Unlocking India’s Potential: Skill Development
as the Engine of Economic Growth
Contents
Executive Summary ................................................................................................................................... 2
Skills as a Catalyst for Social Mobility and Growth ................................................................................... 2
Challenges in India’s Skill Ecosystem ......................................................................................................... 3
Economic Impact: Productivity and Growth Gains ................................................................................... 3
Strategic Initiatives: Policy and Industry Actions ...................................................................................... 4
Policy Recommendations for India’s Skill Development Strategy ............................................................. 6
Sector-Specific Skilling Priorities ............................................................................................................... 7
Conclusion and Call to Action ................................................................................................................... 9
Sources and References ............................................................................................................................ 9
Executive Summary
India’s youth-driven workforce presents a vast opportunity – but skills gaps threaten to leave this
“demographic dividend” untapped. Recent labour surveys show that only about 4.1% of Indians aged 15–
59 have received formal vocational training. At the same time, one study projects a 23 million shortfall of
skilled workers by 2030 unless training is scaled up. The consequences are stark: only roughly half of recent
graduates are deemed “job-ready”, even as companies (over 80%) report intense upskilling needs.
Skill deficits cost the economy. Experts estimate that targeted upskilling could add ~$570 billion to India’s
GDP by 2030 and might even help double the economy by 2030 if India fully leverages its workforce.
Conversely, neglecting quality training risks entrenched low-productivity jobs and widening inequality. This
brief outlines the policy and business imperatives: to reform skill education, strengthen industry linkages,
and invest in scalable training so that skills become the engine of inclusive growth.
Skills as a Catalyst for Social Mobility and Growth
Access to quality vocational education empowers workers to escape poverty and raises productivity. For
the 65+% of Indians who have no training, formal skills can be a game-changer – enabling a transition from
subsistence agriculture or informal labour into formal-sector jobs with higher wages. Studies consistently
show that more skilled workers earn more and advance faster, lifting entire families. Skill development
also broadens opportunity for women: strikingly, India Skills Report 2023 finds 52.8% of young women
deemed “highly employable” versus 47.2% of men. Encouraging female enrolment in STEM and vocational
programs can thus accelerate social mobility. Bridging rural-urban and gender divides in skilling is crucial
to ensuring that growth lifts all communities.
Industry demands underscore this need. Sectors like IT, automotive and healthcare are poised to hire
millions of new workers in the coming decade. But talent shortages are chronic. For example, a report by
WEF and CII warned of a 23 million shortfall of workers with required skills by 2030. In daily terms, that
gap means unfilled jobs in manufacturing and services, slower factory output, and stalled startup ventures.
Conversely, improving workforce skills can boost productivity: one estimate suggests that broad-based
upskilling could inject $570 billion into the economy by 2030. In short, skills are a high-return investment:
better trained workers become more productive, pay more taxes, and consume more, creating a virtuous
cycle of growth.
Challenges in India’s Skill Ecosystem
Despite ambitious initiatives, India’s skill system faces critical shortcomings. Training coverage is still low:
only 3.8% in 2022–23. As a result, roughly 60–70% of youth entering the labour force lack any recognized
training. Quality is another concern. Recent analyses highlight a surge in one-week “certification” courses
with limited content. For example, the share of trainees in multi-year courses fell from 29% (2017) to just
14% by 2024, replaced by short modules that may not build deep skills. Short duration skills are important
for targeted skill as needed by industry. Any short duration skill program must be specific and align with
specific demand (present and future). Placement rates under flagship programs (PMKVY) remain poor, as
reported it is ~22% of certified trainees finding jobs. It suggests a mismatch between training and market
needs.
Gender and regional gaps persist. While more women are “employable” than before, women still comprise
only about 28% of STEM fields globally. India is losing lot of opportunities by not focusing on this segment.
Many rural and marginalized youths lack access to training centers. Fragmentation of schemes (PMKVY,
DDUGKY, ITIs, etc.) and outdated curricula often leave employers unsatisfied: one survey found that a
majority of tech companies and manufacturers rate fresh graduates as underprepared. Finally, monitoring
and data are weak. We spend roughly ₹40,000–50,000 crore per year on skills, but placement and outcome
data are scarce. Without rigorous tracking, investments may not yield returns in employment or
productivity.
