Training India: Is skills gap holding the economy back?

Mechanical skills students are in high demand with employers, as Yogita Limaye reports

In the past two years, India's economy has seen a sharp slowdown and that has had a direct impact on youth unemployment, particularly for graduates chasing white-collar jobs.

But, despite that, some parts of the economy are desperate to find skilled young workers - and that could have a big knock-on effect.

India has a potential "demographic dividend"; its millions of young people could be some of the major global consumers of the coming decades but only if they get the right education and work.

While many leaving university this year will struggle to find suitable work, they will sit side by side in their struggle with businesses that cannot find enough young people ready and skilled for manufacturing.

Those businesses may have to train up recruits from scratch, a process that can take years.

Foiled again

Start Quote

Jaydeepsinh Vaghela

We don't mind paying more for trained workers but where do we find them?”

End Quote Jaydeepsinh Vaghela Managing director, Raviraj Foils

At the factory of Raviraj Foils in Sanand, a town in the western Indian state of Gujarat, the work is frantic. Aluminium foil is being produced by big green machines and stacks of it are spread out all over the floor of the workshop.

The plant needs 250 skilled employees to work round the clock over three shifts to meet demand from its customers, mostly pharmaceutical and consumer goods companies.

But this skilled labour is in short supply. The factory's owner, Jaydeepsinh Vaghela, is forced to employ untrained youngsters from neighbouring villages.

"From the time that we hire someone, we take at least three years to train them fully so they can independently run a machine," he says.

"This significantly increases costs for us and because we need a lot of precision in our work, we often have to suffer wastage as we're forced to keep the factory running with unskilled staff.

"We don't mind paying more for trained workers, but where do we find them?"

Career 'taking off'

It is a problem most sectors in India are struggling with, despite the fact that the country has one of the largest young populations in the world.

The reason is clear. According to the government's Planning Commission, a body that charts the long-term economic roadmap for the country, just a tenth of those looking to join the workforce receive any training.

How the big number breaks down

Region Unemployment rate



Developed Economies and EU


Central and South-Eastern Europe


East Asia


South East Asia and the Pacific


South Asia


Latin America and the Caribbean


Middle East


North Africa


Sub-Saharan Africa


Source: ILO

In comparison, 60%-96% of workers in developed nations in Asia and the West undergo skills development.

A report by FICCI (Federation of Indian Chambers of Commerce and Industry) and Ernst & Young shows that India has fewer than 10,000 vocational training institutes with a capacity of just 1.3 million.

Ganesh Gaikar is a student at the Kohinoor Technical Institute. He's 22 years old and joined the mechanical skills course because he found that past students at the school had no trouble finding jobs.

"This training has really helped me. I still have a few months to go to complete the course but I already have a couple of offers from different companies. I think my career can really take off," he says.

White-collar disappointment

This is in contrast to students finishing university in India. With the economy slowing down sharply over the past two years, fewer white-collar jobs are now available.

Mayank Mehta, a student of finance at a college in Mumbai, is worried about finding work once he graduates. "I don't think it will be easy for me to get a job. The competition is very tough. "

Even the opportunities that are on offer are lower than most students expect. "I think we study so much, we are getting such good education so we need to get that level of job. I don't think that's happening in India," says Suvela Sharma, who's studying mass communication.


High youth unemployment is one of the biggest problems confronting societies around the world, condemning whole generations to a life of much reduced income.

In our special report we look at the challenges facing today's young and jobless, and the attempts to overcome the problem.

The government has woken up to this mismatch between skills and jobs. "I think the problem has been particularly acute in India, both in terms of the education and skilling. And this is where I think we need to get our act together," says Pallam Raju, India's Minister for Human Resources.

The government plans to give skills training to 500 million people by 2022 and it hopes to get industry more involved with the process.

"What I've been focusing on as far as our skilling aspects are concerned is to encourage them to build more linkages with industry and business, because only then the relevance will come in, only then the contemporariness of the skilling will come in and we hope to do it fast," says Mr Raju.

It's a big target, but only when India can reach out to many more of its young people can it turn its large population into an asset instead of a liability.

More Business stories


BBC Business Live


    This morning, before the Tesco announcement, the Motley Fool website for private investors published this front page article, extolling the value of investing in Tesco shares for its "big fat dividends". The half-year dividend has just been cut by 75%. Whoops!


    Despite the heavy falls for supermarket shares, broadly speaking the market is positive and the FTSE 100 is up 22 at 6827. Frankfurt's Dax is up 50 at 9510 and Paris's Cac 40 is 26 higher at 4392. If you're planning a bit of a trip the pound is looking pretty good. Its at 1 euro 2603 and $1.6603. Bulk money market rates being quoted here of course - your tourist cash is generally lower.

    Malaysia Airlines plane

    The Malaysia Airlines plan in brief: 6,000 job cuts (a third of workforce); new chief executive; firm completely nationalised by state investment fund; long-haul routes slashed; return to profitability forecast by 2018.

