Business Desk, ETV Bharat: In what looks like a sign of revival of entrepreneurship in India, registration of new companies hit a 7-year new high in the month of October 2020 after showing a consistent rise in the months after the coronavirus-induced lockdown was lifted.
According to data by the ministry of corporate affairs, a total of 16,607 companies were set up in October 2020 compared with 9,933 in October 2019.
Notably, more than 16,000 companies were set up every month during the Unlock phase between July and October 2020.
To put things in perspective, the number of companies registered in January and February stood at 12,749 and 10,429, respectively, before falling drastically to 5,788 in March and then 3,209 in April due to lockdown restrictions.
But then once the Unlock phase began in July, the number of registrations kept showing a significant rise.
Also, a higher-than-usual number of new manufacturing companies came up during these months. Data shows that the share of manufacturing sector in the new companies registered in October stood at 22%, while the share of business services sector companies stood at 28%.
Currently, the overall share of business services companies in the country is 32% and that of manufacturing companies is 20%.
Read more: Auto sector's bumpy ride in 2020
According to experts, the fact that new manufacturing companies are only subject to a 15% corporate tax is attracting more entrepreneurs into the sector.
The effect of the production-linked incentive (PLI) scheme was also visible in these numbers. To recall, the central government in March this year introduced a PLI scheme for the mobile and allied services sector that aims to give companies incentives on incremental sales from products manufactured in domestic units.
Apart from inviting foreign companies to set shop in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units.
Later in November, the central government extended this scheme to 10 other key manufacturing sectors, but the effect of that would be visible only in registration data for coming months.
According to government data, the total number of companies registered in the country as on 31 October 2020 stood at 20.8 lakh, of which only 12.8 lakh were active. Data shows that 7.5 lakh companies were closed, 2,246 companies were assigned the ‘dormant’ status as per the Companies Act 2013, 6,821 were under liquidation and 39,403 companies were in the process of being struck-off.
