India's unincorporated or informal sector is vast and diverse, playing a vital role in both local and national economies. It provides livelihoods to millions across manufacturing, trade and services, drawing on local skills, cultural strengths and entrepreneurial agility.
The first-ever district-level estimates from MoSPI's Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2025 reveal a sector that's both geographically concentrated and highly varied. Districts with a large share of workforce do not necessarily have high productivity, while some that contribute substantially to value addition are not major sources of employment. The degree of specialisation also differs widely: some districts rely heavily on a handful of activities, while others have a more diverse economic base, with jobs spread across a wider range of industries.
These differences underscore the need to look closely at regional data to understand the diverse economic roles of districts. Such granular evidence can help policymakers identify local strengths and gaps, enabling more targeted, context-specific interventions for the unincorporated sector.
The informal economy is reasonably concentrated. Top 10 districts with the highest number of establishments account for nearly 10% of the national total, while the top 50 capture almost one-third. Strikingly, these 10 districts are spread across 4 states: West Bengal (6), Gujarat (2), Telangana (1), and UP (1).
Concentration spread isn't confined to a few districts. In 28 states/UTs, the top 5 districts account for more than 30% of establishments in their respective states/UTs, while in 26 states/UTs, fewer than 10 districts account for more than half of the establishments. Taken together, these patterns point to a distinct spatial concentration of unincorporated economic activity across the country.
A similar pattern of concentration can be seen in the types of economic activities pursued by these enterprises. Merely 10 activities out of more than 950 National Industrial Classification (NIC) 5-digit activities account for roughly 39% of business units, 29% of workforce, and 21% of GVA. Expand this to the top 50 activities, and they command 75% of units, 63% of the workforce, and 54% of GVA.
But this national-level concentration does not mean that every district has a similar economic structure. At one end of the spectrum sit highly concentrated districts like Murshidabad (West Bengal) and Rangareddy (Telangana), where the top 3 economic activities employ over 40% of the district's informal workforce, nearing 50% in Murshidabad. At the other end are districts like Nadia and South 24 Parganas in West Bengal, where economic activity is much more diversified. The top 3 activities account for less than 20% of the workforce in Nadia and less than 12% in South 24 Parganas.
Employment concentration doesn't automatically translate into productivity. In Murshidabad, the 3 largest activities dominate more than half of all establishments and nearly half of the workforce, yet generate only 30% of the district's GVA, resulting in a low GVA per worker of ₹1,00,443. In contrast, Rangareddy's top 3 activities employ 42% of its workforce, but yield nearly half of its GVA, driving a much higher productivity level of ₹2,72,216 per worker.
Production efficiency is also present in a diversified district: South 24 Parganas has a highly fragmented employment base, yet it records a higher GVA per worker (₹1,32,766) than the highly concentrated Murshidabad. Only 4 of the top 10 districts exceed the national average unincorporated GVA per worker of ₹1.56 lakh.
Location quotient (LQ) offers a simple way to see what makes each district economically distinctive. It compares an activity's share of a district's workforce with its share nationally, highlighting areas where a district is relatively specialised. Estimates reveal distinct local clusters: beedi-making in Murshidabad, imitation jewellery and jewellery retail in Rangareddy, embroidery and lace-making in Surat, and ornamental zari work in Howrah.
These striking differences have important implications for how policies are designed. For decades, interventions have relied on broad, uniform measures, including credit support and regulatory reforms. However, district-level evidence from ASUSE 2025 points to considerable variation in the nature and structure of economic activity across regions.
Districts with intense industrial specialisation require deeply targeted interventions. For instance, specialised hubs need sector-specific infrastructure, modern technology adoption, localised skill upgradation and direct market linkages tailored to their dominant craft or trade.
Conversely, highly diversified districts require a broader mix of interventions. These regions need flexible financial ecosystems, generalised industrial parks and multi-sector digital marketplaces that can support a wide variety of small-scale activities simultaneously.
By providing granular, empirical evidence, the new district-level data allows policymakers to transition away from generic schemes. Designing responsive, localised strategies is no longer just an ideal. It's an economic necessity to bridge the wide productivity gaps fracturing India's informal engine.
Chakraborty and Samaddar are deputy DG and deputy director, respectively, Enterprise Survey Division, MoSPI, GoI
