FM asks entrepreneurs to build not just bigger, but better companies

Finance minister Nirmala Sitharaman addresses the 53rd National Management Convention of All India Management Association, in New Delhi on Tuesday. (Neeraj)AI Quick ReadNew Delhi: Finance minister Nirmala Sitharaman on Tuesday exhorted industry to focus not just on gaining scale but on building stronger, more resilient, and better-governed enterprises to match the goal of a developed India by 2047.

Corporate managers, she said, need to push the boundaries, moving from the "made in India" to the "imagined in India" concept and creating an ecosystem where products are not only manufactured here but also conceived, designed, and developed here for the world.

"Let us, therefore, build not only bigger companies, but better companies — competitive, innovative, trusted and resilient enough to lead India through the decades ahead," Sitharaman said at an event organised by the All India Management Association in the national capital.

India faces a parallel shift in the global trade and supply chain architectures, but resilience can't mean economic isolationism, she stressed. "For India, resilience means deep domestic capacity, fiscal strength, and industrial scale, so that global shocks are absorbed without interrupting national development." India today has the market scale, entrepreneurial energy, and institutional capacity to aim much higher.

So, execution will determine how successfully it can convert these strengths into lasting national capability, she said. Sitharaman said the real opportunity for the management community lies in turning today’s startups into tomorrow’s big corporations.

It's not enough to say how many unicorns (start-ups with a valuation of $1 billion each) have been created, but how many will endure the test of time and scale up, she stressed. India currently has more than 230,000 officially recognised startups, including 120 unicorns.

She called on the management community to help these enterprises "make the difficult transition from founder-led ventures to institution-led companies, without losing the entrepreneurial energy that created them in the first place".

"The same institutionalisation challenge runs through India's family businesses," she said. A large share of India’s micro, small and medium enterprises are family-owned. "Many have strong products, loyal customers and significant growth potential, but expansion can be held back by unclear roles, succession disputes, informal decision-making and disagreements within the family," she said.

The challenge, therefore, is often not entrepreneurship, but institutionalisation. "We need professionalisation: separating ownership from management, defining responsibilities, preparing the next generation, and resolving conflicts before they affect the business itself," she said, calling on AIMA to promote and expand short, practical programmes for family businesses covering succession planning, governance, professionalisation, conflict management and delegation.

Sound corporate governance is not simply a set of external codes to be adopted wholesale; it, in fact, grows out of how institutions actually conduct themselves, and out of the standards they hold themselves to, Sitharaman said.

Trust between businesses, therefore, cannot be demanded but built through the conduct on both sides, she said. Highlighting the virtue of settling disagreements through dialogue rather than litigation, the minister said a mature economy should be able to handle disagreement without immediately becoming adversarial.

"Businesses must engage constructively with the government and regulators. Legal recourse will always remain available, but every disagreement need not begin as litigation," she said. "There is considerable value in engaging early, placing evidence on the table, participating seriously in consultations and working towards solutions before differences become disputes." At the same time, businesses must provide predictability and transparency and be willing to listen, she said.

Sitharaman flagged limited investment in research and development (R&D) in India – 0.83% of GDP against the OECD average of 2.7%, 2.6% in China and 3.5% in the US. This reflects a persistent shortfall in private-sector R&D depth, where the domestic private sector contributes just 36% against over 70% in leading advanced economies, she said, exhorting private firms to scale up their R&D spending.

Simultaneously, higher R&D spending should also translate into more intellectual property being created in and from India, she said. "Manufacturing scale is important, but the next stage is to capture more of the value that comes from design, engineering, patents, software, technology and know-how," she said.