Company Formation in India During Covid-19

by Abhinav K. Digital Marketing Expert, Freelance

The economic impact of Covid-19 pandemic has been felt across the globe in terms of disruption of businesses, job loss, reduced production, reduced sales, and increase in credit terms and so on and so forth.

Further, the nature of doing work has also changed in terms of work from home has become the new norms, more and more virtual meetings happening quite frequently, cloud based systems and software have come into operation. However, despite the pandemic, entrepreneur spirit has not dampened across the globe. Although business sales and revenue has decreased but more and more new businesses were also set up.

India has also seen a surprising trend in terms of increase in entrepreneur spirits amongst the Indian youth across the country during these difficult times. More and more companies have been registered in India during time of pandemic.

Different types of company formation in India has been witnessed during pandemic like

Private Limited Company Registration;
Public Limited Company Registration.
Limited Liability Partnership Registration.

Company formation in India has increased by 25% during first five months of FY 2021-22. Also, there has been an increase in Limited Liability Partnership registration by approx. 45% during same period.

When COVID has started in India during March 2020, inspite of initial disruptions, total number of company formation in India during period April 2020 to August 2020 was 51,784 as reported by the Ministry of Corporate Affairs (MCA). It may be noted that this was peak period of COVID-19 in India and even the pandemic was unable to hamper or stop the spirit of company formation in India.

Further, during entire FY 2020-21, total 1.55 lac Indian company formation took place in India.

If we look at monthly increase, in April 2021, total 12,554 companies incorporated in India which is 3.9 times of companies incorporated during April 2020 i.e 3209 companies.

Similarly, in May 2021 total 10,915 companies incorporated which is 2.3 times of number of companies incorporated during May 2020 i.e 4835 companies.

Also, in case of Limited Liability Partnerships, between April 2021 to August 2021, total 18,390 LLPs were registered which is approx. 44.5 percent increase from last year. During last year, total 12,724 LLPs were registered in India.

It may be noted that there has been a percentage increase in Private limited company registration in India in the field of finance and construction industry. During April 2020 to August 2020, total 90 finance companies and 726 construction based companies were registered where as in FY 2021, Total 354 finance companies and 1545 construction based companies were registered which is approx.. 293 percent and 112 percent increase respectively.

Thus, all the aforesaid trends in increase in company formation in India are indicative of the facts that by and large, the effect of pandemic has been overcome by Indian entrepreneurs. Further, FY 2021 has proven to be fastest growing year in terms of new company formation in India despite COVID-19 pandemic.

Also, this trend has raised high hopes for FY 2022 and expectation is that more and more new company registration will take place in India in coming years.

One can just hope and pray that no new variants of pandemic are effective in near future and this trend of growth in new businesses continues which will really help in contributing to national economy in long run.