ICT adoption lifts labour productivity by 76% in unincorporated sector: SBI Research
Synopsis
A 76% productivity jump and an 84-point lift in registration odds — SBI Research's read of ASUSE 2025 makes the clearest case yet that going digital is also the fastest route to formalisation and credit for India's 7.92 crore unincorporated enterprises.
Key Takeaways
ICT adoption is linked to a 76% rise in labour productivity in the unincorporated sector, per SBI Research .
ICT use raises the probability of firm registration by an average of 84 percentage points .
Registered enterprises borrow an average of ₹5 lakh versus ₹75,000 for unregistered ones; Udyam/Udyam Assist units average ₹10 lakh .
Unincorporated establishments grew to 7.92 crore in 2025 from 7.34 crore in 2023-24, a 7.9% rise.
Sector employment rose to 12.8 crore workers, with urban employment up 18.7% .
Female proprietary enterprises have a 2.44% lower probability of accessing formal credit than male-run units.
Adoption of information and communication technology (ICT) is associated with a 76% jump in labour productivity across India's unincorporated enterprises, underscoring how digital tools are reshaping small-business performance, an SBI Research report said on Thursday, 4 June. The study, drawing on the Annual Survey of Unincorporated Sector Enterprises (ASUSE 2025) by the National Sample Survey Office (NSSO), also found that ICT adoption raises the likelihood of firm registration by an average of 84 percentage points.
Sector-wise productivity gains
The impact of ICT adoption is positive and statistically significant across key segments — 64 percentage points in manufacturing, 82 percentage points in trade and 86 percentage points in other services, according to the report. The findings point to a broad-based digital dividend rather than a narrow services-only effect.
Formalisation and the credit gap
Registered enterprises enjoy a 6.90 percentage point higher probability of accessing credit than their unregistered peers. The loan-size gap is starker: registered units secure an average loan of ₹5 lakh against just ₹75,000 for unregistered ones.
The report flagged a persistent gender gap, noting that female proprietary enterprises have a 2.44% lower probability of tapping formal credit than male-run units.
Which registration helps most
Government-linked registration regimes are tied to deeper formal business practices, the report said. Udyam Assist-registered enterprises scored 15.92 points, followed by Udyam-registered enterprises at 15.45 and GST-registered enterprises at 13.51, compared with unregistered units.
On loan size, unregistered enterprises averaged around ₹3 lakh, registered ones ₹5.5 lakh, while Udyam and Udyam Assist registrants accessed an average of ₹10 lakh. SBI Research recommended ICT affordability measures, a scorecard for Udyam-registered enterprises and provisions for audited bookkeeping as key levers to deepen formalisation.
How the sector is growing
Unincorporated establishments rose to 7.92 crore in 2025 from 7.34 crore in 2023-24, a growth of 7.9%. Rural enterprises expanded by 19.1% — from 3.56 crore to 4.24 crore — while urban units grew a sharper 25.2% — from 2.94 crore to 3.68 crore.
Employment in the sector climbed to 12.8 crore workers in ASUSE 2025, up from 12.06 crore. Rural employment rose 14.5% to 6 crore, and urban employment 18.7% to 6.80 crore.
What to watch next
With the unincorporated sector employing nearly 13 crore Indians, the policy question now turns to whether targeted ICT subsidies and registration nudges can convert these statistical gains into sustained income and credit access at the bottom of the enterprise pyramid.
Point of View
But the more consequential finding is the 84-point registration lift — ICT may be doing what a decade of formalisation drives could not. Yet the persistent 2.44% gender gap in credit access and the seven-fold loan-size gap between unregistered and Udyam-registered units show the divide is widening at the top, not closing at the bottom. Policy has rightly chased registration; it now needs to chase affordability of devices, data and bookkeeping for the smallest units. Without that, the digital dividend risks accruing to those already on the formal grid.
NationPress
2 Aug 2026
Frequently Asked Questions
What does the SBI Research report say about ICT adoption in India's unincorporated sector?
The report finds that ICT adoption is associated with a 76% increase in labour productivity in the unincorporated sector and an 84 percentage-point higher likelihood of firm registration. It draws on the NSSO's Annual Survey of Unincorporated Sector Enterprises (ASUSE 2025).
How does business registration affect access to credit?
Registered enterprises have a 6.90 percentage-point higher probability of accessing credit than unregistered ones. Their average loan size is ₹5 lakh, compared with just ₹75,000 for unregistered enterprises.
Which registration regime is linked to the strongest formal practices?
Udyam Assist-registered enterprises score the highest at 15.92 points on formal business practices, followed by Udyam-registered units at 15.45 and GST-registered units at 13.51. Udyam and Udyam Assist registrants also access the largest average loans, at around ₹10 lakh.
How much has India's unincorporated sector grown?
Unincorporated establishments rose 7.9% to 7.92 crore in 2025 from 7.34 crore in 2023-24. Urban enterprises grew 25.2% and rural enterprises 19.1% over the same period.
Is there a gender gap in credit access among small enterprises?
Yes. The report finds female proprietary enterprises have a 2.44% lower probability of accessing formal credit than male-run proprietary enterprises, pointing to a persistent gender divide in MSME financing.
