India’s unincorporated non-agricultural sector has witnessed major growth during the January-March 2026 quarter, according to the latest Quarterly Bulletin on Unincorporated Sector Enterprises (QBUSE) released by the National Statistics Office (NSO), under the Ministry of Statistics and Programme Implementation (MoSPI).
Notably, the unincorporated non-agricultural sector refers to small businesses and enterprises that operate outside the formal corporate structure and are not involved in farming or agriculture. These businesses are usually owned by individuals, families, or partnerships and are not registered as companies under the Companies Act.
The sector includes small manufacturing units, local shops, traders, repair centres, salons, tea stalls, transport operators, tailoring units, food processing businesses, and various service providers. It mainly covers three broad categories, manufacturing, trade, and services, while excluding agriculture and construction activities. These enterprises are generally small-scale, locally run, labour-intensive, and often operate in informal or semi-formal settings.
The sector plays a major role in India’s economy by generating large-scale employment, supporting rural livelihoods, encouraging entrepreneurship, and strengthening local supply chains.
The NSO report highlights a sharp rise in both the number of establishments and employment generation across the country. It also points towards increasing digital adoption, higher participation of women workers, and growing economic activity in rural India.
According to the report, the estimated number of unincorporated non-agricultural establishments in India reached 9.16 crore during January-March 2026. This marks a year-on-year growth of 16.69 percent compared to 7.85 crore establishments recorded during the same quarter in the previous year.
The rural economy emerged as the biggest driver of this growth. Rural areas recorded a strong increase of 20.46 percent in establishments. Urban areas also witnessed notable growth at 12.59 percent during the same period.
The report stated that the unincorporated non-agricultural sector continues to remain one of the biggest contributors to India’s GDP. It also remains a major source of employment and local entrepreneurship across manufacturing, trade, and service sectors.
One of the biggest highlights of the report is employment generation. The total employment in the sector crossed the 15 crore mark for the first time. The estimated workforce stood at 15.17 crore workers during the January-March 2026 quarter. This represented a year-on-year increase of 15.51 percent over the corresponding quarter of the previous year.
The report described this as a sign of the sector’s growing role in creating livelihood opportunities across the country.
The rural workforce also recorded stronger growth than urban areas. Employment in rural regions increased by 21.65 percent, while urban employment grew by 10.39 percent.
According to the NSO, many unincorporated units depend on casual labourers, migrant workers, and helpers. These workers often move towards seasonal agricultural activities and later return to entrepreneurial or labour work when business activity improves. This movement contributes to the rise in both establishments and employment during periods of stronger economic activity.
The report also highlighted changes in workforce composition. Working owners continued to form the largest segment of the workforce. Their share rose to 60.97 percent during January–March 2026, compared to 58.29 percent during the same quarter last year.
Meanwhile, the share of hired workers slightly declined. It fell to 24.77 percent from 26.86 percent over the same period. Other workers, including unpaid family workers, accounted for 14.26 percent of the workforce.
The services sector emerged as the strongest performing segment within the unincorporated economy. According to the report, the number of establishments in the services sector grew by 24.82 percent compared to the corresponding quarter of the previous year. Employment in the sector increased even faster at 31.13 percent.
The NSO said this growth reflects rising entrepreneurial activity and increasing demand for local services across the country. The sector is becoming an important driver of employment within the broader unincorporated economy.
Another important trend highlighted in the report is women’s participation in the workforce. Women accounted for nearly 29 percent of total employment in the unincorporated sector during the January–March 2026 quarter. This was slightly higher than the corresponding quarter of the previous year.
The report said this reflects the growing importance of the sector in generating employment opportunities for women and supporting inclusive economic participation.
Digital adoption among small businesses also showed rapid progress. Data collected through the revamped Information and Communication Technology (ICT) module of ASUSE 2026 revealed that around 81 percent of establishments used the internet for entrepreneurial activities.
Additionally, nearly 81 percent of establishments adopted cashless transaction methods. These included online banking, Unified Payments Interface (UPI), Point of Sale (POS) devices, and other digital payment systems.
The report noted that this trend reflects increasing formalisation and digital integration of enterprises within the Indian economy.
The percentage of firms reporting some form of registration stood at 41.37 percent. This indicates growing integration of businesses with regulatory systems and formal economic structures.
The quarterly bulletin is part of the government’s effort to provide high-frequency economic indicators. Since 2025, the NSO has been publishing quarterly bulletins on the unincorporated non-agricultural sector under QBUSE.
The QBUSE operates within the framework of the Annual Survey of Unincorporated Sector Enterprises (ASUSE), which was launched in 2021-22. While ASUSE provides detailed annual estimates on financial and non-financial indicators, QBUSE focuses on quarterly estimates related to scale, employment, and sectoral composition.
The report also provided details about the survey methodology. The survey covered both rural and urban India, except some inaccessible villages in the Andaman and Nicobar Islands. It focused on unincorporated establishments operating in manufacturing, trade, and other service sectors.
The survey included proprietorships, partnerships, co-operatives, societies, and trusts. Limited Liability Partnerships (LLPs) were excluded.
According to the report, 5,998 First Stage Units were surveyed across India during the January-March 2026 quarter. These included 2,408 villages in rural areas and 3,590 Urban Frame Survey blocks in urban areas.
The number of establishments surveyed and considered for the bulletin stood at 1,72,845. Out of these, 74,824 were in rural areas and 98,021 were in urban areas.
The NSO said data collection was largely conducted through oral enquiries using Computer Assisted Personal Interviewing (CAPI) on tablets.
The report also cautioned users while interpreting quarterly trends. It stated that quarterly sample sizes are smaller compared to annual surveys. Therefore, some fluctuations may occur due to sampling variability and short-term economic movements.
The bulletin further noted that ASUSE 2026 adopted the new National Industrial Classification (NIC) 2025 instead of NIC 2008. Due to this revision, some activities related to maintenance and repair of vehicles, which were earlier classified under trade, are now counted under the services sector.
The NSO also clarified that ASUSE covers only the unincorporated segment of the non-agricultural economy and excludes construction activities. Therefore, trends observed in QBUSE may not directly match India’s overall GDP estimates.
The latest report nevertheless paints a strong picture of growth in India’s small business economy. Rising rural entrepreneurship, expanding employment opportunities, growing women participation, and rapid digital adoption indicate that the unincorporated sector continues to play a major role in India’s economic expansion and grassroots development.
