Vocational training to be $20b opportunity in India by ’22

The vocational training in India is going to be a $20 billion annual opportunity with 475 million people in need of training by financial year 2022, so suggests the latest study by Kotak Institutional Equities Research.

The study report under the ‘Game Changer’ series titled- ‘The Great Unskilled: Can we fix It?’ prepared by Akhilesh Tilotia, says that sectors like auto, building and construction, textile and organized retail, along with the growth in the unorganised sector, will propel the demand for skilled labour.

“Creating a steady supply of training is the key to next step. The current capacity to train or provide vocational skill is around 4.3 million per year, which is a small fraction of the overall need of 22 million of fresh trainings per year. The big issue that these institutes face is the lack of trainers – this is driven both by the low salary paid to trainers as also the general unavailability of trainers, with training not attracting the talent that gets absorbed into the industry,” it says.

As per the study 81 per cent of this number will contribute 24 per cent of the top-line in vocational training business while 19 per cent of the number in the highest skill level would contribute 76 per cent of the business.

The Kotak Institutional Equities Research says, “With the focus now shifting from education to employability, we believe that vocational training and employability enhancement will become big opportunities for players with scale and experience. We note that many of the ‘consumers’ of education are natural consumers of vocational training institutes.”

It remarks that skilling India will require an overhaul of the education system: introducing vocational training into the school curriculum and targeting those who graduate from/drop out of ‘general’ school programs. For vocational training to work, India requires trained faculty — the first challenge is to train the trainers. Creating an accreditation platform will reduce transaction costs for both students and employers. Funding mechanisms like NSDC raise the viability of training for both students and companies. Bodies like NSDC, which vet and monitor the government-sponsored investments, will help create an ecosystem of more private sector players.

The costs of providing training vary widely – for example, the cost of providing training in ITIs across the country varies from Rs 11,790 to Rs 47,662 per student. A lot of this disparity is explained by the low occupancies and utilizations. Better utilization can lead to decrease in costs, it feels.