India’s long-running shift away from agriculture is still incomplete, with a large part of the workforce continuing to depend on low-productivity and informal jobs, according to a recent SBI Research report based on PLFS 2025 data. 

The report released on Friday noted that while the share of the agriculture in employment has declined over time, the pace of transition remains gradual.  

“The share of agriculture in the workforce has seen a modest 23-percentage point decline from 66% in 1987-88 to 43% in 2023-24 over a 37-year period,” it said. 

Agriculture continues to employ a significant portion 

Despite this decline, agriculture continues to employ a major portion of India’s workforce. “In 2025, agriculture employed 43% of the workforce,” the report added, highlighting the persistence of traditional employment structures. 

A key concern flagged by SBI Research is the limited expansion of formal, large-scale enterprises. “In principle, only 14.5% of the workforce had access to a significant volume of capital being employed in firms having more than 20 workers,” it said. 

Majority of workers concentrated in small and informal businesses 

This indicates that a majority of workers remain concentrated in small and often informal businesses. The report pointed out that “non-agricultural enterprises with fewer than 19 workers employed 42.3% of all workers,” underlining the dominance of small units in job creation. 

SBI Research also highlighted structural challenges in labour-intensive sectors. “Indian enterprises are small in employment-intensive sectors such as apparel, footwear, furniture, and other light manufacturing and are informal,” it said. 

Need for policy support to reallocate capital 

The findings suggest that while policy efforts such as the Production Linked Incentive (PLI) scheme aim to boost manufacturing, more needs to be done to shift workers into higher-productivity sectors. The report emphasised the need for policy support to reallocate capital towards labour-intensive industries and expand formal employment opportunities. 

The analysis underscores that India’s labour market transformation is underway but remains uneven, with a large section of the workforce still outside the formal, high-productivity economy. “India needs to undertake policy changes that would reallocate some of the capital into labour-intensive activities,” it said.