Many companies, especially in the engineering sector, have their own skill-development programmes. But these are too small to make a national impact. The 2025 Periodic Labour Force Survey shows that only 4.9 per cent of Indians aged 15-29 had received formal vocational or technical training. Another 21.2 per cent had acquired skills through informal sources. Formal vocational training reaches only a small minority. Of course, India claims to have trained very large numbers. By June this year, the government’s major skill-development programmes reported a cumulative participation of 16.5 million people under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), 3.66 million under the Jan Shikshan Sansthan, 5.3 million under the National Apprenticeship Promotion Scheme, and 10.7 million through Industrial Training Institutes (ITIs) under the Craftsman Training Scheme.
Adding those numbers would produce more than 32 million programme participations. But they are not 32 million uniquely skilled workers. The schemes cover different activities, periods and categories, and apprenticeships are not equivalent to a permanent skill qualification. The more important question: What happens after training? Can the worker perform a productive job? Does an employer recognise the qualification? Will the skill match what a particular factory needs? Let’s consider automobiles, one of the country’s largest manufacturing industries. A recent study, based on industry consultations, by the National Council of Applied Economic Research (NCAER) found shortages across conventional occupations as well as new ones. Firms reported difficulty finding CNC (computer numerical control) and machine operators, technicians, and mechanics. The skills required by a modern automobile factory (electronics, embedded software, automation, artificial intelligence and cybersecurity) are, therefore, changing even as India is trying to expand its manufacturing workforce.
What should be done? As always, it is good to learn from China and other Asian tigers that have set the gold standard for rapid industrialisation. This is impossible without rapid skill development. After China opened up its economy in 1978 and gave way to reforms, the country’s initial response to its skills problem was direct. It changed the structure of education to match the needs of an industrialising economy. In 1978, vocational students accounted for just 7.6 per cent of students at senior-secondary level. The 1985 education reform made the expansion of vocational education a central objective, seeking to build a system of technical education from basic to advanced levels, and linked it to different industries. By 1990, vocational students outnumbered those in general senior-secondary schools. China’s approach was to build vocational capacity alongside industrialisation. Between 2012 and 2021, according to China’s Ministry of Education, its vocational institutions produced 61 million skilled professionals.
Most importantly, as industries changed, it changed courses. More than 1,000 vocational disciplines were added or upgraded while 108 outdated ones were phased out. In advanced manufacturing, emerging industries and information technology (IT)-enabled services, the ministry said more than 70 per cent of new frontline workers were graduates of vocational schools. Then there was the institutional connection with employers. China reported more than 1,500 vocational-education alliances, collaboration between vocational schools, and about 3,000 enterprises, nearly 24,900 school-enterprise training centres, and more than 1,000 modern apprenticeship programmes. This educational response to industrial needs has become institutionalised and continues smoothly. When a low-altitude economy started to look like a reality, in 2025 alone, six universities established degree courses in “low-altitude technology and engineering”.
Taiwan’s experience is particularly relevant to India’s manufacturing aspiration because vocational education evolved alongside industrialisation. Its system was repeatedly adjusted as the economy moved from labour-intensive production towards capital- and technology-intensive industries. Vocational curricula were designed using analysis of industry requirements, while more recent programmes have strengthened cooperation among vocational schools, technical universities, and companies. Vietnam, too, has been trying to tie vocational education more closely to enterprises and the labour market. Its 2021-30 vocational education strategy explicitly calls for stronger links between vocational institutions, businesses, and labour-market requirements.
All these countries created mechanisms through which changes in their industrial structure could feed back into what schools taught and what companies trained. That is the missing link India needs to strengthen. India has Sector Skill Councils, ITIs, apprenticeships, the PMKVY and an expanding network of industry-linked programmes. The government is also attempting to upgrade 1,000 ITIs and introduce future-skill courses. Apprenticeship is particularly important because it puts training inside the workplace. Yet the Economic Survey 2025-26 notes that only about 6,100 enterprises were actively engaged in apprenticeship training in FY26, with 990,000 apprentices enrolled.
To make any serious impact, this array of programmes requires continuous industry-training feedback loops. India needs to identify the factories and technologies it wants to attract. It needs to forecast the occupations they will require, define the competencies, redesign the curricula, and train the workers. It has to put them into factories through apprenticeships, measure employment, wages and productivity; and then change the curriculum again. China, South Korea, Taiwan, and Vietnam have all built versions of that loop. Until India does that, billions will be wasted in the name of “skill development” and India’s manufacturing dream will remain just that – a dream.
The writer is cofounder of www.moneylife.in and a trustee of the Moneylife Foundation; @Moneylifers
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