Assessing the Effectiveness of Corporate Law Amendments on MSME and Startup Development in India
Keywords:
MSMEs, Startups, Corporate laws, Companies Act 2013, Limited Liability Partnership Act, Ease of doing business, EntrepreneurshipAbstract
The Indian startup ecosystem has undergone a remarkable transformation in recent years, largely driven by changes in corporate law and government Programs like 'Make in India' and 'Startup India' have been launched to support business development. This research examines how these legal reforms have influenced the expansion of Micro, Small, and Medium Enterprises (MSMEs) and startups in India. Through a qualitative and comparative approach, the research analyzes the evolution of corporate laws, focusing on key legislation such as the Companies Act 2013 and its subsequent amendments. The study examines the effectiveness of governance and compliance mechanisms, as well as the role of government interventions in fostering entrepreneurship and business growth. The findings reveal that streamlined legal frameworks, simplified compliance procedures, and targeted incentives have significantly contributed to the expansion of MSMEs and startups. The introduction of initiatives like the Startup India program has led to a surge in startup registrations, with the number of recognized startups increasing from 733 in 2016 to over 159,000 by January 2025. Furthermore, the ease of doing business reforms has improved India's global ranking, reflecting enhanced regulatory efficiency and a more conducive business environment. However, the study also highlights challenges such as fluctuations in funding trends and the need for continued support to ensure sustainable growth. The research concludes by emphasizing the importance of a stable and supportive regulatory landscape in driving innovation, attracting investments, and promoting the long-term success of MSMEs and startups in India.
Downloads
Metrics
References
Abraham, R., Schmukler, S. L., & Subramanian, K. V. (2015). Financial development and corporate governance: Evidence from India. Emerging Markets Review, 23, 201–222. https://doi.org/10.1016/j.ememar.2015.04.004
Anwar, S., & Hashmi, R. (2019). Micro, small and medium enterprises (MSMEs) financing in India: A critical analysis. Journal of Public Affairs. https://doi.org/10.1002/pa.1983
Arora, P., Mehta, C., & Raman, U. (2023). Digitalisation and transformations of women’s labour in sanitation work. https://core.ac.uk/download/578928906.pdf
-, A. (2024). The Impact of Artificial Intelligence on Space Technology. International Journal For Multidisciplinary Research, 6(5). https://doi.org/10.36948/ijfmr.2024.v06i05.29410
Abdul Rahuman, M., & Abdhul Rahim, A. (2024). A Study on Micro, Small and Medium Enterprises (MSMEs) in India - Opportunities and Challenges. ComFin Research, 12(4), 9–12. https://doi.org/10.34293/commerce.v12i4.8133
Bell, D. N. F., Bloom, N., Blundell, J., & Machin, S. (2023). Targeting with simplicity: Evidence from a small business relief program during COVID-19. Journal of Public Economics, 220, 104864. https://doi.org/10.1016/j.jpubeco.2023.104864
Bergman, M., Hassan, A., & You, X. (2019). Legal reforms and business growth in emerging markets. International Journal of Law and Management, 61(3), 423–438. https://doi.org/10.1108/IJLMA-03-2018-0045
Binh, K. B., Park, D., Jhang, H., & Ryu, D. (2020). Capital markets for small- and medium-sized enterprises and startups in Korea. The Journal of Asian Finance, Economics and Business, 7(12), 195–210. https://doi.org/10.13106/jafeb.2020.vol7.no12.195
Chakraborty, I., & Bhowmik, S. K. (2020). Analyzing the financing gap in the Indian micro, small, and medium enterprises sector. Journal of Small Business Management, 58(2), 438–452. https://doi.org/10.1111/jsbm.12414
Charkha, P., & Shah, R. (2021). Ease of doing business and MSME growth in India: A regulatory perspective. Journal of Entrepreneurship and Management, 10(2), 65–78.
