The data underlines three broad trends: the continued dominance of the services sector, the growing preference for limited liability partnerships among small and professional firms, and the government’s focus on infrastructure creation through new incorporations. They also suggest an uptick in companies positioning themselves around artificial intelligence (AI), though registrations alone offer limited insight into business scale or intent.
Mint takes a closer look at the trends reflected in the data.
Which are the sectors where business registration is growing?
The services sector remains the front-runner in new business registrations, consistent with its position as the largest contributor to India’s economy. Services now account for more than half of economic output, and the first advance estimate of GDP for the current fiscal pointed to 9.1% growth in the sector, compared with 7.2% in the previous fiscal.
Data from the ministry of corporate affairs showed that information technology, software services and consultancy-related activities are among the fastest-growing categories of new registrations. Wholesale and retail trade follows, reflecting its popularity among small enterprises, while education and training and construction activities also feature prominently. The relatively low capital requirement in services continues to make the sector a preferred entry point for new businesses.
Among states, Delhi, Maharashtra, Telangana and Uttar Pradesh lead in new registrations. The data did not point to any clear seasonality in business formation.
What does the data tell about LLPs?
Limited liability partnerships (LLPs) are becoming increasingly popular, particularly among service-sector firms. Last month alone accounted for over 7,900 LLP registrations, close to a third of all new business registrations in the month. More than 5,600 LLPs were registered in December 2024.
Experts attribute the growing preference for this structure—introduced in 2009 under a separate law—to its tax treatment and operational flexibility.
“From a taxation standpoint, LLPs enjoy a clear advantage as profits are taxed only at the entity level, and distributions to partners do not attract any additional dividend or distribution tax,” explained Rajat Mohan, senior partner at AMRG & Associates. “This eliminates the issue of economic double taxation that is inherent in the company structure and makes LLPs more efficient from a cash-flow and profit-retention perspective.”
Equally important, Mohan said, is the flexibility LLPs offer in structuring profit-sharing and management rights. Entrepreneurs can align profit distribution, capital contribution and decision-making powers with commercial realities rather than being constrained by rigid statutory norms applicable to companies. This flexibility is particularly valuable in closely held and professional ventures.
LLPs are also especially well-suited for professional and service-oriented businesses such as consulting, legal, accounting and advisory firms, where external equity funding is not an immediate priority, he added.
What business is the government getting into?
Company incorporations by the government reflect its current growth priorities, particularly infrastructure creation. Most of the new companies registered by the central government in December were focused on power transmission.
The central government set up nine companies during the month, of which eight were in power transmission and one in the metro rail segment. State governments formed five companies in December across different areas, including life sciences and AI innovation in Telangana.
The emphasis on transmission capacity aligns with the expansion of renewable energy generation, which requires scaling up power evacuation infrastructure. Non-fossil fuel capacity now accounts for more than half of India’s 509GW generation capacity, and the country is targeting 500GW of clean energy capacity by 2030.
Are AI-focused start-ups booming?
Registrations also show a rise in companies referencing artificial intelligence in their names. More than 300 such companies were formed in December, twice the number registered in each of the preceding two months and the highest since April.
This figure captures only companies that explicitly reference AI in their names. Broader IT-sector registrations, including firms that use AI tools as part of their services, would take the number higher. The data indicates growing interest in the emerging area.
What is the size of new businesses being formed?
The average paid-up capital of new business registrations is typically around ₹400,000, reflecting the dominance of small private-sector enterprises. Paid-up capital represents the funds shareholders have contributed at the time of incorporation.
Actual capital deployed is likely to be higher, as businesses often rely on other sources such as debt, promoter loans, trade credit and subsequent equity infusions as they scale operations.