Co registrations dip 11% in July, LLPs’ rise 21%

NEW DELHI: Company registrations declined almost 11% year-on-year in July, after a 12% increase in the previous month, showed corporate affairs ministry data.

An official attributed the fall to an unfavourable base effect.

A total of 14,887 companies, including foreign firms, were incorporated in July, against 16,698 a year ago, as per the data.

With this, company registrations saw year-on-year decline in three out of the first four months of this financial year, after a surge to record levels in 2023-24.

Nevertheless, the monthly numbers of above 14,000 beat the long-average trend, experts said.

Strong LLP numbers

The registration of limited liability partnerships (LLPs) has witnessed steady expansion this fiscal, barring a one-off drop in May after many months. LLP registrations increased 21% year-on-year in July to 5,896.

In the first four months of this fiscal, LLP registrations increased more than a fourth to 23,618.

On the other hand, a total of 62,325 companies were registered during this period, down 2.6% from a year before.

In 2023-24, 16.3% more companies and 62.7% more LLPs were incorporated than in the previous year, on the back of strong economic growth prospects over the medium term and bullish stock markets on top of measures such as easier incorporation rules. A record 185,314 companies and 58,990 LLPs were incorporated during the fiscal.

The economy grew at a higher-than-anticipated pace of 8.2% in 2023-24.

Factors such as easier foreign direct investment rules, greater ease of doing business, large consumer base and the availability of resourceful manpower supported the incorporation of companies and LLPs in recent years, according to Noorul Hassan, partner at law firm Lakshmikumaran & Sridharan.

The base effect, therefore, turned unfavourable for company incorporations in 2024-25, according to experts.