Hub & Spoke

PM-SETU: Ratios Matter

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Indisciminate Increase of Load on the Hub

PM-SETU Scheme

Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs program aims to completely upgrade government industrial training institutes across country. Main goal is modernizing technical education so students learn modern skills needed for jobs today. Government wants to build strong network where students from different areas easily access high quality training facilities and expert teachers.

Hub and Spoke Cluster Architecture

Program uses special network design known as hub and spoke model. Overall plan upgrades 1,000 government institutes structured into 200 central hub institutes connected with 800 supporting spoke institutes. Standard setup links 4 spoke institutes to 1 central hub. States and union territories can adjust layout based on local needs. North Eastern region and hilly states use mini hubs with relaxed rules to handle tough geographical terrain.

Financial Outlay and Budgeting

Government fixes maximum money for single central hub at ₹81 crores over 5 years. Funding follows 3-way sharing model where central government gives up to ₹40 crores while state government provides ₹30 crores and industry partner brings ₹11 crores. Every single supporting spoke institute gets budget capped at ₹40 crores over 5 years with center giving ₹18 crores, state providing ₹17 crores, and industry contributing ₹5 crores. Total budget for standard cluster with 1 hub and 4 spokes reaches ₹241 crores evaluated through strategic investment plan.

Funding Mechanics and Rules

Money from center, state, and industry goes into special bank account called escrow account managed by special purpose vehicle. Release of funds depends entirely on strict performance rules. Institutes receive initial 10% advance payment first. Next yearly funds depend on maintaining at least 75% money usage and achieving target performance goals.

Operational Challenges in Expanded Clusters

Adding extra spoke institutes beyond standard 4 limit creates serious practical problems across daily administration, technical training, and student mobility. When administrators stretch hub-and-spoke ratio to 5, 6, or more spokes, system faces severe stress points:

  • Physical Overload of Advanced Machinery: Central hub acts as center of excellence housing high-end equipment, specialized production units, and advanced toolrooms. Managing practical training sessions for students coming from too many extra institutes overloads physical capacity of hub workshop and leads to frequent equipment breakdown.
  • Severe Commuting Hardship and Travel Strain: Wider geographical radius increases travel distance between outlying spoke institutes and central hub. Students and faculty members waste precious academic hours traveling long distances just to access specialized labs or mandatory practical training modules.
  • Diluted Administrative Oversight: Management committee and special purpose vehicle face immense difficulty maintaining close supervision over numerous disparate campuses. Continuous monitoring of key performance indicators, attendance tracking, and quality audits becomes weak and ineffective across scattered institutes.
  • Industry Partner Disengagement: Anchor industry partners committed to specific cluster configurations find it hard to manage joint placements, curriculum alignment, and apprentice tracking when student volume exceeds planned capacity. Overstretched batches reduce individual attention from corporate mentors.
  • Faculty Burnout and Resource Shortage: Expert trainers based at central hub struggle to split their teaching schedules effectively among too many outlying spokes. Traveling instructors face exhaustion, leading to irregular classes and poor delivery of advanced technical concepts.
  • Severe Financial and Infrastructure Imbalance: Spreading fixed capital budget across inflated number of institutes leaves laboratories underfunded and libraries short of resources. Adding extra spokes without increasing hub budget creates major financial gaps and severely hurts overall training quality.

Strategic Priority for High Student Density

Any necessary adjustment in hub-and-spoke ratio must lean strictly toward a higher configuration rather than a lower one, particularly in densely populated urban and semi-urban student regions. Expanding the operational radius downward by packing fewer institutes into a hub underutilizes high-end infrastructure, which still is better than stressing the resources by lowering the ratio, whereas prioritizing higher capacity ensures that massive student enrollments receive adequate technical exposure. Managing high student density effectively requires robust structural reinforcement and proportional budget scaling so that swelling trainee numbers never overwhelm central hub facilities.

