of locally available raw materials and labour. This is how rural entrepreneurship can play in ameliorating the socio-economic conditions of the rural people in particular and the country in general.

Proper utilisation of local resources

Rural industries help in the proper utilisation of local resources like raw materials and labour for productive purposes and thus increase productivity. They can also mobilise rural savings which help in increase of rural funds.

Employment generation

Rural industries create large-scale employment opportunities for rural people. The basic problem of large-scale unemployment and underemployment of rural India can be effectively tackled through rural industrialisation.

Prevents rural exodus

The lack of employment opportunities, heavy population pressure and poverty forced the rural people to move to urban areas for livelihood. It creates rural-urban imbalance. Under these circumstances, rural industries help in reducing disparities in income between rural and urban people and acts as a potential source of gainful employment. This prevents rural people to migrate to urban areas.

Fosters economic development

Rural industrialization fosters economic development of rural areas. This curbs rural-urban migration on the one hand and also reduces disproportionate growth of towns and cities, growth of slums, social tensions and environmental pollutions etc. on the other.

Earnings of foreign exchange

Rural industries play an important role in increasing the foreign exchange earnings of the country through export of their produce.

Producer’s goods of consumers’ choice

Rural industries including village and cottage industries produce goods of individual consumers’ choice and taste. Jewellery, sarees, artistic products are produced to cater to the needs of different consumers according to their taste, design and choice.

Entrepreneurial development

Rural industries promote entrepreneurial development in the rural sector. It encourages young and promising entrepreneurs to develop and carry out entrepreneurial activities in the rural sector which finally facilitate the development of the rural areas.

Rural Entrepreneurship-Historical Perspective

The economic history of India begins as early as 3300-1300 BC, with Indus Valley Civilization. During this period Indian economy (which subsumed present-day Pakistan, Bangladesh and part of Afghanistan) was very well organized. It evolved from a largely agricultural and trading society into a mixed economy of manufacturing and services, while a large majority still involved in agriculture. The period was marked by intensive trade activity and urban development. Though there was a significant urban population, much of India’s population resided in villages, whose economy was largely isolated and self-sustaining. Each village had farmers, carpenters, iron-smiths, goldsmiths, barbers, doctors (ayurvedic practitioners) teachers, preachers (Brahmins -pujarees), weavers and general merchants (kirana shops). Agriculture was the predominant occupation and satisfied the village’s food requirements, besides providing raw materials for hand-based industries such as textiles, food processing and crafts. All the professions/ businesses were family based. The family pooled their resources to maintain the family and invest in business ventures. The system ensured younger members were trained and employed and that older and disabled persons would be supported by their families. The system prevented agricultural land from splitting with each generation, aiding yield from the benefit of scale. Such sanctions curbed the spirit of rivality in junior members and instilled a sense of obedience.

Future of Rural Entrepreneurship

The future of Entrepreneurship is the future of the Country. For India, it directly translates as the future of the nation. Considering the importance being attached to improving the rural economy, proposed doubling of farmers’ income and providing urban facilities in rural areas, we can safely assume that the future of Rural Entrepreneurship is bright in India. This bright future will depend on taking concrete steps of establishing Rural Management as a discipline in all Indian Universities (to make available rural managers), making rural posting compulsory for all government doctors (for at least 5 years), ensuring disbursement of timely loan to all rural entrepreneurs by banking system, and linking all nearby cities/ towns with all-weather roads to rural areas, to facilitate smooth transportation of rural products/ services to urban areas. All this has started to happen. Rural Technology Parks are getting built (NIRDPR, Hyderabad being a leading example) to show-case success of rural enterprises. There is a strong need to establish and strengthening Rural Management institutions for proper teaching, training, hand-holding, documenting and disseminating rural entrepreneurship success stories. Strengthening of National Council of Rural Institutions (to serve as a national think-tank, provide policy analysis and feedback, design develop and mentor Course Materials and Master trainers and ultimately serve as a repository and clearing house of Rural Engagement/ Rural Entrepreneurship success stories for the whole country) must be one of the top priorities of the union government.


Rural Entrepreneurship is not a new concept for India. Indian has been one of the most ancient developed rural economies. The village self-rule (gram-swaraj) is an Indian Concept. We need to reinvent our economic prowess. As India still lives in villages, the route of Indian economic development will be fast-forwarded by Rural Entrepreneurship. Fortunately, there is unison of thinking among policymakers (in all states and at federal level) on this subject at this point of time, as the country is facing acute rural distress. The current situation provides a good opportunity for rural entrepreneurship to flourish.