Time to Transform Skilling in India: From One-Size-Fits-All to Industry-Led Innovation

A decade after the Ministry of Skill Development and Entrepreneurship (MSDE) launched the 'Skill India' initiative, significant strides have been made in expanding access to education and vocational training. Over thirty million individuals have received training through various schemes like the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), while more than 15,000 Industrial Training Institutes (ITIs) have been set up or modernized. Yet only 10-12% of the Indian workforce receives formal vocational training, compared to 96% in South Korea and 52% in the US.

Despite these efforts, India’s skilling landscape faces a crucial question: Where do we go next? How can we bridge the gap between training and meaningful employment, especially with the rapid advancements in technology and the evolving demands of Industry 4.0?

Identifying the Gaps: Skills Needed for Industry 4.0

To make India’s demographic dividend a true asset, we need to focus on future-ready skills. According to a report by the World Economic Forum, eighty-five million jobs globally could be displaced by a shift in labour between humans and machines by 2025, while 97 million new roles may emerge that are more adapted to the new division of labour. In India, there is a pronounced demand for skills in data science, AI, machine learning, robotics, advanced manufacturing, cybersecurity, and digital marketing.

However, the current skilling programs are often outdated, misaligned with market needs, and lack the depth required for these emerging sectors. There is a pressing need to rethink how skilling is approached, moving beyond short-term courses and certifications to more structured, industry-integrated learning models.

Learning from Global Models: What Works and Why

Several countries have successfully revamped their skilling ecosystems by closely aligning with industry needs:

• United Kingdom: The Apprenticeship Levy raised ￡2.8 billion in 2022, funding over 300,000 apprenticeships that are directly linked to industry requirements. This model not only incentivizes companies to invest in training but also ensures that skills are directly tied to employment needs.
• Germany: The Vocational Education and Training (VET) system emphasizes a dual education model where students split their time between classroom instruction and workplace training. This model has resulted in an 82% employment rate for vocational graduates, a significant achievement compared to India's figures.
• South Korea: The country mandates skilling schools in partnership with local industries, specializing in vocational training that meets specific local demands. As a result, South Korea boasts a youth employment rate of over 44% in vocational sectors.

These models provide a clear takeaway: Industry-driven skilling ecosystems are far more effective in preparing the workforce for future challenges.

A New Approach: Industry-Government Collaboration for Future-Ready Skills

India needs a shift towards a demand-led skilling model where industry and government collaborate more deeply:

• Skills Development Levy: Inspired by the UK model, India could introduce a Skills Development Levy to fund a joint industry-government body for skilling initiatives. The funds could be used to create targeted programs for sectors most likely to face technological disruption. A similar levy in Singapore has been successful, where companies receive subsidies to train employees, ensuring both worker retention and skill enhancement.
• Labour Cess for Skilling Platforms: Introducing a labour cess could create industry-partnered skilling platforms that are agile and responsive to emerging skill demands. These platforms could focus on high-demand sectors like renewable energy, digital technologies, and advanced manufacturing, ensuring continuous reskilling and upskilling aligned with industry demands.
• Vocational Schools in Partnership with Corporates: Like South Korea, India could mandate that corporates partner with educational institutions to develop specialized skilling schools focused on in-demand skills. This could help ease the transition from education to employment and ensure that training is relevant and up-to-date.

Digital Skilling and the Future of Work

Digital learning platforms and Massive Open Online Courses (MOOCs) have witnessed explosive growth in India, especially post-pandemic. Platforms like Coursera, Udemy, and Skillsoft have seen a 200-300% increase in enrolments for courses on AI, data science, and digital marketing. The government should collaborate with these platforms to create curated learning paths that combine online learning with practical, industry-specific training modules.

India could also develop its digital hubs akin to South Korea's K-MOOC or Singapore’s SkillsFuture, where citizens receive credits for courses relevant to future job markets.

Actionable Steps: How to Make It Happen

To build a cohesive and advanced skilling ecosystem in India, here are the actionable steps:

1. Policy Alignment and Incentives: The government should streamline policies to incentivize corporate participation in skilling programs. Tax incentives, grants, or a points-based system for companies heavily investing in skilling could be effective.
2. Public-Private Partnerships (PPPs): Strengthen PPPs to build vocational and digital training centres across India. Leverage the corporate sector’s expertise and resources to build centres of excellence in future skill domains.
3. Focus on Quality Assurance: A robust quality assurance framework is crucial to ensure that training programs are impactful and aligned with market needs. The GOI should establish a national body to certify skill providers and programs.
4. Targeted Skilling for Emerging Sectors: Identify sectors poised for growth and build skilling programs around them, ensuring that these programs have clear pathways to employment. This could be managed through regional skill councils that focus on local industry needs.

For India to harness its demographic dividend and position itself as a global economic powerhouse, we must move beyond the traditional approach to skilling. The time is now for all stakeholders—government, industry, educational institutions, and the workforce—to come together and build a dynamic, future-ready skilling ecosystem that is agile, relevant, and inclusive.

Only through such collaboration can India truly transform its skilling landscape and prepare its workforce for the demands of the 21st-century global economy.

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