1.67 lakh new companies in FY22, but growth rate slows

NEW DELHI: India created 1.67 lakh companies in FY22, the highest in the past three years, led by business services, manufacturing and community, personal and social services, according to data from ministry of corporate affairs.

In FY20, more than 1.23 lakh companies had been set up, while in FY21 over 1.55 lakh companies had been set up, led by the services sector where the primary generator of new companies was business services.

However, the growth in new registrations has slowed in FY22 over FY21 to 7.5%, from 26% seen in FY21 over FY20. Registration of new companies is a reflection of sentiment, confidence, and growing economic activity that can be created by the companies, besides entrepreneurship in that segment.

“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.

The services sector was the big generator of new companies as more than 1.05 lakh such companies were set up in the last fiscal, showed the data seen by Mint. Besides 44,161 business services companies and 23,416 companies in the community, personal and social services space set up till March 2022, more than 20,000 new trading companies and 6,200 finance companies were set up last financial year, which was the highest since FY20.

The spokesperson of the ministry of corporate affairs was not immediately reachable for comment.

Analysts noted that the jump in new registrations during the lockdown year, FY21 is significant as people preferred to start their own enterprises and operate from home and there was no need to buy land or set up a factory.

This has also been reflected in the share of services in total new registrations with business services having the highest share of 40% in 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 said.

The incentive to start something new has been accelerated by the idea of going in for initial pubic offerings at a later date.

Manufacturing, construction, electricity, gas, and water companies totalled more than 47,800 new companies in FY22, while agriculture and allied activities made up more than 13,300 companies, according to the data.

The three categories within industry saw the highest number of new companies being set up in FY22 versus FY21 and FY20, with manufacturing, construction and electricity, gas and water categories rising 50%, 38% and 13%, respectively over FY20. .