Co-funded by IPA’s Entrepreneurship and Private Sector Development program and in partnership with Dharmalife Foundation, researchers are conducting a randomized evaluation in rural India to measure whether layering business support interventions onto credit provision can improve business performance, financial health, and economic empowerment for women micro-entrepreneurs.

The Challenge

Despite the provision of credit, many women micro-entrepreneurs in low- and middle-income countries struggle to grow their businesses beyond subsistence levels.¹ Previous research has documented that small businesses often fail to expand even after receiving credit, suggesting that credit alone may be insufficient for sustainable growth.² In rural India, women tailors face multiple constraints: limited access to markets beyond their immediate communities, restricted product development skills, and traditional gender norms that constrain their business activities. These women typically operate small-scale tailoring enterprises with modest incomes, making it difficult to invest in business expansion or skill development.

While microfinance has improved access to capital, most women entrepreneurs lack complementary business support—particularly in marketing and product development—needed to effectively utilize credit and scale their enterprises. Without targeted growth strategies, many women remain trapped in low-return, home-based activities despite having the potential to significantly increase their incomes and expand their market reach, and achieve sustainable business growth.

The Evaluation

In collaboration with Dharmalife Foundation, researchers are conducting a randomized evaluation in rural India to measure whether strategic business support interventions can improve the impact of credit provision for women micro-tailors and enhance their income, business performance, and economic empowerment.

Researchers will provide women micro-tailors with seed capital along with various combinations of business support. A total of 300 women tailors have been randomly assigned to the following groups:

• Pure comparison (60 women): Participants continue their existing tailoring activities without receiving seed capital or business support.
• Standard credit (60 women): Participants receive standard credit provision (seed capital) only, following typical business practices.
• Market development first (60 women): Participants receive credit plus market development support (improved customer targeting, digital marketing training via WhatsApp/Facebook) for six months, followed by product development support (design upgradation, product range expansion) for six months.
• Product development first (60 women): Participants receive credit plus product development support for six months, followed by market development support for six months.
• Combined support (60 women): Participants receive credit plus both market development and product development support simultaneously for 12 months.

All groups subsequently receive a sustainability intervention focusing on zero-waste techniques and textile recycling.

Researchers will measure impacts on business performance (sales, profits), market development metrics (digital platform engagement, business-to-business orders), product development indicators (new designs, skills improvement), credit repayment rates, access to additional financing, as well as women's confidence, agency, and economic empowerment across the five groups.

Results

Results will be available in 2027.

Sources

^1. Abebe, Girum, Rachel Cassidy, and Toni Weis. "Access to Capital and Women’s Entrepreneurship." Policy Research Working Paper 11232 (2025).

^2. Banerjee, Abhijit, Dean Karlan, and Jonathan Zinman. "Six randomized evaluations of microcredit: Introduction and further steps." American Economic Journal: Applied Economics 7, no. 1 (2015): 1-21.

Implementing Partner