Industry Partnership in Skill Development

Industry Partnership in Skill Development

Presentation Overview 1. Institutional Framework for Skill Development in India 2. India s Demographic Dividend 3. Government-Industry Partnership in Skill Development 4. Evolving Next Generation Models I. Training Sponsorship through the National Skill Development Fund (NSDF) II. III. IV. Corporate owned State-of-the-Art centres Donation in Kind Amendments to Apprenticeship Act

Institutional Framework for Skill Development Over the last one year, the skill development ecosystem has evolved significantly through a centrally coordinated effort with the formation of a new Ministry Formation of Ministry: New ministry notified on 10 th Nov, 2014 Shri Rajiv Pratap Rudy takes over as new Minister of State (independent charge) of the ministry Ministry of Skill Development & Entrepreneurship* www.skilldevelopment.gov.in Key Achievements: National Skill Development Mission National Policy for Skill Development and Entrepreneurship 2015 Skill Loan Scheme launched PMKVY, an INR 1500 Cr Scheme launched National Skill Development Agency (NSDA) National Skill Development Corporation (NSDC) National Skill Development Fund (NSDF) Sector Skill Councils (SSC) Directorate General of Training (DGT) * Other bodies under the Ministry include Indian Institute of Entrepreneurship (IIE) and National Institute of Entrepreneurship and Small Business Development (NIESBUD)

India s Demographic Dividend and Opportunities Less than 2.5% of our current workforce of 480+ Mn has undergone formal skilling; 12 million people enter the workforce every year School and Higher Education GER determines the number of students enrolled in school at several different grade levels. 44% of the population comprises of children Dropout rate in primary schools 50% for boys and 58% for girls, Over 70% in many States Dropout in Secondary schools 37% of secondary students fail 11% dropout even before exams Workforce Readiness & Employability Less than 2.5% of the total workforce in India having undergone formal skill training as compared to 68% in the UK and 52% in the US, the quantum of the challenge is still high. Total workforce in the country is estimated at 487.4 million, About 93% of workers are in the informal sector which is transient in nature 51% is in the non-farm sector

Survey of 2000 trainees across 23 private training organizations and 20 large and medium sized employers Only 53% of candidates get prejoining counseling; 48% dissatisfied with their jobs or profile; 17% quit job due to lack of post-placement support Source: Accenture Impact Study, 2013 Based on extensive case studies of 20 accident workers working in ancillary units in Gurgaon, it was identified that lack of training and safety awareness is a key reason for such accidents. Source; Agrasar SafeInIndia Report, 2015 Less than 20% engineers are employable for software jobs, 7.49% are employable for core engineering jobs, even though more than 90% aspire for such jobs. 1/3 rd of 4000 plumbers surveyed couldn t handle customer expectations Source: Aspiring Minds India Employability Survey India has only 3 lakh apprentices while Germany has 3 million, Japan 10 million and China 20 million. From an employer perspective also the participation rate is negligible Source: Team Lease India Labour Report, 2012 Out of about 3 Lakh candidates who appeared for the Employability Skill Test across domains, only 37.22% were found employable. Source: Wheebox India Skills Report 2015 Low quality human resource funnel and low participation through apprenticeship leads to non-availability of matching skills, and low productivity workforce

Government-Industry Partnership in Skill Development Adoption of ITI by Private Players 11964 ITIs Government runs 2284 and rest are Privately-run Seating capacity of 1.86 Million 126 Trades (73 Engineering, 48 Non-Engineering and 5 exclusively for Visually Impaired) Duration is 1-3 years 1227 Government-run it is have been adopted by Industry through Institution Management Committee (IMC) Major participants include Tata, Mahindra, Maruti, etc. 49% owned by GoI; 51% by Industry Chairman is Mr S Ramadorai, Tata Group Government has provided Rs 1000 Crores in public funds to catalyze private sector participation Over 250 private vocational training organizations funded About 5000 training centers established across the country 40 Sector Skill Councils (SSC) established in partnership with the industry associations; SSC provided non-statutory certification body status; set standards of training through National Occupation Standards

