India Sees 37% Surge in New Companies, AI Startups Lead Growth

The registrations also shot up on a sequential basis from 23,280 in January before accelerating further in February.

The new registrations of companies were dominated by the services sector, particularly IT services, consultancies and professional services. Nearly 300 AI-related businesses are set up on average every month. In February, 248 AI-focused companies were formed, which reflects the growth of the startup ecosystem in the country.

The majority of new businesses are closely held, private limited companies. The average paid-up capital of companies formed in January, for example, stood at Rs 600,000, suggesting that entrepreneurship is being driven by small businesses. The authorised capital or the maximum capital new businesses are allowed to raise remains two to three times the paid-up capital, which is indicative of the future investment potential.

New government companies accounted for only a handful of incorporations each month and were limited to entities managing social sector initiatives, power transmission, or other utility businesses.

Wholesale and retail trading is another significant area of new business registrations, signalling formalisation of trading activities, driven by the government's digital push.

Tax and consulting firm AKM Global managing partner Amit Maheshwari said the 37 per cent year-on-year jump in company registrations is a strong indicator of improving business sentiment and continued formalisation of the economy.

"The sustained momentum, with February marking the second-highest incorporations this financial year, suggests entrepreneurs are positioning early for the next growth cycle. While registrations alone do not guarantee economic expansion, the trend clearly signals confidence in India's regulatory and growth framework," he said.

The government's Startup India framework has significantly altered the entrepreneurial risk-reward matrix by steps such as providing a tax holiday eligibility to DPIIT-recognised startups and reducing compliance thresholds for small companies and one-person companies, AMRG Global partner Rajat Mohan said.

- IANS