NEW DELHI: The Dutch give start-up benefits to budding entrepreneurs-and the State's largesse stops right there. ``You have to fend for yourself after the initial sops. Nobody is protected. We believe that companies should be able to grow on their own, if they have the ability to do so,'' explains Hans W van Santen, First Secretary, Economic & Commercial Affairs, Royal Netherlands Embassy.

In the Netherlands, there are no clear-cut divisions between business enterprises, that is, businesses are not clubbed together according to their sizes. Distinguishing them as tiny, small, medium and large could possibly be only an Indian innovation.

``In the Netherlands, there is only one industry and anybody can produce anything,'' says Santen. However, first generation entrepreneurs are not altogether ignored. ``Anybody who starts a business does get certain incentives. For instance, there is a tax holiday. But the small-scale sector is not protected. After a business starts running, it is supposed to fend for itself.''

There is a national policy of incentives for small business with regional variations. ``There are regional variations, as the provinces also have their methods of promoting the small sector. We also take care that the benefits reach only those who deserve them,'' Santen states.

On the job front, the situation is similar to India. Small and medium enterprises in the Netherlands are the best job bet. They provide most of the fresh jobs. These companies are very flexible, capable of adopting new technologies and adapting to the changes that take place in the various industries,'' Santen points out.

Small business produces a variety of goods and services. ``This is very important for a country like ours where two-thirds of the population is engaged in the service sector.''

Though the small-scale sector, both in manufacturing and services, is thriving in the Netherlands, the country has never pampered this sector. There has never been a policy of reservations, an experiment unique in India. ``Not many countries have a reservation policy,'' Santen said.

``To enhance the employment capacity of small and medium-sized firms (SMEs) which account for 60 per cent of Dutch employment, the Dutch Government released a policy document on entrepreneurship in the summer of 1995, entitled "Jobs through enterprises."

An OECD report commented: ``The loan period for funding under the SME Credit Guarantee Scheme, the earlier main venture capital instrument in the Netherlands, has been replaced by another programme that targets small, innovative start-ups. The fiscal and tax benefits have also been announced.``Further, if a unit performs well and grows fast, it has no incentive to stop growing or split into two companies beyond a certain point lest it should lose the benefit it has been getting as a small business.''

This often happens in India, assuring horizontal rather than vertical growth and depriving the companies of economies of scale. ``We believe that the companies should be able to grow if they are able to.''

What lessons can India draw from the Netherlands in the field of small-scale industry? Says Santen, ``New technologies should be available to them and they should have the money to buy them. Circumstances should be made conducive for this to happen. Banks can help entrepreneurs to upgrade their units technologically. Further, incentives should be given in such a manner that in the long run, the growth of industries is not arrested.''

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.