The informal sector in India has consolidated its position in the economy instead of fading away with time. It has taken up the challenges of the new economic dispension with vigorous competitiveness and amazing adaptation & enthusiasm. However, low labour productivity is one of the serious problems related to this sector. It is argued that technological upgradation is likely to solve this problem substantially. This paper attempts to identify the areas within the informal manufacturing sector where such technological upgradation would be fruitful. Several segments and activity groups are identified as Target groups both at the National and Regional level. Associated policies should address availability of proper technology, resource needs for technological upgradation and promoting formal-informal linkages.