New Delhi: New company registrations rose to 24,136 in February, up 37% from a year ago and the second highest in the current financial year, indicating strong entrepreneurial sentiment and formalization of economic activities.
Data from the Department of Corporate Affairs showed registrations picked up again after a slowdown in October and November, when just over 15,000 and nearly 14,000 companies were formed. Registrations peaked at around 23,280 in January before accelerating further in February.
Most new businesses are closely held limited companies. The average paid-up capital of companies founded in January, for example, remained at the same level ₹600,000, indicating that business is driven by small businesses. Authorized capital, or the maximum capital new businesses can raise, remains two to three times paid-up capital, the data showed, indicating future investment potential.
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The new government companies formed only a few companies each month and were limited to entities managing social sector initiatives, energy transmission or other public service enterprises.
New business registrations were dominated by the service sector, especially IT services, consultancy and professional services. Almost 300 Businesses related to artificial intelligence are established on average every month. In February, 248 companies focused on artificial intelligence were founded, according to the data.
The dominance of the service sector is consistent with the composition of the economy, with this sector accounting for more than half of economic output. Wholesale and retail trade is another major area of new business registrations, signaling the formalization of business activities, aided by the government’s digital push, the data showed.
Amit Maheshwari, managing partner at tax and advisory firm AKM Global, said the 37% year-on-year increase in company registrations is a strong indicator of improving business sentiment and continued formalization of the economy.
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“The sustained momentum, with February recording the second highest incorporation rate this financial year, suggests that entrepreneurs are soon positioning themselves for the next growth cycle. While registrations alone do not guarantee economic expansion, this trend clearly signals confidence in India’s regulatory and growth framework,” Maheshwari said. The Indian economy is expected to grow by 7.6% this financial year.
Experts also said that the acceleration of company registrations is not only cyclical, but structurally and institutionally driven.
“Governmental Startup The Indian framework has significantly changed the business risk-reward matrix by providing tax holiday eligibility to DPIIT-recognized start-ups, calibrated relief in angel tax provisions (subject to prescribed conditions), accelerated exit mechanisms under the insolvency and bankruptcy framework and reduced compliance thresholds for small and sole proprietorships,” said Rajat Mohan, Partner, AMRG Global.
Mohan explained that the country’s tax regime itself offers structural benefits for corporates, including preferential corporate tax rates under the new regime, clarity on dividend taxation and greater flexibility in profit retention and reinvestment. This fiscal efficiency encourages entrepreneurs to incorporate in anticipation of scale, financing and long-term tax optimization, he said.
Also, digital economy provides strong commercial strength, Mohan said, adding that e-commerce platforms are increasingly favoring structured entities for scalability, credibility and regulatory compliance.
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