Nearly 1 Lakh MSMEs Shut Since FY21; Minister Jitan Ram Manjhi Cites Key Reasons

98,990 enterprises registered on the government’s Udyam registration portal as MSMEs have shut themselves down between the financial year 2020-21 and July 28, 2025. The majority, 39,446 enterprises, were shut in FY25, nearly doubling from 19,828 in FY24 and tripling from 13,290 in FY23. During FY22 and FY21, 6,222 and 175 units were closed, respectively, according to the data shared by the MSME Minister Jitan Ram Manjhi in a written response to a question in the Lok Sabha.

As of July 28, 20,029 units have been shut in the current financial year.

“There are various reasons for an enterprise to deregister such as change in the company owner, certificate not required, duplicate registration, shut down of enterprise and other,” Manjhi said.

Also read: The Next Generation Reforms Required on TReDS to Boost MSME Financing in India

However, "the number of MSMEs shut down as a proportion of those which have registered since the revision in the MSME definition on July 1, 2020 is only 0.15 per cent," the minister said. In the last five years since the launch of the Udyam portal in July 2020, 6.62 crore enterprises have registered themselves as MSMEs with the MSME Ministry.

Importantly, the MSME Ministry Shobha Karandlaje had informed Parliament in December last year that no survey for closed MSMEs has been conducted so far. The minister was responding to a question in the Rajya Sabha on whether the government has conducted any survey of closed units and steps taken to revive and rebuild such MSMEs during the last five years.

Also read: Bridging the Digital Divide: Why MSMEs Aren’t the Problem, Tech Design is

The government in budget this year had expanded the MSME definition to Rs 500 crore from previous Rs 250 crore to get enterprises under the MSME ambit and benefit from the available schemes by the government including collateral-free loans, priority lending, public procurement, and more.

Moreover, the credit guarantee cover under the CGTMSE scheme was also enhanced from Rs 5 crore to Rs 10 crore for MSMEs and startups, leading to an additional credit of Rs 1.5 lakh crore in the next five years.