As per the data obtained from the ministry of corporate affairs, India created 1.67 lakh new companies in FY22, the highest in the past three years, led by business services, manufacturing, and community, personal, and social services in that order.
In FY20, more than 1.23 lakh companies had been set up, while in FY21, over 1.55 lakh new companies had been formed, led by the services sector.
However, the growth in new registrations has slowed in FY22 over FY21 to 7.5%, down from the 26% seen in FY21 over FY20. Registration of new companies reveals people’s confidence as well as growing economic activity.
“The growth in new registrations has slowed down in FY22, which was expected since as the economy opened up and companies started operating, there were job openings across sectors,” said Madan Sabnavis, chief economist at Bank of Baroda.
Services sector generates most companies
As per the data revealed, the services sector was the biggest generator of new companies, as more than 1.05 lakh companies were set up in the last fiscal under this header. Besides, 44,161 business services companies and 23,416 companies in the community, personal, and social services spaces have been set up till March 2022.
More than 20,000 new trading companies and 6,200 financial companies were set up last financial year, which was the highest since FY20.
During the lockdown period, people were busy starting their own businesses and operating from home. In establishing this kind of business, there is no need to purchase land or set up a factory.
“With schemes like Stand-Up India, etc., and these incentives, there is a trend for more people to start their own businesses,“ Sabbavis added.
He noted that the incentive to start something new has been accelerated by the idea of going in for IPOs at a later date.
More than 47,800 new companies in manufacturing, construction, electricity, gas, and water were set up in FY22, while agriculture and allied activities made up over 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.
The mining and quarrying segment saw a decline of 12% in new registrations in FY22 versus FY21, with 991 new companies being set up in the year ended March 2022.
On a state-wise basis, new registrations rose in several states, with Maharashtra, Uttar Pradesh, Delhi, and Karnataka being among the top four states where the maximum number of new registrations took place.