Unincorporated Sector Drives Job Growth, Digital Divide Persists

India's unincorporated non-agricultural sector has demonstrated robust job creation, adding 7.5 million workers to reach 128.1 million employed in 2025, yet significant disparities in digital adoption and economic contribution persist across states.

India’s unincorporated non-agricultural sector, excluding construction and corporate enterprises, added roughly 7.5 million workers in a single year, employing 128.1 million people in 2025.

This was up from 120.6 million in the previous year.

Growth, however, remained uneven across states in multiple domains, according to the Operational and Economic Characteristics of the Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2025 released by the National Statistics Office (NSO) on Wednesday.

State-wise Distribution and Economic Contribution

Uttar Pradesh had the largest share of establishments in the sector at 13.8 per cent and the biggest share of workers at 14.5 per cent in 2025, according to the report.

West Bengal (WB) followed with 13.1 per cent of establishments and 10.4 per cent of workers, while Maharashtra ranked third with 8.3 per cent of establishments and 9.1 per cent of workers in the sector.

These three states together accounted for roughly 35 per cent of all establishments in the unincorporated non-agricultural sector.

The report, however, also shows that size is not the same as strength.

Maharashtra and Tamil Nadu (TN) contribute more to value added than their establishment counts might suggest. Maharashtra accounted for 11.2 per cent of gross value added (GVA), while TN’s share was 8.2 per cent.

UP remained the largest contributor, with 11.7 per cent of all-India GVA.

In urban areas, Maharashtra topped the GVA share, followed by Uttar Pradesh and Tamil Nadu.

Digital Adoption and Productivity Gaps

The digital divide across states is another clear takeaway.

The report said internet use for entrepreneurial activities rose sharply at the all-India level, with states such as Delhi, Haryana and Assam recording the highest rates of digital adoption.

While Delhi led all states at 71.9 per cent in internet adoption among informal establishments, UP (18.7 per cent) and West Bengal (25.7 per cent) reported the lowest adoption rate.

The gap between digitally connected and disconnected states broadly mirrors the gap in productivity — Delhi, Haryana, and TN record the highest GVA per establishment and per worker nationally.

“Digital adoption varies widely across major Indian states, with Delhi, Haryana and Assam recording the highest adoption rates,” the report noted.

Additionally, internet use for business purposes jumped from 27 per cent in ASUSE 2023-24 to 39 per cent in ASUSE 2025, an increase of 12 percentage points.

Rural adoption rose from 18 per cent to 31 per cent, and urban adoption was up from 37 per cent to 49 per cent.

Role of Female Proprietors

The report highlighted that 27 per cent of all unincorporated establishments nationally are headed by female proprietors.

In the manufacturing sector, this share crosses 60 per cent.

Telangana records the highest proportion of female-led establishments at 38.55 per cent, with 80.45 per cent of its proprietary manufacturing units run by women, thus marking the highest in any major state.