Gender gaps in informal sector entrepreneurship in India

The Annual Survey of Unincorporated Sector Enterprises (ASUSE) is a nationwide exercise conducted by the National Sample Survey Office (NSSO) under the Ministry of Statistics and Programme Implementation (MoSPI). Initiated as an annual survey in 2021–22, ASUSE provides data on non-agricultural unincorporated establishments operating across rural and urban India in manufacturing, trade, and other services, excluding construction. Prior to ASUSE, data on this sector was collected once every five years, with the last round in 2015–16 under the NSS 73rd round. ASUSE addresses the need for regular and timely data on the informal economy, a segment often underrepresented in traditional economic statistics due to the difficulty of capturing its scale and activity.

The ASUSE data categorizes ownership of these unincorporated establishments into several forms: proprietorship (single owner), partnership, self-help groups (SHGs), societies/trusts/clubs, cooperatives, and others. Figure 1 shows that proprietorship constitutes about 95 percent of unincorporated establishments across the three available survey years: 2021–22, 2022–23, and 2023–24. Additionally, proprietorship, defined by a single owner, allows ownership to be attributed by gender, facilitating gender based analysis. In contrast, other ownership types involve collective arrangements, which limits the ability to disaggregate ownership data by gender. Consequently, this article examines the gender distribution of ownership in proprietary establishments from the three survey years, focusing on the division across rural and urban areas, establishment types, and the broad activities undertaken by them.

Figure 2 illustrates, between 2021–22 and 2023–24, approximately three out of every four proprietary establishments in the unincorporated non-agricultural sector were owned by men (75 percent). Over the same period, the share of women proprietors increased  from 23.9 percent to 27.2 percent. As Figure 2 shows ownership by transgender individuals remained minimal throughout, below one percent, the analysis restricts the gender analysis to male and female proprietors.

Rural – Urban Divide

The rural-urban distribution of proprietorship by gender reveals a decline in the male-to-female ownership ratio from 2021–22 to 2023–24.  Figure 3 shows that in rural areas, the ratio of establishments owned by men to those owned by women remained at about 2.8 in 2021–22 and 2022–23, then decreased to 2.5 times in 2023–24. Urban areas saw the ratio decrease from about 3.8 in 2021–22 to 2.9 in 2023–24.

Although male proprietors continue to outnumber female proprietors areas, as shown in Figure 2, the downward trend in the gender ratios across rural and urban areas indicate a relative increase in female ownership. However, throughout the period, rural areas maintained lower gender ratios than urban areas, indicating comparatively higher female representation in rural proprietorship.

Establishment Type

The ASUSE survey categorizes establishments into Own-Account Establishments (OAE) and Hired Worker Establishments (HWE). OAEs are typically managed and operated by the owner, relying on unpaid family or owner’s labour, while HWEs employ at least one regular worker.

Figure 4 shows that, from 2021–22 to 2023–24, the share of female-owned hired worker establishments in total proprietary establishments remained largely unchanged. Over the same period, the share of women-owned own-account establishments in the total increased from 23.1 percent to 26.3 percent, a rise of 3.2 percentage points.

As illustrated in Figure 4, in 2023–24, the share of women owning own-account establishments in total establishments (26.3 percent) was nearly 29 times higher than in hired worker establishments (0.9 percent). Whereas, for men, the share in own-account establishments (61.1 percent) was about 5.2 times higher than in hired worker establishments (11.7 percent) in the same year. This indicates that while both genders predominantly operate own-account establishments, women are more concentrated in them compared to men.

Extending the analysis to include the sectoral dimension, Figure 5 shows that for both male and female proprietors, the proportion of hired worker establishments is greater in urban areas, compared to rural. Establishments with hired workers owned by men in urban areas made up around two-thirds of all hired worker establishments (around 68 percent), while male proprietors in rural areas contributed about a quarter (25–27 percent) across the three years. Figure 5 shows, in 2023–24, male proprietors owned establishments with hired workers over 12 times more than women in urban areas (67.8 percent vs. 5.4 percent, respectively), and nearly 18 times more in rural areas (25.4 percent vs. 1.4 percent, respectively).