Economic Impact: Productivity and Growth Gains
Closing the skill gap has quantifiable macroeconomic benefits. Productivity rises as skilled workers adopt
new technologies and methods more quickly. National policy analyses emphasize that moving up the “skill
ladder” shifts the economy into higher-value sectors. For instance, a young workforce adept in digital and
technical skills can accelerate India’s manufacturing output and IT exports. Quantitatively, harnessing the
demographic dividend through skills could double India’s GDP by 2030. Even without that ceiling, one
estimate shows India’s GDP could be 5–10% higher by 2030 if workforce skills improve substantially.
The ripple effects are large. Higher productivity boosts firm profits (and tax revenues), while workers gain
higher wages and better job security. Formal sector growth expands the tax base, allowing more funding
for health and education – further strengthening social mobility. Economists also note that skilled
manpower attracts foreign investment and drives innovation. In sum, skill development is not a cost but
a multiplier: modest annual gains in labour productivity translate into percentage points of GDP growth
(for example, raising the labour productivity growth rate by 1% could add ≈0.7% to GDP growth annually).
Given India’s growth aspirations (8%+), prioritizing skills is a strategic imperative.
Strategic Initiatives: Policy and Industry Actions
• Scale up Quality Training Infrastructure: Government should expand vocational programs and
upgrade ITIs and polytechnics, especially in underserved states. Under the National Education
Policy 2020, vocational subjects must be integrated in schools and colleges; rapid implementation
with industry-vetted curricula will ensure relevance. The ₹2 lakh crore allocation in Budget 2024–
25 – a 30% hike to ₹1.48 lakh crore for education and skills is a strong start. These funds must
target high-impact schemes (e.g. apprenticeships, tech skilling labs) and incentivize state-level skill
missions.
• Strengthen Industry Linkages: Employers must co-design training. Public–private partnerships
(through Sector Skill Councils and MSME clusters) should align curricula to job requirements. The
Apprenticeship Act reforms and NAPS can be leveraged to ensure every large employer takes
apprentices. We need to simplify licensing and subsidies for on-the-job training. Encourage
MSMEs to absorb apprentices. Incentives (like tax breaks or co-funding) could encourage
companies to train workers. Digital platforms (Skill India’s portals, edtech firms) should provide
market-aligned courses at scale.
• Promote Lifelong Learning and Inclusion: Policies should recognize credentials from short courses
and on-the-job training, while improving their quality. Initiatives like the PMKVY can help workers
take skills across jobs. Special focus must be on women and marginalized groups: for example,
provide scholarships or stipends for female trainees and set targets for their enrolment, echoing
proposals that empowering women in STEM can accelerate economic gains.
o Leverage on-the-job learning: In India’s workforce, young professionals overwhelmingly
prioritize learning skills while working over climbing a strict career ladder. A Deloitte 2025
survey finds that 94% of Gen Z and 97% of millennials in India prefer picking up relevant
skills on the job and value growth opportunities more than titles. This shows the
importance of recognizing credentials from short courses and workplace training (e.g., via
portable skill cards and ensuring these credentials translate into real career
advancement).
o Align education with industry needs: Many formal degree programs lag behind current
industry requirements. College degrees steadily lose relevance due to their outdated
curriculums. As a result, companies increasingly hire for attitude and aptitude, focusing
on training recruits in the specific skills they need rather than relying on academic
qualifications. To address this gap, vocational programs and sector skill councils should
continuously update curricula in partnership with employers and expand internships and
apprenticeships that give students hands-on experience in emerging fields.
o Promote on-demand, experiential upskilling: I emphasize flexible, hands-on learning
opportunities, we should bridge skill gap through on-demand, on-the-job learning and by
training adaptable candidates before deploying them on projects. In practice, this means
encouraging companies and training providers to offer micro-courses, bootcamps and
mentorships that let workers build new competencies as technology evolves. Continuous
learning platforms (including digital courses and workplace simulations) should be
expanded so individuals can upskill in bite-sized, practical modules while they work.
o Integrate formal education and lifelong learning: While industry-based training is
growing, formal education still matters in many fields. In field jobs, on-the-job experiences
and skill matter more than academic education. Policy should therefore integrate skill-
building with traditional degrees (NEP also emphasize that) —for example, by embedding
specialized short courses or micro-credentials into college programs or granting academic
credit for industry certifications. This hybrid approach preserves the value of foundational
degrees while giving students access to job-relevant training throughout their careers.
o Ensure inclusion of underrepresented groups: Special efforts are needed to bring women
and marginalized communities into skilling programs. For instance, providing scholarships
or stipends (to offset lost wages) and setting target quotas can encourage greater female
participation. Skill development pays off for women, it brings self-esteem among women
of rural India: a recent survey found 52.8% of trained young women were deemed “highly
employable” (versus 47.2% of men). Similarly, reserving seats and conducting outreach in
rural and disadvantaged areas will help ensure that lifelong learning benefits all segments
of society.
