Indian companies up by 11.4%, indicating economic growth

The annual survey conducted on micro, small, and medium enterprises (MSMEs) exposed significant benefits for those integrating with e-commerce channels

October 10, 2023

Over 85% of the participating enterprises reported a surge in both total sales and profit margins

14% of integrated firms mentioned that they had expanded their workforce

Challenges faced by MSMEs include market access, customer retention, and effective product marketing

MSMEs underscored the importance of streamlined coordination between central and state governments

India added a total of 120,966 companies and LLPs between April and September 2023,  marking an 11.4% increase from the previous year when the figure stood at 108,583, according to data from the government.

The surge in company incorporation aligns with multiple indicators of strong economic growth, including healthy goods and services tax collections, high PMI for both services and manufacturing, and increased credit demand. The services PMI reached a 13-year high in September, while the manufacturing PMI, though experiencing a recent dip, remained well above historical averages.

Government officials attribute this surge to various initiatives aimed at reducing compliance burdens, decriminalising minor offences, and eliminating obsolete laws within the Indian corporate landscape. Finance and Corporate Affairs Minister Nirmala Sitharaman recently announced the removal of 39,000 unnecessary compliances and 1,500 outdated laws by the current government.

According to the Reserve Bank of India’s consumer sentiment survey released on October 6, expectations for the general economic outlook, employment, income, and spending are set to improve over the next year, with the future expectations index reaching a four-year high.

The Business Confidence Index of the Confederation of Indian Industry also hit a three-quarter high between July and September. This surge is attributed to robust domestic demand, sustained government spending, and healthier balance sheets for both companies and banks. Businesses are anticipating increased sales of consumer goods during the upcoming festive season.

Furthermore, the IMF predicts that India will remain the world’s fastest-growing large economy in the current fiscal year and the next, with expected growth rates of 6.1% and 6.3%, respectively—more than double the global average.

Source: Economic Times

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