Inside the sprawling industrial corridors of Surat and Visakhapatnam, a quiet revolution in Indian vocational training is finally breaking ground. Bulldozers and procurement teams backed by ArcelorMittal Nippon Steel India are moving into government Industrial Training Institutes, replacing decades-old lathes with robotics labs and clean-energy simulators. These clusters represent the vanguard of the Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs (PM-SETU), New Delhi’s most ambitious attempt to bridge the chasm between classroom instruction and factory-floor reality.
Launched by Hon’ble Prime Minister Narendra Modi on October 4, 2025, with a ₹60,000 crore outlay, PM-SETU arrived with a bold five-year mandate. Rather than pouring taxpayer money into top-down bureaucratic repairs, the scheme proposed turning 1,000 government ITIs into 200 modern Hub-and-Spoke clusters managed through public-private Special Purpose Vehicles (SPVs). As the scheme crosses its first anniversary in late 2026, a comprehensive review of its progress reveals a fascinating paradox. Institutional groundwork and curriculum reforms have moved at breakneck speed, yet financial deployment, physical rollouts, and human-resource readiness lag far behind linear five-year expectations.
5-Year Clock vs Year-1 Reality
Measured purely on proportional arithmetic, 20% of a 5-year scheme should ideally reflect roughly ₹12,000 crore in committed capital and forty operational clusters by its twelfth month. On paper, PM-SETU appears heavily back-loaded. By October 2026, the National Steering Committee (NSC) under the Ministry of Skill Development and Entrepreneurship had approved Strategic Investment Plans (SIPs) for 19 ITI clusters out of the targeted 200 hubs. Cumulative approved investments stood at approximately ₹3,687 crore, accounting for just over six percent of the total ₹60,000 crore budget.
Beneath that conservative spending figure, however, lies brisk administrative mobilisation. Within twelve months, all 36 States and Union Territories constituted their State Steering Committees, and 850 out of the 1,000 targeted ITIs were officially mapped into clusters. Simultaneously, the Directorate General of Training (DGT) overhauled the Craftsmen Training Scheme by introducing 32 new-age courses spanning Artificial Intelligence, Semiconductor Fabrication, Green Hydrogen, Electric Vehicle Maintenance, Industrial Robotics, and Drone Technology.
Hinterland Waits
A closer look at the 19 approved clusters exposes a sharp geographic divide across India. Industrialised states with established manufacturing ecosystems have eagerly embraced the scheme, converting policy blueprints into signed Shareholders’ Agreements.
Andhra Pradesh secured the nation’s first SIP approval in May 2026 for its four-ITI Visakhapatnam cluster, partnering with ArcelorMittal Nippon Steel India on a ₹200 crore upgrade. Gujarat followed closely with a ₹240 crore Surat cluster anchored by the same steel major alongside technical partner NAMTECH. Rajasthan became the first state to execute a formal Shareholders’ Agreement for its ₹241 crore Bhiwadi cluster, anchored by H.G. Infra Engineering Limited.
Odisha leveraged its mineral belt to secure multiple approvals across Barbil and Cuttack with Jindal Naveen Avsar Limited and Tata Steel Foundation. Telangana demonstrated sector diversity by onboarding Zen Technologies for defence simulation and Apollo MedSkills for healthcare across its Medchal and Hyderabad clusters. Meanwhile, late-2026 approval tranches brought Uttar Pradesh’s Meerut cluster, Maharashtra’s Chhatrapati Sambhajinagar hub, and two clusters in Jammu and Kashmir into active capital deployment.
Beyond these nine frontrunners, the map turns decidedly slower. Karnataka, Bihar, Haryana, and Assam remain locked in Request for Proposal (RFP) tender cycles, while Himalayan and island territories including Meghalaya, Sikkim, Uttarakhand, and the Andaman and Nicobar Islands are still soliciting bids through November 2026.
