Why Training Alone Won’t Fix India’s Skills Problem

In recent years, discussions surrounding India’s skills gap have intensified. The government and policymakers have concluded that filling this gap would be crucial for job creation and the success of the manufacturing sector. Much of the debate revolves around numbers - how many job-seekers are trained and placed - rather than whether the training delivers meaningful employment gains. For workers, the central question is: do the skills lead to better wages and employment outcomes? The lack of student interest in vocational training signals that, for some, the answer is no. If skill programmes do not translate to better wages and aspirational jobs, young Indians are unlikely to choose them, no matter how many programmes the government creates.

Skills Without Returns

Firms pay wages for workers’ contributions to production, but if those wages cannot compensate for the cost of acquiring those skills, then the worker will opt out of the job. This mismatch is visible across the Indian economy. A 2025 National Council of Applied Economic Research survey revealed that high-growth sectors, such as the automotive and green energy sectors, have difficulty mobilising people for roles. This difficulty stems from issues arising on the industry side, where firms are unable to offer competitive wages. A motor vehicle mechanic in Gurgaon may earn around Rs 25,000 in the automotive industry, but as a delivery worker, he could make up to Rs 40,000. The trade-off is worse for a solar farm worker who earns about Rs 15,000 with far fewer benefits than a delivery worker in the city.

If skill programmes do not translate to better wages and aspirational jobs, young Indians are unlikely to choose them, no matter how many programmes the government creates.

Evidence from a 2019 empirical study on the effect of vocational training on wages in India highlights this problem. Vocational training raises wages significantly in the primary sector, by about 37 percent, and moderately in the secondary sector, by about 18 percent. However, its effect on the tertiary sector is insignificant. This sectoral variation means that the return from training is not uniform, and the impact is weak in sectors such as manufacturing and services, where many jobs are being created today. This also explains why many young Indians gravitate towards the gig economy - which offers higher pay - even though these jobs lack long-term security.

Even the role of government can be limited when people do not see the economic sense in getting trained in those skills. Take the Vayumitra Skill Development Programme, for instance, which was designed to create a skilled workforce for the wind energy sector. The programme had no takers in Andhra Pradesh, which has 4,398 MW installed wind capacity, and only 30 takers between 2015 and 2024 in Karnataka, which has 7,715 MW of installed wind capacity. While the low intake can be attributed to many factors, it also signals that many jobs that report a skill gap are non-aspirational for young Indians.

Weak Links in the Training Ecosystem

Weak linkages between vocational institutes and industries add to the challenge. Curricula lack real-world exposure, such as modern laboratories and experience with advanced technology and fieldwork. These gaps compel firms to either spend resources on on-the-job training, which raises costs, or operate with a skill shortage.

Skill studies in India have been fragmented, supply-driven, and based on different methodologies, which makes it difficult to build a national picture or align training with actual labour demand.

Currently, India lacks a dynamic framework that enables continuous monitoring of skills needs across sectors and states and for conducting periodic forecasting. Skill studies in India have been fragmented, supply-driven, and based on different methodologies, which makes it difficult to build a national picture or align training with actual labour demand.

Further, many vocational programmes train students without giving them a realistic view of the jobs they will be eligible for. This creates a mismatch in expectations between students and industry. Providing information sessions on job roles, locations, and salary benefits can assist trainees in self-selection, ensuring that those who complete training are better matched to industry needs and more likely to remain employed.

Rethinking India’s Skills Approach

Vocational training cannot deliver meaningful employment outcomes unless wages and benefits match the skills acquired. Skill development policy in India needs to evolve to align training efforts with sectoral competitiveness and worker aspirations. Three shifts are crucial:

1. Make skills training demand-led: As discussed previously, India needs a system that continuously maps labour market needs to adjust the training curricula accordingly. This entails real-time labour market information systems, better coordination between industry and training institutions, and transparent communication of job prospects. This is crucial for reducing mismatches between skills demanded by the market and the skills being produced, and for providing workers with a realistic view of their options.
2. Address constraints that suppress wages: Indian firms rank access to finance and land, obtaining business licenses and permits, corruption, and trade regulations as serious business environment constraints, and they consider these challenges to be more pressing than an inadequately educated workforce. Unless these burdens are eased, many firms will remain unable to pay competitive wages or invest in training. Skilling policy must be linked with regulatory and industrial reforms that improve firm competitiveness.
3. Scale training models that integrate placements: Vocational training can deliver better employment and wage outcomes when it combines rigorous trainee selection, quality instruction, and job placement support. Identifying and scaling training models that have demonstrated the ability to provide meaningful and sustained employment through public-private partnerships is necessary.

For young Indians, new-age jobs must be aspirational and provide clear pathways for their ambitions. Only then can India’s skilling ecosystem shift from the focus on numbers and deliver real impact. 

Anika Chhillar is a Research Assistant with the Centre for Economy and Growth at the Observer Research Foundation.

• Domestic Politics and Governance
• Skilling
• India
• skill development in india
• skill development programmes in india
• skill development schemes in india
• Skill India Mission
• skill india scheme
• vayumitra skill development programme
• vsdp

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