A whopping 1,55,377 new companies were registered in India during FY21 compared with 1,22,721 in FY20, according to Rubix Data Sciences. This is despite the economic downturn and disruptions all around caused by the pandemic.
“Momentum in new company registration has continued in FY22 despite the second wave,” said Rubix, a technology and analytics-based B2B risk
management and monitoring platform.
This may be in sync with the government’s efforts to reduce regulatory hurdles in incorporating new companies. India climbed 79 places to the 63rd rank in 2020 in ease of doing business from 142 in 2014, according to the World Bank.
FY21 was a year of extremes in terms of new company incorporation: the year began with a record-low registration of 3,209 companies in April 2020 and ended at a record high in March 2021 when 17,324 companies were registered, data compiled by Rubix showed.
“Such insights are essential to assess the health of India’s business environment and the mood of the economy,” Kaushal Sampat, founder of Rubix said. “Our observations suggest that the current fiscal is also looking buoyant, with new company registrations hovering around pre-pandemic levels or higher.”
One of these firms, incorporated in November last year and now bought by former
chief executive Sam Ghosh, Cosmea Financial Holdings has even sought a small finance bank license.
The study showed that the registration of new companies in the manufacturing sector grew by about 45% to 33,483 in FY21 from 23,014 in the preceding year. In the services sector, new company registrations grew by 16% while the number of new companies registered in agriculture and allied activities jumped by 112%!
“India has made big strides in the ease of starting a business. Growth in the annual rate of new firm formation suggests that the concentration of economic activity is shifting away from a limited number of firms to many new entrants,” said Rubix co-founder and chief executive Mohan Ramaswamy.
The government also took a slew of measures to make access to credit easier for small and medium enterprises. Schemes like loans in 59 minutes by public sector banks introduced in 2018, allowing contactless digital lending platform and online bill discounting for MSMEs has ensured higher credit flow to this sector.
The MSME loans are however creating trouble for lenders with rising defaults. India Ratings & Research projected gross non-performing assets from this segment to rise to 13.1% by FY22 from 9.9% in FY21. Stressed assets on account of those units may rise to 15.6% from 11.7% over the same period.