Only a small % of students make it through the full cycle of the education system Most of them have access to low-quality education system at the school-level High gender imbalance and dropouts in the process No career pathways for dropouts Many of the students in higher education institutes are not job-ready Vocational skill is not a preferred option; limited capacity in public training institutions like ITIs, etc. Lack of high quality joint industry programs Low participation or/and visibility of corporate sector involvement in skill development leading to lower participation and lower aspirations in skilling programs High attrition rates in certain sectors Flexible labour models and nonavailability of just-in-time workforce to adapt to business cycles Low productivity and quality resulting in high investment in inhouse training; on-the-job training has limitations Affects global competitiveness Difficult to source specialized and new-age skills Low productivity among supply chain vendors, SME contractors, managed service providers, etc. 36.4% of GDP as investment to get 1% growth in employment. India s skill development program needs to train for the next generation of jobs Source: Kotak GameChanger Perspectives, March 14

Evolving Next Generation Skill Development Models (I) Sponsor Training through National Skill Development Fund National Skill Development Fund has been setup as a receptacle to fund NSDC and channelize CSR funds from private companies and PSUs The sponsor shall have the choice of deciding the geography, trade, gender or the social grouping that they would like to target for this purpose The training shall be branded in such a way that industry contribution is fully acknowledged. The industry would be fully associated with the management, supervision and oversight of the training in order to ensure the training is in the compliance with the requirement of the corporate Since January 2015, over 75 Crores have been committed by various public and private sector enterprises to train over 45000 persons across the country

Evolving Next Generation Skill Development Models (II) Setup a Corporate Skill Excellence Centre Special industry initiative for corporates to participate in PPP mode 1. Industry-owned State-of-the-Art Centres to substantially increase youth aspirations as part of the Skill India initiative, and, 2. Centre could cater to the captive demands of the corporate, enhance productivity of supply chain partners and meet demand arising from aspirations in the surrounding areas in a sustainable manner. Funds can be routed through the National Skill Development Fund 80G and FCRA exemption available 35CCD available through applications to the National Skill Development Agency Skill development is part of activities listed under CSR contribution NSDC will identify a Training Partner to manage and operate the centre Service Tax Exemption available if, Vocational education/training/skill development courses offered by any institution setup by the Government of India, State Government or any local authorities Any service provided by NSDC Training Partner, SSC, Assessment agency approved by NSDC/SSC Government can sponsor trainees under Pradhan Mantri Kaushal Vikas Yojana and Deen Dayal Upadhyay Gramin Kaushal Yojana programmes

Evolving Next Generation Skill Development Models (III) Provide land and building Industry can provide land, building premises and donate equipment to operate through a NSDC approved training partner The training centre can be in an already existing building or even in a rented building Donate high technology, equipment, simulators and machines to Government in order to address the issue of technology obsolescence. NSDC to assist with identification of training partner Government can sponsor trainees under Pradhan Mantri Kaushal Vikas Yojana and Deen Dayal Upadhyay Gramin Kaushal Yojana programmes The Training Centre again shall have full branding of the sponsoring Corporate who shall be full associated with the oversight of the Centre.

Evolving Next Generation Skill Development Models (III) Amendments to Apprenticeship Act Germany has 3 million, Japan has 10 million and China has 20 million apprentices but India only 0.2 million. Keeping this in mind and also outcomes of existing programs, the Government has taken following initiative to revamp apprenticeship training Amendments of the Apprentices Act, 1961 and Rules Engagement of apprentices in a band of 2.5% to 10% within a financial year. Establishment can also engage apprentices in optional trades Scope has been extended to non-engineering pass outs. Establishments have been permitted to outsource basic training in an institute of their choice may be ITIs. Revision of rates of stipend 70% of minimum wage in 1 st year; 80% in 2 nd year and 90% in 3 rd year Apprentice Protsahan Yojana (APY) 50% of the prescribed stipend paid to apprentices during the first two years of their training. Revamping of syllabus Portal for Apprenticeship Training and APY

