The Aakhya Weekly #154 | Fixing the Skill Gap, One Upgrade at a Time!
In Focus: India’s 2025 Skills Policy to Train, Tackle, and Transform
On this July 4th, while many may have expected a commentary on the United States’ foreign policy moves in the first six months of Trump 2.0, perhaps, Aakhya Weekly’s attention is instead on a quieter yet significant development in India: the release of the draft National Skill Development Policy 2025 for public consultation.
Building on the legacies of the 2009 and 2015 policies, the 2025 draft offers renewed hope for closing the long-standing skill gap, especially in an era shaped by rapid technological change. This need is more pressing than ever, with India’s median age at just 28 and 65% of its population under the age of 35. If India aims to position itself as a global investment hub, it must do more than highlight the number of skilling programmes; it must deliver results, especially when it currently ranks 27th in the QS World Future Skills rankings.
Before anyone shares their feedback, whether as an industry expert or a concerned citizen, this edition of the Weekly offers a clear context: an overview of India’s current skilling landscape, past efforts to address it, and what the new policy seeks to do differently.
2025 - India and Skilling
Looking back at the 2024 statistics, the Ministry of Skill Development and Entrepreneurship (MSDE) reported that 51% of youth graduating are now employable, a significant rise from 33.9% in 2014. However, the real challenge in skilling lies not with fresh graduates but with those already in the workforce. It is, in fact, the existing employed population that remains the bigger concern.
Despite a drop in the unemployment rate, a rise in self-employment opportunities and expanding industry avenues, 82% of the workforce continues to face underemployment, meaning they are engaged in jobs that do not match their skills, potential, or aspirations.
While there are several reasons, key among them is the rapid pace of economic change that has led to demand for skills that did not exist ten years ago. Yet, the education system has failed to keep pace, be it even a skill as basic as precision farming or as advanced as generative AI. This gap feeds into long-standing legacy challenges, further, e.g. the urban-rural divide, unequal access to quality training, outdated curricula, and a lack of industry-relevant exposure, which continue to hinder inclusive skill development across the country. At the same time, the demand for skilled talent isn’t declining—it’s growing. As the economy grows, NSDC finds that India requires a staggering 103 million skilled professionals, while the current available supply is only around 74 million.
How did we come to this? What happened to 2009 and 2015?
None of this has happened in the absence of government efforts. Since 2009, successive skill development policies have aimed to equip individuals with essential skillsets, supported by various sector skill councils and complementary government initiatives. At the same time, however, the reasons why they did not work were barely discussed.
At the outset, the 2009 National Skill Development Policy was unique, and it brought the vision of creating a skilling ecosystem. At that time, the target was to equip 26 million in the organised and 433 million in the unorganised sector with relevant skills that would make them job-ready and employable. However, as noted by the Institute of Applied Manpower Research (IAMR), the policy lacked clarity on what skilling truly involved. Moreover, while it focused on employability, it failed to recognise the growing importance of self-employment and entrepreneurship.
To address earlier gaps, the government introduced the National Skill Development and Entrepreneurship Policy in 2015, which gained momentum through partners like NSDC, Sector Skill Councils, and various ministries. It broadened the vision of skilling as lifelong learning and supported entrepreneurial aspirations. However, a review by the Committee for Rationalisation of Sector Skill Councils highlighted issues such as certain key sectors not being assigned skilling responsibilities, even while others lacked the infrastructure and expertise to meet quality standards. With the rise of tech-driven skills, an important question arose: was it time for a new ‘Skill and Entrepreneurship Policy’?
The New Skill Development and Entrepreneurship Policy
From a broader perspective, the 2025 policy combines a unique blend of insights and existing policy approaches, incorporating the best guidelines to ensure successful implementation. Drawing inspiration from the UNESCO-UNEVOC definition of skills and establishing its core vision around lifelong learning and empowerment, the policy blends data-driven accountability, industry co-ownership, and a whole-of-government approach, key recommendations that have long been suggested.
Firstly, to address the challenges of skilling scope and scalability, it was recognised that skilling is a constantly evolving field. This required a data-driven approach capable of tracking market changes and demands. To this end, a Labour Market Information System is being developed, unifying data from government sources, skilling platforms, and industries to create a baseline for labour demand and supply. By leveraging codification models, economic indicators, GST filings, and e-way bills, the system will estimate sectoral demands, enabling the skilling scope to dynamically expand and shift focus to areas of higher demand.
