NEW DELHI: India’s more than 43 million rural enterprises, an estimated 97 per cent of which are nano enterprises, could have a significant impact on the job market and incomes if allowed to invest, expand and create employment, according to a report by Transform Rural India (TRI), in collaboration with IDinsight. The report, titled ‘State of Rural Entrepreneurship in India 2026’, was released on Friday.
Transform Rural India is a non-profit initiative that works alongside rural communities to advance inclusive development, while IDinsight is a global non-profit advisory, data analytics and research organisation founded in 2011. TRI was founded in 2016.
The organisations used unit-level data from the Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2025 to arrive at their conclusions and findings.
The report says that of the more than 43 million rural enterprises, around 40 million are own-account enterprises — those operated by owners alone or with unpaid family labour — accounting for almost 93 per cent of the total.
In contrast, only 7 per cent, or around 3 million enterprises, are hired-worker enterprises employing at least one paid worker. Despite their small share, hired-worker enterprises employ 8.4 million hired workers.
The report said what distinguished own-account enterprises from hired-worker enterprises was that the latter generated twice the value added per worker, at ₹1.88 lakh, compared with ₹0.99 lakh for own-account enterprises.
In addition, their value added per establishment is around seven times higher, and they hold approximately six times the fixed assets.
“Hired-worker enterprises employ an average of 4.5 workers per establishment, creating wage income that can generate further demand within rural economies.”
The report also finds that hired-worker enterprises are more likely to have owners with higher educational attainment and access to formal bank accounts and computers.
They are less likely to be owned by women or members of Scheduled Castes and Scheduled Tribes.
The report said that while women owned around 28 per cent of rural enterprises, only 1.1 per cent of women-owned enterprises employed hired workers, compared with 9 per cent of men-owned enterprises.
“These differences indicate that the barriers to enterprise growth may not only be financial but may also include unequal access to productive assets, technology, networks, and control over business decisions,” the report said.
It, however, said that despite being a vital cog in the economy, rural enterprises faced challenges in accessing finance, markets, capabilities and infrastructure.
“Only 11.8 percent of mini and nano rural enterprises have an outstanding loan, and only 4.6 percent borrow from a commercial bank. The Pradhan Mantri MUDRA Yojana has expanded the reach of collateral-free lending, but 78 percent of its loans are below Rs 50,000,” the report said.
It said such small-ticket loans could help sustain self-employment, but they might be insufficient for enterprises seeking to invest in equipment, expand production or hire workers. The challenge is not only to increase the volume of credit but also to design financial products that help existing enterprises scale up.
The report also found that access to large markets was another challenge, as only around 8.5 per cent of rural enterprises manufactured under contract for a larger buyer and, among these, 90 per cent supplied exclusively to a single buyer.
Franchising accounts for only 0.1 per cent of enterprises, while direct exports are negligible.
“Even when small enterprises gain access to larger buyers, delayed payments constrain their ability to operate and grow. An estimated Rs 7-8 lakh crore is locked up in delayed payments to MSMEs, and public entities account for nearly 40 percent of the value of delayed payments owed to MSMEs. For small enterprises that already face high borrowing costs, delayed payments further reduce the working capital available for productive investment,” the report found.
Source: Business Standard