Thank you

Annexure 1: CSEC Proposed Model Ownership Owned Trust/Society Land & Building Own Leased Operating Model Self-Managed By NSDC Training Partner Center Size (in sq.ft.) 25000 15000 6000 *CAPEX Costs (in Cr) 7.5 4.5 1.8 OPEX As per centre requirements Center Capacity (min nos. per year) 1000 500 250 Recognition Corporate Skill Excellence Centre Focus Sectors/Trades Single Sector/ Multiple Sectors/ Multiple Trades Multiple Trades Duration of Training Program 2-6 months or as per need Assessment Third-party Assessment Agency Certification Joint Certification with Sector Skill Council (SSC); International partnership preferred highly Branding Co-branding with Skill India logo Training & Assessment Costs As mutually agreed to and based on certain norms. For Provisions for Special Areas/PWDs Government funded scheme respective guidelines will apply. Boarding, Lodging & Transportation Residential Facilities Optional Lab & Equipment As per requirement of SSC *Assumed at INR 3000 per sq.ft inclusive of land, building and refurbishments; market rates apply otherwise

Annexure 2: Financial Incentives for Skill Development The Ministry, through its various agencies and programs, provides various incentives for corporates that setup Corporate Skill Excellence Centres as part of their core business or CSR activities. National Skill Development Fund (NSDF) Government of India fund to channelize all investments in skill development activities FCRA exemption available for investment in skill development 80G certificate available Application of CSR under Section 135 of the Companies Act, 2013 Employment enhancing vocational skills especially among children, women, elderly, and the differently enabled and livelihood enhancement projects Rural development projects National Skill Development Agency (NSDA) Under Section 35 CCD of the Income Tax Act a company can avail benefits of weighted tax deductions of 150 percent of the expenses (other than land or building) incurred on skill development projects. A skill development project shall be considered for notification if it is undertaken by an eligible company and the project is undertaken in separate facilities in a training institute. The eligible company, before undertaking any skill development project, shall make an application for notification of such project to the NSDA National Skill Development Corporation (NSDC), Sector Skill Council (SSC) and/or Assessment Agency approved by NSDC/SSC Application of Service Tax Exemption Vocational education/training/skill development courses offered by any institution setup by the Government of India, State Government or any local authority Any service provided by NSDC Training Partner, SSC, Assessment agency approved by NSDC/SSC Convergence of Government schemes, specifically through Pradhan Mantri Kaushal Vikas Yojana (PMKVY) Ready pool of private training partners that have undergone extensive due diligence

Annexure 3: Facilitation and Support Unit NSDC will provide a single window support system in setting up of Corporate Skill Excellence Centres, selection of operating partner where required, convergence of Government schemes and facilitation for financial incentives where applicable. CSR funds can be routed through NSDF with specific outcomes to be implemented by NSDC. A list of such services provided below. Activity Application and processing Location identification and selection of trades Proposal development Identification of Training Partner Assessment & Certification Placement and Social outcomes Convergence of Government schemes Recognition Branding and Visibility Facilitation and Support Services Online processing with status Nation-wide reports based on skill gap studies at sector- and district-level available; feasibility study can be initiated based on project requirements Assistance in building a sustainable model for skill development Identification of Training Partner to operate and manage the center where required; transparent selection process based on mutually agreed parameters Third-party assessment of individual candidates; certification by relevant Sector Skill Councils as per the National Skills Qualification Framework (NSQF) Placement linkages and post-placement tracking where relevant; social outcomes report focused on candidates and quality of training Subsidized cost of training & assessment through allocation from Pradhan Mantri Kaushal Vikas Yojana (PMKVY) Recognition of center as Corporate Skill Excellence Centre by the Ministry/NSDC Co-branding guidelines with Skill India logo and adequate visibility in press and through events