Key findings
- India has about 7.92 crore small unincorporated businesses, employing 12.81 crore workers (2025), up 8.0% and 6.2% in a year.
- Services are the fastest-growing segment, with the number of businesses up 10.3%.
- Most are one-person or family businesses: only 13.4% employ hired workers.
- A typical small business adds ₹2.53 lakh a year in value; urban businesses add about twice as much as rural ones.
- 39.4% use the internet for business, and 27.0% are owned by women.
- Retail is the biggest activity (27% of businesses), followed by tailoring, personal services and transport.
- Uttar Pradesh and West Bengal have the most small businesses; Gujarat’s add the most value each, 3.2 times Odisha’s.
This report on the state of small business in India draws on the government’s Annual Survey of Unincorporated Sector Enterprises (ASUSE), which covers the shops, workshops, food stalls, service providers and home businesses that make up most of India’s enterprises but are not registered as companies. National figures come from ASUSE 2025 (survey year January to December 2025, released March 2026); activity and state detail from the full ASUSE 2023-24 report. Advanton computed the rankings, comparisons and shares.
Published November 2026. See the methodology and Indian small business statistics.
India’s small businesses at a glance (2025)
Table of Contents
| All | Manufacturing | Trade | Other services | |
|---|---|---|---|---|
| Businesses | 7.92 crore | 2.15 crore | 2.42 crore | 3.36 crore |
| Workers | 12.81 crore | 3.49 crore | 4.25 crore | 5.06 crore |
| Growth in businesses (year on year) | 8.0% | 6.5% | 6.2% | 10.3% |
| Growth in workers | 6.2% | 3.6% | 6.9% | 7.4% |
| Value added per business a year | ₹2.53 lakh | ₹1.92 lakh | ₹3.01 lakh | ₹2.56 lakh |
| Value added per worker a year | ₹1.57 lakh | ₹1.18 lakh | ₹1.71 lakh | ₹1.71 lakh |
| Share employing hired workers | 13.4% | 11.0% | 16.5% | 12.6% |
Source: MoSPI, ASUSE 2025 factsheet. Value added is gross value added (GVA): output minus the cost of inputs.
Finding 1: still growing fast
The number of small businesses grew 8.0% in a year and their workforce 6.2%. Growth outpaced India’s population growth by a wide margin, a sign that more Indians are starting or formalising small enterprises. Fixed assets per business also rose, from about ₹3.24 lakh to ₹3.42 lakh (up 5.6%), suggesting owners are investing, not just multiplying.
Finding 2: services lead the growth
Other services (repairs, personal services, transport, education, health, professional and other services) grew fastest: businesses up 10.3% and workers up 7.4%. Services are now the largest segment, with 3.36 crore businesses, against 2.42 crore in trade and 2.15 crore in manufacturing.
What it means: demand for services is rising with incomes and urbanisation, and service businesses are usually cheaper to start than manufacturing.
Finding 3: most small businesses employ only their owners
Only 13.4% of small businesses employ hired workers; the rest (about 86.6%) are own-account enterprises run by the owner, often with unpaid family help. Trade businesses are the most likely to hire (16.5%), manufacturers the least (11.0%).
Where businesses do hire, annual pay (emoluments) per hired worker averages ₹1.47 lakh, about ₹12,200 a month, higher in urban areas (₹1.56 lakh) than rural (₹1.25 lakh).
What it means: the step from owner-only to employer is the main growth barrier. Tools that help with hiring, payroll and management address the largest group of businesses that have not yet made that step.
Finding 4: urban businesses add about twice the value
A typical small business adds ₹2.53 lakh a year in value. Urban businesses add ₹3.49 lakh, about 2.1 times rural businesses (₹1.69 lakh). Per worker, value added is ₹1.89 lakh in urban areas against ₹1.19 lakh in rural areas.
What it means: urban markets support larger, more productive small businesses; rural businesses are smaller but far more numerous.
Finding 5: the digital shift is half done
39.4% of small businesses use the internet for business purposes. That leaves most small enterprises offline, a large opportunity for digital payments, online listings, marketplaces and business software, and a large gap for policymakers.
Finding 6: one in four small businesses is owned by a woman
27.0% of small businesses are owned by women, about 2.1 crore businesses. Raising that share is one of the clearest routes to more enterprises and jobs, and women-owned businesses are a large, specific market for finance, training and business services.
Finding 7: what India’s small businesses do
Across 46 activities in ASUSE 2023-24, the largest are:
| Activity | Businesses | Share |
|---|---|---|
| Retail trade | 198.7 lakh | 27.1% |
| Wearing apparel (tailoring and garments) | 89.3 lakh | 12.2% |
| Personal and community services (salons, laundries and others) | 80.0 lakh | 10.9% |
| Land transport (passenger and goods) | 67.9 lakh | 9.3% |
| Food and beverage service (restaurants, dhabas, caterers, cafés, stalls) | 37.0 lakh | 5.0% |
| Financial services | 28.2 lakh | 3.8% |
| Administrative and support services | 23.6 lakh | 3.2% |
| Textiles | 22.2 lakh | 3.0% |
Share of the 7.34 crore businesses covered in ASUSE 2023-24.
What it means: the four largest activities (retail, tailoring, personal services and transport) account for almost 60% of all small businesses. Suppliers, software and financial services built for these four reach the majority of the sector.