    Tesco sign

    Tesco's profit warning and slashed dividend has knocked its rivals' shares for six. Sainsbury's is down 5%, Morrisons is down 4% and Marks and Spencer is down 3%. Waitrose is not listed, of course, being owned by the John Lewis Partnership. Asda is owned by US giant Wal-Mart, whose shares trade in US time.


    The market doesn't like what it's seen in the Tesco statement. Shares are down 8%.


    The job cuts - about 30% of the workforce - are part of a restructuring of the airline, which has seen a steep drop in passenger numbers following the two air disasters involving its planes.

    MALAYSIA AIRLINES 08:15: Breaking News

    Malaysia Airlines says it will cut 6,000 staff. More details to follow.

    WATER BILLS 08:12:

    Just to make it clear, the OFWAT announcement covers the 18 regulated water and sewerage companies in England and Wales.


    The Nationwide's chief economist, Robert Gardner, says the fact that the economy is picking up means the property market will probably continue to thrive. "Consumer sentiment remains buoyant thanks to declining inflation and sustained increases in employment. The first increase in interest rates still appears some way off - we expect the first increase in the first quarter of 2015."


    Tesco invents some new business jargon. "The actions announced today regarding capital expenditure and, in particular, dividends have not been taken lightly. They are considered steps which enable us to retain a strong financial position and strategic optionality." Strategic optionality? Who writes that sort of thing?

    WATER BILLS 07:36:

    Average bills for water and sewerage customers may fall by around 5% in real terms between 2015 and 2020, says the water industry regulator OFWAT. It has published its draft proposals for the industry's prices. The regulated water companies put forward their price plans last December and OFWAT will deliver its final ruling this coming December.

    CAT BAIT 07:30:

    Russia's biggest lender, Sberbank, is looking to boost mortgage sales by offering a free cat to anyone willing to buy a property with money loaned from the bank.


    The lender says the outlook for the housing market remains highly uncertain: "The number of mortgage approvals fell by almost 20% between January and May, suggesting that activity was cooling. However, there was a modest rebound in June and it is unclear how much of the slowdown was due to the introduction of Mortgage Market Review rather than an underlying loss of momentum."


    Tesco is cutting its dividend payout to shareholders. It says it will set the interim dividend at 1.16p per share - a reduction of 75% from last year's interim dividend.


    Tesco's profits were previously expected to be £2.8bn for the year - now it says below £2.5bn.


    House prices are still going up says the Nationwide building society. In August they rose by another 0.8%, pushing the annual rate of inflation to 11%. It's the 16th monthly rise in a row.


    "We now expect trading profit for 2014/15 to be in the range of £2.4bn to £2.5bn. Trading profit for the six months ending 23 August 2014 is expected to be in the region of £1.1bn."


    Tesco has brought forward the start date for Philip Clarke's replacement David Lewis as boss. He now starts the job on Monday.

    TESCO PROFIT WARNING 07:05: Breaking News

    Tesco says its profits will be lower than expected. Dividends to be cut.

    Virgin planes

    Virgin Australia overnight announced losses of A$355.6m (£200.5m) for the year - more than three times its loss last time. It blamed "weak consumer sentiment" and too many planes - like its rival Qantas which reported its results yesterday.

    CO-OP VOTE 06:35: BBC Radio 4

    Big changes to the structure of the deeply troubled Co-op group will be put to a ballot of members tomorrow. Phil Dorrell, of consultants Retail Remedy, tells Today that even if the changes go through, a new leadership will have lot of work to do. "This will be a large step-change. My one concern would be that it probably shouldn't be the final change for the Co-op, they should consolidate, make sure they get their businesses back on track, and then have another look at it in a couple of years time."

    EUROZONE ECONOMY 06:22: Radio 5 live

    Wake Up to Money ponders whither the eurozone? This week France had to re-appoint its cabinet because of its failing economy. Italy re-entered recession earlier this month and even German GDP was down slightly in the latest quarter. Kathleen Brooks, from tells the programme: "Some economies are falling at a faster rate than others but what we've really seen is the core economies Germany and France lagging behind Spain."

    HOUSE PRICES 06:14:
    For Sale signs

    The gap between house sellers' asking prices and actual selling prices is widening, says the property website Hometrack. It explains that the market is cooling down, at least in terms of prices. It says sellers in England and Wales typically got 96% of their asking price in August, falling back for the third month in a row. But it adds house prices only tend to start falling when the percentage of the asking price that sellers achieve falls below 94%.

    GOOGLE DRONE 06:03:
    Google drone

    Overnight, Google said it was developing drones to act as flying delivery vehicles. The company calls it Project Wing. But it said it would take many years to create a service with lots of drones making lots of deliveries every day. More here.

    06:00: Rebecca Marston Business reporter, BBC News

    All of that. Stay with us - we're here 'til 13:00.

    06:00: Ian Pollock Business reporter, BBC News

    Good morning, we are here again, to keep you informed, educated and possibly entertained.



From BBC Capital


  • A map of social media interactionsClick Watch

    Twitter's map of the Middle East conflict – how the two sides react to each other on social media

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.