After a slowdown in the first two months of this financial year Company registrations recovered in June with a 12% increase year-on-year, according to the latest Ministry of Corporate Affairs Data.The founding of limited liability companies (Limited liability company) continued to rise strongly, apart from a one-off decline in May after many months, and increased by 73% in June compared to the previous year.

A senior government official described the latest increase as “encouraging” and a “vote for the Growth prospects” medium to long term.

According to the data, 15,375 companies, including foreign ones, were registered in June, compared to 13,696 a year earlier. 6,362 LLPs were formed in June, compared to 3,672 a year earlier.

The increase in June offset the decline in company formations in the previous two months. A total of 47,438 companies were registered in the June quarter, a slight increase from 47,318 in the same quarter last year.

LLP registrations rose by almost 29% to 17,722 in the June quarter. Factors such as strong economic outlookOptimism in the Indian stock marketsrelaxed foreign direct investment Rules and the government's commitment to ease of doing business have boosted investments and promoted the formation of companies and LLPs, said Noorul Hassan, partner at law firm Lakshmikumaran & Sridharan. “India's large consumer base and availability of resourceful workforce are other important factors,” added Hassan. Ruhi Jain, Executive Director (Corporate Compliance) at IndusLaw, said conducive Business environmenteasy access to a large consumer base, improving infrastructure and financial inclusivity, as well as regulatory simplification and digital and other initiatives have helped attract businesses.

Meanwhile, the prospects for Services tradeboth internal and external, and the booming services economy following the pandemic debacle are also driving up LLP registrations. Services exports rose over 12% year-on-year to $90.4 billion in the first quarter of this fiscal, while outbound shipments of goods increased by nearly 6%.

In 2023-24, 16.3% more companies and 62.7% more LLPs were incorporated than the previous year. A record 185,314 companies and 58,990 LLPs were incorporated in 2023-24. The base effect was therefore unfavourable for calculating the growth of company formations in 2024-25, especially in the first two months of this financial year, experts said. The impact of the general elections also weighed on registrations in April and May. However, after the elections were over, the longer-term growth outlook again influenced formations, they added.

The economy grew more than expected in the last fiscal year at 8.2%.

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