Company registrations on downhill trek, down 22% in October

NEW DELHI: Fresh company incorporations saw this fiscal's steepest fall in October and the registration of limited liability partnerships (LLPs) eased for the first time in five months, with experts attributing the fall to an unfavourable base and a slowdown in urban demand.

Latest corporate affairs ministry data showed 12,207 new companies, including the foreign ones, were registered in October, down 21.8% from a year earlier, recording the fourth straight month of decline.

LLP incorporations-which had surged consistently in each month since last fiscal, barring May, defying the high base-dipped 12.4% in October from a year before, the data showed. The number of registrations had increased 16.3% for companies and 62.7% for LLPs in 2023-24 to touch record levels, as investors had remained bullish over robust economic growth prospects and strong stock markets.


India will remain the world's fastest-growing major economy in 2024-25, although the pace of expansion would slow to 7% from 8.2% last fiscal, according to the International Monetary Fund.

The latest data showed, sequentially, the incorporation of companies went up 9.9% in October from the previous month but that of LLPs eased 5.1%. Between April and October, a total of 100,337 companies were incorporated, down 7.9% from a year before.

As many as 38,482 LLPs got registered in the first seven months of this fiscal, up 17.5% from a year earlier.

'Urban demand slowdown'
"Slowdown in urban consumption this fiscal year seems to have weighed on the growth of company and LLP registrations," said a senior executive with a big accounting firm.

"Company incorporations, especially, could continue to fall vis-a-vis last year, although they would still remain above the historical average. Also, the incorporation level is essentially normalising after an exceptional last year," he added. The drop in the company and LLP registrations remained in sync with some other urban demand gauges.

Sales volume growth of fast-moving consumer goods in urban India moderated to 2.8% in the June quarter from 10.1% a year before.

Auto sales eased 2.3% in the first half of this fiscal, mainly due to the lower sales in the September quarter in urban areas. Housing sales and launches also dropped in the September quarter.

In its monthly economic review for September released last week, the finance ministry flagged moderation in urban demand in the first half "due to softening consumer sentiments, limited footfall due to above-normal rainfall, and seasonal periods during which people tend to refrain from new purchases".