• Accountability and Outcomes: Introduce rigorous monitoring of schemes using AI and other
advanced technologies. Placement rates (jobs secured after training) should be published and tied
to funding to bring transparency. The government’s Skill India Mission should adopt outcome-
based grants and third-party audits/ Impact studies from credible organisations. NSDC can enrol
such Impact study organisations after rigorous due diligence of their credentials. Data from PLFS
and NSO surveys should be used to refine policy (e.g. tracking how trained youths fare in the job
market).
• Business Leadership in Skilling: Companies should invest more in training their own workforces
and communities, organisation like NSDC can play big role here specially in collaboration with its
10 private sector shareholders CII, FICCI, ASSOCHAM, SIAM, CREDAI, NASSCOM, CLE, GJEPC, CITI
and RAI. These shareholders can set up sectoral academies in coordination with Sector Skill
Councils. Large firms should expand apprenticeship seats and engage in college outreach.
Technology firms, in particular, must upskill millions for AI, cloud and digital roles – NASSCOM
forecasts this is critical to meet future demand. Corporate CSR funds can be directed to quality
vocational projects (as some IT and manufacturing firms already do).
Policy Recommendations for India’s Skill Development Strategy
National-Level Policy Reforms
• Unified Governance & Coordination: Establish a high-level national skilling accelerator that brings
together central and state ministries (Skill Development, Education, Labour, Agriculture, etc.) with
industry partners to set priorities. For example, the World Economic Forum–backed India Skills
Accelerator aims to “align education with industry need” by mobilizing government–industry
collaboration. A permanent multi-stakeholder forum can drive the National Skills Qualifications
Framework (NSQF) adoption, monitor sectoral skill gaps via labour-market data, and ensure
consistent implementation of vocational education reforms across states.
• Outcome-Oriented Funding and Tracking: Tie budget allocations to clear performance metrics
(enrolment, certification, placement rates). Deploy robust MIS and digital dashboards – building /
updating platforms like the Skill India Digital Hub – to track every training cohort. Mandating real-
time reporting (for example, via a Unified Labour Management Information System) ensures that
funds are disbursed to programs meeting quality targets and identifies providers needing support.
• Curriculum Standardization & Quality Assurance: NCVET to update and enforce industry-aligned
curricula. Majority of training programs should be outcome-based, regularly revised with inputs
from employers/ Industry (ideally all skill curriculums must be reviewed in time bound
methodology). For example, integrate foundational modules in AI, cloud computing, cybersecurity
and digital literacy into core vocational courses – as emphasized under the National Education
Policy – and require accreditation of trainers. Policymakers must demand stringent certification:
NSDC/ SSC approved training centres should pass periodic audits.
• Scaling Institutions & Centres of Excellence: Rapidly expand training infrastructure by upgrading
existing institutes and creating specialized hubs. The 2024–25 Budget’s plan to upgrade ITIs in
hub-and-spoke clusters is a right step in this direction. This can be broadened into sectoral Centres
of Excellence (CoEs) – for example, establishing AI labs or green-energy training centres in
partnership with private firms. The government’s scheme to set up 30 AI CoE hubs (in partnership
with Microsoft) – reaching 150 college “spokes” across six states – demonstrates the impact of
such clusters. Scaling this model, with industry funding and up-to-date equipment, will ensure
high-quality hands-on training in priority domains.
• Private Sector Incentives: Policy makers should introduce fiscal and regulatory incentives for
companies that invest in skill-building. Options include extending CSR tax credits for firm-run
apprenticeship or training programs and offering placement-linked subsidies. Schemes that
“reward companies providing upskilling programs” should be encouraged. For instance, larger
subsidies or import-duty concessions could be offered to manufacturers who certify local workers
under formal training schemes. This would mobilize industry resources: one can extend models
like the ₹5,000/month internship stipend (funded partly by CSR) introduced in Budget 2024 or add
training requirements to Production Linked Incentive (PLI) contracts.
• Flexible Skill Financing: Enhance financing for learners and MSMEs. Expand loan and voucher
schemes (e.g. increasing eligibility of the Model Skill Loan to cover short certificate courses up to
~₹7.5 lakh). Create special education savings accounts or digital vouchers for disadvantaged youth
and subsidize online/mobile courses. For MSMEs, provide matching grants to subsidize employee
training costs. In short, ensure that financial barriers do not prevent youth from entering short-
term skill courses, and that small businesses can afford to upskill their workforce without liquidity
constraints. Skill loan as initiated in 2014, should be put in priority sector for Banks.
