New company registrations surge amid government push for entrepreneurship

India is witnessing a significant uptick in company registrations, reflecting growing entrepreneurial activity and government-driven efforts to promote ease of doing business. According to the data presented in Rajya Sabha on Tuesday, 11 Feb ’25 over 1.38 lakh new companies have been registered under the Companies Act, 2013, between April 1, 2024, and January 26, 2025. However, business closures also remained a concern, with 17,654 companies shutting down during the same period.

Replying to a parliamentary question posed by Rajya Sabha MP Parimal Nathwani, Harsh Malhotra, Minister of State for Corporate Affairs and Road Transport & Highways, outlined in a written reply the trends in business formation, closures and the government’s initiatives to encourage entrepreneurship. India recorded 1,38,027 new company registrations in FY24-25 up to January 26 this year. The previous financial year saw 1,85,318 companies registered, while 1,59,302 companies were incorporated in FY22-23, he noted. 

Maharashtra led the country with 23,733 new company formations, followed by Uttar Pradesh (15,150), Delhi (12,373) and Karnataka (10,332). Punjab saw 2,147 new businesses incorporated between April 1, 2024, and January 26, 2025.Company closures, however, remain a pressing issue. A total of 17,654 companies have so far closed in FY24-25, compared to 22,044 in FY23-24 and 84,801 in FY22-23. 

Delhi reported the highest number of business closures at 2,746 in FY24-25, followed by Maharashtra (3,669), Uttar Pradesh (1,003) and Karnataka (1,540). The number of dormant and inactive companies stood at 2,528, as of January 2025. 

To enhance India’s business ecosystem and start-up culture, the government has undertaken several initiatives. The decriminalisation of 63 offenses under the Companies and LLP Acts aims to encourage compliance and reduce regulatory burdens. The definition of a small company has been expanded by increasing the capital threshold from ₹2 crore to ₹4 crore and turnover from ₹20 crore to ₹40 crore. 

Zero-fee incorporation is now available for companies with an authorized capital of up to ₹15 lakh. Additionally, companies can now shift their registered offices at zero cost, while the government has also permitted AGMs and EGMs to be conducted via video conferencing, significantly reducing compliance costs. 

While the numbers indicate a strong start-up and business-friendly environment, analysts caution that high closure rates and dormant companies suggest challenges such as regulatory compliance, funding issues, and market conditions.

Business experts believe that with continued policy support, infrastructure improvement, and access to finance, India can sustain its entrepreneurial momentum, making it a global leader in business and innovation.