Das, K. (2020). Exploring the financing gap for Indian micro, small, and medium enterprises. Journal of Entrepreneurship in Emerging Economies, 12(3), 370–390. https://doi.org/10.1108/JEEE-01-2019-0010
Dayanandan, A., & Kuntluru, S. (2023). Mandatory auditor rotation and audit quality. International Journal of Accounting & Information Management, 31(4), 585–599. https://doi.org/10.1108/ijaim-02-2023-0049
Demirguc-Kunt, A., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2006). Law and firms' access to finance. The World Bank Economic Review, 20(3), 431–449. https://doi.org/10.1093/wber/lhl004
Dinesh, K. K., & Sushil, N. A. (2019). Strategic innovation factors in startups: Results of a cross-case analysis of Indian startups. Journal for Global Business Advancement, 12(3), 449. https://doi.org/10.1504/jgba.2019.10022956
Dubey, R. (2023a). Corporate law and startup ecosystem in India: An empirical analysis of policy impact. Indian Journal of Business Law, 15(1), 22–39.
Dubey, R. (2023b). Transformation of Indian MSMEs (Micro, Small, and Medium Enterprises) and startups using advanced HR analytics (pp. 69–77). IGI Global. https://doi.org/10.4018/978-1-6684-9151-5.ch005
Economy Profile of India. (2019). World Bank Washington DC. https://doi.org/10.1596/32840
Goswami, P., & Thakur, Y. S. (2017). MSME performance and classifying problems of micro, small and medium enterprises in India. Asian Journal of Research in Business Economics and Management, 7(7), 245. https://doi.org/10.5958/2249-7307.2017.00111.6
Ghodake, M. O. (2025). Startup Growth and the Entrepreneurship Ecosystem in India: Opportunities and Challenges. INTERANTIONAL JOURNAL OF SCIENTIFIC RESEARCH IN ENGINEERING AND MANAGEMENT, 09(03), 1–9. https://doi.org/10.55041/ijsrem43141
Hartanto, S. (2024). Protection of minority shareholders from fraud in limited liability company dividend distribution. Lex Prospicit, 2(1), 32. https://doi.org/10.19166/lp.v2i1.8020
Intelly, I., & Parkash, D. C. (2022). Insolvency and Bankruptcy Code 2016 in sustaining Indian economy. International Journal for Multidisciplinary Research, 4(4), 308–314. https://doi.org/10.36948/ijfmr.2022.v04i04.033
Jain, H. M., & Rana, Y. P. (2020). Techno-commercial aspects of space-based startups ecosystem in India (pp. 475–489). Springer Singapore. https://doi.org/10.1007/978-981-15-1724-2_45
Juminawati, J., Sukoco, B. M., & Suyanto, S. (2021). Entrepreneurship and MSMEs performance in developing countries: A study of adaptability and accessibility. Journal of Small Business and Enterprise Development, 28(5), 711–728. https://doi.org/10.1108/JSBED-12-2020-0440
Kiprop, B. (2023). Locational determinants of US cross-border venture capital investments into developing countries. https://core.ac.uk/download/579977294.pdf
Kukreja, V., & Makhija, A. (2023). The Companies Act and MSMEs in India: Legal framework and entrepreneurial implications. Indian Journal of Corporate Affairs, 18(2), 95–112.
Michelini, L. (2012). Social innovation and new business models: Creating shared value in low-income markets. Springer. https://doi.org/10.1007/978-3-642-32150-4
Morse, G. (2015a). 10. Limited liability partnerships—The corporate structure. In Limited Liability Partnerships. Oxford University. https://doi.org/10.1093/he/9780198744467.003.0010
Morse, G. (2015b). 12. Limited liability partnerships—Liability to third parties. In Limited Liability Partnerships. Oxford University. https://doi.org/10.1093/he/9780198744467.003.0012
Majid, I., & Lakshmi, Y. V. (2022). An Analysis of Artificial Intelligence Initiatives and Programmes in India (pp. 281–292). crc. https://doi.org/10.1201/9781003355960-19
Nath, R. (2024). MSMEs and India’s economic transformation: Policy, progress, and potential. Journal of Economic Policy and Research, 19(1), 33–51.
Nufus, E. H., Zuhroh, I., & Suliswanto, M. S. W. (2021). Analysis of COVID-19 impact on micro, small, and medium enterprises (MSMEs) credit distribution in East Java banks. Journal of Accounting and Investment, 22(2), 342–360. https://doi.org/10.18196/jai.v22i2.10701
Panda, R. K. (2020). Financing constraints and firm performance: Evidence from Indian micro, small and medium enterprises. Small and Medium Enterprises Journal.
