Why India needs to re-engineer the skill ecosystem


To meet an incremental requirement of skilling 110 million additional workers by 2022, India will have to rethink its skilling capacities for the existing and future workforce

India symbolises a remarkable growth story for the world and Skill India is one of Prime Minister Narendra Modi’s flagship initiatives, aimed at sustaining this growth story and making India the world economic leader. In fact, predicted to grow at 7.5 per cent — 7.7 per cent per annum, India is expected to sustain its position as the world’s fastest growing economy till 2018. A forecast by the Ministry of Skill Development and Entrepreneurship (MSDE) suggests there would be an incremental requirement of skilling 110 million additional workers by 2022. It is obvious that India will have to rethink its skilling capacities for the existing and future workforce in order to achieve this.

Delving deeper into the issue, FICCI and KPMG in India together launched a white paper titled ‘Re-engineering the skill ecosystem’. The report examines the complexity and diversity of the country in terms of economic development, demography, geography, internal and international migration and unavailability of relevant data, and recommends the way forward.

As per the report, an interesting characteristic of the employment growth story has been the growth in the formal workforce. The estimation of the number of employees in various social security benefit schemes indicates that nearly 114 million employees or 22 per cent (2014–15) are in formal employment. This number has been steadily rising. The report suggests two important trends, vis-à-vis the Indian workforce, that call for attention and action— first, the scope of job creation in formal employment opportunities and second, the implications of Industry 4.0 on future jobs.

The report states that the future Indian consumer will reside in Tier 2 and Tier 3 cities. Hence, predictably, this market is likely to be the centre of attraction for global and Indian consumer-focussed industries. The services and manufacturing sectors are likely to create more employment opportunities. With government schemes like Make in India, eased out FDI companies like Apple, Xiaomi, LeEco, Suzuki and others from across the globe are seeing great investment opportunities in India.

However, this also means the country will have to gear up to meet the demand for skilled workforce generated from these foreign investments. Undoubtedly, to reach the full potential, India will have to gravitate towards a formal system. To accomplish this and reskill the existing workforce, MSDE has already embarked on a herculean task of skilling 400 million by 2022. Mohandas Pai, chairman FICCI Skill Development Committee and chairman Manipal Global Education, says, “There is an urgent need to evaluate our current scenario, look at future projections and re-engineer the skill ecosystem accordingly.”

The issues that form roadblocks in our current skilling framework are few yet complicated. First, the women Worker Population Ratio (WPR) in India is about one-third that of the male WPR. According to data from the World Bank, India ranks 10th from the bottom, globally, in terms of women labour participation. The other two important issues that emerge upon analysing the rising number of unemployed graduates are — poor quality of education and a mismatch in the demand and supply of education or skills. The low women WPR requires policy action combined with conscious efforts by the private sector to reduce impediments to equal access to jobs. Improvement in the quality of education needs government action to develop an integrated and dynamic educational system.

Also, in the larger context of growing formal employment and Industry 4.0, it becomes more critical to focus on integrating the education system to meet new skill needs in a timely manner. The challenge for skill India is that education and skill training are delivered in parallel, in a siloed manner. Formal education is delivered through traditional universities and polytechnics. Industrial Training Institutions (ITI) act as primary institutions to deliver skill training, focussing mostly on technical trades. However, these systems operate in silos with limited options for vertical and horizontal mobility. Additionally, especially with regard to skill training, unlike the US, UK or Australia the critical component of industry linkage is missing in the Indian ecosystem.

The renowned German dual system, for example, offers well-integrated vocational training programmes that begin at the school level. A key differentiating factor that drives quality of education is the strong apprenticeship-linkage during training, where a student opting for vocational education, spends approximately three and a half days per week getting on-the-job training and the rest at the vocational school. At the same time, vocational education systems in Australia and the UK are clear examples of the excellent coordination between the industry and the vocational programme, wherein the industry is involved at each stage from the curriculum design to its validation.

Shobha Mishra Ghosh, senior director-FICCI adds, “Vocational education and skill development have never been aspirational in our country. In India, 77 per cent of those above 30 years and 42 per cent in the age group 18–29 years are employed. There is an urgent need to integrate skill development within our formal education to meet the 21st century skill requirements.”

Taking cues from the examples, the report suggests that the Indian government formulate a system, which ensures a regular feedback mechanism from the industry whilst designing and updating the Technical Vocational Education and Training (TVET) courses. This would go a long way in propelling the advent of vocational education and create its acceptability among the wider masses. Narayanan Ramaswamy, partner and head, education and skill development, KPMG in India, says, “The bright side to the challenge of skill development is that the government recognises India’s favourable demographic dividend and is shouldering the responsibility of providing employment to the millions of youth in a big way. However, nothing short of a revolution is required in the skilling and vocational education space, which in my view has assumed critical proportions and might well determine the future growth of this country.”

In order to provide the right opportunities for skill training to ensure timely availability of skilled manpower, the FICCI–KPMG white paper recommends the following strategic changes to re-engineer the ecosystem that can facilitate the transformation.

Policy-level actions: Developing skill development plans based on state-level analyses, of the major industries driving economic growth and rising formal employment opportunities by state and central governments, is essential. With future growth coming from formal employment, an intensive recognition of prior learning exercise to certify available skills as per the National Skills Qualification Framework level also becomes vital.

Quality enhancement actions: An active role of industry is key to improving the aspirational value of skill training programmes in India. Upgrading existing skillsets of teachers also needs to be formally undertaken. Special incentives can be provided to the industry by the government in order to invest their two per cent CSR funds towards skilling initiatives in order to ensure adequate capitalisation.

Other systematic improvements: Improving the WPR of women through women-centric component in Skill State Plans and annually monitoring and recognising high-performing states could be a positive step in this direction. Establishing and growing more skill universities is also one of the key suggestions.

It is now evident that to fulfil the future requirement for skilled talent and to make the most of the growth opportunities, all the stakeholders — the government, industry, training partners, learners and other service providers need to work alongside to create a robust and resilient skilling ecosystem. This will not only ensure long-term sustainability of the skilling system but will also help in changing the perception of the labour populace in general, towards skilling.


  1. Yes there is an urgent need of skilling people, particularly the high school on wards. We have been producing unskilled graduates of no use, to have graduate tag for inflated ego to avoid labour job. This need propels a great opportunity in the business of skilling people. Even traditional sectors like drivers, plumbers, electricians etc are to be and can be skilled properly, easily and in a big quantity to cater future requirements.

  2. industry must understand that their active involvement in skill development is very essential. To implement training system similar to German dual training system industries should voluntarily come forward to make partnership with ITIs in Maharashtra

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Prajjal Saha is the editor and publisher of HRKatha, which he founded in 2015. With nearly 25 years of experience in business journalism, writing, and editing, he is a true industry veteran who possesses a deep understanding of all facets of business, from marketing and distribution to technology and human resources. Along with his work at HRKatha, he is also the author of the Marketing White Book. Thanks to his extensive experience and expertise, he has become a trusted source of insight and analysis for professionals across a wide range of industries.