This is presented as a constructive observation of the PM-SETU (Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs) scheme. While it is admittedly early days since launch, the significantly slow pace of implementation is deeply worrisome, and extensive discussions with various ground-level stakeholders fail to inspire confidence regarding long-term execution. (Current status of PM-SETU implementation towards the end of this article)

The scheme was originally designed to completely revamp vocational training across India by restructuring 1,000 Government ITIs into a Hub-and-Spoke model comprising 200 Hubs and 800 Spokes. The core objective was to switch from a rigid government-led training style to an industry-managed system where Anchor Industry Partners (AIP) hold a 51% stake in a Special Purpose Vehicle to run the clusters, while government funds up to 83% of the costs. However, rollout has hit significant roadbumps and progress is moving much slower than acceptable. The scheme remains stuck firmly in pre-implementation and tendering stages as states struggle to finalize Requests for Proposals from corporate entities. Beneath this sluggishness lie deep, structural defects in scheme design.

Bureaucratic Friction and Administrative Gridlock

The 51:49 public-private partnership structure sounds good on paper, but it creates intense administrative gridlock. Corporate agility is consistently bottlenecked by traditional, slow-moving government approval cycles. State governments have had to frequently ask the Ministry of Skill Development for clarifications on how to frame agreements, creating massive administrative drag that stalls ground-level execution.

Non-Standardized Portability and Localized Syllabi

Because each Anchor Industry Partner customizes curriculum to fit its own specific factory needs, a syllabus created in Karnataka might differ completely from one in Haryana. If these customized courses do not align perfectly with the National Skill Qualification Framework, student certificates lose value if graduates move out of that specific industrial cluster, severely limiting interstate labour mobility.

Dual Competence Requirements for the Oversight Body

A major institutional weakness is lack of a specialized governance structure capable of managing this transition. An oversight body tasked with managing a massive transformation like PM-SETU cannot function merely as an auditing entity or a bureaucratic ledger-keeper. Because the public-private structure of Special Purpose Vehicles relies on complex escrow accounts and performance-linked milestones, oversight body requires deep financial competence to track milestone-based disbursements, audit asset monetization strategies, and verify whether valuations attached to corporate contributions are fair.

Equally vital is domain delivery competence. The governance framework must include professionals from emerging technical sectors capable of evaluating pedagogical quality, monitoring technology lifecycles, and ensuring that customized curricula maintain alignment with the National Skill Qualification Framework. Without this dual expertise of financial stewardship and deep vocational understanding, the oversight mechanism risks reducing its function to checking boxes rather than ensuring genuine instructional quality and wage-verified placements.

Critical Deficit in Trainer Ecosystems and Pedagogical Gaps

The most severe operational bottleneck threatening PM-SETU is acute non-availability of qualified trainers, a crisis that extends all the way up to master trainers responsible for training other instructors. Installing advanced robotic arms, automation kits, and CNC machines is entirely redundant without personnel capable of teaching students how to operate them. India faces a massive structural deficit in instructors who understand modern technologies like EV maintenance, AI-driven logistics, and smart manufacturing.

This human resource vacuum cannot be solved simply by importing personnel from factory floors. While industry experts possess deep technical knowledge, they frequently lack the vital pedagogical skills required to manage classrooms, design curricula, and break down complex industrial concepts for adolescent learners. Teaching is an entirely different capability set than manufacturing. Conversely, existing ITI faculty lack exposure to modern automation, leaving a massive gap between industrial reality and classroom instruction. The Training-of-Trainers framework within PM-SETU is lagging far behind infrastructure targets, creating a situation where high-tech labs sit idle because there is a total absence of individuals who can both operate the technology and teach it effectively.

Corporate Dilemma and Capitalist Paradox

The reliance on private companies to co-invest and manage these ITI clusters has exposed a fundamental capitalist paradox where Anchor Industry Partners face zero incentive to spend corporate resources to act as public charity, especially if it risks creating talent pipelines for direct rivals. Because ITI graduates are free agents, Anchor Industry Partners cannot legally force them to stay. A competitor who spent zero rupees on training can simply offer these newly skilled graduates slightly higher salaries and steal them away, forcing the investing company to subsidize its competitor’s HR department. Furthermore, teaching cutting-edge Industry 4.0 skills requires exposing internal operational workflows and proprietary tools, creating massive intellectual property risks regarding leakage to rivals. Finding top-tier industrial partners willing to invest heavily in remote, rural Spoke ITIs is also incredibly difficult, as most industrial giants remain concentrated around major manufacturing zones.

Strategic Perks Designed to Attract Private Investment

To convince Anchor Industry Partners to take these risks, the scheme pitches specific operational advantages. While companies cannot legally lock students in, they get exclusive, year-round access through on-the-job training inside corporate facilities. By graduation, these students are fully integrated into company culture and machinery, requiring zero onboarding time. Additionally, major corporations rely on hundreds of Micro, Small, and Medium Enterprise vendors. By managing a PM-SETU hub, an Anchor Industry Partner can train youth who will work for their supply chain vendors, which directly raises component quality and reduces defect rates. Finally, setting up a state-of-the-art training center independently requires 100% private funding, whereas PM-SETU provides up to 83% government funding for capital expenditure, allowing companies to build high-tech training ecosystems for a fraction of market price.

