How to Upgrade India's Social Enterprise Ecosystem

Posted by Esha Chhabra

India has become a hotbed of social enterprise, home to impact technology like D.Light Design's low-cost LED lights for rural communities, Sarvajal’s water ATMs, and Aravind Eye Hospital’s high-quality, high-volume, low-cost health care.

India is an obvious staging ground for social innovation—it's home to bright young minds, serious development issues, a lack of public services, and a growing divide between globalized cities and rural poor. India’s freedom from strict regulations like in the U.S. or Europe makes it an ideal playground for social entrepreneurs, enabling them to test ideas and develop the ones that are ripe for further growth. 

But India’s social enterprises are struggling to scale, communicate, and share their ideas, and they still lack support from the country’s leading businesses. Social enterprise in India remains a messy, unregulated, chaotic venture. India’s social space has been defined by thousands of community-based nonprofits that lack the capital to become regional or national catalysts for change. Much of the buzz around social enterprise is concentrated in the city of Hyderabad—a hub for young, educated, and technically savvy Indians.

Hyderabad recently hosted the Khemka Forum, a one-of-a-kind gathering of social entrepreneurs and their stakeholders in India that featured Karthik Chadrasekar, an executive at social enterprise investor Acumen Fund, and Sonal Shah, former director of the White House’s Office of Social Innovation. The mission at the two-day event was to build an “ecosystem” to bolster social enterprises.  

Serious hurdles remain, Chandresekar says. “While there are so many enterprises, for example, in the energy space, they’re not necessarily talking with each other, combing their voices, and approaching the government or the private sector for support,” he says.

As an energy portfolio manager at Acumen, Chandrasekar has attended the conference for the past two years and works with energy-based social enterprises routinely in an effort to encourage collaboration. That's a challenge not just because of busy schedules but also because of competitive attitudes that don’t lend themselves to partnerships. “It’s hard to get them to share their business models, their ideas in an open platform,” he says.

Harish Hande, CEO and founder of SELCO, a social enterprise that offers base-of-the-pyramid solar energy services in India, is calling on fellow social entrepreneurs to do just that. An active participant in the Khemka Forum, he’s pushing for an “open-source” approach to business that would enable other sustainable energy entrepreneurs to learn from the SELCO model, which involves charging poor customers in small increments—making solar technology affordable for even those earning just $3 or $4 a day.  Going forward, SELCO will incubate young enterprises, giving life to more successful ventures addressing energy poverty in the country. “That way they don’t have to go through the pain of 15 years that we did,” Hande said, pointing other entrepreneurs to a Yale School of Management case study of his company. “They can do it in 5 years.”

For Sonal Shah, now a Tide Fellow focusing on impact investing and social innovation, the biggest takeaway from the two-day event was the desperate need for more human capital. While the country is home to no shortage of interesting enterprises, they don’t have the people power to carry their ideas forward thanks to low retention rates and lack of available talent. “Social enterprises take time to build, and finding top flight talent that wants to work in rural areas is difficult,” she says. “Hiring great talent locally is also difficult. The best ones get better paying jobs and hiring and training consistently becomes expensive.” Shah proposes creating more programs at local colleges that train talent for social enterprise.

Despite the weak ecosystem, India is doing a few things right in the social enterprise space.  Shah explains that social entrepreneurship has gone from a “huh, what’s that?” idea to an widely understood concept in the last decade, a phenomenon she’s seen while developing IndiCorps, a nonprofit that gives Indian-Americans a chance to work on challenging development issues in India. And a growing number of India’s largest businesses are catering to the needs and preferences of poor residents by developing services that fit their pocketbook and way of life—a requirement in India’s economy that also provides important lessons to social enterprise.

Tata, an iconic Indian brand and global conglomerate, designed the Swach (Hindi for “clean”), a low-cost water purifier, which can be delivered to Indian homes for a little more than $20. Though inexpensive, it’s still beyond the reach of much of India’s poor.  But Chandrasekar point outs that while Tata crafted the Swach, they haven’t built anything in other sectors, “so, they’ve done these projects on and off, sometimes successful, sometimes with a more opportunistic mindset.”

The Mahindra Group, the parent company of automobile company Mahindra & Mahindra, recently started a campaign called Spark the Rise, to support the work of social enterprises. The company is calling on the public to submit inventive ideas and vote on the best ones as part of an effort to bring the most innovative to market. “I see a lot of energy and inventive business models here in India that use the base-of-the-pyramid approach, treating the poor as customers, looking at it as a business opportunity,” Shah says. “That’s something we can do more of in the U.S., especially when you look at health care, for instance.”

But Shah know there's a long way to go to bring more Indian companies into the social innovation sphere. “To do so, we’re going to have give companies a good education on why they should be interested,” she says. “In fact, many of these Indian businesses can skip some of the steps and mistakes that American companies have made over the last three, four decades. It can happen faster here, if they get that education.”

For that to happen, big businesses in India need to move toward viewing poor consumers as a market that needs long-term investment, not a charity. That will require more research, deeper investment, and an eye toward deep impact. Add a social enterprise sector with an eye toward scale and collaboration, and India has a chance to become a blueprint for other democratic nations with emerging markets looking for business-led development. And ultimately, India’s experiments in frugal innovation may provide lessons for the United States in the art of the impact economy.

Photo via (cc) Flickr user Engineering for Change