Social businesses have the potential to blend financial sustainability with solutions to social issues like poverty, inequality, and environmental degradation
The deliberations of the United Nations’ Sustainable Development Goals (SDGs) across the globe are getting louder. However, SDGs have much to do with inclusive development in India. Nevertheless, as India marches towards becoming a global economic powerhouse, the challenge of inclusive development remains a daunting task. Despite robust economic growth, disparities in wealth, education, healthcare, and opportunities persist, leaving large segments of the population marginalized. In this context, the concept of social business has garnered increasing attention as a solution that addresses both social and economic challenges simultaneously.
Of late, this alternative paradigm for development is getting a boost in the country.Social business is a powerful model designed to tackle pressing social problems - poverty, inequality, healthcare and education - while operating in a financially sustainable way. Unlike traditional businesses, which prioritize profit maximization for shareholders, social businesses are driven by a mission to solve societal issues, and any profits generated are reinvested into the business to scale its impact. This innovative approach to entrepreneurship is particularly relevant in India, where the scope for addressing societal gaps through market-driven solutions is immense.The Genesis of Social BusinessOver the past decade, India has witnessed a surge in interest in social entrepreneurship. Fueled by rising awareness of social issues, a growing youth population, and the rise of impact investment funds, the country is now home to a plethora of social businesses across sectors.
Organizations like SELCO, which provides affordable solar lighting to low-income households, and Araku Coffee, which empowers tribal farmers through sustainable agriculture practices, exemplify how businesses can be a force for good.India's unique landscape of socio-economic diversity also presents a fertile ground for social innovation. Entrepreneurs are finding creative ways to solve challenges related to agriculture, healthcare, sanitation, education, and financial inclusion. For example, Amul, India's dairy cooperative giant, operates on principles that align closely with social business, ensuring fair wages for farmers while providing quality products to consumers. Similarly, Goonj, a non-profit working in rural India, converts urban waste into useful products, addressing both poverty and waste management.
An Alternative PathIndia, with a population of over 1.4 billion, faces an array of socio-economic challenges.
Although the country has made significant progress in areas like technology and infrastructure, millions continue to struggle with basic needs like clean water, healthcare, education, and employment opportunities. Traditional government interventions and charity-driven models, while vital, often fail to create sustainable and scalable solutions. This is where the social business model comes in—bridging the gap between business and social responsibility.Facets of Social BusinessIndia’s healthcare sector, while rapidly growing, remains highly unequal. Millions of people, particularly in rural areas, lack access to quality medical services. Social businesses like Narayana Health, founded by Dr. Devi Shetty, are addressing this issue by providing low-cost, high-quality healthcare to the masses.
The education sector in India faces challenges of accessibility, quality, and affordability, particularly in rural and marginalized communities. Social enterprises like Teach for India are working to bridge the gap by bringing talented individuals to teach in under-resourced schools.
Agriculture remains the backbone of India’s economy, employing over 50% of the population. However, smallholder farmers often struggle with access to markets, credit, and sustainable practices. Social businesses like DeHaan, which offers end-to-end agricultural services including input distribution, crop advisory, and market linkage, are empowering farmers and improving their incomes. India’s push towards renewable energy, in line with its commitments to combat climate change, has opened up a new frontier for social businesses.
The rise of eco-friendly and sustainable products, driven by social businesses, has also led to a growing market for sustainable fashion and organic products in urban areas.
Growing Graph of Social Business
A critical enabler of social business in India has been the rise of impact investing. Impact investors, unlike traditional venture capitalists, seek to generate not just financial returns but also measurable social and environmental impact. The growth of funds like Aavishkaar, Acumen, and Omidyar Network has provided crucial capital to early-stage social businesses, allowing them to scale and deepen their impact. The Indian government has also recognized the potential of social businesses to drive inclusive growth. Programs like Startup India, which provides financial support, mentorship, and tax incentives, have been extended to social enterprises, encouraging more entrepreneurs to tackle pressing social issues.Not All RosesMany social businesses, especially those operating in rural areas, struggle to secure the necessary funding to scale their operations. Traditional financial institutions often view social enterprises as high-risk, given their focus on impact rather than profit maximization. Although impact investing is on the rise, the availability of patient capital—long-term, low-return investments necessary for social businesses to thrive—is still limited.One of the biggest challenges for social businesses is scaling their impact while maintaining financial sustainability. Often, social enterprises are deeply rooted in local contexts, which can make it difficult to replicate their models across different geographies. Additionally, scaling can sometimes dilute the focus on the social mission, as businesses seek profitability to sustain growth.The regulatory environment for social businesses in India is still evolving. Navigating complex bureaucratic processes, securing the necessary permits, and dealing with multiple government agencies can be time-consuming and expensive. There is also a lack of clear legal recognition for social businesses, which often operate in a grey area between non-profit organizations and traditional for-profit companies. Measuring Social Impact: Unlike traditional businesses, where success is measured purely in terms of financial performance, social businesses must demonstrate their social impact. However, measuring impact can be complex, and there is no standardized framework for doing so. Many social businesses struggle to strike a balance between maximizing their impact and ensuring that they remain financially viable.India’s booming tech industry has become a key driver of social innovation.
The proliferation of smartphones and internet connectivity has enabled social businesses to reach remote and underserved populations more effectively. From fintech solutions that provide micro-loans to rural entrepreneurs, to edtech platforms offering quality education at scale, technology is unlocking new opportunities for social businesses to deepen their impact. One notable example is the Jan Dhan-Aadhaar-Mobile (JAM) trinity, a government initiative that has expanded financial inclusion by linking bank accounts to mobile numbers and Aadhaar (India’s biometric identification system). This digital infrastructure has empowered social businesses to deliver services like digital payments, insurance, and healthcare more efficiently.
The Way Forward
As India continues its journey toward becoming an inclusive, equitable, and sustainable society, social businesses will play an increasingly important role. With the rise of a new generation of socially conscious entrepreneurs, supported by impact investors and technology, the potential for social business to drive change is greater than ever.
The COVID-19 accelerated the momentum for social entrepreneurship in India, with many seeing social businesses as a key pillar in the country’s post-pandemic recovery. However, for the social business movement to truly take off, greater support from the government, investors, and civil society is essential.
Policymakers must create an enabling environment through targeted incentives and streamlined regulations. Meanwhile, impact investors need to provide more patient capital to allow social enterprises to grow sustainably.Precisely, social business represents a powerful tool for driving inclusive development in India. By addressing social problems through innovative, financially viable solutions, social businesses can empower individuals, uplift communities, and contribute to a more equitable and prosperous society.
As India continues to evolve, the role of social business will only grow in importance, offering hope for a future where economic growth and social progress go hand in hand.
(The writer is an Associate professor at the School of management, Presidency University, Bengaluru; views expressed are personal)