Finding 8: where small businesses earn the most
Value added per business varies more than 25-fold between activities. Among activities with large survey samples:
| Highest value added per business | A year | Lowest value added per business | A year |
|---|---|---|---|
| Accommodation | ₹10.7 lakh | Tobacco products | ₹0.37 lakh |
| Machinery | ₹9.4 lakh | Wearing apparel (tailoring) | ₹1.0 lakh |
| Sale of motor vehicles, parts and accessories | ₹9.0 lakh | Financial services | ₹1.0 lakh |
| Rubber and plastics products | ₹7.6 lakh | Real estate | ₹1.3 lakh |
| Wholesale trade | ₹7.3 lakh | Textiles | ₹1.5 lakh |
The highest-earning activities are also the most likely to employ people: only 19% of accommodation businesses and 33% of machinery businesses are owner-only, against 97% to 99% in tobacco products, financial services, real estate and land transport.
What it means: capital-intensive and hiring activities earn much more per business; very common owner-only activities earn far less. Before starting, compare the activity’s typical value added with your income goals (small business statistics by activity).
Finding 9: Uttar Pradesh and West Bengal have the most small businesses
| State | Small businesses | Share of India |
|---|---|---|
| Uttar Pradesh | 93.8 lakh | 12.8% |
| West Bengal | 92.7 lakh | 12.6% |
| Maharashtra | 64.4 lakh | 8.8% |
| Gujarat | 46.5 lakh | 6.3% |
| Tamil Nadu | 45.2 lakh | 6.2% |
| Bihar | 43.2 lakh | 5.9% |
ASUSE 2023-24.
West Bengal stands out: it has almost as many small businesses as Uttar Pradesh with far fewer people, but its businesses are among the smallest by value added (see Finding 10). Manufacturing is a large share of small businesses in West Bengal (35%), Telangana (34%), Karnataka (32%) and Gujarat (31%), while services dominate in Kerala (54%), Andhra Pradesh (48%), Odisha (47%) and Jharkhand (46%).
Finding 10: Gujarat’s small businesses are the most productive
Among states with more than 10 lakh small businesses, average value added per business is highest in:
| Highest | Value added per business a year | Lowest | Value added per business a year |
|---|---|---|---|
| Gujarat | ₹3.80 lakh | Odisha | ₹1.19 lakh |
| Haryana | ₹3.67 lakh | West Bengal | ₹1.33 lakh |
| Kerala | ₹3.62 lakh | Bihar | ₹1.64 lakh |
| Maharashtra | ₹3.38 lakh | Madhya Pradesh | ₹1.75 lakh |
| Tamil Nadu | ₹3.25 lakh |
Advanton calculation: weighted average across manufacturing, trade and services, ASUSE 2023-24.
A small business in Gujarat adds about 3.2 times as much value as one in Odisha. The gap reflects urbanisation, access to markets and credit, infrastructure and the mix of activities.
Small businesses vs factories
India’s registered factories, covered by the Annual Survey of Industries, engaged about 2.10 crore people in 2024-25 (factory employment). Small unincorporated businesses employ 12.81 crore workers, roughly six times as many. Factories add far more value per worker, but small businesses are where most non-farm Indian workers earn a living outside government and large companies.
| Small unincorporated businesses (ASUSE 2025) | Registered factories (ASI 2024-25) | |
|---|---|---|
| Workers | 12.81 crore | 2.10 crore persons engaged |
| Typical size | mostly owner-only | larger units, all with hired workers |
| Where | every town and village | industrial clusters and states |
What it means: policies and products aimed at small businesses reach far more workers than those aimed at factories alone.
What this means
For entrepreneurs:
- Services are growing fastest and are often cheaper to start.
- Choose activities with healthy value added per business, and check your state’s figures before committing.
- Going online is still a competitive advantage for most small businesses.
For lenders, suppliers and software companies:
- The biggest segments (retail, tailoring, personal services, transport) are mostly owner-only businesses with simple needs: payments, inventory, credit and visibility.
- Six in ten small businesses are offline today; digital adoption is the growth market.
For policymakers and researchers:
- The jump from owner-only to employer is where support can create jobs.
- Large differences in value added between states point to gaps in markets, credit and infrastructure.
Questions about small business in India
How many small businesses are there in India?
About 7.92 crore unincorporated small businesses in 2025, employing 12.81 crore workers (MoSPI, ASUSE 2025).
What is the most common small business in India?
Retail trade, which accounts for about 27% of small businesses, followed by tailoring and garments, personal services and land transport.
How much does a small business in India earn?
A typical small business adds about ₹2.53 lakh a year in value (gross value added), ₹3.49 lakh in urban areas and ₹1.69 lakh in rural areas.
What share of Indian small businesses use the internet?
39.4% in 2025.
Which state has the most small businesses?
Uttar Pradesh, closely followed by West Bengal (ASUSE 2023-24).
Explore the data
- Small businesses by state and all small business statistics
- Market size estimates for 200 business types
- The free India Market Report Builder
- Free market research data for India
Methodology
- National figures (businesses, workers, growth, value added, hiring, internet use, women’s ownership and fixed assets) come from MoSPI’s ASUSE 2025 factsheet, survey period January to December 2025.
- Activity and state figures come from the full ASUSE 2023-24 report (October 2023 to September 2024), which publishes the most detailed breakdowns; its total coverage (7.34 crore businesses) differs from the 2025 figure because of the different survey year.
- Value added per business by state is Advanton’s weighted average of the manufacturing, trade and services figures, weighted by the number of businesses in each.
- Activity rankings use only activities with at least 300 sampled businesses; small-sample state and activity figures are treated as indicative.
- Value added is gross value added, not profit or revenue.
How to cite this report
Advanton. (2026). State of Small Business in India 2026: 10 Findings From Official Data. https://advanton.com/state-of-small-business-india-2026/
See how to cite Advanton.
Sources
- Ministry of Statistics and Programme Implementation (MoSPI), Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2025 factsheet, released March 2026.
- MoSPI, ASUSE 2023-24 full report, appendix tables.
Last reviewed November 11, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.