Rural entrepreneurship is a boon for economic development of developing country like India. In the present scenario of industrialization, rural entrepreneurship is a great opportunity for rural people, who otherwise are compelled to shift from rural to semi urban and urban areas. Contrary to this it is also true that rural entrepreneurs has to face so many problems and challenges like resistance from family, pressure from society, legal challenges and scarcity of funds. They are also facing problems of non availability of skilled labour, raw material and proper infrastructure, competition from large scale players, lack of education, insufficient technical and conceptual ability. In this way, this research paper mainly focuses on the challenges and problems faced by rural entrepreneurs. This paper also analyzes the prospects and potentialities of rural entrepreneurship for economic development of country. An attempt is made to provide suggestion and recommendation to overcome the problem faced by entrepreneur in the development of rural entrepreneurship. The Government should come forward to support them by way of providing adequate infrastructure in terms of transportation and storage, providing training, making funds available at cheaper cost, providing tax incentives and simplification of legal formalities. In nutshell, it is still in incipient stage and will have miles to go before it starts contributing in India’s growth.

KEYWORDS: Rural Entrepreneurship, Economic Development, Industrialization, Legal Formalities.