PM-SETU

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 This limits the “customized syllabus” to non-core, outdated, or basic skills.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.

Bridging Skills for 2047: The PM-SETU

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The Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs (PM-SETU) scheme represents a landmark initiative by the Ministry of Skill Development and Entrepreneurship (MSDE) to reimagine vocational education in India. Rooted in the vision of a “Viksit Bharat 2047”, the scheme seeks to modernize and elevate the Industrial Training Institutes (ITIs) and National Skill Training Institutes (NSTIs) into aspirational, industry-aligned institutions that produce highly employable youth.

Background: The 2008 Craftsmen Training Scheme and Its Limitations
The genesis of India’s formal vocational training ecosystem lies in the Craftsmen Training Scheme (CTS), operational since 2008 under the Directorate General of Training (DGT). While the CTS offered 169 trades aligned with the National Skills Qualification Framework (NSQF), it was largely government-managed, with limited industry participation. The infrastructure remained outdated, curricula were slow to adapt to evolving industry needs, and placement outcomes were inconsistent. Despite the presence of 33 NSTIs (including 19 for women), the system lacked the agility and responsiveness required to meet the demands of a rapidly transforming economy.

Introduction to PM-SETU: A Paradigm Shift
PM-SETU introduces a transformative model that is government-owned but industry-managed. With a total outlay of ₹60,000 crore over five years—shared among the Central Government (₹30,000 crore), State Governments (₹20,000 crore), and Industry (₹10,000 crore)—the scheme is structured into two components:

  • Component I focuses on upgrading 1,000 Government ITIs through a Hub-and-Spoke model, where 200 ITIs serve as hubs managing 800 spoke ITIs.
  • Component II aims to augment five NSTIs (Bhubaneswar, Chennai, Hyderabad, Kanpur, Ludhiana) into National Centres of Excellence (NCOEs), with global partnerships and advanced training capabilities.

The scheme is co-financed by the Asian Development Bank and the World Bank through result-based loans, ensuring accountability and performance-linked funding.

Operational and Governance Model
The scheme introduces Special Purpose Vehicles (SPVs) to manage clusters of ITIs. These SPVs can be industry-led or state-led, depending on the availability of credible Anchor Industry Partners (AIPs). Industry-led SPVs hold a 51% share, with the remaining 49% equally divided between the Centre and State. SPVs have full autonomy over curriculum design, trainer recruitment, financial operations, and infrastructure upgrades. Governance is ensured through a tripartite agreement comprising a Shareholders’ Agreement (SHA) and a License Agreement (LA).

At the national level, a Steering Committee chaired by the Secretary, MSDE, provides policy direction, while State Steering Committees oversee implementation, approve Strategic Investment Plans (SIPs), and monitor progress. Independent Monitoring Agencies (IMAs) verify milestones and ensure transparency.

Pitfalls Identified in the Scheme Design
Despite its robust framework, PM-SETU could have several potential pitfalls:

  • Complex Governance Structure: Multi-tiered committees and overlapping responsibilities may slow decision-making and create bureaucratic bottlenecks.
  • Dependence on Industry Participation: The success of clusters hinges on credible AIPs. Lack of interest or capacity could derail implementation.
  • HR Integration Challenges: Coexistence or deputation of government staff with SPV personnel may lead to role ambiguity and resistance to change.
  • Monitoring Burden: KPI-based fund release and performance tracking require sophisticated systems, which may strain under-resourced states.
  • Equity and Access Concerns: Risk of urban-centric clusters and exclusion of remote regions if not carefully planned.
  • Digital Divide: AR/VR tools and Learning Outcome Management Systems (LOMS) may not be accessible in low-connectivity areas.
  • Curriculum Fragmentation: Excessive customization by SPVs could lead to inconsistency in training quality and certification standards.
  • Sustainability Post-Scheme: Long-term viability depends on continued industry engagement and revenue generation.

Mitigation Strategies in the New Scheme
To address these challenges, PM-SETU incorporates a comprehensive mitigation plan:

  • Strengthening SPV Governance: Clear role definitions, onboarding programs for ITI staff, and change management training are mandated.
  • Ensuring Timely Fund Flow: Streamlined KPI tracking and technical assistance for SIP and AOP preparation are provided.
  • Standardizing Curriculum Framework: A core curriculum is mandated across ITIs, with flexibility in specific modules. All course approvals are routed through CSTARI and NCVET.
  • Planning for Sustainability: SPVs are encouraged to develop revenue-generating activities such as production centers, fee-based courses, and consultancy services.
  • Bridging the Digital Divide: Infrastructure grants and digital literacy programs are planned for ITIs in underserved regions.
  • Promoting Inclusive Cluster Selection: Clusters in NE, hilly, and tribal regions are prioritized, with relaxed hub-spoke definitions and gender/social equity targets.
  • Monitoring Industry Commitment: Performance-linked clauses in SPV agreements and multi-industry consortia are encouraged to ensure sustained engagement.

Conclusion
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.