This paper investigates the distributional consequences of industrialization on income inequality across Gujarat’s 33 districts over the period 2006–2023. Departing from the conventional aggregate-level analysis, we adopt a granular sectoral salary dynamics framework that disaggregates wages across eight industrial sectors — agriculture, chemicals and petrochemicals, textiles and apparel, engineering and metals, diamond processing, pharmaceuticals, construction, and information technology and financial services — and tracks their evolution under varying intensities of industrial deepening. The study constructs a novel District Industrialization Intensity Index (DIII) from six administrative and survey-based components and integrates it with a harmonised sectoral wage panel drawn from the Annual Survey of Industries (ASI), Periodic Labour Force Survey (PLFS), EPFO administrative records, and the sixth and seventh Economic Censuses. Four analytical frameworks are employed: (i) Kuznets inverted-U testing via semi-parametric panel estimation to assess whether Gujarat follows the classic industrialization-inequality trajectory; (ii) Oaxaca-Blinder decomposition of formal-informal wage gaps to identify the contribution of industrialization to endowment versus return effects; (iii) a Generalised Method of Moments (GMM) dynamic panel model to estimate the wage-growth effect of industrialization while controlling for persistence and endogeneity; and (iv) inter-sectoral wage linkage analysis using Input-Output multipliers to quantify wage spillovers from manufacturing to services and agriculture. Results reveal an inverted-U pattern consistent with Kuznets at the district level, with inequality peaking at a DIII value of approximately 0.54 — corresponding to the industrialization intensity of mid-tier districts such as Rajkot, Anand, and Mehsana. The Oaxaca-Blinder decomposition shows that industrialization explains 34% of the formal-informal wage gap, primarily through returns effects rather than endowment differences. The GMM estimates indicate a significant positive effect of industrialization on wage growth (coefficient 0.063, p < 0.01) in the short run, but this effect attenuates and becomes statistically insignificant beyond an industrialization intensity threshold of 0.71, indicating diminishing marginal wage returns. Input-Output multiplier analysis reveals that one rupee of manufacturing wage income generates approximately INR 1.84 of total economy-wide wage income through forward and backward linkages. Policy implications emphasise the distributional primacy of the formal employment quality over the quantity of industrial employment, the need for sector-specific minimum wage reforms, and the strategic role of agro-processing and pharmaceutical industries as high-multiplier, low-inequality pathways to inclusive industrialization.