Children are the ones who are very importance for deciding how the world is to be after certain years. Children play a vital role in improvement of a countries wealth and standard . Child labor refers to the employment of children in different illegal sectors for monetary gain.  Child labor is a big curse to the nation. In a developing country like India child labor is a major threat for its further development. Children are forced to work under organized and unorganized sectors like crackers industries, matchbox manufacturers, as small workers in hotels and so on. Child labor in an unorganized sector is a serious socio-economic problems challenged by most of the country’s in the world. Mostly children from poor economic background are involved in child labor for overcoming their daily needs. The primary reason for this is children are not aware about their rights and freedom because of the lack of education and knowledge also their parents are not having sufficient knowledge about educating their children. Though there are many laws existing for providing compulsory education for children it is not followed all over India which is a major drawback of the government. India being a country with 39 percent of total population represent children is the 3rd manpower country in the world. This shows the negligence of our Indian government in the development of the country. Here author tries to convey the reasons and causes of child labor in unorganized sector and gives certain suggestions for reducing child labor in unorganized sectors like small looms, matchbox industries, candle industry, crackers industry.