Over 167,000 businesses set up in FY22, the highest in 3 years
The industrial sector, comprising manufacturing and electricity, gas and water firms, set up more than 47,800 companies in FY22
PremiumThe number of businesses set up in the year ended 31 March rose to the highest in three years, led by the services sector, ministry of corporate affairs data showed, signalling a steady rise in entrepreneurial activity despite the disruptions caused by the pandemic.
As many as 167,076 companies were set up in FY22, a 7.5% increase from the 155,377 companies created in the previous year, according to data compiled by the corporate affairs ministry. Around 122,721 companies were set up in FY20.
The steady rise in entrepreneurial activity points to improving sentiment about business prospects and confidence that economic growth will rebound despite the pandemic.
The increase in the number of new businesses is also a good sign for the economy and the jobs market.
“The growth in new registrations has slowed down in FY22. This was expected as the economy opened up and companies started operating, there were job openings across sectors," said Madan Sabnavis, chief economist at Bank of Baroda.
In the alternative scenario, joblessness would have prompted people to start their own ventures.
The data showed that the services sector was the biggest creator of new companies, accounting for more than 105,000 in FY22. Among the newly registered services companies, 44,161 were set up for business services, 23,416 in the community, personal and social services space, more than 20,000 trading companies and 6,200 finance companies.
Analysts noted that the jump in new registrations during the lockdown year of FY21 is significant as people preferred to start their own enterprises and operate from home rather than having to buy land or set up a factory. This, in turn, is reflected in the high share of services in new registrations, with business services accounting for around 40% of services.
“The government has been putting a lot of focus on startups with schemes like Stand-Up India. With these incentives, there is a tendency for more individuals to start their own ventures," Sabnavis added.
He noted that the incentive to start something new was accelerated by the trend of many new companies going in for initial public offerings.
The industrial sector, comprising manufacturing, construction and electricity, gas and water companies, set up more than 47,800 companies in the past fiscal year, while agriculture and allied activities set up 13,400 companies, according to the data.
New registrations have risen across most states, with Maharashtra, Uttar Pradesh, Delhi and Karnataka leading the growth.
As part of the government’s ease of doing business drive, the corporate affairs ministry has taken several initiatives to reduce procedures, time and cost for starting a business in India.
The steps include revision of the definition of small companies, which has reduced the compliance burden on about 200,000 companies; zero fees for company incorporation for up to ₹15 lakh authorized capital; incentivization of incorporation of one-person companies; and decriminalization of technical and procedural violations under the Companies & LLP Act, the ministry said in a statement.
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