The central government has revealed that more than two lakh private companies closed over the past five financial years, with a large share struck off for remaining inactive. The disclosure came through a written reply by minister of state for corporate affairs Harsh Malhotra in the Lok Sabha on December 2, adding fresh perspective to the churn inside India’s private sector.
According to the ministry’s data, 2,04,268 private companies ceased operations between FY 2020-21 and FY 2024-25. These closures happened due to amalgamations, conversions, dissolutions or strike-offs under the Companies Act, 2013.
The single biggest spike came in FY 2022-23, when 83,452 companies were removed from records during a focused Ministry of Corporate Affairs (MCA) drive to weed out dormant and inactive entities. The numbers for other years remained far lower, pointing to the scale of that particular clean-up.
The year-wise picture shows the contrast:
FY 2020-21: 15,216
FY 2021-22: 64,054
FY 2022-23: 83,452 (peak year)
FY 2023-24: 21,181
FY 2024-25: 20,365
In total, 1,85,350 companies were struck off during this five-year window, including 8,648 up to July 16 of FY 2024-25.
Companies qualify for strike-off when they remain inactive for long periods or voluntarily shut shop after completing regulatory requirements.
Malhotra’s response also made it clear that the government has no proposal to support workers affected by these shutdowns. The ministry views such closures as a routine part of business cycles. As of now, there is no dedicated mechanism to rehabilitate displaced employees from companies that dissolve or get struck off.
The minister also addressed concerns about shell companies being used for money laundering or other illegal financial activities. He pointed out that the term “shell company” does not exist in the Companies Act, 2013. But when suspicious activity is detected, cases are referred to agencies such as the Enforcement Directorate (ED) and the Income Tax Department.
Strike-off drives like the one in FY 2022-23, he said, are part of broader efforts to clean up the corporate database, remove inactive entities and minimise misuse.
Malhotra said the government is simultaneously pushing reforms to encourage genuine businesses. These include:
– Decriminalisation of 63 offences under the Companies Act and the LLP Act
– Lower corporate tax rates for existing and new domestic companies
– Gradual removal of exemptions and deductions to create a simpler and more predictable tax system
These steps, he suggested, aim to balance the removal of non-viable companies with better conditions for active ones.
Despite the closures, new company registrations remain strong. FY 2024-25 alone has seen 1.38 lakh new registrations up to January. Policymakers and investors will now watch whether the high number of strike-offs signals deeper economic stress or is simply a case of long-overdue regulatory housekeeping.