In contrast, own-account establishments are more in rural areas for both genders. Figure 5 shows, of all establishments classified as own-account establishments, its ownership by men from rural areas made up the largest share, though their share declined from 42.8 percent in 2021-22 to 37.9 percent in 2023-24. Figure 5 illustrates that the share  of female proprietors in rural areas remained stable at 16 percent, while their urban counterparts’ share rose from 10.3 percent in 2021-22 to 13.5 percent in 2023-24. While men still dominate, the gender gap is narrower than in hired worker establishments. As Figure 5 shows, in 2023–24, rural male proprietors accounted for 37.9 percent and urban male proprietors for 32 percent of all own-account establishments—each exceeding twice the corresponding female shares of 16.6 percent and 13.5 percent respectively.

Broad Activity Category Analysis

Between 2021–22 and 2023–24, the share of female-owned establishments increased across all broad activity categories—manufacturing, trade, and other services. Figure 6 shows that over the three years, the share of female-owned establishments within manufacturing rose from 54 percent to 58.7 percent, representing the highest female representation among all activity categories. In contrast, the respective share of female-owned establishments in trade and other services remained below 14 percent and 17 percent respectively throughout the three years. By 2023–24, the share of female-owned establishments in manufacturing (58.7 percent) was more than four times the share in trade (13.8 percent) and over three times the share in other services (16.4 percent). In contrast, male ownership remained dominant in trade (86.2 percent) and other services (83.6 percent) in 2023–24, reflecting the widest gender gaps in these sectors.

Further extending the analysis, the distribution of male and female proprietors across rural and urban establishments is examined by broad activity category.

Figure 7 shows that from 2021–22 to 2023–24, female proprietors from rural areas accounted for the highest share in total establishments engaged in manufacturing, rising from 36.1 percent to 38.2 percent. In contrast, urban male proprietors represented the lowest share, fluctuating between 19 percent and 20 percent during the same period. By 2023–24, the share of rural female ownership in manufacturing (38.2 percent) exceeded that of urban female ownership (20.5 percent), with rural women owning nearly 1.9 times as many establishments as their urban counterparts. 

Between 2021–22 and 2023–24, approximately 85 percent of all trade establishments across rural and urban areas were owned by men as shown in Figure 7. While female ownership remained limited, the share of female-owned trade establishments rose from 6.2 percent to 7.5 percent and 5.5 percent to 6.3 percent across the same period in rural and urban areas respectively. Figure 7 reveals that by 2023–24, female proprietors in rural areas owning trade establishments (7.5 percent) accounted for 1.2 times the share of their urban counterparts (6.3 percent). Despite these gains, the gender gap remained – male proprietors within trade establishments owned roughly 11 times more establishments than female proprietors in rural areas (42.8 percent vs. 7.5 percent, respectively) and 7 times more in urban areas (43.3 percent vs. 6.3 percent, respectively).

By 2023–24, male proprietors headed 83 percent of all establishments in the other services sector across both rural and urban areas. Figure 7 shows, by 2023–24, female proprietors in urban areas operating other services establishments (11.8 percent)  held 2.5 times the share of their rural counterparts (4.7 percent). Within other services establishments, in 2023-24, male proprietors held 40.9 percent of establishments, nearly nine times the female share (4.7 percent). In urban areas, the gender gap was narrower, with male proprietors accounting for 42.6 percent of establishments—about 3.6 times the female share (11.8 percent).

In conclusion, the evolving trends in Indian women’s entrepreneurship in the informal sector reflect some positive changes in the existing landscape, while gender disparities continue to persist. While the changes signal progress, the trends  should be interpreted with caution. The years 2021–22 and 2022–23 coincided with the second and third waves of the COVID-19 pandemic and phases of economic recovery, respectively. In 2021–22, business closures in India’s informal sector—resulting from lockdowns, mobility restrictions, supply chain disruptions, and reduced demand—contributed to declines in both entrepreneurial activity and its reporting. The subsequent increase recorded in 2022–23 likely reflects a combination of economic recovery, reopening of enterprises, and improved survey coverage, which together may overstate the extent of year-on-year growth. Nevertheless, the positive trends highlight the potential of women entrepreneurship, but the persistence of gender gaps also emphasize the need for continued efforts to address regional and sectoral disparities.