Indian Entrepreneurs have created a record of setting up new ventures amid the ongoing catastrophic Covid-19 pandemic. During FY21, a massive record of 1,55,377 new companies was registered in India. According to Rubix Data Sciences, as of FY20, the number of new company registrations stood at 1,22,721. The new registration record was witnessed despite the economic downturn and unpredictability all around caused by the pandemic.
A technology and analytics-based B2B risk management and monitoring platform Rubix said, “Momentum in new company registration has continued in FY22 despite the second wave.”
India Ranking Up
One of the factors that must be in sync with the recent record is the government’s effort to reduce regulatory hurdles in incorporating new companies. According to the World Bank, India stood at rank 142 in 2014 in terms of ease of doing business and now has climbed 79 places to reach the 63rd rank in 2020.
FY21 saw extremes of all kinds, which began with a record low registration of 3,209 companies in April 2020 and reached a record high of 17,324 in March 2021, according to data compiled by Rubix.
Kaushal Sampat, the founder of Rubix, said, "Such insights are essential to assess the health of India's business environment and the mood of the economy. Our observations suggest that the current fiscal is also looking buoyant, with new company registrations hovering around pre-pandemic levels or higher."
Growth Per Sector
The study by Rubix also showed that the manufacturing sector saw a growth of 45% in new companies and grew by 33,483 from 23,014 in FY21. New company registrations grew by 16% in the services sector, and the agriculture and allied activities sector grew by 112%.
Rubix co-founder and chief executive Mohan Ramaswamy stated, “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.”
The government also took a slew of measures that made provisions to make access to credit easier for small and medium enterprises. Public Sector Banks introduced schemes like a loan in 59 minutes that allowed MSMEs to access contactless digital lending platforms and online bill discounting with higher credit flow for this sector.
The rising defaults in MSME loans are creating a stir of trouble for the lenders. The gross non-performing assets from this segment projected by India Ratings & Research rose to 13.1% by FY22 from 9.9% in FY21. Over the same period, stressed assets on account of those units may rise from 11.7% to 15.6%.