6,789 Startups Recognised by DPIIT Have Shut Down, Govt Reveals

On March 10, Minister of State (MoS) for Commerce Jitin Prasada informed Parliament that as of January 2026, over 6,700 startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) had closed their doors. Prasad stated in a written response presented to the Lok Sabha that 6,789 legally recognised startups had been deemed closed or liquidated. According to MoS, startup failures can be attributed to a variety of factors. These include, but are not limited to, the following: business model viability, market demand alignment, domestic and global economic conditions, product/service nature, fundraising prospects, and other company-specific considerations.

How these Startups were Selected?

The Startup India Seed Fund Scheme (SISFS) has chosen 219 incubators by January 2026, according to Prasada, who was responding to a different topic. Additional funding of INR 575 Cr has been allocated to these incubators as part of the programme, he said. On top of that, 3,311 startups have been chosen by the authorised incubators to get help under the programme.

With an initial investment of INR 945 cr, the SISFS was set up in April 2021 to aid early-stage entrepreneurs financially through incubators as they progress through various stages of development. The gross pledges under the fund-of-funds system (FFS) amount to INR 12,362.70 cr. Out of this total, the chosen alternative investment funds (AIFs) have received a distribution of INR 6,829.47 cr.

Current DPIIT’s Recognised Startups in India

Some of the many industries represented by these defunct startups include hardware (166), edtech (491), agriculture (301), healthcare and life sciences (553), and IT services (875). The minister stated that the country had over 2.12 lakh DPIIT-recognised businesses as of the end of January 2026.

It is important to remember that FFS was formed in 2016 with the purpose of releasing domestic funds for cutting-edge technology businesses. Startups receive funding from the state-backed fund, which in turn invests in AIFs. As of January 2026, 348 startup borrowers have been granted loans of INR 925.9 Cr through the Credit Guarantee Scheme for Startups (CGSS). By providing guarantees against credit instruments up to a certain limit, CGSS facilitates debt financing for startups through financial institutions.