India records surge in business registrations despite tariff shock

India has seen a remarkable surge in business registrations, with 20,170 companies and 6,939 LLPs incorporated in August, reflecting investor confidence despite global uncertainties and new US tariffs. Key factors include India's 7.8% GDP growth in Q2, domestic reforms like GST, and a strong services sector. Trade agreements with the UK and ongoing talks with the EU and US further bolster prospects. While challenges remain, India is poised to maintain its status as the world’s fastest-growing major economy.

Despite global economic uncertainties and the recent imposition of additional US tariffs, India’s entrepreneurial momentum surged in August, reflecting growing confidence in the country’s long-term economic prospects. Official data reveals a sharp increase in the registration of companies and limited liability partnerships (LLPs), underlining the nation’s resilience and optimism.

According to the Ministry of Corporate Affairs, 20,170 companies, including foreign entities, were incorporated in August, marking a 37% year-on-year growth. LLP registrations also climbed, rising by 22% to reach 6,939. This marks the eighth consecutive month of growth in company incorporations and the sixth straight month of increased LLP registrations.

A senior official attributed this trend to "persistent optimism about India’s growth potential," even as the global economic environment remains volatile. However, the official acknowledged challenges ahead, particularly with the US imposing an additional 50% tariff on Indian goods beginning August 27.

Domestic Reforms to Spur Growth

Officials remain confident that domestic policy measures will counterbalance external pressures. Reforms, particularly in the Goods and Services Tax (GST) framework, are expected to fuel domestic consumption and encourage both new investments and the expansion of existing businesses.

India's robust economic performance in the June quarter, where GDP grew by a remarkable 7.8%, has further bolstered investor sentiment. A second government official noted that such indicators reinforce confidence in the country's economic trajectory.

Projections and Challenges Ahead

The International Monetary Fund (IMF) has forecasted Indian economic growth at 6.2% for FY26 and 6.3% for FY27—figures that significantly outpace global averages. However, the newly imposed US tariffs are expected to impact growth to some extent, with economists predicting a potential reduction of 0.3 to 0.8 percentage points annually. Despite this, the finance ministry has maintained its growth projection for FY26 at 6.3-6.8%, buoyed by the strong performance in recent quarters.

Strengthening Global Ties

India’s global trade strategy has also been gaining traction. A free trade agreement (FTA) with the UK, finalized in July, marks a significant step in deepening trade relations. Simultaneously, negotiations for trade deals with the European Union and other key economies are underway, aiming to diversify exports and strengthen India’s global economic foothold.

Analysts suggest that a potential trade agreement with the US could mitigate the impact of the new tariffs, providing a much-needed boost to bilateral trade relations.

Focus on Ease of Doing Business

India’s sustained efforts to enhance the ease of doing business have played a pivotal role in fostering economic activity. LLP registrations, in particular, have benefited from the robust growth in the services sector, which continues to be a major driver of the economy.

As India continues to solidify its status as the world’s fastest-growing major economy, the surge in business registrations underscores the enduring confidence of investors in the country’s economic fundamentals. While challenges remain, particularly on the global trade front, India’s proactive domestic policies and international trade initiatives are likely to ensure sustained growth in the years to come.