India’s corporate sector has witnessed a dynamic shift in the current financial year, with 17,654 companies closing down while 1,38,027 new firms have been registered as of January 26, 2025, according to data released by the Ministry of Corporate Affairs.

The figures were disclosed in a written response by Minister of State for Corporate Affairs Harsh Malhotra during a session in the Rajya Sabha. The statistics shed light on the evolving business climate in India, with both company closures and fresh registrations reflecting the broader economic environment.

Breakdown of Company Closures

The 17,654 shuttered companies include those that have been:

• Amalgamated with other firms
• Converted into Limited Liability Partnerships (LLPs)
• Liquidated or dissolved
• Struck off from official records

This trend is part of an ongoing shift in the corporate ecosystem, where businesses either consolidate, transform into LLPs for tax efficiency, or shut down due to financial constraints or regulatory non-compliance.

Comparing the Numbers: Past Financial Years

The latest data indicates that company closures have declined compared to previous years:

• FY 2023-24: 22,044 companies shut down
• FY 2022-23: 84,801 companies shut down

The reduction in company closures suggests improved business conditions and regulatory reforms that may have helped stabilize struggling enterprises.

New Business Registrations on the Rise

Despite the closures, entrepreneurial activity remains strong, with 1,38,027 new firms registered between April 2024 and January 26, 2025. This marks a steady increase in business formation and investment confidence.

Comparison of New Registrations Over the Years

• FY 2023-24: 1,85,318 new businesses registered
• FY 2022-23: 1,59,302 new businesses registered

Although the FY25 registrations are slightly lower than in FY24, the numbers still indicate strong business growth and confidence in India’s economic potential.

The government has implemented several initiatives to promote ease of doing business, which include:

• Decriminalization of 63 offences under the Companies Act and LLP Act
• Simplified compliance processes for corporate filings
• Digital transformation initiatives, including online business registration
• Financial incentives for startups and MSMEs

These reforms have played a crucial role in encouraging more entrepreneurs to enter the market while reducing bureaucratic hurdles that previously discouraged company formation.

Why Are Companies Shutting Down?

While thousands of new businesses are being established, several factors contribute to company closures, such as:

• Economic downturns impacting profitability
• Regulatory non-compliance leading to company strikes
• Shifts in market demand, making some businesses obsolete
• Mergers and acquisitions, leading to business consolidations

For many firms, conversion into LLPs is a strategic decision due to lower compliance costs, better tax benefits, and reduced liability risks.

Outlook for Indian Businesses in 2025

Experts suggest that the Indian business ecosystem will continue evolving with a strong focus on digital transformation, sustainability, and global competitiveness. The government’s pro-business policies and increasing access to funding for startups and MSMEs could further boost business registrations.

Despite global economic uncertainties, India’s resilient entrepreneurial landscape signals a promising future for business expansion and innovation.