PM-SETU Scheme: An Initiative Long Overdue, A Step Forward In Transforming ITI Ecosystem

The NEP’s focus on vocational education, flexible learning pathways, multidisciplinary approaches, and the integration of skills into mainstream education has direct implications for Industrial Training Institutes (ITIs). As a result, revamping ITIs is not just a policy necessity but also a strategic imperative to achieve the NEP’s vision of positioning India as a knowledge and skill superpower.

However, despite the policy’s announcement in 2020, little tangible progress was made on this front. The launch of the Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs (PM-SETU) scheme in October 2025, therefore, fills a long-standing gap.

Modernising Industrial Training Institutes 

PM-SETU represents one of the most ambitious efforts by the Government of India to revive and modernise Industrial Training Institutes (ITIs), which have long been the backbone of vocational education in the country. With an estimated outlay of Rs. 60,000 crore, the scheme aims to upgrade about 1,000 government ITIs nationwide through a hub-and-spoke model.

Under this model, 200 ITIs will be developed as “hubs” equipped with state-of-the-art infrastructure, innovation centres, and advanced training facilities, while 800 “spoke” ITIs will disseminate these advancements to their surrounding regions. The overarching goal is to make the ITIs industry-driven, technologically updated, and responsive to the evolving demands of the labour market.

Transforming Traditional ITI Ecosystem

At its core, PM-SETU envisages transforming the traditional ITI ecosystem by placing industry at the centre of governance and curriculum design. Each cluster of ITIs will be anchored by an industry partner responsible for modernising infrastructure, introducing demand-driven courses, ensuring outcome-based training, and promoting linkages between training and employment.

This approach aims to eliminate the chronic mismatch between what is taught in ITIs and what industries actually need, a gap that has long plagued India’s skill development efforts. The scheme also includes a major thrust on digital learning systems, the establishment of incubation and innovation facilities, and exposure to new-age trades such as artificial intelligence (AI), renewable energy, robotics, and advanced manufacturing.

Additionally, five National Skill Training Institutes (NSTIs) at Bhubaneswar, Chennai, Hyderabad, Kanpur, and Ludhiana are being strengthened as global centres of excellence in skill development.

New Financing Model 

A unique aspect of PM-SETU is its financing model. The project will be jointly funded by the central and state governments, industry partners, and multilateral agencies such as the World Bank and the Asian Development Bank. This blended model is designed not only to mobilise adequate resources but also to bring in international expertise and global best practices in the design, delivery, and evaluation of vocational training programmes.

The scheme also incorporates a significant component for vocational skill labs in 1,200 schools across India, including Navodaya Vidyalayas and Eklavya Model Residential Schools, to expose students to skill training from an early stage and reduce the social stigma attached to vocational education.

The strengths of PM-SETU lie primarily in its design and intent. Firstly, the scale and investment are unprecedented; with Rs. 60,000 crore earmarked, there is significant potential to modernise infrastructure, upgrade equipment, and attract better trainers. Secondly, the hub-and-spoke model offers a balanced structure: hubs can serve as innovation and excellence centres, while spokes ensure accessibility in remote and underdeveloped regions.

Thirdly, industry integration—perhaps the most critical reform—promises to make the curriculum relevant, increase hands-on exposure, and ensure higher placement rates. Fourthly, the focus on trainer development and early vocational exposure in schools can create a continuous pipeline of skilled and motivated students. Fifthly, the co-financing with multilateral institutions can provide global benchmarking and technical supervision, which may prevent the scheme from degenerating into another bureaucratic exercise.

Finally, by promoting flexible course durations and outcome-based learning, the scheme aligns with modern educational principles that value employability and lifelong learning over rote certification.

Assessing Challenges And Risks

Yet, it is important to recognise the numerous challenges and risks inherent in such a vast initiative. Implementing reforms across 1,000 ITIs—spread over diverse states with varying administrative capacities, industrial bases, and governance standards—presents enormous coordination hurdles. States differ significantly in their commitment to vocational education, financial resources, and ability to attract industry partners.

Moreover, there is a real danger of prioritising physical infrastructure while failing to address systemic issues such as curriculum reform, faculty quality, and sustained industry engagement. Previous government efforts to modernise ITIs—like the World Bank-aided Vocational Training Improvement Project and the Upgradation of 1,396 ITIs through PPP—faltered precisely because they emphasised buildings and equipment over pedagogy, trainer development, and outcome monitoring.

