Latest data available with the ministry of corporate affairs (MCA) showed that the number of companies incorporated during April-December 2020 went up by nearly 21% to over 1.1 lakh, compared to a 5.2% increase witnessed during the corresponding nine month period in 2019.
If the trend continues, already more companies have been registered in India so far this year than the overall number for the entire 2019-20, which added up to over 1.2 lakh. And, this is despite the lockdown, when there was a slowdown in the number of new registrations. Besides, experts have been saying that several companies, especially the smaller ones, have been forced to shut shop due to financial distress.
According to the MCA database, at the end of December 2020, there were13.1 lakh active companies, as against 11.8 lakh at the end of 2019, representing an increase of 11%.
What has led to a spurt is unclear but government officials indicated that one of the reasons could be faster incorporation with the entire process taking four-six hours from the time the details are submitted, instead of several days earlier.
While the equity base of the newly incorporated companies was not immediately available, the authorised capital has doubled to nearly Rs 47,000 crore, partly due to Rs 32,000 crore being the authorised capital for the companies registered in August.
So far this fiscal, on an average, the authorised capital works out to over Rs 5,200 crore a month, as against a little under Rs 2,600 during April-December 2019. But excluding August, it is Rs1,805 crore a month.
So far during the current financial year, there has been no change in the trend in terms of location — with Maharashtra accounting for the biggest chunk. But manufacturing overtook business services in terms of the number of companies registered. Even community, social and personal services saw a more rapid growth, while construction seemed to be losing steam, given the downturn in the sector over the last several months.
Data sourced from MCA showed that during April-December 2020, new companies looking to undertake manufacturing activity went up over 40% to 24,422.