Number of foreign businesses exiting India surpass new entrants

Source: The post is based on the article “Number of foreign businesses exiting India surpass new entrant” published in The Hindu on 23rd March 2023

What is the News?

Over the past few years, foreign businesses exiting India have outnumbered those entering it.

What does the government data say about foreign firms in India?

The number of foreign companies quitting India has exceeded the number of new entrants since 2018.

For instance, 470 new foreign investors set up business in India between 2018 and 2022. But on the other hand, more than 550 overseas firms ceased operations and became inactive in the same period.

2019 was the only year when the number of foreign firms that started India operations (137) outnumbered the 133 firms that shut and became inactive.

This rise in exits of companies could largely be attributed to the slump that followed the Covid-19 pandemic’s sweep through the country, forcing a nationwide lockdown in 2020. Crippled finances, a shortage of labour, and supply-chain issues, among other problems, forced many of these entities to wrap up their operations.