The view propounded vigorously by Mohammad Habib that workers, artisans and craftsmen were not allowed to live within the city walls prior to the establishment of Turkish rule in India is examined. On the basis of primary archaeological sources, especially excavation reports and epigraphic data, this paper argues that diverse occupational groups, whose services were essential for the growth and development of towns, lived within the city precincts. Manufacturers and merchants both worked and lived together in the same town. The segregation theory, therefore, is rejected.