Arjun, a master carpenter in Delhi’s Laxmi Nagar locality, has been practising his craft for the past 25 years. Most of his work has come by word of mouth, and there has never been a shortage of it. His sons, though, did not want to follow in his footsteps. They preferred to get an education and a salaried job. Arjun’s elder son, Pankaj Kumar, 28, completed his BA and a two-year fitter course at the Industrial Training Institute (ITI) in their hometown of Gaya in Bihar. Post qualifying, he got a year-long apprenticeship at an auto firm, but it did not transition into a permanent job. He spent the next 12-18 months doing odd jobs while hunting for a desk assignment. Eventually, he found one in Gurugram, but they were offering just Rs 12,000 per month. Pankaj instead chose to take up a job at a plywood shop in Kirti Nagar’s furniture market. “Now, he is earning more than double of what the office job was offering and also getting bonus and Provident Fund,” says Arjun. His younger son, Vicky Kumar, 26, has also completed his graduation and is now looking for a teaching job in a government school back home in Gaya.
Arjun and his sons exemplify the paradox at the heart of India’s labour market: more young people are choosing degrees over traditional trades, only to find that their qualifications do not translate into the jobs or earnings they aspire to. The disconnect is particularly striking in an economy that grew 7.6 per cent in FY26, the fastest pace among major economies, according to the World Bank. Yet the education and skills system is failing to equip enough young Indians for the opportunities that growth is creating. India has 367 million people aged 15-29, a cohort larger than the entire population of the United States. A staggering 198 million, or 54 per cent, of them are outside the labour force, which means they are neither working nor seeking work. Of the remaining 169 million, 17 million are unemployed. Among the 152 million who have jobs, only 18 million, or 11.8 per cent, have regular salaried employment with social security. The remaining 134 million work in the informal sector, in insecure forms of employment that include regular wage work without social security, self-employment, casual labour and platform or gig work, according to an analysis of Periodic Labour Force Survey (PLFS) 2025 by JustJobs Network, an applied research organisation.
This is happening even as Indian youth are more educated than ever before. Between 2022 and 2025, the share of young people aged 15-29 with secondary or higher education rose from 56.5 per cent to 62.6 per cent, according to the JustJobs Network analysis. Yet higher levels of education have not necessarily meant better employment outcomes. Only 42.6 per cent of Indian graduates are employable, according to the Graduate Skill Index 2025 by consulting firm Mercer, which assessed nearly one million students. The mismatch is reflected in the unemployment numbers. Youth unemployment stands at 10 per cent, three times the overall unemployment rate. According to the JustJobs Network analysis, it rises to 22.7 per cent among graduates and those with higher qualifications, compared with 8 per cent among those educated up to the secondary level. The numbers add up every year, as 7-8 million youngsters enter the workforce each year.
Even when employed, only 8.25 per cent of graduates are in roles aligned with their qualifications, as noted in Economic Survey 2024-25. One reason, as a 2026 NITI Aayog report, ‘Reimagining Skilling for Viksit Bharat@2047’, points out, is the heavy concentration of students in generic degree programmes with weak links to jobs. Of the 34 million students enrolled in undergraduate courses, 11.3 million are pursuing BA, while combined enrolment in BA, BSc and BCom exceeds 20 million. At the same time, employers across the country are struggling to find people with the right skills. According to ManpowerGroup’s 2026 Global Talent Shortage Survey, 82 per cent of employers in India find it difficult to find skilled talent, well above the global average of 72 per cent.
It is a classic case of a labour market failing to connect supply with demand: young people are looking for jobs while industry is looking for talent, yet the two fail to meet because the skills employers need are not the ones the education system is providing. The result is an inefficient labour market. The NITI Aayog report highlights the multiple disconnects across the education, skills and jobs axes. Candidate aspirations often differ from job realities; curricula are outdated and misaligned with industry needs; the education system runs on a parallel track to skilling; and talent is not always available where the jobs are.