Detailed Cost Impact of Adding Spokes

Hub institute works both as normal training center and as central hub supporting other spokes. Dividing ₹81 crores across 5 units including hub itself, means about ₹16.2 crores supports each unit. If cluster adds more spoke institutes instead of standard 4, hub requires extra investment to keep distribution fair. Adding extra spokes without increasing hub budget creates major financial imbalance and hurts training quality. Typically for each Spoke ITI added to the hub should call for additional outlay of ₹16.2 Crore at hub ITI and ₹40 Crore each for the added Spoke ITI

Conclusion and Need for Rigorous Implementation

Protecting original design and rules of PM SETU program remains extremely important to prevent past failures where huge money spent produced poor results. Changing core structural ratios or financial safety limits risks repeating old mistakes of spending funds without achieving real skill development or employment targets. Keeping strict hub and spoke framework ensures proper resource use and strong accountability.

PM-SETU Program: Potential Fault Lines and Fixes

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PM-SETU marks a bold and strategic shift in India’s skilling landscape. By integrating industry-led governance, modern infrastructure, flexible curricula, and robust monitoring mechanisms, it aims to create a future-ready workforce aligned with national development goals. While the scheme is ambitious and complex, its design reflects a deep understanding of past shortcomings and a commitment to inclusive, sustainable, and high-impact transformation.

Read my earlier article on details of the scheme Bridging Skills for 2047: The PM-SETU here. Though it covers potential pitfalls and mitigation risks, this article addresses the same is in greater detail.

Potential Risks and Mitigation

I have tried to classify the potential risks into various categories and highlight the issues under each one of them.

Pitfalls in Delivery: The Anchor Industry Partner (AIP) Model

Commitment and Focus: Industries’ primary focus is business and profit, not skill development. They may view managing an ITI cluster as a Corporate Social Responsibility (CSR) compliance or a low-priority function, leading to inconsistent engagement and neglect of the training center.

Achor Industry’s Priorities

Proprietary Knowledge & Secrecy Companies are often reluctant to share proprietary knowledge, cutting-edge technology, or trade secrets with the ITI, fearing it could benefit competitors or lead to leakage of confidential processes. This limits the “customized syllabus” to non-core, outdated, or basic skills.

Geographic Mismatch Finding a genuinely relevant and committed AIP for ITIs located in remote or underdeveloped rural areas is extremely difficult due to the low density of established industries, defeating the purpose of modernizing every cluster.

Bureaucratic Conflict The “Government-owned, Industry-managed” model creates a high potential for friction. Industry-led SPVs (Special Purpose Vehicles) may clash with existing government bureaucracy, processes, and the typically slow decision-making cycles of the government.

Pitfalls in Assessment and Standards

The shift to outcome-based, customized training creates new risks for standardization and quality control:

Non Standard Assessment and Misplaced Metrics

Assessment Subjectivity: When the assessment is heavily influenced by the AIP or local industry, it risks becoming non-standardized across different ITI clusters. An assessment standard set by a small regional industry might not meet the quality threshold of a national or international company.

“Certificate of Attendance” Risk: There is a risk that the assessment focuses purely on fulfilling a placement metric rather than genuine competency. If the AIP needs a certain number of workers, the assessment might be diluted to certify candidates quickly, leading to poor quality graduates.

Trainer Capacity Gap: The biggest long-standing challenge in ITIs is the lack of qualified trainers who are competent in the latest Industry 4.0 technologies (AI, Robotics, EV maintenance). PM-SETU requires a massive, rapid “Training-of-Trainers” (ToT) program, and failure to execute this will render the new customized syllabus and machinery useless.

Pitfalls in Qualification Portability

Achieving true national and global portability of a certificate based on a customized syllabus is complex:

Qualification Portability

Lack of Uniformity in Customization: A syllabus customized for one AIP’s plant in Karnataka may teach different skills or standards than one customized for a different AIP’s plant in Haryana. If these customized certificates do not map perfectly to the National Skill Qualification Framework (NSQF), their value outside the local industrial cluster diminishes.

