167,000 new businesses set up in FY22, highest in 3 years
NEW DELHI: The 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 167,000 companies were set up in FY22, a 7.5% increase from the 155,000 companies created in the previous year, according to data compiled released by the corporate affairs ministry. More than 123,000 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, which was expected since the economy opened up and as firms 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 focus on startups with schemes like Stand-up India, etc. 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, as per the data.