MISMATCH 1 : SKILLING SHORTCOMINGS
The Industrial Training Institutes, or ITIs, have long been the backbone of India’s skilling system. Providing courses that can last from six months to two years, or even for a few weeks for those seeking upskilling in new technology, these vocational training courses aim to equip students with industry-relevant skills after Class 10 or 12 and provide formal certification for otherwise manual and technical trades like electricians, welders, machinists, car mechanics and air-conditioning technicians, bringing dignity to them. Fees for government ITIs is highly subsidised, starting from Rs 1,000 a year; private ITIs are much more expensive: their fees can vary from Rs 10,000 to Rs 50,000 a year, depending on the course.
Currently, India has 14,789 ITIs, with 2,538,487 seats. However, capacity utilisation stands at just 48.2 per cent, meaning roughly one in every two seats is vacant, according to NITI Aayog’s 2023 report, ‘Transforming Industrial Training Institutes’. Thus, ITIs supply only 100,000-700,000 workers every year, when they could provide twice the number. It gets worse. According to a 2024 TRACER study by the Union ministry of skill development and entrepreneurship (MSDE), only 39.5 per cent of ITI pass-outs were employed and 9.5 per cent were engaged as apprentices. Consequently, just 4.1 per cent of India’s working-age population (15-59 years) is formally trained. And since there is no wage premium for ITI certification, 30.6 per cent of students opt for informal training instead, as PLFS 2023-24 notes.
“ITIs don’t have the prestige associated with institutes of higher education and are the fallback option for those for whom higher education remains inaccessible,” says Tamoghna Halder, assistant professor of Economics at Azim Premji University. Historically, he adds, physical labour in India is associated with marginalised castes. So, a young person’s aspiration is to exit from that work arrangement and move up the dignity ladder through a degree and get a desk job. Their research, published in ‘State of Working India 2026’, shows 77.4 per cent of students in ITIs are from disadvantaged backgrounds, including the Other Backward Classes, Scheduled Castes and Tribes.
One reason for the poor outcomes is that courses are often out of date. The 2023 NITI Aayog report found that curricula in many ITIs lagged years behind industry requirements. Some were still teaching HTML even as industry had moved on to Python. Vinita Aggarwal, a former executive member of the National Council for Vocational Education and Training (NCVET), says the regulator has since undertaken a rationalisation exercise, archiving around 7,147 qualifications that had limited relevance to the current labour market. Awarding bodies—responsible for developing, certifying and maintaining the quality of skilling standards—can now choose from around 3,221 qualifications.
Industry, however, says the problem persists. Bhavna Chopra Srikrishna, head of Stainless Academy at Jindal Stainless, points to a disconnect between training and emerging industrial needs. Despite the growing use of stainless steel in tunnelling, railway coaches, metros and utensils, she says welding courses at ITIs and polytechnics continue to focus largely on steel in general. “Welder courses are widely available in polytechnics and ITIs, but they still don’t teach about welding stainless steel,” she says. That gap was the primary reason Jindal Stainless started its own academy in 2018. It has since tied up with seven to eight engineering colleges and polytechnics to teach students about stainless steel and has applied to become an awarding body. Prasanna Pahade, CEO of the Automotive Skills Development Council, says that while some institutes now offer exposure to Computer Numerical Control (CNC) machines, Programmable Logic Controllers (PLCs), robotics and electric vehicle (EV) systems, wider modernisation is needed.
Relevance is another problem. ITI courses remain heavily skewed towards manufacturing, even though services account for more than 50 per cent of GDP. That is partly because ITIs were built primarily to serve industry, leading students to associate them with industrial trades. And while manufacturing has established career pathways—for instance, electrician to technician to supervisor—such progression is less clearly defined in the services sector. As a result, while ITIs offer almost an equal number of courses in engineering and non-engineering trades (86 and 78, respectively), 85 per cent of students enrol in manufacturing trades, as a 2026 NITI Aayog working paper, ‘Education and Skilling for Employment: From Credentials to Learning Outcomes’, notes.
Trainers, who play a critical role in determining learning outcomes, are in short supply too. As of July 2025, only 46.9 per cent of the 217,724 sanctioned trainer positions had been filled across ITIs, according to the NITI Aayog working paper.
Privatisation of ITIs has added another layer of concern over their quality. According to ‘State of Working India 2026’ report, much of the expansion since the 2000s has been driven by the private sector. Over 70 per cent of ITIs are now privately run, compared with the pre-1980s era, when 80 per cent were government-run. An analysis of the MSDE’s ITI rankings suggests that private ITIs are more likely to fall short on quality parameters—including instructor qualifications, pedagogy and enrolment—than government-run institutions.