Reddy, K., Locke, S., & Scrimgeour, F. (2010). The efficacy of principle-based corporate governance practices and firm financial performance: An empirical investigation. International Journal of Managerial Finance, 6(3), 190–219. https://doi.org/10.1108/17439131011056224
Rios-Campos, C., Viteri, J. D. C. L., Rubio, D. E. D., Rivadeneira, R. H. S., Calderón, E. V., Rivadeneira, J. E. S., León, J. J. C., Avalos, S. J. D., Zaquinaula, H. E. A., Merino, L. A. A., & Vilcarromero, J. R. (2024). Startups and angel investors. South Florida Journal of Development, 5(4), e3854. https://doi.org/10.46932/sfjdv5n4-017
Ramaswamy, A., & Krishnamoorthy, A. (2015). The Nexus Between Microfinance & Sustainable Development: Examining The Regulatory Changes Needed For Its Efficient Implementation. European Journal of Sustainable Development, 5(3). https://doi.org/10.14207/ejsd.2016.v5n3p453
Sahoo, S. (2020). Micro, small, and medium enterprises in India: Overcoming challenges through reforms. Asian Journal of Economics and Public Policy, 8(4), 102–115.
Sharma, K., Singh, A., & Verma, P. (2024). Innovation and entrepreneurship in Indian MSMEs: A post-reform evaluation. International Journal of Innovation Studies, 6(1), 12–27. https://doi.org/10.1016/j.ijis.2024.01.002
Sheoran, M., & Kumar, D. (2020). Role of environmental concerns on the startups networking: A study of Indian startups. International Journal of Mathematical, Engineering and Management Sciences, 5(6), 1300–1311. https://doi.org/10.33889/ijmems.2020.5.6.096
Singh, L. (2019). Startup India initiative – A comparative study of selected states. Pranjana: The Journal of Management Awareness, 22(1), 1. https://doi.org/10.5958/0974-0945.2019.00001.3
Singh, L. (2021). The Companies Act 2013 and its similarities and dissimilarities with Companies Act 1956. EPRA International Journal of Economic and Business Review, 1–5. https://doi.org/10.36713/epra6050
Singh, V. K. (2021). Policy and regulatory changes for a successful startup revolution: Experiences from the Startup Action Plan in India (pp. 33–67). World Scientific. https://doi.org/10.1142/9789811235825_0002
Subačienė, R., Tamulevičienė, D., Mačerinskienė, A., Budrionytė, R., & Tvaronavičienė, M. (2019). Social enterprises: Evaluation of the impact of state support and corporate income exemptions on the state budget of Lithuania. Entrepreneurship and Sustainability Issues, 6(3), 1156–1171. https://doi.org/10.9770/jesi.2019.6.3(7)
Sutrisno, H. (2023). Corporate governance and entrepreneurial growth in South Asia: A legal review. Asia-Pacific Journal of Business Administration, 15(3), 145–162. https://doi.org/10.1108/APJBA-12-2022-0193
Singh, P., & Singh, R. (2024). The Impact of Startups on Economic Growth in India: An Assessment of Trends and Challenges. Management Insight, 20(01), 27–33. https://doi.org/10.21844/mijia.20.1.3
Steiber, A., & Alänge, S. (2015). Silicon Valley: A Cradle of Management Innovation (pp. 37–51). springer. https://doi.org/10.1007/978-3-319-24921-6_3
Waggoner, M., & Lamb, R. (2020). Understanding securities class action lawsuits. Journal of Business Law and Ethics, 8(2). https://doi.org/10.15640/jble.v8n2a2
Wasnik, A. P., & Jain, A. (2023). Government support for startups: A comprehensive analysis of funding initiatives and the role of the Indian government in nurturing the startup ecosystem. Center for Open Science. https://doi.org/10.31219/osf.io/jy8e6
Whittaker, J., & Machell, G. E. J. (2021). The law of limited liability partnerships. Bloomsbury Professional. https://doi.org/10.5040/9781526516718
Downloads
Published
How to Cite
Issue
Section
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
You are free to:
- Share — copy and redistribute the material in any medium or format
- Adapt — remix, transform, and build upon the material for any purpose, even commercially.
Terms:
- Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