Structural Friction of 51% Mandate
The discrepancy between rapid institutional planning and uneven physical rollout stems directly from PM-SETU’s governance architecture. Unlike conventional public works where ministries disburse funds straight to contractors, PM-SETU mandates a corporate SPV for every cluster. In this structure, an Anchor Industry Partner must hold a controlling 51 percent equity stake alongside 24.5 percent each from the Central and State governments, contributing toward an overall ₹10,000 crore private-sector target alongside ₹30,000 crore from the Centre and ₹20,000 crore from States.
Expecting private enterprises to take majority ownership and operational responsibility works seamlessly when a conglomerate already operates massive plants ten kilometres from the hub ITI. For firms like Tata Steel or AM/NS India, funding a ₹240 crore cluster is a direct investment in their own future talent pipeline.
The calculus changes dramatically in non-industrial districts across Bihar, eastern Uttar Pradesh, or the Northeast. Lacking large local factories, corporate houses see little commercial incentive to lock capital into Section 8 companies and manage sprawling five-ITI networks. Without a dominant anchor employer, state governments are forced to assemble fragile consortiums or float repeated tenders that draw lukewarm responses. Left unaddressed, this structural bottleneck risks deepening the exact regional disparities PM-SETU was built to erase.
NSTI Bottleneck and Acute Shortage of Master Trainers
While cluster SPVs navigate corporate negotiations on the ground, Component II of PM-SETU aims to fortify the apex of India’s skilling pyramid. Backed by a dedicated ₹1,500 crore allocation, ₹1,100 crore for physical infrastructure and ₹400 crore strictly for Training of Trainers, Centre is upgrading five National Skill Training Institutes (NSTIs) in Bhubaneswar, Chennai, Hyderabad, Kanpur, and Ludhiana into sector-specific National Centres of Excellence. Operating on an 80-to-20 funding split between New Delhi and industry partners, four of these institutes have signed technical tie-ups with Singapore, France, Australia, and Germany to benchmark curricula and simulation laboratories against global manufacturing standards.
Yet this apex layer carries a sobering operational risk that could undermine the entire scheme. Even if brick-and-mortar upgrades and imported machinery arrive on schedule, itself a substantial assumption given public-works timelines, true operationalisation of these NSTIs remains far from assured. For decades, India’s vocational ecosystem has suffered from a chronic, debilitating shortage of skilled and experienced trainers.
You cannot teach semiconductor fabrication, industrial robotics, or green hydrogen maintenance merely by installing expensive equipment inside freshly painted campuses. Master trainers with real shop-floor experience command lucrative salaries in the private sector and rarely gravitate toward rigid public-sector pay scales or administrative postings. Unless these five NSTIs rapidly recruit, retain, and empower genuine industry practitioners rather than relying on under-trained legacy staff, the promised cascade of knowledge down to the 200 ITI clusters risks stalling before it begins. Without a credible solution to the trainer deficit, even the best-funded Centres of Excellence risk becoming hollow monuments of hardware.
Recovering Lost Time Over the Next 4 Years
With 4 years remaining on the PM-SETU clock, policymakers recognise that administrative drag cannot be allowed to stall human capital creation. In July 2026, the Ministry of Skill Development and Entrepreneurship made a pivotal course correction by clearing simultaneous nationwide rollout across all 200 clusters, abandoning its earlier phased approach.
Sustaining that momentum through 2030 will require deeper structural pragmatism. Standardising legal templates for SPV registration can shave months off bureaucratic negotiations, while introducing a tiered equity model for non-industrial districts—allowing industry associations or sector skill councils to hold a 26 percent operational stake—would unlock stalled tenders in eastern and hill states. Equally vital, NSTIs must be granted lateral-hiring autonomy and market-linked compensation to bring seasoned engineers and master technicians from active factory floors into classrooms.
PM-SETU has already accomplished what decades of piecemeal reforms could not by placing industry at the centre of vocational governance. If New Delhi pairs its rapid curriculum modernisation with flexible SPV rules for India’s hinterland and an urgent war-footing drive to solve the trainer crisis, the slow financial start of year one could yet give way to a decisive transformation of India’s workforce before 2030.