Beyond infrastructure, trainer quality and curricula, the ITI skilling ecosystem, says Sabina Dewan, founder and executive director of JustJobs Network, needs to be hyper-localised. Currently, skilling courses are uniform across the country when they should instead respond to local labour-market needs. “Courses have to be determined based on the hyperlocal requirements of the industry in that area,” she says. She cites the example of Ambala, which once had a thriving ecosystem of medical device manufacturers, an industry that eventually died because, among other reasons, ITIs in the region didn’t train talent for the sector. “When there is granular local labour-demand data and training is mapped to that demand, real change will happen,” says Dewan.
The government says it is moving towards such decentralisation. According to the MSDE, skill development plans are now being prepared at the state and district levels, mapping local industries, workforce availability, migration patterns, training capacity and emerging job roles. In 2024-25, 746 district plans and 28 state plans were submitted. The ministry is working to link scheme targets and public expenditure with district-level demand. “This represents an important shift—from allocating training opportunities administratively to planning them around the economic character of each region,” the ministry says.
Projected shortages underscore the urgency. Staffing firm Quess estimates that, by 2031, India could face a shortage of 1.8 million workers in construction and infrastructure, 1.3 million skilled-trade professionals—including electricians, welders, plumbers, fitters and HVAC technicians—598,026 nurses and allied health providers, and 946,543 workers in tourism and hospitality. Across 19 sectors, the cumulative manpower shortage could reach close to 9.9 million.
Rahul Gama, CHRO, CEAT, says the roles hardest to fill are the ones at the intersection of traditional craft and new-age technology: skilled machine operators who can work with automated and semi-automated curing and moulding lines; maintenance technicians who understand both mechanical and electronic systems; and quality control inspectors trained in modern testing and analytics tools. “These roles demand a working knowledge of digital dashboards, basic troubleshooting logic, and safety protocol far beyond what traditional curricula cover,” he says. The talent pipeline, he adds, has not kept pace with the rapid modernisation of shop floors. “Many applicants come in with theoretical certification but need three to six months of structured on-the-job training before they can become truly productive.”
The government is also changing its approach. “India’s skilling mission is entering a more mature phase where training, from a standalone activity, is now seen as an ecosystem where skills are connected with employment, productivity, entrepreneurship and mobility,” says the MSDE. One example is the Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs (PM-SETU) scheme, under which 1,000 government ITIs—200 hub institutions and 800 spokes—are proposed to be upgraded with an investment of Rs 60,000 crore. The difference, the ministry says, is that “industry participation is embedded into the model”. In May this year, following an internal review, the Directorate General of Training also de-affiliated 611 ITIs that had remained non-operational and recorded zero admissions for four consecutive years between 2022 and 2025.
But upgrading a system with a weak foundation may not yield the desired results. Nor can the government alone solve India’s skills challenge.
MISMATCH 2 : INDIFFERENT INDUSTRY
Industry involvement is a prerequisite for defining the skills it needs, designing curricula along with ITIs, taking on apprentices and investing in upskilling its workers. However, only 7.7 per cent of Indian firms provide formal training to employees, according to the 2026 NITI Aayog working paper. NCVET’s Aggarwal, too, urges industry to get more involved in skilling. “After all, who are we skilling for?” she asks. “The ministry and NCVET have made a lot of effort to bring industry onto the platform, but we don’t get a proactive response.”
The government’s main lever to address this has been the National Apprenticeship Promotion Scheme (NAPS), launched in 2016 to provide on-the-job training to candidates aged 14 to 35 across sectors, allowing them to learn while they earn. Under the scheme, apprentices receive a monthly stipend ranging from Rs 6,800 to Rs 12,300, with the government reimbursing employers 25 per cent of the prescribed stipend, or up to Rs 1,500 per apprentice per month. But uptake remains low on both sides. Of the 195,939 establishments registered under NAPS, only 26 per cent, or 51,133, were active in FY25. On the apprentice side, 1.3 million candidates were registered, but only 75.3 per cent, or 985,000, entered training. Of these, just 25.4 per cent, or 251,000, completed their training in FY25, according to a February 2026 NITI Aayog report, ‘Revitalising India’s Apprenticeship Ecosystem’.
