Border states see fewer company registrations in May amid geopolitical tensions
Overall company registrations remained strong at 20,718 in May, though slightly down from 23,776 in April.
NEW DELHI : Fewer new companies were registered in the border states of Rajasthan, Punjab, Himachal Pradesh, Gujarat, and the Union Territory of Jammu and Kashmir in May, compared to the steady rise seen since the beginning of the year, data from the ministry of corporate affairs showed.
Tensions were high along the Line of Control in the first half of May, when India launched Operation Sindoor against Pakistan-based terror groups in response to the Pahalgam terror attack. Armed militants killed 26 people in Kashmir on 22 April. The Operation Sindoor lasted four days before the ceasefire on 10 May.
Experts, however, believe the drop in new company registrations would be a temporary blip.
Also Read: Indian companies' profit puzzle: When global turmoil meets economic theory
Jammu and Kashmir saw 117 company registrations in May, down from 165 in April; Rajasthan reported 923 new business registrations, down from 990; Punjab registered 323 new companies, down from 364; Gujarat reported 1,247 new company registrations, down from 1,458; and company registration dropped from 106 to 89 in Himachal Pradesh.
The dip remained limited, with major state economies like Maharashtra and Uttar Pradesh still witnessing strong business registrations, though the numbers were a tad below those in April.
Nationwide trend
Overall company registrations remained strong at 20,718 in May, though slightly down from 23,776 in April. Company incorporation has seen a steady improvement since January 2025, when over 16,700 companies were registered.
Experts pointed out that broader global economic uncertainties and normalization from the surge in registration seen in the past may have contributed to this slight dip.
“The drop in new company registrations across the border states in May appears to be a temporary phenomenon, possibly influenced by regional tensions and broader geopolitical developments at the time," said Anisha Jhunjhunwala, senior consultant-IBC at NPV Insolvency Professionals Pvt. Ltd.
“Broadly, the registration of over 20,000 new firms nationwide in the month underscores the resilience of India’s entrepreneurial activity and the ongoing formalization of its economy, despite regional setbacks," she said.
The services sector continued to be strong, with nearly three-fourths of all new business registrations in this sector, accounting for slightly more than half of the ₹1,176 crore paid-up capital—the amount paid by investors for the shares subscribed.
Also Read: When diversification backfires: Four Indian companies walking a fine line
Experts said limited liability partnerships (LLPs) are gaining more popularity among entrepreneurs. The shift suggests a growing preference for LLPs, particularly among startups and professional firms, due to their lower compliance requirements and simpler operational structures, said Subodh Dandawate, associate director-regulatory services at Nexdigm, a business and professional services company.
“The decline in company incorporations (in May) may also reflect a normalization following the spike observed in the previous fiscal year. Additionally, global economic uncertainties could be contributing to the slowdown in new company formations," said Dandawate.
At the end of May, there were 1.89 million active companies in the country, with nearly 20,000 companies getting added every month. Over 10,000 companies are under liquidation.
Also Read: Why some Indian companies are paying dividends despite posting losses
topics