Industry Recognition (Internal vs. External): While the certificate will be recognized by the Anchor Industry Partner that helped design it, securing external recognition from the wider, unassociated industry (especially in the informal sector, where most of India’s workforce is employed) remains a challenge.

Social Stigma: Despite significant investment, vocational training in India often suffers from low social prestige compared to formal higher education. Unless PM-SETU demonstrably guarantees high-paying and aspirational jobs, the scheme may still face low capacity utilization (vacant seats) and a lack of highly motivated students, as seen in past ITI reform efforts.

Mitigation for Delivery & AIP Commitment (Industry Engagement)

To ensure the Anchor Industry Partner (AIP) delivers on its mandate and doesn’t merely provide token involvement, the scheme uses financial and governance levers:

Financial Skin in the Game: The scheme employs a blended financing model where the industry is required to contribute an estimated ₹10,000 crore (out of the total ₹60,000 crore). This Industry Share ensures a financial commitment and vested interest in the success and long-term viability of the ITI cluster.

Performance-Linked Funding: Funds are released to the state and the Special Purpose Vehicle (SPV) based on Key Performance Indicators (KPIs). These KPIs are tied to outcome-based metrics like placement rates, capacity utilization, and trainer competency upgrades, ensuring that the focus remains on results rather than just infrastructure spending.

Strong SPV Governance: The Special Purpose Vehicle (SPV) managing the ITI cluster is structured to give the AIP significant autonomy (potentially a 51% share in industry-led SPVs), but this autonomy is balanced by a tripartite agreement (Shareholders’ Agreement and License Agreement) that clearly defines roles and mandates the AIP’s obligations for curriculum, infrastructure, and outcomes.

Encouraging Consortia: The scheme encourages the formation of a consortia of multiple industries rather than relying on a single AIP, especially in smaller or remote clusters. This diffuses the risk of a single company losing interest and broadens the relevance of the skills imparted.

Mitigation for Assessment & Standards

To combat subjectivity and the risk of poor trainer capacity, PM-SETU is leveraging institutional and global partnerships:

Global Benchmarking and Co-Financing: The project is co-financed by multilateral agencies like the World Bank and the Asian Development Bank (ADB). This involvement brings in international expertise and global best practices for design, delivery, and rigorous third-party evaluation, ensuring the standards are not just local but globally relevant.

Focus on Trainers (ToT): A major component is the capacity augmentation of 5 National Skill Training Institutes (NSTIs) into Global Centres of Excellence (NCOEs). These NCOEs are tasked with the crucial mission of running an intensive Training-of-Trainers (ToT) program to skill and re-skill up to 50,000 trainers in new-age trades (like AI, Robotics, etc.), directly tackling the quality gap.

Outcome-Based Certification: The scheme emphasizes strengthening the National Council for Vocational Education and Training (NCVET) framework to ensure that customized courses are properly aligned and mapped to the National Skill Qualification Framework (NSQF) levels. Assessment is therefore focused on demonstrating a defined level of competency needed for employment.

Mitigation for Qualification Portability & Stigma

Integration with NSQF and Pathways: By ensuring that customized courses are mapped to the NSQF, the qualification gains a defined, nationally recognized value, making it portable across states and industries in India.

Flexible Educational Pathways: The scheme creates new pathways for students, allowing them to pursue long-term diplomas and executive programs after their ITI certificate. This integration with the broader education system helps reduce the social stigma associated with vocational training by offering options for higher education and career progression, rather than a single terminal qualification.

Hub-and-Spoke Model for Equity: The Hub-and-Spoke model (200 Hub ITIs connected to 800 Spoke ITIs) is designed to ensure that the cutting-edge infrastructure and training standards of the “Hub” are disseminated to ITIs even in remote or underserved regions, promoting equitable access and ensuring a uniform quality standard across the country.

These mitigation strategies aim to transform the ITI ecosystem from a state-run, rigid system into a market-responsive, accountable, and high-quality vocational training network.