India is currently driving towards an ambitious journey of turning the economy into a $10 trillion giant by 2047. It can only do so only by tapping into its biggest asset, a huge population, but only if it is a skilled one.
According to a survey by workforce and HR management service provider Ultimate Kronos Group covering more than 300 manufacturers, 76 per cent of the organisations reported skilled labour shortage hurting their profitability in 2023 – with 35 per cent defining the impact as “severe”.
The survey findings, shared exclusively with ET, show that 8 per cent of the organisations witness production delays on the frontline at least once in every two weeks.
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India currently has a ticking time bomb: Birthrates are falling, life expectancy is increasing, even as its youth starts ageing.The Prime Minister Narendra Modi-led government will announce their first major policy announcement, the Union Budget, on July 23 that will lay the roadmap for the next five years of Modi 3.0. India has found it difficult to spark sufficient business spending to create enough work, particularly for young people in the country.
Does India produce good workers?
Lok Sabha 2024 results suggests that unemployment remains a big obstacle for the coalition government. A post- election survey showed Indian voters were primarily worried about unemployment, decreasing incomes, and inflation, causing disenchantment that led to Modi’s weak showing in the national election, reported news agency Reuters.
“Employability should ensure that our working-age population is employable and contributes to the economy. Top CEOs call out the relative scarcity of a skilled task force as one of the biggest impediments to India’s growth,” wrote Nitin Paranjpe, non-executive chairman at HUL for ET.
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Industry groups are echoing the need for job-linked incentives in the upcoming budget. Sanjiv Puri, President of CII suggested the launching of an employment-linked incentive scheme for specific sectors to leverage the demographic dividend.
“A job-linked vocational education scheme which seeks to train manpower to meet the current and future demands of the industry will provide the much-needed impetus for this shift,” saidRohin Kapoor, Partner, Education & Skilling, Management Consulting, BDO India.
An acute shortage of skilled labour is amajor challenge for Indian manufacturers in sectors likeengineering, automotive, electronics, infrastructure, chemical, pharmaceutical and food processing.
“Lack of world class training infrastructure facilities, no guarantee of jobs post completion of programs, limited industry and academia dialogue & connect, shortage of trainers to meet the massive demand, poor monitoring and supervision of training centres,” said Kapoor on some of the reasons why India has failed to have strong skilled workforce despite schemes in place.
Industry players have suggested providing incentives for upskilling.
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“The industry and startup ecosystem faces a talent shortage due to a lack of new-age skills among individuals. Despite this need, individuals are reluctant to invest in skilling programs because of the high tax rates on educational services. To encourage individuals to upskill and make it a habit & a household culture, we need to offer tax benefits/privileges similar to those under Section 80C (like Mutual Funds or Life Insurance). This will incentivise individuals and motivate them to invest in skilling (acquiring important job skills) while also bridging the talent gap in the long run,” suggested Mayank Kumar co-founder and MD of upGrad.
Budget measures must go beyond job-creation
Citi Bank economists Samiran Chakraborty and Baqar Zaidi recently lamented the quality of jobs being created in India in a report.
An analysis of the official data showed about 46 per cent of the workforce is still employed in agriculture, even though the sector contributes less than 20 per cent to gross domestic product. Manufacturing accounted for 11.4 per cent of total jobs in 2023, a lower share than in 2018, the figures show, a sign that the sector hasn’t bounced back since the pandemic, reported Bloomberg.
For now, the government’s skill development policy remains outdated as it was laid in 2015. “Our first national policy on skill development & entrepreneurship was announced in 2015 & already several milestones have been achieved. Although, a lot needs to done,” said Kapoor.
The Centre, realising the need to skill the population, is set to introduce a new policy on skilling to replace the National Policy on Skill Development and Entrepreneurship, 2015, almost 10 years after the policy was launched to impart skills training in the country, reported ET. The move is aimed at giving a renewed push to skilling in India while aligning it to the new age skills. The ministry has engaged the Boston Consulting Group (BCG) to draft a new policy that will set fresh targets and lay out a roadmap to achieve the government’s vision of making India the skills capital of the world, a senior government official told ET.
In the upcoming budget, there is also a need to include a skill-based census, experts believe. “A country-wide skills census must be conducted to identify the level of skills possessed by our citizens & reasons for unemployment. The census will also help us in gaining an understanding of whether the skills imparted under various programs are logically linked to the job opportunities in the market. Further, a comparison to the global skilling ecosystem and gaps therein can also be identified,” commented Kapoor.
“The government should focus on gaps with respect to building industry relevant curricula, setting up world class physical training infrastructure facilities, designing effective ‘train-the-trainer’ programs across industries and formalizing an open and transparent communication line with the industry,” remarked Kapoor.
For schemes to work, need for quality workers:
PLI, the pet project of the Modi government has shown immense success to kickstart the manufacturing industry in the country. But the lack of a skilledworkforce has slowed the pace.
The PLI scheme, which provides a substantial $1.7 billion incentive, has already attracted investments in semiconductor manufacturing facilities, showcasing government efforts to boost capacity and job creation. Some of the areas that are facing the shortage are research and development, design, manufacturing, and advanced packaging.
India, which is trying to compete with China by showing itself as the next alternative, has shown enough interest in setting up the semiconductor industry in the country. “The semiconductor industry has grown at a breathtaking pace in recent years. As demand for semiconductors rise rapidly, so does the need for skilled professionals, further intensifying the talent shortage,” Shivendra Srivastava, Head of People, Samsung Semiconductor India told ET. According to a study by TeamLease Degree Apprenticeship, India is predicted to face a shortage of 3,00,000 skilled professionals in the semiconductor industry by 2027.
India’s burgeoning semiconductor sector is facing a surge in demand for talent, fuelled by new investments and the government’s ambitious plan to transform the country into a chip manufacturing hub. This shortfall is likely to be compounded by the projected industry growth, driven by global electronic manufacturers and the Indian government initiatives like the India Semiconductor Mission and PLI schemes.
To make do with the existing population, major companies like Intel India, AMD, Applied Materials and Tessolve are teaming up with students and employees to work on real-life projects, establishing labs in institutes like IIT-Bombay, driving industry-academia partnerships to conduct research in core design and AI training and sponsoring students pursuing research.
The upcoming budget that will be presented by a coalition government has Telugu Desam Party (TDP) as one of the key allies. The party’s supremo Chandrababu Naidu has already pushed for the skill-based census. The game-changing idea could help the Modi government address the overgrowing issue.
Content Source: economictimes.indiatimes.com