Recent MCA initiatives driving a surge in company registrations, says MoS Harsh Malhotra
India has seen the incorporation of 1,12,962 companies by the end of November in the current fiscal year, the Lok Sabha was informed on Monday.
The surge in corporate registrations reflects the impact of several government initiatives aimed at fostering a business-friendly environment, according to Harsh Malhotra, Minister of State for Corporate Affairs and Road Transport and Highways.
These measures include reforms to ease company registration and improve the overall ease of doing business, driving greater corporate activity across the country, Malhotra said in a written reply to a Lok Sabha question.
The initiatives highlighted by the Minister include setting up of Central Registration Centre in January 2016 to centralise the online process of incorporation in order to expedite the registration process.
Zero fees for businesses
Also the cost of starting a business has been reduced significantly through a number of initiatives including “zero fees” for incorporation of all companies with authorised capital upto ₹ 15 lakhs.
Government had also brought in amendments to the Companies Act in 2020 to facilitate Ease of Doing Business, Decriminalisation of Offences and to improve compliance requirements, specifically for Small companies, One Person Companies, Start-Ups and Producer companies.
In 2023-24, India saw incorporation of 1,85,312 lakh companies with collective paid up capital of ₹ 30,927.40 crore. Out of them 71 percent were in service sector, 23 in industrial segment and 6 percent in agriculture.
In 2022-23, as many as 1,59, 524 companies were registered with a collective paid up capital of ₹ 18,132.16 crore.
At the end of March 2024, India had a total number of 26,63,016 companies. Out of them, 16,91,495 were active. As many as 9,31,644 registered companies were closed, 2,470 were dormant entities and 10,385 companies were under liquidation.
As on March 31, 2024, there were a total of 5,164 foreign companies registered in the country. Out of them, as many as 3,288 companies or 64 per cent were active.
Corporate purge
Ministry of Corporate Affairs (MCA) has also focused on cleansing the country’s corporate sector of dormant and potentially illicit entities. It has in last five years struck off a staggering 2.33 lakh companies in what is seen as by far the most comprehensive clean-up of India’s corporate registry to date.
The dramatic numbers point to a government on a mission to root out shell companies—often suspected of facilitating tax evasion, money laundering, and other economic offenses. While there is no statutory definition of “shell companies” under the Companies Act, the MCA’s focus has been on identifying and eliminating inactive firms that have failed to meet statutory compliance requirements for consecutive years.
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