On the lower uptake among industry, B. Thiagarajan, chairman of the CII National Committee on Skills and managing director of Blue Star, says that while large industries face little difficulty, MSMEs struggle with compliances. As for the high dropout rate among apprentices, he says it is often because the exposure they gain during their apprenticeship helps them secure jobs elsewhere. This, he argues, should not necessarily be viewed negatively.
However, apprenticeship participation in India remains low compared with Germany, where apprentices and interns account for 2.7 per cent of the labour force. Part of the problem is a misunderstanding of what an apprenticeship is meant to achieve, says Manish Sabharwal, co-founder of TeamLease Services. “We treat apprenticeship like a job, and that’s a mistake. An apprenticeship is a classroom,” he says. It must be a classroom where candidates solve real problems on the shop floor, learn by observing other workers and develop the ability to work as part of a team.
The deeper issue, though, is financing: who should pay for skilling? “We have a financing failure in skill development,” says Sabharwal, because employers have little fiscal incentive “to manufacture their own employees”. Three risks, or what he calls “three holes in the bucket”, make it difficult for employers to earn a return on their investment in training: learning risk, when they pay for training but the candidate fails to learn; attrition risk, when they pay for training, the candidate becomes productive but then leaves for another job; and productivity risk, when they pay for training but the candidate still fails to become productive.
The financing problem is even more acute for smaller businesses, says Anil Bhardwaj, secretary general of the Federation of Indian Micro, Small & Medium Enterprises (FISME). “No kid in, say, Delhi or Tamil Nadu would want to work in a factory for Rs 10,000-15,000; they would rather do delivery work or drive a bike taxi,” he says. It also makes little economic sense for those from distant states such as Bihar and Jharkhand to take up such an offer when the entry-level salary is grossly inadequate to sustain the cost of living in the destination city. Moreover, MSMEs typically operate on shoestring budgets, often without dedicated HR or training departments, which forces production-facing workers to train freshers while meeting their own targets.
The government had also launched the PM Internship Scheme to provide youth aged 18-25 with internship opportunities in top companies. Interns receive a monthly stipend of Rs 9,000, one-time assistance of Rs 6,000 and insurance cover. Implemented by the ministry of corporate affairs, the scheme is gaining traction, albeit slowly. In the third pilot, running from April to December 2026, 340 companies have offered 122,000 internship opportunities, with 10,195 candidates physically joining by July 15. The joining figures have already surpassed that of the first pilot (8,760) and the second (7,308).
MISMATCH 3 : GAPS IN EDUCATION
Higher education continues to run on a parallel track to skilling and remains largely insulated from industry demands. India has tried to introduce vocational education in schools for decades, the latest effort being the National Education Policy (NEP) 2020. Its implementation began in phases from 2020, with an emphasis on introducing vocational exposure from Grade 6, without a rigid separation between academic and vocational education. The aim was to encourage hands-on learning early and reposition vocational education as an aspirational choice rather than as a fallback option. Early exposure to skilled trades could also help reduce the social stigma attached to manual work and help skilled manual trades attract a premium. However, even today, schools are not equipped to integrate vocational education effectively. “Right now, adoption is minuscule as the curriculum framework on how schools should implement vocational education is a recent phenomenon,” says Dewan of JustJobs Network. “We need a much more concerted push to implement it effectively.”
NITI Aayog’s ‘School Education System in India’ 2026 report highlights several other issues. Most vocational courses are offered as optional subjects, not given adequate instructional time, and are often seen as options for academically weaker students. Many schools lack the infrastructure needed for hands-on and experiential learning—workshops, laboratories, industrial equipment—even as trainers are in short supply. The report cites a 2023 review by the ministry of education that found more than 40 per cent of sanctioned vocational trainer posts vacant in several states.
India also seriously lags in investment in vocational education and training (VET), allocating only around 3 per cent of total education spend to vocational training in 2021, compared with the 10-13 per cent spend on VET institutions in Germany, Singapore and Canada, according to a December 2025 study by NCAER (National Council of Applied Economic Research), ‘India’s Employment Prospects: Pathways to Jobs’.
