Indian Informal Sector – Street-smart Techniques That Can Be Applied To Organized Sector Businesses

The Indian informal sector contributes nearly 50% to the country’s GDP and the unorganized labor force comprises about 90% of India’s total workforce. These two figures show how much we rely on the informal industry. If the informal economy stops to flourish, like it has during the pandemic, it can cause the GDP to suffer. This is why it is very important for the government to come up with measures every now and then, and especially in times like these, to provide a continuous boost to the informal economy in India.

Entrepreneurs and businesses that employ management graduates to utilize their wisdom can learn a lot from the small businesses that are a part of India’s informal sector. They just need to be open enough to not only observe how these businesses work but also ask the people behind them about how they manage without any funding and skilled labor force. Indian businesses that want to do well will have to learn how they can serve their audience without challenging or breaking the traditional buyer psyche. Business management and marketing strategies that do wonders in other countries may not have the same impact in India.

Street vendors that make a significant part of the informal sector in India can offer business insights that you won’t find anywhere else. The Indian business market demands businesses to be both determined and resilient. The chances that business may have to deal with failure before they can taste success are very high. So if they aren’t resilient and determined enough, they would give in to the demands and go two steps back, which will put their growth on hold. Some businesses go down even before they have started finding their footing in this competitive business world.  Talking to the street vendors like chaiwalas and owners of small kirana stores, you will come to know that giving up and not finding a way out of the mess is not even an option. Their livelihood and that of their family members depend on the money they make on a daily basis.

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The income inequality gap between the organized sector and the unorganized sector is too big to even mention. However, that doesn’t come in the way of the informal sector being more adaptive than its organized counterpart. You will find street vendors that sell fruits in the day running a Maggi stall in the evening. And they won’t put all their eggs in one basket before they are sure that it can give them the expected return. Before investing more time and money on a business idea, they would first have a short pilot run to understand the response of the market. This helps them in saving themselves from losses. Even if the other idea doesn’t work, they have a tried and tested business already in place to earn their livelihood. If businesses can evolve with the changes in the market, they will have a much better chance of succeeding.

Businesses that can see things from a street vendor’s perspective can come out with innovations that help them survive the most testing of challenges that the market throws at them. If you observe these vendors closely, you will learn a whole host of practical skills that no course will ever teach you. Most, if not all of these vendors multitask. They handle more than one task, which also saves them the money that they would have to pay to the person they hire to perform the other tasks. Other important business concepts that you can learn from them include the importance of staying up to date with market trends, different ways to beat the competition, and the importance of presentation and location to the success of the business idea. 

Your success in the informal sector depends a lot on how trustworthy your customers find you and the amount of effort you are willing to put in towards building long-lasting relationships. How you touch the lives of your customers at the human level also plays a big role? A lot of street vendors also give their customers different payment options – just like those online stores. You can pay them in cash or use a digital payment method as well to make the payment. This is a great way to not lose customers to your competition.

Informal employment plays an important role in meeting the basic needs of a major part of the population of the country, especially the part that makes the Indian poverty. The best thing about the informal sector is that it gives equal employment opportunities to everyone regardless of their gender, age, religion, caste, color, or any other basis of division. 

Education doesn’t play a role in the unorganized sector, so there is no division on that basis as well. If a person is good enough for the job, nothing else matters. This is amongst the most important lessons that the organized sector needs to learn from its unorganized counterpart. There is a lot of talk about equal opportunities but the reality is completely different on the ground. If it can do away with these prejudices and learn how the informal sector treats its workers, it can fare a lot better than it usually does.

Indian festivals give the informal sector an opportunity to sell more in less time. So street vendors either expand their offerings and resources or switch to a different business idea altogether to make the most of these opportunities. Flexibility and timing are the keys to how you sell more and make more money during these times.

There is so much to learn from the street vendors and others that are a part of the informal sector.  Learning from a person who has seen more challenges than a business in the organized sector can open a whole new perspective of doing business.


  • “Grow Together (Post 30) – Capt. Raghu Raman shares Management Lessons on Josh Talks” | Vijaya Gowrisankar | 24 October 2018
  • “Street-Smart & Enterprising – Business Lessons I Learned From the Wonderful ‘Walas’ of India” | Ramya Sriram | 20 March 2017

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