Over 6,300 recognised startups shut down in 2025; no spike in closures, says govt

As many as 6,385 recognised startups have shut down as of October 31, the government informed Parliament on Tuesday, but denied reports of any surge in closures this year compared to 2024.

Recognised startups are eligible for a number of incentives, such as income tax benefits under the Startup India initiative by the Department for Promotion of Industry and Internal Trade (DPIIT).

"As on 31st October 2025, 6,385 recognised startups are categorized as closed (i.e., dissolved/struck-off), as per the Ministry of Corporate Affairs (basis data shared on 11th November 2025)," Minister of State for Commerce and Industry Jitin Prasada said in a written reply to the Lok Sabha.

Maharashtra reported the highest number of shutdowns at 1,200, followed by Karnataka (845), Delhi (737) and Uttar Pradesh (598).

Prasada said the government had not observed any increase in the pace of shutdowns in 2025, adding that closures typically stem from business-model challenges, funding constraints, market conditions and product viability.

He informed the House that 1,97,692 startups have been recognised by DPIIT as of October 31, 2025.

"Closures that do occur are generally influenced by factors such as the viability of the business model, alignment with market demands, domestic and global economic conditions, the nature of products and services developed, the ability to attract funding, and other business-specific considerations," he said.

Funding under Startup India

The reply also detailed the flow of funds under Fund of Funds for Startups (FFS), Startup India Seed Fund Scheme (SISFS) and Credit Guarantee Scheme for Startups (CGSS).

Under the Fund of Funds, ₹2,283.75 crore was committed to AIFs in 2023, ₹1,319 crore in 2024 and ₹850 crore in 2025 (up to Oct 31), with corresponding drawdowns of ₹1,153.05 crore, ₹1,074.93 crore and ₹879.57 crore.

The Seed Fund Scheme disbursed ₹163.6 crore to incubators in 2023, ₹105.2 crore in 2024 and ₹94.6 crore in 2025.

Maharashtra, Karnataka, Tamil Nadu and Telangana were among the major recipients.

Under Section 80-IAC of the Income Tax Act 1961, an eligible startup can claim a deduction of an amount equal to 100 per cent of the profits and gains derived from an eligible business for three consecutive assessment years.