6,385 startups marked closed but no surge in shutdowns says Government ecosystem remains stable

Despite 6,385 recognised startups being officially marked as closed, the government has clarified that there is no spike or alarming trend in shutdowns within India's startup ecosystem. The data was shared in Parliament based on records maintained by the Ministry of Corporate Affairs and reflects the updated status of startups previously registered under the Startup India initiative.

India currently has 1,97,692 recognised startups, which receive benefits such as tax incentives, relaxed compliance norms, access to government funding schemes and innovation support through incubator networks.

Government says 6,385 recognised startups have closed, but no spike in shutdowns — India’s startup ecosystem remains stable and continues to generate jobs.

No upward trend in closures, says Centre

In a reply to the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada said the 6,385 entities marked as closed include companies that were voluntarily dissolved, wound up, or struck off by the Registrar of Companies. He emphasised that the government has not witnessed an upward trend or sudden increase in startup shutdowns, suggesting that the ecosystem continues to grow steadily.

The minister also highlighted that startup closures are influenced by typical business challenges — including difficulty achieving scalability, investment hurdles, market competition, and economic uncertainties. “Shutdowns do not reflect policy failure,” he said.

State-wise breakup of shutdowns

The Ministry’s data indicates that startup closures are distributed across major innovation hubs:

State / UT	Number of closures
Maharashtra	1,200
Karnataka	845
Delhi	737
Uttar Pradesh	598
Telangana	368
Tamil Nadu	338

These states also represent some of the highest concentrations of startups in the country.

Government continues to expand Startup India support

To boost the innovation ecosystem and support founders across growth stages, the government continues to run major Startup India programmes, including:

Fund of Funds for Startups (FFS) – supports venture capital investment

Startup India Seed Fund Scheme (SISFS) – provides early-stage capital for MVP development and product launch

Credit Guarantee Scheme for Startups (CGSS) – offers collateral-free credit support

Additionally, under Section 80-IAC of the Income Tax Act, eligible startups can avail 100% tax exemption for three consecutive years. As of October 31, 4,147 startups have received eligibility certificates for the tax benefit.

Job creation remains strong

Commerce and Industry Minister Piyush Goyal reported that recognised startups have created over 21.11 lakh direct jobs, and the employment impact continues to rise as more companies scale across sectors like fintech, healthtech, AI, deep tech, electric mobility and agritech.

Universities and incubators further power innovation

Research institutions and universities continue to play a major role in nurturing startups.The IIT Madras Incubation Cell alone has incubated 511 startups worth over ₹53,000 crore in valuation and generated over 11,000 direct jobs. In 2024–25, the institute added more than 100 deep-tech startups under its Startup Shatam mission.

Outlook remains positive

Officials say that while startup closures are natural in any dynamic global entrepreneurial ecosystem, India continues to show strong momentum, especially in early-stage innovation, job creation, investments and incubation support.

The government maintains that India’s startup landscape remains fundamentally robust, expanding and resilient, even as individual ventures experience the typical cycle of launch, growth and exit.