India's demographic dividend depends on fixing vocational education. Evaluate recent initiatives to make ITIs industry-relevant.

India's large working-age population becomes a dividend only if young people gain skills that employers will pay for. ITIs are the backbone of vocational training. Their number rose by 42% between 2014 and 2026 [1], but their results have not kept pace. Recent reforms, led by PM-SETU, are a promising but incomplete correction.

Recent initiatives

• PM-SETU (launched October 2025): a ₹60,000 crore Centrally Sponsored Scheme to upgrade 1,000 Government ITIs through a Hub-and-Spoke model of 200 hubs and 800 spokes [1].
• Government-owned, industry-managed SPVs: the anchor industry partner holds 51% of each SPV, and the Centre and the State hold 24.5% each [1].
• 5 NSTIs become National Centres of Excellence. The scheme targets 20 lakh youth and 50,000 trainers over five years [2].

Strengths

• Industry has its own money at stake: industry puts in ₹10,000 crore [1]. Under the earlier PPP scheme, industry partners did not train faculty or arrange on-the-job training, as a CAG audit in Uttar Pradesh found [4].
• Curriculum shaped by demand: NITI Aayog found only about 0.09% of trained candidates recorded as placed [3]. Letting employers shape courses tackles that failure directly.
• Fiscal leverage: the World Bank and ADB co-finance half of the Central share [2].
• Skills for the future: new-age courses, smart classrooms and digital content [1].

Limitations

• Teacher shortage: only 36% of sanctioned instructor posts are filled [3]. The scheme funds buildings, equipment and trainer upskilling, but it does not fill posts. That remains the States' job.
• Slow execution: one year on, only 14 clusters have been approved against a target of 200 hubs [1].
• Regional skew: ITIs are selected by regional industrial potential [1], so districts with little industry may be left out.
• Accountability gap: public assets sit in an SPV where the State holds only 24.5% [1]. If the industry partner withdraws, as partners effectively did under the earlier scheme [4], the State is left with the problem.

Way forward

• The National Steering Committee should publish placement data for each cluster [1].
• Funds should be released to SPVs in stages and tied to results. Under the earlier scheme, only 49% of the loan funds were used [4].
• States should include instructor recruitment in their upgradation proposals, and public-led hubs should serve districts with little industry.

Overall, PM-SETU fixes the main flaw of earlier PPP attempts: industry now has a stake in the outcome. Its success will still depend on hiring teachers, publishing placement data and including every region. If these gaps are closed, ITIs can drive SDG 4.4 (more youth with skills relevant to jobs) and turn India's demographic potential into a real dividend.