How Diversified is the Informal Manufacturing Sector Across Indian States?

The present paper examines the structure and diversification of informal manufacturing sector across Indian states. Using the National Sample Survey “quinquennial” rounds on unorganised manufacturing enterprises in India for the years 1994-95, 2005-06, and 2010-11, we have analysed the industrial structure of the states at two-digit industry level by employing location quotient and examined the degree of diversification of informal manufacturing sector in different states by employing diversification coefficient. We have also examined the co-location of informal manufacturing enterprises across states. The results show that most of the states have a narrow industrial base and diversification does not appear to be very wide across states. The findings provide strong evidences for significant positive correlation between the diversification of informal manufacturing sector and level of industrial development, and the presence of co-location of informal manufacturing enterprises across states.