Policy Revisions Required to Accelerate Progress

To get PM-SETU back on track, government needs to implement structural course corrections that address both administrative delays and corporate anxieties. The Ministry should allow Anchor Industries to sign reasonable, legally binding apprenticeship-to-hire contracts where students agree to work for the partner firm for 18 to 24 months post-graduation in exchange for subsidized education. To deter poaching, competing firms hiring a graduate within two years of graduation should be mandated to pay training clawback fees directly to the original investing Anchor Industry Partner.

To resolve the teaching crisis, the government must collaborate with central universities and corporate partners to launch specialized pedagogical diplomas for engineers, transforming industry experts into certified educators. Funding must be aggressively diverted into mandatory corporate training stints for existing ITI faculty. To solve regional disparity, government should offer higher fiscal incentives or tax breaks for companies managing remote Spoke ITIs. Furthermore, the Ministry must mandate a core 70% standardized syllabus aligned with national frameworks, confining industry-specific training to the remaining 30% to ensure certificate portability. Finally, state-level single-window clearance channels must be created to fast-track corporate entity formation, and funding milestones should be strictly tied to actual graduate placement wages rather than mere enrollment numbers.

CURRENT STATUS

Overview of the PM-SETU Rollout

The implementation of the Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs (PM-SETU) scheme has gained momentum across India, driven by the Ministry of Skill Development and Entrepreneurship (MSDE) and the Directorate General of Training (DGT). According to official parliamentary and Ministry updates, currently 19 States and Union Territories have officially floated Requests for Proposals (RFPs) and tenders to onboard industry expertise, while 32 States/UTs have formed State Steering Committees to oversee the rollout. These procurement notices primarily target Anchor Industry Partners (AIPs) willing to co-invest and co-manage institutional clusters under a modernized Hub-and-Spoke model, reshaping vocational training through public-private collaboration. While nearly 20 states have crossed the hurdle of initiating these tenders, the scheme remains stuck in this exact stage. Publishing the RFP is proving to be the easy part, finding private corporations willing to actually bid on them and finalize the 51% stake agreements is where the current delay lies.

State-Specific Tender Actions

Several state governments have moved swiftly into the active bidding phase with substantial financial outlays. Haryana has issued an RFP for the Chhara ITI Cluster Upgradation in Jhajjar with a massive project outlay of ₹241 Crore, alongside onboarding project monitoring consultancies. Rajasthan’s Directorate of Technical Education has aligned its tenders with a similar ₹241 Crore per cluster framework, utilizing a structured funding split where the state and center cover 83% of costs, leaving a mandatory 17% (approximately ₹41 Crore) for the winning industry bidder. In the northeast, Assam has invited bids for the Guwahati Cluster, comprising ITI Guwahati as the hub and four surrounding spokes with an estimated project value of ₹281 Crore. Meanwhile, Andhra Pradesh has released highly localized, cluster-specific RFPs targeting key hubs like Kurnool, Dhone, Nellore, and Vijayawada to establish specialized training ecosystems.

Cluster Management and Upgradation Mandates

The technical and financial mandates embedded within these state tenders reflect a uniform strategy to decentralize ITI governance and future-proof the curriculum. Winning bidders across states like Odisha, Uttar Pradesh, Uttarakhand, and Tripura are required to establish a Section 8 non-profit Special Purpose Vehicle (SPV), maintaining a 51% industry stake against a 49% government share to ensure operational autonomy. Furthermore, the RFPs strictly bind the selected partners to upgrade infrastructure and introduce the DGT’s newly curated, future-ready courses. This ensures that the upgraded clusters move away from legacy trades and pivot aggressively toward high-demand sectors, including artificial intelligence programming, drone technology, green hydrogen production, semiconductor manufacturing, and 5G infrastructure.

Onboarding Status of Anchor Industry Partners (AIP)

The rollout of the ₹60,000-crore PM-SETU scheme has officially transitioned from the bidding phase to execution, with Andhra Pradesh becoming the first state in India to onboard an Anchor Industry Partner. This milestone was formalized by the Ministry of Skill Development and Entrepreneurship (MSDE) during the third National Steering Committee meeting.

First Onboarded Partner and Pilot Cluster

The inaugural Strategic Investment Plan (SIP) approved under the scheme belongs to the consortium of ArcelorMittal Nippon Steel India (AM/NS India) and its academic partner, the New Age Makers Institute of Technology (NAMTECH). This industry partnership has been officially onboarded to manage and transform the Visakhapatnam ITI Cluster in Andhra Pradesh, backed by a project cost of ₹200.21 Crore. This cluster will serve as the national blueprint for the hub-and-spoke model.

Current Pipeline and Approvals

While AM/NS India is the first to achieve final, formal clearance to begin operations, several other major industry leaders are heavily engaged in the final stages of the selection process. Companies like Hindustan Aeronautics Limited (HAL), Hero MotoCorp, Bajaj Auto, and ITC Limited have actively submitted proposals. With 12 states having already closed or nearing the closure of their initial Request for Proposal (RFP) timelines, the central ministry expects a wave of additional AIP onboardings and cluster approvals to be cleared in the coming months.

References

1. Ministry of Skill Development and Entrepreneurship (MSDE) Parliamentary Replies: Unstarred Question responses in both the Lok Sabha (Question No. 4939 & 5928) and the Rajya Sabha (Question No. 3794) answered in March 2026.
2. Press Information Bureau (PIB) Delhi: The Ministry reiterated these exact numbers in official government press releases titled “Operationalisation of PM–SETU” and “ITI Upgradation Under PM SETU”, issued by the Press Information Bureau.