Co, LLP incorporations surge in May on investor optimism

New Delhi: Company incorporations jumped 29% in May from a year before and those of limited liability partnerships (LLPs) surged 37%, as strong economic growth and consumption outlook over the medium-to-long term continued to encourage investors to set up units.

As many as 20,720 companies, including overseas entities, got incorporated in May, against 16,081 a year earlier, showed the latest corporate affairs ministry data.

With this, company registrations rose for a fifth straight month through May.


Similarly, the number of LLPs that got incorporated in May stood at 7,487, compared with 5,464 a year before.

The rates of increase in company and LLP incorporations in May were partly aided by a favourable base effect.

"The country's growth prospects continue to remain strong, and so do its macroeconomic fundamentals. Consumer sentiments have improved. These give investors the confidence to take advantage of the country's growth story," a senior government official had told ET late May.

A sustained push for ease of doing business and lower compliance burden for companies have helped, the official had said. The strong run of incorporations in recent months comes despite a continued crackdown on shell companies.

The spike in LLP registrations in recent years has been supported by robust services trade, according to experts. Services exports grew 13.6% last fiscal to touch a record $387.5 billion, even though merchandise despatches remained flat at $437 billion amid external turmoil.

India will remain the world's fastest-growing major economy over the next two years, according to the International Monetary Fund (IMF), which expects the country's rates of expansion to touch 6.2% in 2025 and 6.3% in 2026.

The Indian finance ministry expects a growth rate of 6.3-6.8% in FY26, as projected in the latest Economic Survey. The growth would be driven significantly by strong private consumption and resilient services exports, chief economic advisor V Anantha Nageswaran said last week.

This rate of expansion would enable India to beat Japan to emerge as the world's fourth-largest economy in FY26, as per the IMF's GDP forecast, Nageswaran said. The number of companies incorporated in 2024-25 dropped 2.2% on-year to 181,135, after record incorporation the previous year. But a record 68,669 LLPs got registered last fiscal, up 16.4% from a year before.