India has recorded 6,385 officially recognised startups as closed as of October 31, the government informed Parliament on December 2 — but asserted that there is no surge or alarming trend in shutdowns.

The data, sourced from the Ministry of Corporate Affairs, reflects the operational status of startups previously recognised under the Startup India initiative. India currently has 1,97,692 recognised startups, which are eligible for tax incentives, simplified compliance and access to multiple government-backed funding programmes.

Responding to a written question in the Lok Sabha, Minister of State for Commerce and Industry Jitin Prasada clarified that the closures include entities dissolved or struck off by the Registrar of Companies and that the government does not see any growing spike in shutdowns.

Maharashtra leads in closures

Among states, Maharashtra accounts for the highest number of shutdowns with 1,200 closed startups, followed by Karnataka (845) and Delhi (737). Other key states include:

·        Uttar Pradesh: 598 closures

·        Telangana: 368

·        Tamil Nadu: 338

Together, these states represent a significant share of India’s startup ecosystem.

‘Closures reflect normal business dynamics’

Prasada said that startup exits are shaped by multiple factors — including business model viability, market shifts, funding challenges and broader economic conditions — rather than policy gaps.

“Closures are part of a natural entrepreneurial lifecycle and do not indicate policy failure,” the minister noted.

Support continues through major schemes

The government highlighted ongoing support to early- and growth-stage startups through flagship programmes such as:

·        Fund of Funds for Startups

·        Startup India Seed Fund Scheme

·        Credit Guarantee Scheme for Startups

These initiatives offer access to capital, mentorship and risk-sharing mechanisms.

Additionally, 4,147 startups have been issued certificates to claim the 100% income tax exemption under Section 80-IAC for three consecutive financial years.

Employment impact remains strong

Commerce and Industry Minister Piyush Goyal, in a separate statement, said recognised startups have created more than 21.11 lakh direct jobs, with the number expected to rise as startups scale across sectors.

The innovation ecosystem built around educational and research institutions have also strengthened. At IIT Madras Incubation Cell, 511 startups valued at over ₹53,000 crore have emerged, generating more than 11,000 direct jobs. The incubator added over 100 deep-tech ventures this year under its Startup Shatam programme.

A maturing ecosystem, not a shrinking one

While thousands of startups have shut down over the years, officials maintain that these numbers represent the natural churn of a rapidly expanding ecosystem, rather than a contraction.

India now ranks among the world’s largest startup hubs, and the government says the fundamentals — investment flow, job creation, and innovation — remain strong.

The closures, officials say, are a reminder that entrepreneurship comes with risk — but also that the ecosystem continues to evolve, mature and expand.