India’s startup ecosystem has grown rapidly over the past decade. But with growth also comes churn. Government data shows that 6,385 recognised startups have shut down as of 31 October 2025. However, officials say there has been no unusual rise in closures this year compared with 2024.
Maharashtra has seen the highest number of shutdowns at 1,200. Karnataka follows with 845 closures, while Delhi has 737 and Uttar Pradesh 598. Despite these numbers, the government says the pace of shutdowns has remained steady.
Startups close for many reasons. Common issues include weak business models, limited funding, changing market needs, and tough competition. Some products or services may also fail to find enough customers, making it hard to continue operations.
Even with closures, India continues to build a large base of young companies. As of 31 October 2025, a total of 1,97,692 startups have been recognised by the Department for Promotion of Industry and Internal Trade (DPIIT). This shows the scale and diversity of the country’s startup landscape.
Recognised startups receive benefits such as tax exemptions, easier compliance rules and access to various support schemes.
The government continues to fund and guide new businesses through several schemes:
Eligible startups can claim a 100% tax deduction on profits for three consecutive assessment years under Section 80-IAC of the Income Tax Act. This reduces early financial pressure and helps new firms reinvest in their business.
Read more: Fitch Raises India FY26 Growth Forecast to 7.4% on High Consumer Spending.
India’s startup closures reflect natural business cycles rather than any sharp decline. While many startups struggle due to funding or market challenges, the overall ecosystem remains strong and continues to expand. Government schemes, tax benefits and funding support are helping new entrepreneurs grow, even as some ventures close along the way. The numbers show both the opportunities and realities of building a business in India today.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Published on: Dec 4, 2025, 3:18 PM IST
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