Over 2 lakh private firms shut in five years, Govt tells Lok Sabha
Dec 01, 2025
Synopsis
More than two lakh private companies have shut down in India over the past five years. These closures occurred due to various reasons including amalgamation and dissolution. The government has no proposal to rehabilitate employees of these defunct companies. Additionally, over 1.85 lakh companies were removed from official records for not conducting business.
More than 2.04 lakh private companies have shut down over the past five years, the government informed the Lok Sabha on Monday.
In a written response, Minister of State for Corporate Affairs Harsh Malhotra said 2,04,268 private companies were closed due to amalgamation, conversion, dissolution, or being struck off under the Companies Act, 2013.
According to the data, 20,365 companies closed in 2024-25, while 21,181 and 83,452 private firms were shut in 2023-24 and 2022-23, respectively. Another 64,054 companies were shuttered in 2021-22, and 15,216 in 2020-21.
Responding to a query on whether employees of these closed entities were rehabilitated, the minister said there is no proposal before the government.
The ministry has also removed 1,85,350 companies from official records in the five financial years beginning 2021-22, with 8,648 companies struck off till July 16 this fiscal. Companies can be removed from the registry if they have long ceased operations or voluntarily seek removal after meeting regulatory requirements.
On questions related to shell companies and their possible use for money laundering, Malhotra noted that the term "shell company" is not defined in the Companies Act, 2013. He said 1,85,350 companies were struck off between 2021-22 and July 16 this year, with the highest number — 82,125 — removed in 2022-23 during a ministry-led strike-off drive targeting inactive firms.
To a query on whether the government plans to strengthen coordination with the Enforcement Directorate and Income Tax Department to monitor the misuse of such companies, Malhotra replied in the affirmative. "Whenever such instances are reported, the same are shared with other government agencies for monitoring such activities," he said.
The minister also reiterated that it is the government's policy to phase out exemptions and deductions while rationalising tax rates to create a simpler and more transparent regime. "Moreover, the government has undertaken several reforms to promote investment and ease of doing business, including substantial reductions in corporate tax rates for both existing and new domestic companies," he said.
He was responding to a question on whether the government plans to offer tax incentives to encourage companies to set up units in backward or rural areas.
[The Economic Times]
