With a volatile external sector increasing the challenge of demand-driven growth, the Prime Minister unveiled a slew of proposed reforms from the Red Fort’s ramparts on August 15. While a recalibration of GST could induce higher domestic consumption and spur domestic investment with employment growth, India must seize this opportunity to also rethink its education system and increase the productivity and employability of its labour force. Our traditional education system — academic and rote-based — is unlikely to deliver a workforce equipped for the future of work.
In India and across the world, formal vocational or skill training is associated with higher chances of an individual being employed and obtaining a job in the formal sector. Yet, only 4 per cent of India’s workforce is formally trained, even though the institutional coverage of the Vocational Education and Training (VET) system is extensive — with over 14,000 Industrial Training Institutes (ITIs) and 25 lakh sanctioned seats. Actual enrolment was only around 12 lakh in 2022, implying just 48 per cent seat utilisation. Our VET system struggles with not only low uptake but also modest employment rates for those who undergo training. In 2018, the employment rate among ITI graduates was 63 per cent, whereas countries with robust VET systems such as Germany, Singapore, and Canada reported employment rates ranging between 80 and 90 per cent. These statistics point to a VET system that is both ineffective and unattractive to our youth.
Why is the uptake and employment rate low for India’s VET system?
The first factor is the stage of the education system at which VET is integrated. Countries that introduce VET earlier in the schooling system show a stronger association with better labour market outcomes. In Germany, for example, VET is integrated at the upper secondary level through a dual system, combining school education with paid apprenticeships. In contrast, in India, VET is an afterthought — offered post high-school education, which not only shortens the period available for hands-on training before the youth enter the job market, but also does not allow for orientation towards employable skills.
A second aspect is the absence of a defined pathway to higher (or academic) education via vocational skilling. For instance, Singapore offers VET either as technical education at the post-secondary level or via polytechnics at the tertiary level through dual vocational tracks, but has defined pathways from VET to traditional university education. India, in contrast, offers no formal academic progression from VET to mainstream higher education, nor does our education system offer credit transfers between systems. This reduces the uptake of VET by many who wish to keep the option of traditional, academic education viable.
Third, and possibly most important, is the perception and quality of VET in India. Singapore has industry-led curriculum design, high instructor quality, regular audits and a mechanism that seeks constant feedback from employers and trainees. Singapore also has a Skill Future Programme, where the government offers subsidies to upskill throughout one’s career. In India, in contrast, many courses are outdated and misaligned with industry needs. Over one-third of ITI instructor posts are vacant due to limited training capacity at National Skill Training Institutes. Quality monitoring is weak, with irregular ITI grading and no feedback systems.
Relatedly, investing in robust public–private partnerships to deliver VET is critical for successful skilling. In Germany, Singapore, and Canada, governments fund VET institutions, while employers pay for apprenticeships, share training costs, and also help design curricula. In India, the engagement of employers in the private sector is limited, if not absent. ITIs depend heavily on government funding, with minimal private sector investment in infrastructure and training apparatus. Medium and Small Scale Enterprises drive local job creation, but have low engagement with ITIs due to capacity constraints. Sector Skill Councils, which play a key role in integrating training with industry needs, lack state-level presence.
What can India learn from international experiences to overhaul its VET programme?
First, integrate VET into early schooling. The National Education Policy (NEP), 2020 recommends such integration, but progress has been slow. Second, fast-track reforms to implement the National Credit Framework that defines clear progression pathways and aims to have a board for nationally recognised certifications. Third, to improve training quality, align VET courses with local industry demand through regular market assessments, expand NSTIs and fast-track instructor recruitment to address capacity gaps, and strengthen ITI grading by incorporating trainee feedback. Fourth, scale models like the Private Training Partner approach by leveraging public infrastructure and private expertise. Involve MSMEs, and strategically use CSR funding to boost industry relevance. Fifth, increase public spending on VET and ensure the financial viability of institutions by linking public funding to their performance and granting them autonomy to generate their own revenue.
We must invest more in human capital. India allocates around 3 per cent of total education expenditure to VET, compared to 10-13 per cent in countries like Germany, Singapore, and Canada. Public funding can be optimised with improved financial viability of ITIs through lower per-student costs of training and by allowing ITIs autonomy to generate their own revenue.
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Recent government schemes — such as the Employment Linked Incentive (ELI) scheme, the PM Internship Scheme, and the ITI Upgradation Initiative — reflect an increased focus on employment outcomes. ELI Part A offers up to Rs 15,000 for first-time EPFO-registered workers, while the revised ELI, Part B gives employers Rs 3,000 a month for every new hire. Both ELI schemes push formalisation of jobs but have no skilling components. The Prime Minister Internship Scheme aims to provide one-year placements to youth in top companies, but lacks pathways to permanent jobs. The ITI Upgradation Scheme focuses on modernising 1,000 government ITIs in partnership with industry, but not necessarily the quality of training.
Policy initiatives, thus far, have either tinkered on the margins of our existing education system or are afterthoughts. They are unlikely to transform the level of productivity and employability of our workforce unless we overhaul a system that is becoming increasingly outdated. Such an overhaul is crucial for making vocational training a pathway to jobs — an essential step towards a Viksit Bharat.
ARJITA CHANDNA
Source: Indian Express, 22/08/25
