New Delhi: In a significant revelation to Parliament, the government has disclosed that a total of 6,385 startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) have been categorised as 'closed' as of October 31, 2025. This data, sourced from the Ministry of Corporate Affairs, was shared by Minister of State for Commerce and Industry, Jitin Prasada, in a written reply to the Lok Sabha on Tuesday.
State-Wise Breakdown of Startup Closures
The state-wise distribution of these closures shows that Maharashtra leads the list with 1,200 closed startups. It is followed by other major startup hubs: Karnataka (845), Delhi (737), Uttar Pradesh (598), Telangana (368), and Tamil Nadu (338). These six states together account for a substantial majority of the shutdowns.
Despite these numbers, the government has stated that it has not observed any alarming increase in the rate of startup closures. Minister Prasada explained that closures are typically influenced by a combination of factors. These include the viability of the business model, alignment with market demands, prevailing domestic and global economic conditions, the nature of the products or services offered, and the ability to secure necessary funding.
The Brighter Side: Massive Job Creation
In a separate but related reply, Union Minister for Commerce and Industry, Piyush Goyal, presented a highly positive metric from the startup ecosystem. He informed the House that, as of the same date, recognised startups have reported creating over 21.11 lakh (2.11 million) direct jobs. This figure underscores the sector's critical role as a major employment generator in the Indian economy.
The data becomes more contextual when considering the total pool of recognised startups. As of October 31, 2025, the DPIIT has granted recognition to 1,97,692 (nearly 1.98 lakh) entities under its Startup India initiative. This means the closed startups represent a fraction of the overall recognised universe.
Government Support and Tax Benefits
The Startup India initiative provides a host of incentives to eligible entities. A key benefit is under Section 80-IAC of the Income Tax Act, which allows eligible startups to claim a 100% deduction on profits and gains for three consecutive assessment years. To date, 4,147 recognised startups have received eligibility certificates to avail of this substantial tax incentive.
Furthermore, the government is running three flagship schemes to bolster the ecosystem:
- Fund of Funds for Startups (FFS): To provide capital through SEBI-registered Alternative Investment Funds.
- Startup India Seed Fund Scheme (SISFS): To offer financial assistance for proof of concept, prototype development, and market entry.
- Credit Guarantee Scheme for Startups (CGSS): To provide credit guarantees on loans extended to DPIIT-recognised startups.
The government's stance, as reflected in the parliamentary replies, is that startup closures are a natural part of a dynamic business landscape. The primary focus remains on fostering innovation and providing a supportive framework, which is evidenced by the sector's impressive job creation numbers despite the challenges faced by some individual companies.