MISMATCH 4 : ASPIRATION VS JOB REALITY
Often, the workforce shortage is not simply a question of availability but also of interest and social perception. Take hospitality and tourism. It is a sector with relatively low entry barriers and is expected to require 1.4 million additional workers by 2031, according to Quess estimates, creating a manpower deficit of 946,543 as rising disposable incomes and domestic tourism drive demand. Yet the biggest gaps are at the operational and supervisory levels: chefs and kitchen professionals, food and beverage service staff, housekeeping and front-office personnel, technicians and engineering staff, and, increasingly, workers who can combine hospitality skills with digital technology. “Hospitality often requires employees to work weekends, holidays and shifts, and many properties are located outside major urban centres, leading to a shortage of skilled manpower. There is also a perception among young workers that hospitality offers demanding working conditions without sufficiently attractive career progression,” says Rajiv Mehra, general secretary, Federation of Associations in Indian Tourism & Hospitality (FAITH).
Healthcare faces a similar challenge, particularly in filling roles for nurses and allied health technicians who assist with procedures, equipment and physiotherapy. The shortage is especially acute for experienced OT nurses and technicians specialising in oncology, cardiac and emergency care. Mayank Rautela, group chief human resources officer at Apollo Hospitals, says one reason is the limited number of colleges offering relevant courses, compounded by a perception that compensation is unattractive. That may be true at the entry level, he acknowledges, but opportunities for career progression increase substantially with experience. To counter the misperception, Apollo has launched initiatives to make employees aware of career pathways from day one. Its programmes allow nurses to fast-track their careers. “Earlier, a staff nurse could be at the same position for five to seven years, but today we have created different bands—junior nurse, staff nurse, going all the way to the most sought-after OT nurses,” he says. There are also upskilling programmes that enable nurses to move into management, become nurse trainers or seek opportunities abroad, including in West Asia and the UK.
But not every talent gap can be fixed through corporate initiatives. Some barriers run much deeper in India’s social and cultural fabric, particularly the way the country views manual work. There is a huge skill gap in hands-on trades such as electrical and plumbing work because of what Dewan of JustJobs Network calls India’s strong “head over hand” bias, in which manual trades and blue-collar work are seen as less valuable. Quess estimates that the shortage of skilled-trade workers, including plumbers and electricians, will widen to 1.3 million by 2031. “No parent aspires for their kid to become a carpenter or an electrician. Those are seen as fallback jobs,” says Dewan. But the reality is that white-collar jobs are also shrinking and becoming more specialised. “In this age of AI,” Dewan adds, “cognitive jobs will become fewer and fewer, and manual trades will actually grow in importance. So, we need to raise both the quality of the trade itself and ensure policy focuses on improving the social perception of those trades.”
Chief economic advisor V. Anantha Nageswaran echoed this shift when he recently spoke about the changing prospects for software jobs and the need to value skilled trades such as welding, plumbing, electrical work and carpentry. The country, he said, should view these skills with dignity and respect. “It’s about trade skills. It’s about soft skills, which AI cannot easily replace, where human presence is required.”
Changing this perception will require not just curricula and teachers but also counselling and communication. Students and their parents are often unaware of the career pathways skilling can open up over the next 10-20 years—from working as an electrician in Germany to becoming a caregiver in Japan. It is only when students buy into these possibilities, says Bhardwaj of FISME, that skilling courses will generate demand. Skilling is often pushed from the top; it will gain traction only when it answers to students’ aspirations, capabilities and interests. “The main customer of skilling programmes is the student, and hence it is important to understand what their aspirations are,” he says.
MISMATCH 5 : THE CHASM OF GEOGRAPHY
Most large-scale manufacturing in India is concentrated in Karnataka, Tamil Nadu, Maharashtra, Gujarat and Delhi-NCR, while most labour is from Bihar, Jharkhand, Odisha and Chhattisgarh. The jobs thus are not where the people are. Nitin Dave, chief executive officer of Quess Staffing, says migration is particularly difficult for workers at the start of their careers when they have never ventured beyond their villages. Besides the financial cost of moving and the lack of safe housing, there are “the softer aspects of moving away from peers and family, staying in a different culture, eating different food”, says Dave, adding that such issues are magnified for women workers.
