In developing nations, the informal economy is a vital source of employment, contributing to GDP and employment generation globally. The informal sector employs almost 60% of people worldwide, with Africa having 85% of its population in the informal sector. In India, developing countries create over 90% of informal jobs. Men contribute to 63.0% of employment, while women make up 58.1%. Unemployment is a major challenge in the informal economy, with factors such as lack of education, rapid population growth, and agricultural dominance contributing to global unemployment. In 2018, India's unemployment rate reached a 45-year peak of 6.1%, with one in five young people unemployed. The informal sector in India is characterized by a lack of social protection and security, with many workers lacking health insurance, pensions, maternity benefits, and unemployment benefits. They also face workplace dangers such as violence, disease, accidents, and injuries. In cases of conflicts, harassment, or exploitation, informal workers lack legal representation and are powerless to negotiate for changes to their pay, hours worked, or working conditions. In conclusion, the informal economy in India faces significant challenges, including high unemployment rates, poverty, and inequality. Policies that restrict informal business ventures can lead to further inequality and unemployment. The main objective of the study is to assess the role of employment generation in the informal sector in India. The methodology of the study is based on a secondary source of literature. The literature was sourced from the Scopus database, which includes articles between 2000 and 2022. 90 pieces of literatures have been sourced out of which duplicates and papers that are not related were removed. Finally, 35 literatures were found to fit the study. The study explores the role of the informal sector in employment generation in India, incorporating theoretical background on unemployment and its impact on employment. The informal sector's importance and the reasons behind its selection are evident from this analysis.