Government data reveals that 2,04,268 private companies shut down in India between FY21 and FY25. Closures stemmed from amalgamation, conversion, dissolution, or being struck off under the Companies Act, 2013. Despite the surge, there is no rehabilitation plan for affected employees, raising concerns about sustainability and resilience in India’s corporate sector.
India’s corporate landscape has witnessed a significant churn over the past five years, with more than two lakh private companies ceasing operations. According to a written reply in the Lok Sabha by Minister of State for Corporate Affairs Harsh Malhotra, the closures were due to amalgamation, conversion, dissolution, or regulatory strike-offs under the Companies Act, 2013.
The data highlights both the volatility of the private sector and the government’s efforts to weed out dormant or non-compliant entities.
Major Takeaways
Total Closures: 2,04,268 private companies shut between FY21–FY25.
Yearly Breakdown:
FY20-21: 15,216 closures
FY21-22: 64,054 closures
FY22-23: 83,452 closures
FY23-24: 21,181 closures
FY24-25: 20,365 closures
Regulatory Action: 1,85,350 companies struck off official records in the same period.
Employee Impact: Government confirmed no rehabilitation proposal for workers of closed firms.
Policy Note: Closures reflect stricter compliance enforcement under the Companies Act.
Notable Updates
FY22-23 saw the highest spike, largely due to a dedicated drive to remove inactive firms.
The government continues to emphasize ease of doing business reforms, while monitoring suspicious corporate activity.
Analysts suggest closures may also reflect post-pandemic stress and consolidation trends.
Conclusion: The closure of over two lakh private companies underscores the dynamic yet fragile nature of India’s corporate ecosystem. While compliance enforcement is strengthening, the absence of employee rehabilitation measures raises questions about the broader socio-economic impact of such large-scale corporate exits.
Sources: Rediff Money, Daily Excelsior, Times of India, YourStory, Times Now