Another major risk concerns industry participation. While the scheme rightly assigns industry a central role, many firms, especially in smaller towns or less industrialised states, may be reluctant to take on managerial or financial responsibility for ITIs. Without clear incentives and accountability mechanisms, industry involvement could remain nominal.

Furthermore, differences in local industrial ecosystems mean that a uniform template of courses and partnerships may not be effective; a one-size-fits-all approach would likely fail to accurately reflect regional economic realities. Trainer availability and quality also pose a serious bottleneck. Even if infrastructure improves, the lack of qualified instructors with up-to-date industrial experience can undermine training quality. Retaining competent trainers, especially in remote areas, is another enduring problem.

The state's capacity to co-finance and implement reforms is another weak link. Delays in fund release, bureaucratic red tape, and uneven monitoring could impede progress. Past experiences have shown that the maintenance of ITI infrastructure is often neglected once the initial capital investment is made. Without dedicated operational budgets and maintenance plans, the new facilities could deteriorate over time.

Strong Data And Monitoring Systems 

Similarly, the introduction of outcome-based learning requires strong data and monitoring systems to track student performance, placements, and satisfaction—something Indian vocational institutions have historically lacked. Without transparent metrics and third-party evaluation, the scheme’s effectiveness cannot be objectively measured.

Equity and access are also critical concerns. While the hub-and-spoke design is intended to enhance outreach, social and geographical barriers may still prevent students from disadvantaged backgrounds—especially women, tribal groups, and rural youth—from fully participating. The cost of tools, travel, and materials can be prohibitive for poor students, and cultural attitudes toward vocational trades often deter enrolment.

The scheme must, therefore, include scholarships, awareness drives, and community engagement programmes to ensure inclusivity. Moreover, if placement opportunities remain concentrated around urban hubs, the scheme may exacerbate migration and regional imbalances instead of reducing them.

Promising Opportunities

Despite these limitations, PM-SETU opens several promising opportunities. It can significantly boost MSMEs by providing them with a pool of skilled workers, enabling better productivity and technological adoption. It can also help India prepare for emerging sectors, such as renewable energy, logistics, electronics, and digital services, where the demand for skilled manpower is rising globally.

By establishing robust linkages between ITIs and industry, the scheme can help India advance up the global value chain and enhance its competitiveness in manufacturing and services. The inclusion of vocational labs in schools could gradually de-stigmatise vocational education and create a culture that values skill-based learning. Over the long term, such reforms can promote social mobility, enabling young people who do not pursue higher academic education to access stable, dignified, and well-paying jobs.

Essential Measures

Nevertheless, the scheme’s success will ultimately rest on implementation integrity and robust institutional design. To maximise its impact, several measures are essential. First, a clear institutional framework should define the responsibilities of the central and state governments, industry partners, and implementing agencies, all backed by strong monitoring and evaluation systems.

States must have the flexibility to identify trades relevant to their local economies, rather than being compelled to follow uniform national templates. Timely fund flows and active state participation are crucial, as are transparent systems for procurement, reporting, and auditing to prevent leakages and corruption.

Placing a strong emphasis on faculty development—including continuous training, industry internships for instructors, and performance-based incentives—will be vital. Similarly, dedicated maintenance budgets and regular reviews should be built into the scheme to ensure long-term sustainability.

The government should also institute data-driven monitoring systems that track enrolment, completion, employment outcomes, and wage levels, making this information publicly available. Independent evaluations and audits can ensure accountability. Industry partners should be encouraged to commit long-term through fiscal incentives, joint certification, or shared infrastructure.

Furthermore, equity measures—such as scholarships for underprivileged students, targeted outreach in rural and tribal areas, and gender-inclusive facilities—should be integral to the programme.

Transforming Vocational Education Landscape

PM-SETU has the potential to transform India’s vocational education landscape if implemented with vision, discipline, and integrity. Its success would depend on the balance between infrastructure creation and human capacity development, between central direction and state flexibility, and between industry participation and government oversight.

It represents an opportunity to finally integrate India’s vast youth population into productive employment, reduce skill mismatches, and make vocational training an aspirational goal. Yet, if mismanaged or treated as another infrastructural project, it could become a missed opportunity, repeating the mistakes of the past. The scheme’s critical test, therefore, will not lie in how many ITIs are upgraded, but in how many students are truly empowered with relevant skills and sustainable livelihoods.