Agriculture sector recorded the highest growth in new business registrations at 103% in FY21 – Dun & Bradstreet Research

Mumbai: Dun & Bradstreet, a leading global provider of B2B data, insights and AI-driven platforms, released a whitepaper today on “Business Dynamism in India.” The whitepaper captures India’s business dynamism during the pandemic and its varied impact on businesses and sectors. The whitepaper reveals that the manufacturing sector witnessed 39,539 registrations in FY21 compared to 26,406 in FY20, an increase of 13,133 firms or a growth rate of 50%. While the agriculture sector observed 12,368 registrations in FY21 compared to 6,107 in FY20, the services sector also fared well with the highest number of registrations at 83,079 in FY21 and witnessed a growth rate of 14%.

Dr Arun Singh, Global Chief Economist, Dun & Bradstreet said, “The pandemic has significantly
altered how businesses conduct commerce. As a result, companies in India are becoming more
dynamic, and competitive but the impact is varied. Some sectors such as manufacturing of food and
kindred products, computer related services, educational services, etc. have witnessed a healthy
growth in business registrations. On the other hand, sectors such as transportation services, repair
services, restaurants, bars, etc. have contracted in business registrations due to social distancing
measures. Another emerging trend is that the share of businesses being registered outside
mainstream locations such as Mumbai, New Delhi, Bengaluru, Chennai, etc., is increasing. Top 10
cities accounted only for 42% of all new business registrations in FY21 compared to 55% in FY17.
Various factors such as short product lifecycle, as in the case of agricultural products, non-tradeable
consumables such as healthcare services, etc. could have necessitated business registrations where
those products and services are consumed, given the logistics challenges during the pandemic”

Avinash Gupta, Managing Director & CEO – India, Dun & Bradstreet said, “While the pandemic
changed the business landscape dramatically, it presented itself as an opportunity, and many
businesses capitalized on the evolving trends, leading to an increase in business registrations. About
195,880 businesses were registered in FY21, a record high. Most of the newly registered businesses
are concentrated in sectors that witnessed a pandemic-induced spike in demand and 96% of the newly
registered business had a paid-up capital of up to Rs 1 million. However, Dun & Bradstreet’s research
reveals that the historical survival rates of businesses that fall in this category are low. Hence,
businesses that partner with such ventures need to continuously monitor their portfolio and establish
red flag alerts to protect their capital. At the same time, it is also important to note that as newer
businesses are entering the market, survival becomes a challenge for the existing ones. They have to
adapt to the upcoming trends to stay relevant or risk going out of business”

Key findings of the whitepaper:

 A total of 195,880 businesses were registered in FY21, a record high

 Birth rate of new businesses showed a healthy pace of increase from 7.8% in FY16 to 10.2% in
FY20 and further to 11.6% in FY21, despite the pandemic and subsequent waves of lockdown.

 Agriculture sector recorded the highest growth in new business registrations at 103% in FY21.
The sector observed 12,368 registrations in FY21 compared to 6,107 in FY20

 Manufacturing sector recorded the second highest growth in new business registrations at
50% in FY21

 Subsectors such as agriculture production (crops), food and kindred products manufacturing,
wholesale of non-durable goods, chemicals manufacturing, social services, educational
services, and computer related services gained significant new registrations. Subsectors such
as wholesale trade of durable goods, transportation services, repair services, restaurants,
bars, etc. witnessed significant contraction in business registrations.

 The share of businesses being registered outside mainstream locations such Mumbai, New
Delhi, Bengaluru, Chennai, etc. is increasing. Top 10 cities accounted only for 42% of new
business registrations in FY21 compared to 55% in FY17.

 96% of the newly registered businesses had a paid-up capital of up to Rs 1 million. Historically,
one in two companies in this category went out of business within four years of incorporation
Methodology.

This whitepaper is based on an extensive research conducted on business registrations and exit rates
across sectors and business sizes using secondary data from national and international organisations,
and further supplemented by interactions with domain experts and a detailed review of existing
literature to allow our team of economists and data scientists to provide an unique perspective.