Sector-Specific Skilling Priorities
• Digital Technologies (AI, Cloud, Data): Scale industry-academia initiatives in high-tech skills.
Expand the model of tech-company–supported labs into new regions: for example, set up
additional AI and cloud CoEs (with partners like Google, IBM, AWS) in Tier II/III cities, connected
to local colleges. Integrate micro-credential modules in AI, machine learning, data analytics and
cybersecurity into university and ITI curricula. Incentivize student internships in tech firms through
placement stipends (e.g. the ₹5,000/month model) and CSR engagement. Finally, leverage the Skill
India Digital Hub’s repository of free IT/digital courses to reach rural youth.
• Green Energy & Sustainability: Skill Development Policies should align skilling with India’s energy
transition. Qualification packs in renewables and hydrogen must be massively scaled. We need to
Introduce specialized courses and apprenticeships in solar PV installation, wind turbine
maintenance, EV battery manufacture, and green hydrogen production. For example, MNRE’s new
Green Hydrogen Mission skilling guidelines (FY2024–30) mandate creating CoEs and updating
curricula in partnership with MSDE. Building on this, MSDE can co-finance CoEs in clean energy,
and fast-track “Solar-PV Technician” or “Green Building Professional” certificates under PMKVY.
Public funding (or subsidized loans) should support training providers that tie up with renewable
energy firms. According to industry experts, India already employs ~1 million in renewables (4th
globally) and is poised for 500+GW non-fossil capacity by 2030 – creating millions of green jobs.
Proactive skilling in these areas (solar, wind, biofuels, waste management, EVs) will capture that
growth.
• Healthcare & Allied Services: Address the acute shortage of healthcare workers (worldwide) by
expanding allied-health training. Increase seats in nursing, paramedical and pharmacy colleges,
especially in underserved regions. Establish “Healthcare-ITI” programs (multi-year diplomas) for
nurses, lab technicians, radiographers, etc., with clinical attachments in public hospitals. Fast-track
short-term certificate courses to quickly deploy support staff: India needs twice as many doctors,
three times as many nurses, and four times as many paramedics as it currently has. Even majority
of countries are facing this shortage of medical staff and India can be source for getting such skilled
medical staff for them. Use e-learning and simulation labs to reach rural candidates and offer rural
service bonds or higher stipends for placements in primary care centres. Partnerships with private
hospitals, Training Companies and NGOs can train and absorb graduates. Strengthening allied-
health courses and digital health skilling (e.g. telemedicine, health IT) is vital to meet the projected
demand.
• Electronics Manufacturing & Hardware: Support the burgeoning electronics sector (expected 25–
30% CAGR by 2030) with customized training. The Electronics Sector Skills Council already offers
50+ apprenticeship courses; this should expand rapidly. Government can set targets (or tax
incentives) for electronic manufacturers to intake local apprentices under NAPS, and subsidize
training on components like PCB assembly, semiconductor testing, and chip design. Update legacy
schemes with modern curricula on IoT devices and consumer electronics. Establish more
electronics training centres tied to PLI plants, ensuring students learn on modern production lines.
Rapid industry-led training is crucial: electronics apprenticeships rose to ~91,000 in 2023–24 and
are projected to hit 1 million by 2027 (55% annual growth), reflecting strong private demand –
public policy should capitalize on this momentum.
• Logistics & Supply Chain: Modernize logistics skills in tandem with infrastructure upgrades. Under
national schemes like PM Gati Shakti, collaborate with logistics companies and the Logistics Sector
Skill Council to develop courses in warehouse management, cold chain operation, transport
planning, and e-commerce fulfilment. Ensure curricula include digital tools (fleet management
software, RFID tracking). Incentivize job placements in trade corridors and ports by linking training
to upcoming logistics park projects. This sector is strategically important – attracting investment
requires a workforce fluent in technologies like automation and TMS software. Bridging this gap
will improve supply-chain efficiency and support exports.
• Agritech & Allied Areas: Elevate agricultural productivity through targeted skilling including
Scaling up Drone Didi program. Expand SSCs offerings to cover New Age technologies in farming
including precision farming, agri-drones, IoT-based irrigation, and organic farming practices.
Leverage existing infrastructure - the four Government Farm Machinery Training & Testing
Institutes (FMTTIs) should begin offering courses on modern agri-equipment and drone operation.