Increasingly, therefore, many workers are gravitating towards delivery jobs instead of factory work because they are closer to home, offer greater flexibility and provide immediate earning potential. “We are extensively counselling workers on the long-term career and earnings growth path of working in a factory,” says Dave. “We tell our 1,200 recruiters that they have to sell the future to a candidate, not a job.”
India has the world’s largest working-age population, an advantage many other countries can only aspire to match. To make the most of this demographic dividend requires addressing education, employability and employment together, says Sabharwal of TeamLease Services. A candidate’s employability cannot improve without reforming education; but even if education improves, employment outcomes ultimately depend on the availability of productive jobs in the market. “Education, employment, employability cannot be unpacked,” he says. India must strengthen the entire continuum—from strong foundational skills and ITIs that teach what industry needs to the creation of jobs youth can aspire to. Miss any link and the chain breaks. The demographic dividend could then turn into frustration and social unrest, a glimpse of which we saw this summer at Jantar Mantar. n
CASE STUDY : STITCHING A FUTURE
A good student all along, with a CGPA of 7.8 in Class 12 and a second division in his BA course in Delhi, Sudheer wanted to write the CISF and Delhi Police exams. But when his tailor father’s health began failing, he had to find a job immediately. His quickest option was to learn the basics from local tailors and YouTube and take over his father’s business in Defence Colony. A clerk’s position in an advocate’s office promised Rs 10,000-12,000 a month, but he had to let it go. “I know I could have earned more later, but I didn’t have the luxury to earn less even for a month.” Today, bent over his sewing machine, Sudheer works from 10 am to 10 pm.
—Sonal Khetarpal
CASE STUDY : A DIFFERENT CUP OF TEA
Shaheen was just five when her labourer father died. She paid for her education by tutoring young children. In 2011, she graduated with a degree in Sociology and Political Science from Shashi Bhushan Degree College, Lucknow, after which she earned a diploma in Desktop Publishing. As Shaheen started looking for jobs, she realised the long working hours and low salary hardly seemed worth it—the job of a computer operator offered Rs 7,000 monthly and a call centre job too paid only Rs 6,000 for an eight-hour workday. She quit both after working for a few days. She then decided to pursue a diploma in Cosmetology in 2016, but jobs at salons were no different. “I was offered Rs 5,000 per month without a single weekly day off,” says Shaheen. In May 2022, she decided to open a tea stall opposite Tulsi Theatre in Hazratganj. “I have an interest in cooking, and I have turned that into my business,” she says. ‘Lucknow Chaiwali’ operates from 7 am to 10 pm and has built a regular clientele. “Now, I am my own boss and I also earn more than I did in the private sector.”
—Ashish Misra
CASE STUDY : JUST A PIPE DREAM
When he completed a plumbing course at the local Industrial Training Institute (ITI) in 2024 post matriculation, Ritik had hoped he would finally be able to supplement the family income. His father works at a private hospital, earning around Rs 12,000 a month. But despite repeated efforts, Ritik failed to find a job as a plumber. Visits to several recruitment agencies ended with the same response: most of the available opportunities were either in metropolitan cities or abroad, particularly in the Gulf countries. Since his modest background did not allow him to relocate to another city, travel overseas or continue to pay recruitment commissions, Ritik took up a job as a salesperson in a clothing shop to earn an immediate income. But he hasn’t given up hope entirely. He continues to apply for plumbing-related positions in government departments, including the Public Health Engineering Department (PHED), and hopes to eventually find work in the field in which he trained.
—Amitabh Srivastava
CASE STUDY : HOPE TURNS SAWDUST
A native of Gaya, Bihar, Pankaj did not want to be a carpenter like his father, Arjun. He studied for a BA degree and followed it up with a two-year fitter course at the Industrial Training Institute (ITI) in his hometown. He served as an apprentice at an auto firm for a year, but a permanent job remained a dream. After doing odd jobs for the next year while hunting for office work, he got an offer from a Gurugram firm, but the salary was just Rs 12,000 a month. Meanwhile, he got married and had a household to run. So, Pankaj settled for a job at a plywood shop in Kirti Nagar’s furniture market, making laminate catalogues. While he may have regrets, his father Arjun is very proud: “He is earning double of what the office was offering and getting bonus and Provident Fund too.”
—Sonal Khetarpal
– Ends