THEBUSINESSBYTES BUREAU

NEW DELHI, FEBRUARY 2, 2026

In a major boost to India’s skilling ecosystem, the World Bank’s Board of Executive Directors has approved financing to modernise the country’s vast network of skills training institutes, aiming to better align training outcomes with labour market demand and unlock greater employment opportunities for millions of young Indians entering the workforce each year.

Jobs remain central to India’s growth trajectory, competitiveness, and its larger ambition of becoming ‘Viksit Bharat’. Despite a demographic advantage, India continues to grapple with a significant skills mismatch. Nearly 72 percent of the unemployed are young people, reflecting a gap between the skills imparted through training institutions and those demanded by industry. This mismatch constrains productivity, limits firm growth, and suppresses earnings. Industrial Training Institutes (ITIs), the backbone of India’s vocational education system, play a vital role in skilling youth, but many face structural challenges, including inadequate infrastructure, a shortage of qualified trainers, and insufficient resources to meet evolving industry standards. As a result, job placement rates for ITI graduates remain below 50 percent.

Addressing these challenges, the Supporting Pradhan Mantri Skilling and Employability Transformation Through Upgraded ITIs (PM-SETU) Program, backed by an $830 million World Bank loan, seeks to comprehensively revamp the ITI network. The initiative aims to align skills training more closely with labour market needs, produce over one million better-skilled workers annually, and significantly increase workforce participation among young graduates. Prepared jointly with the Asian Development Bank, the program also seeks to crowd in private sector participation, mobilising at least $680 million in private capital to strengthen and modernise the ITI ecosystem.

 “With more than 12 million people entering the labour market every year, job creation is a national priority for India,” said Paul Procee, Acting Country Director, World Bank India. “Private sector-led job creation is at the heart of the World Bank Group’s new Country Partnership Framework for India. By supporting India’s $4 billion investment to upgrade ITIs, this program will embed industry-driven training across the system so that high placement rates become the norm, not the exception.”

The program also places a strong emphasis on inclusion and gender diversity. Traditionally, most ITI trades — such as electrician, mechanic, and welder — have been male dominated. Over the next five years, PM-SETU will modernise curricula and promote greater participation of women, with a target of ensuring that at least 25 percent of ITI students are women, enabling them to access higher-paying and more sustainable employment opportunities.

In addition, the initiative will encourage ITIs to evolve into financially sustainable institutions. “The program will help ITIs offer a more balanced mix of training, consultancy, and production functions, allowing them to generate their own revenues to expand and improve training quality,” said Marguerite Clarke and Toby Linden, task team leaders of the program. “Through a hub-and-spoke model with extension centres, ITIs will emerge as specialised, resource-efficient centres of excellence.”

The $830 million loan will have a final maturity of 19.5 years, including a grace period of four years, providing India with long-term, stable financing to transform its skilling landscape and better prepare its youth for the demands of a rapidly evolving job market.