Update Krishi Vigyan Kendra (KVK) and ATMA training modules to include agri-startup skills (e.g.
solar pumps, hydroponics, agri-fintech). The scale is large – nearly 10 million farmers/rural youth
have been trained under programs like STRY, KVK and ATMA in the last three years – but focus now
needs to shift to quality and advanced content. Introduce certification pathways (e.g. “Kisan Drone
Pilot”) and agri-entrepreneur incubators so that skilling translates into increased farm incomes
and job creation in agri-services.
• Raise Training Targets and Incentivize Quality Long-Term Training – Set a goal (e.g. 50 million
newly skilled by 2030, aligned with GDP targets). Monitor progress via annual skill reports/ impact
studies. Shift funding from cursory courses to substantive programs, as ultra short-term training
has limited impact.
These steps, backed by data, will translate to measurable outcomes: for example, increasing the share
of trained workers from ~4% to even 10–15% of the workforce could raise aggregate productivity by
an estimated 15–20% over the decade, boosting GDP growth by 1–1.5% annually (based on
productivity elasticities).
Conclusion and Call to Action
India stands at a crossroads. The decisions made today on skills education will reverberate across decades.
A well-trained workforce can support sustained ~8% growth, higher exports, and broad-based prosperity.
Conversely, neglect invites persistent underemployment and social inequality. Policymakers must act
swiftly to channel recent budgetary commitments into quality skilling programs by:
• Prioritizing outcome-based funding where allocations are tied to actual placements and income
improvements, not just enrolments.
• Establishing a national skill registry to track individual skilling journeys and ensure mobility of
credentials across sectors and geographies.
• Mandating industry advisory boards for all government-funded training institutions to keep
curricula aligned.
The message is clear: Unlocking India’s economic and social potential requires treating skill development
as mission-critical infrastructure. By building partnerships between government, industry, and educators,
and by targeting resources to those most in need of training, India can transform its workforce. This will
raise incomes, enhance competitiveness and make social mobility a reality for millions. The time to
accelerate India’s skills revolution is now – for a more prosperous and equitable future.
Sources and References
1. Periodic Labour Force Survey (PLFS) 2022-23, Ministry of Statistics and Programme Implementation (MoSPI)
2. World Economic Forum & Confederation of Indian Industry (CII) Report on Future of Jobs in India, 2023
3. India Skills Report 2023, Wheebox and Tagged with CII, AICTE and UNDP
4. Deloitte Global 2025 Gen Z and Millennial Survey (India-specific insights via Livemint, 2024)
5. Budget 2024–25 Highlights, Ministry of Finance, Government of India
6. National Education Policy (NEP) 2020, Ministry of Education, Government of India
7. Skill India Digital Hub and PM Kaushal Vikas Yojana (PMKVY), Ministry of Skill Development and Entrepreneurship (MSDE)
8. NASSCOM Reports on Digital Workforce and Emerging Technologies (2023–2024)
9. National Skill Development Corporation (NSDC) data portal and sector skill council reports
10. interviews published in Livemint.
Abbreviations:
ASSOCHAM: Associated Chambers of Commerce and Industry of India
CITI: Confederation of Indian Textile Industry
CLE: Council for Leather Exports
FICCI: Federation of Indian Chambers of Commerce and Industry
GJEPC: Gem and Jewellery Export Promotion Council
MNRE: Ministry of New and Renewable Energy
NASSCOM: National Association of Software and Service Companies
SIAM: Society of Indian Automobile Manufacturers
AICTE: All India Council for Technical Education
ATMA: Agricultural Technology Management Agency
CII: Confederation of Indian Industry,
CREDAI: Confederation of Real Estate Developers’ Associations of India
DDUGKY: Deen Dayal Upadhyaya Grameen Kaushalya Yojana,
FMTTI: Farm Machinery Training and Testing Institute
ITI: Industrial Training Institute, WEF: World Economic Forum,
KVK: Krishi Vigyan Kendra
MSDE: Ministry of Skill Development and Entrepreneurship
MSME: Micro, Small, and Medium Enterprises
NAPS: National Apprenticeship Promotion Scheme
NCVET: National Council for Vocational Education and Training
NSDC: National Skill Development Corporation
NSO: National Statistical Office
NSQF: National Skills Qualifications Framework
PLFS: Periodic Labour Force Survey
PLI: Production Linked Incentive
PMKVY: Pradhan Mantri Kaushal Vikas Yojana,
RAI: Retailers Association of India
SSC: Sector Skill Council
STEM: Science, Technology, Engineering, and Mathematics
STRY: Skill Training for Rural Youth
UNDP: United Nations Development Programme
