5,000 startups registered under the Startup India programme closed so far, says Govt

India’s vibrant startup ecosystem, celebrated as a hub of innovation and job creation, has seen over 5,000 startups registered under the Startup India initiative shut down, according to government data as of Dec. 5, 2024.

This accounts for 3.3% of the 1.52 lakh startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT).

Jitin Prasada, Minister of State in the Commerce Ministry, shared the information in a written reply to a Lok Sabha query on Tuesday, Dec. 10, 2024.  

Maharashtra leads in closures

Among states, Maharashtra reported the highest number of closures, with 929 startups shutting down, followed by Karnataka (644), Delhi (593), Uttar Pradesh (487), and Telangana (301).

The closures reflect the challenges faced by startups, including intense competition, funding shortfalls, and unclear market strategies. 

Job creation amid challenges  

Despite these closures, the Startup India initiative has played a significant role in employment generation, creating over 16.6 lakh direct jobs across more than 55 industries.

IT services emerged as the top contributor with 2.04 lakh jobs, followed by healthcare and life sciences (1.47 lakh), professional services (94,060), education (90,414), construction (88,702), and food and beverage (88,468).  

MSMEs also face setbacks

The struggles are not confined to startups. Micro, Small, and Medium Enterprises (MSMEs), registered through the Udyam portal, have also experienced significant closures.

As of Nov. 15, 2024, 61,469 MSMEs, predominantly micro-units, have shut operations since the portal's launch in July 2020. Recent months have seen an accelerated decline, with over 12,000 closures between July and November 2024 alone.  

While the numbers indicate growing pains for India’s startup and MSME sectors, experts emphasize the need for better access to mentorship, sustainable funding channels, and policies tailored to long-term growth.