Over 2 Lakh Private Companies Shut Down In Five Years — Govt Explains Reasons In Lok Sabha
Between 2020–21 and 2024–25, over 2.04 lakh private firms in India closed down — mostly due to mergers, voluntary closures or strike-offs. The government says no plan exists to rehabilitate affected employees.
Pune | December 4, 2025: Over the past five financial years, more than 2.04 lakh private companies across the country have officially shut down, according to details shared in Parliament. The closures span from 2020–21 to 2024–25, with a noticeable spike during 2022–23 when over 83,000 companies were removed from records. The following year saw a drop, while more than 20,000 companies closed during the current financial year.
Officials explained that these closures occurred for a variety of reasons. Many firms were dissolved voluntarily by their owners, several were absorbed or merged during restructuring, and a large number were struck off after remaining inactive for long periods. Authorities noted that such strike-offs are part of a long-term effort to clean up the corporate registry and ensure that only active, compliant companies remain listed.
Addressing concerns about the employees of these defunct firms, the government stated that it currently has no proposal to rehabilitate workers impacted by company shutdowns. It added that employment matters in private firms fall under labour regulations and not corporate filings.
Questions were also raised about whether the rise in closures indicates the presence of shell companies. Officials clarified that the term “shell company” has no legal definition, but regulatory agencies continue to monitor suspicious activity wherever necessary.
Despite the significant number of shutdowns, the government maintained that these actions reflect a push toward transparency, stronger compliance, and healthier corporate governance norms.
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