MYUVA Scheme Reduces Risk For First-Time Entrepreneurs In India

India doesn’t lack entrepreneurial ambition. What is missing is something more fundamental: making entrepreneurship a rational choice for ordinary people. Entrepreneurship often fails not for lack of intent, but because our systems do not adequately reduce early-stage risk.

Brijmohan Khushwaha grew up in Itawa watching his father’s income rise and fall with the monsoons. Like everyone around him, he wanted the stability of a salaried job, but the pandemic of 2020 didn’t just disrupt jobs; it shattered the illusion that employment equals stability.

At 32, Brijmohan chose the path of self-reliance over familiarity, taking a path not many in his circumstances would walk. He started an LED manufacturing unit. The decision was informed by research that showed how government schemes like the CM Yuva Yojana reduced early-stage risk. His enterprise today records annual sales of ₹25-30 lakh, employing six people, including women.

Entrepreneurship: A Risky Bet?

With one of the world’s youngest populations and over 50.2 million MSMEs, India should have been a global leader in enterprise creation, but this is far from the current reality. First-time entrepreneurs face steep barriers like limited access to formal finance, high regulatory friction and a lack of credible support making entrepreneurship riskier than a government or salaried job.

Capital as the Constraint

Access to capital is the biggest impediment for most first-time entrepreneurs. Even a modest enterprise would typically require ₹50,000-₹2,00,000 to start. If machinery, land or workspace is involved, the costs rise quickly. Young entrepreneurs are routinely excluded from formal lending systems in the absence of collateral or credit history.

The Uttar Pradesh government’s Mukhyamantri Yuva Udyami Vikas Yojana (MYUVA) was designed to address this constraint directly.

Under the scheme, eligible diploma/degree holders, and graduates of government skills programmes can access interest-free loans of up to ₹5 lakh. These loans are collateral-free, include a 10% margin money subsidy, provide a ₹5 lakh insurance cover, and waive industrial licensing requirements for the first 1,000 days.

The scheme is effective because of the combination it offers. Finance, regulatory friction and early-stage vulnerability are addressed together, lowering the cost of failure and shortening the time between entrepreneurial intent and enterprise creation.

The Uttar Pradesh government has processed over two lakh applications, with around 40,000 youth receiving loans. In aggregate, this represents ₹2,751 crore deployed into youth-led enterprises.

The role of Banks, Industry Associations, and Non-Government Organizations in systems change for entrepreneurship

Entrepreneurship is not a solo act and state support alone does not sustain businesses. Entrepreneurship succeeds when institutions operate in coordination.

Banks do much more than just lend money. For example, the Small Industries Development Bank of India (SIDBI) guides entrepreneurs in planning their businesses and managing their finances. The National Bank for Agriculture and Rural Development (NABARD) helps people in Self-Help Groups and Joint Liability Groups build useful skills, so they can start businesses in farming and beyond.

Industry groups like FISME, FICCI, and CII bring business owners together to learn from each other, find mentors, access new markets, and have a collective voice in policy decisions. 

Non-government organizations help bridge gaps through capacity building, digital literacy, and community-level engagement. Together, all these actors form an ecosystem that determines whether enterprises survive and scale.

Lessons for State Governments

The experience of Uttar Pradesh suggests that entrepreneurship policy works best when states act as ecosystem builders.

Three lessons stand out: reducing early-stage risk matters more than increasing subsidies, bundled interventions outperform isolated schemes, and enterprise growth requires coordination across finance, regulation, skills, and markets.

From Schemes to Systems

For entrepreneurship to scale, states must focus on institutional coordination.  Finance, regulation, skills, and market access cannot operate in silos. They must be designed to operate together at the district level where it becomes easier for entrepreneurs to navigate the systems. The effectiveness of the MYUVA schemes lies in how multiple constraints are addressed simultaneously. Other states witnessing Uttar Pradesh's story should note: the question isn't how to support entrepreneurs, but how to build systems that make that support replicable and sustainable.

The shift should reflect clear policy implications. Success should be measured not only by the number of loans disbursed but by the survival of enterprises, jobs created,  and time it takes for an enterprise to  transition from startup to stability.

Stories like Brijmohan’s are signals of what becomes possible when systems reduce risk. Our challenge is not the absence of schemes but the absence of systems that can consistently translate entrepreneurial intent into viable enterprises.

The tools already exist. Institutions are in place. We need a move from fragmented schemes to integrated systems that make entrepreneurship a rational choice for ordinary Indians. 

This article has been written by Alok Kumar, IAS, Principal Secretary, Infrastructure and Industry, Industrial Development, MSME and Export Promotion - Government of Uttar Pradesh, and Ramesh Dharmaji, Senior Advisor - Global Alliance for Mass Entrepreneurship (GAME)