Over 2 Lakh Private Companies Shut in Last 5 Years in India, Says Government

India has recorded a significant rise in corporate closures over the last five years, with more than 2 lakh private companies ceasing operations for various reasons, stated Government in Lok Sabha. 

Corporate Closure Rise Across Five-Year Period 

A total of 2,04,268 private companies has shut down due to amalgamation, conversion, dissolution or being struck off the registry, said, Minister of State for Corporate Affairs Harsh Malhotra. The trend has fluctuated year to year, with 2022–23 witnessing the sharpest spike at 83,452 closures, followed by 64,054 in 2021–22.  

The numbers eased in 2023–24, when 21,181 firms exited, and stood at 20,365 in 2024–25. The pandemic period, 2020–21, saw 15,216 companies shut down. 

Large Number of Inactive Companies Removed from Records 

In parallel, the Ministry of Corporate Affairs has removed 1,85,350 companies from official records across 5 years starting 2021–22, including 8,648 firms struck off until July 16 of the current fiscal. The biggest clean-up effort took place in 2022–23, when 82,125 companies were removed during a drive targeting inactive entities. 

Policy Direction and Economic Preferences 

Responding to concerns about incentives for industrial expansion, the government highlighted its ongoing approach of simplifying taxation by reducing exemptions while adjusting tax rates.  

Several measures have already been introduced to make investments more attractive, including lower corporate tax rates for both new and existing domestic companies. 

Read More: Japanese Big Property Firms Increase Their Bets on India’s Hot Property Market! 

Conclusion 

The updated data points to a period of churn in India’s corporate landscape, marked by a mix of voluntary closures, structural changes and the removal of non-operational firms. As the government continues to streamline company records and refine economic policies, the business environment remains dynamic and closely watched.

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