I have written two pieces on India's unincorporated businesses, which can be loosely termed the informal sector, using data from the Annual Survey of Unincorporated Sector Enterprises (ASUSE). My first analysis showed that productivity improves as businesses grow and hire workers. The second showed that productivity and wages differ substantially across states. Last month, the government released another ASUSE report for 46 municipal corporations with over a million population, allowing us to see what happens in top Indian cities.
India had around 7.9 crore unincorporated non-agricultural establishments employing 12.8 crore workers in 2025. Around 87% are sole proprietorship businesses. An average worker across all firms generated around Rs 1.6 lakh in gross value added (GVA) during the year, a good measure of the informal sector's productivity. These 46 cities account for only around 13% of establishments and 16% of workers, but generate roughly 21% of the sector's GVA.
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The Productivity Gap Between Cities
Pimpri-Chinchwad comes out on top, with annual GVA per worker of around Rs 2.90 lakh. It is a major automobile and engineering hub, with thousands of small units clustered around large automobile manufacturers.
Hyderabad follows at Rs 2.77 lakh, while Delhi is at Rs 2.66 lakh and Faridabad at Rs 2.61 lakh. Coimbatore, Bengaluru, Pune and suburban Mumbai also record relatively high productivity. At the other end, Gwalior generates just Rs 98,273 per worker. Varanasi is at around Rs 1.32 lakh and Agra at Rs 1.39 lakh.
That means an average worker in Pimpri-Chinchwad generates almost three times the value generated by a worker in Gwalior.
Suburbs May Not Be That Productive
Delhi and its neighbouring Faridabad are among the top productive cities in India. But Ghaziabad, another major city in the same metropolitan region, lags with a GVA of Rs 1.63 lakh per worker. There's an uneven pattern here.
However, if we look at Mumbai, the productivity of suburbs looks different. Greater Mumbai records GVA per worker of around Rs 2.18 lakh. Navi Mumbai is at Rs 2.22 lakh, Thane at Rs 2.25 lakh, Vasai-Virar at Rs 2.28 lakh and Kalyan-Dombivli at Rs 2.57 lakh - the highest. Every satellite city around Mumbai has higher labour productivity compared to core Mumbai.
The contrast with Delhi is interesting. Delhi, by itself, is more productive than Mumbai, but productivity becomes much more uneven as we move into its surrounding cities.
One possible reason is how these satellite cities developed. Mumbai's suburbs were more deliberately planned around industrial estates, manufacturing clusters and logistics links, including access to the port. Delhi's surrounding cities developed less uniformly and across different states. Faridabad, for example, has a strong planned-industrial history, which may partly explain why its productivity is close to Delhi's. Ghaziabad developed with a more mixed pattern of residential, commercial and industrial activity. So the difference may not be about city versus suburb, but about the kind of economic base each suburb developed.
The same logic applies to states.
The Same State Can Contain Very Different Urban Economies
Maharashtra is perhaps the clearest example. The Mumbai-Pune belt, covering Greater Mumbai, Thane, Kalyan-Dombivli, Navi Mumbai, Vasai-Virar, Pimpri-Chinchwad and Pune, has GVA per worker of more than Rs 2 lakh across every city in the dataset.
But as we move away from this belt, the productivity drops. Nashik and Chhatrapati Sambhajinagar are both around Rs 1.71 lakh per worker, while Nagpur is around Rs 1.59 lakh. The gap between Pimpri-Chinchwad, the highest, and Nagpur, the lowest among these Maharashtra cities, is around 1.8 times.
Indore leads in Madhya Pradesh with Rs 1.93 lakh GVA per worker, while Gwalior's is below Rs 1 lakh. The gap between them is almost twofold. Jabalpur and Bhopal lie somewhere in between, at around Rs 1.6 lakh.
Uttar Pradesh is even more varied. Kanpur generates around Rs 2.25 lakh per worker, followed by Meerut and Lucknow at above Rs 2 lakh. At the other end, Agra and Varanasi generate below Rs 1.40 lakh per worker. Kanpur's lead in the state also highlights that Ghaziabad's proximity has not translated into higher productivity since its GVA per worker is lower than Kanpur, Meerut and Lucknow.
The productivity range among Gujarat's cities is narrower than in the states discussed above. Surat, Rajkot, Vadodara and Ahmedabad generate roughly Rs 1.7 lakh to Rs 2 lakh per worker. Although these cities don't top the charts, they highlight a more uniform productivity and industrial growth across the state. Gujarat is important from another angle also: women's participation.
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The Gender Geography Of India's Small Businesses
There are two aspects to consider here. First is ownership and second is employment.
Surat is among the highest in both. Women own 43% of proprietary firms, and they account for 41% of total workers. Women own more than 40% of firms in cities such as Vadodara, Pune, Ahmedabad and Pimpri-Chinchwad. On the other end of the spectrum, we have cities such as Srinagar, Patna, Varanasi and Kanpur where female ownership is between 10% and 14%. When we look at employment, Visakhapatnam has the highest female worker share among the 46 cities, at around 43%.
A city can have more women working in businesses without necessarily having an equally high proportion of women owning businesses.
Final Take
India's informal sector productivity appears to be geographically clustered. But being part of a large metropolis does not guarantee high productivity. The Delhi experience shows it. What matters more is the ecosystem that developed around a city. The policy implication is that simply becoming more urban may not be enough. How cities urbanise, industrialise, and become more business- and employment-friendly matters.
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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