The study uses a disaggregated approach to look into Labour Productivity in the informal manufacturing sector in India over the last two decades, specially Trends in productivity levels and regional disparities, its regional pattern, and Factors affecting the productivity levels. Wide variation in productivity levels is observed. The Western and North-western states are found to be doing better. Regional disparities are higher for intermediate goods compared to others. However, converging tendencies are also perceived. General economic condition of the state and Availability of loan are identified as factors affecting productivity levels. Policies for improving productivity levels in this sector, specially in lagging regions, should include general economic upliftment, development of proper infrastructure, technological upgradation and easy and cheap credit availability.