Secondly, to address underemployment, the skills mismatch between the workforce and industry needs, and the barriers to introducing new job roles, it was recognised that private sector co-ownership is essential. The private sector not only has direct access to the workforce but also plays a vital role in bridging the skill gap through effective policy implementation. As a result, both lifelong learning through upskilling and reskilling programs, and industry-led skilling institutions are being promoted through fiscal and non-fiscal incentive models. This approach will not only help bridge the technological advancement gap but also provide momentum for skilling in emerging, industry-driven economic sectors such as gig and creative economies.
Thirdly, for an economy to be truly self-reliant, it must facilitate the ease of self-employment. With the startup ecosystem flourishing, entrepreneurial ambitions are at an all-time high. We have all had conversations within our circles about becoming entrepreneurs at some point in our respective futures. However, despite these aspirations, many of us never take the first step, often due to financial constraints or the lack of proper guidance. The policy positions entrepreneurship as a central pillar of the framework, promoting entrepreneurial aspirations through initiatives like NEP 2020, mentorship programs, and dedicated institutions, while also streamlining the process by proposing the introduction of an industry classification for nano-enterprises.
Lastly, to eliminate silos, reduce duplication of efforts, and strengthen the government’s processes to achieve these goals, the policy establishes a comprehensive framework. At the top, the National Skill Development Mission (NSDM) leads, with the Ministry of Skill Development and Entrepreneurship (MSDE) acting as the central coordinating body. A Project Implementation Unit (PIU) works with line ministries and states, serving as the primary execution bodies, leveraging their State and District Skill Development Plans to drive implementation.
Conclusion
The draft National Skill Development Policy 2025 represents a significant step forward in addressing India's evolving skilling needs. What remains to be seen now is the consultation process and how quickly it can be operationalised. As the popular saying goes, "We are closer to 2050 than we were to 2000," and in this context, we are now closer to 2047, making it all the more urgent to act swiftly and decisively.
Top Stories of the Week
Ballots in Your Pocket: Bihar Goes Voting 2.0
Bihar has become the first state in India to implement mobile phone-based e-voting for municipal elections. This initiative, launched on June 28, 2025, during municipal bypolls and elections in six Nagar Panchayats, aims to enhance accessibility and transparency. The e-voting system enables eligible voters- senior citizens, divyang voters, pregnant women, and migrant voters- to cast their ballots remotely via the e-SECBHR mobile app or the State Election Commission's website. The Android-based app will be required for registration.
The system leverages advanced security features, including blockchain technology for immutable record-keeping, facial recognition for identity verification, and an audit trail similar to VVPAT, ensuring a tamper-proof and secure voting experience. While traditional polling booths remained operational, this digital innovation saw significant uptake, with approximately 70.20% of registered e-voters utilising the new system. This pioneering step positions Bihar at the forefront of India's electoral modernisation efforts, paving the way for broader digital voting adoption across the nation.
Cabinet Approves ELI Scheme to Generate 3.5 Crore Jobs
The Union Cabinet has approved the Employment Linked Incentive (ELI) Scheme with an outlay of ₹99,446 crore to create over 3.5 crore jobs between August 2025 and July 2027. Under the scheme, first-time employees registered with the EPFO will receive a subsidy of up to ₹15,000 in two instalments, while employers hiring additional staff will receive incentives of up to ₹3,000 per new employee per month. Extended incentives for the manufacturing sector will cover the third and fourth years of sustained employment.
This decision is backed by announcements made in the Union Budget 2024-25, which included five employment-focused schemes worth over ₹2 lakh crore intended to benefit 4.1 crore youth. The ELI Scheme operationalises key budget commitments to incentivise first-time hiring and promote formal employment, particularly in sectors critical for economic growth.
The official scheme guidelines have not been released yet. However, critics, such as CITU, have argued that it simply channels public money to employers. In response, labour ministry officials assert that strict conditions, including EPFO registration and mandatory job retention, will guarantee meaningful and lasting employment outcomes.
A Few Good Reads
Pratap Bhanu Mehta writes that amid social media noise and warmongering, the youth need empathy and reassurance, not fear and division.
Anand Ethirajalu argues that cutting out middlemen is key to making regenerative farming viable and beneficial for small and marginal farmers.
Hyun Song Shin discusses the global economy’s fragility, stressing the need for consistent policies and public trust to ensure stability and growth.
Vivek Katju contends that while Hardeep Puri rightly acknowledged India’s strong response to Pakistan-backed terror, he erred in dismissing prior diplomatic efforts as theatrical.
Tehmeena Rizvi asserts that India’s pragmatic foreign policy reflects strategic maturity, not a departure from its core principles.