6,385 Startups Marked Closed, But No Surge in Shutdowns, Says Government

The government has informed Parliament that 6,385 recognised startups have been categorised as closed as of October 31, according to Ministry of Corporate Affairs data. These entities were previously registered under the Startup India initiative but have since been dissolved or struck off by the Registrar of Companies.

Despite the number, the government clarified that there is no surge in shutdowns, and the closures represent normal business churn in a rapidly evolving entrepreneurial landscape. India currently has 1,97,692 recognised startups, benefiting from tax incentives, simplified compliance and government-backed funding schemes run by DPIIT.

In a written reply to the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada said that closures stem from business-related challenges such as sustainability issues, market shifts, funding limitations and economic pressures, rather than any policy shortcomings.

State-wise Startup Closures

According to official data:

• Maharashtra leads with 1,200 closed startups

• Karnataka follows with 845

• Delhi records 737

• Uttar Pradesh: 598

• Telangana: 368

• Tamil Nadu: 338

These states account for some of the most active startup hubs in the country.

Support Systems and Incentives Still Strong

The government highlighted ongoing support through three flagship Startup India schemes:

1. Fund of Funds for Startups (FFS)

2. Startup India Seed Fund Scheme (SISFS)

3. Credit Guarantee Scheme for Startups (CGSS)

These programmes provide everything from early-stage capital to credit guarantees and mentoring.

Additionally, under Section 80-IAC of the Income Tax Act, eligible startups can claim a 100% profit deduction for three consecutive years. As of October 31, 4,147 startups have been certified for this benefit.

Commerce and Industry Minister Piyush Goyal noted in a separate statement that recognised startups have generated over 21.11 lakh direct jobs, reflecting sustained growth despite individual company failures.

Incubation Ecosystem Expands

India’s academic institutions continue to strengthen the innovation pipeline. The IIT Madras Incubation Cell has so far incubated 511 startups with a combined valuation exceeding Rs 53,000 crore. These startups have created more than 11,000 direct jobs, with over 100 new deep-tech startups added in 2024–25 under its Startup Shatam mission.

Officials emphasise that while startups naturally shut down due to market dynamics, the broader ecosystem remains resilient and forward-looking as India continues to scale its innovation-driven economy.