Could Upskilling Be The Answer To India’s Wage Gap Problem?

India aspires to be the factory of the world, with the wealth of a young population, the average age being 28. In comparison, China’s average age is 38, Japan and Germany at 49. The government is keen on skilling the youth with internship schemes and restructuring the Skills India Programme.

The National Skill Development Corporation (NSDC) CEO, Ved Mani Tiwari, has undertaken the mammoth task of solving this deeply entrenched problem. With his vast experience in public as well as private organisations in infrastructure companies, he experienced the problem firsthand.

When Tiwari was working with the Delhi Metro, they were attempting to bring global train manufacturers to set up shop in India. International companies were adamant and wanted to supply from their Canadian or Polish factories instead.

When Tiwari argued that India is a low labour cost economy, one of the bidders showed him their German plant. As he visited the European factory, Tiwari realised that for a similar job, a company has to hire four workers in India. For a larger number of workers, they’d have to hire a supervisor and the costs swell with larger premises, bigger canteens, social security and more.

“If you take all that into consideration, the unit cost of labour could be probably cheaper but labour throughput is more expensive. It hit me hard. We have a true productivity problem,” he recounted.

Many moons later, when he was working at metals major Sterlite, he observed that Brazilian workers are paid four times more than Indians due to purchasing power parity. He considered sending Indian workers there, only to discover that Brazilian workers are much more productive.

"Again, it hit me hard. Ultimately, my Indian is suffering because we have not been able to skill them to a productivity level which a global competitive market force demands,” he explained.

A Broken System With No Skills Premium

A peculiar job dichotomy exists in India — companies complain of a lack of skilled workers, while a large number of unemployed youth clamour for jobs. According to Wheebox ETS India Skills Report 2025, 54.8% of Indian graduates are employable, which leaves a lot to be done for the other half.

India’s employment framework disincentivises skilling at the blue-collar level. Most of India’s workforce, around 90%, belongs to the informal sector. Large companies outsource a lion’s share of their people-intensive activities to subcontractors. Due to the nature of outsourcing, cost is the only factor subcontractors provide to their clients.

“There is no skill premium. You would be amazed that if you go to a private hospital how much do you pay and how much a general duty assistant (GDA) in nursing gets paid,” he explains. Little would change until a worker can claim that he or she can be more productive because they’re highly skilled and hence paid more.

“India does not have a job problem today. It has a wage problem. Because the levels at which the people are being paid, we are into a welfare regime,” he opines.

While blue-collar workers are suffering from apathy, the training of white collar workers dwindled due to a sociological problem – the changing relationships of people with jobs. After Tiwari graduated in engineering from Madanmohan University of Technology, he joined his first job as a management trainer. And his first employer invested a year into me in the form of a training programme.

“Those days, employment was for life. Now that the employer and employee relationship is broken. The education ecosystem always created a base level and the employers had to fill in. Now, this is broken,” he explains.

The Many Avatars Of NSDC

NSDC is trying to fix the broken system, and is itself constantly evolving to take on new avatars. When it was formed in 2010, it was a funding institution for training centres. In 2015, the government launched the youth skilling and entrepreneurship scheme Pradhan Mantri Kaushal Vikas Yojana, and NSDC was implementing it until 2021.

In the post-Covid era, it has taken its biggest pivot yet, to create four pillars of strategy. It

provides for early exposure to technology like AR/VR in schools as well as improving critical thinking and problem-solving. It also aids the migration of skilled workers for global opportunities.

Yet another of its objectives is to impart digital foundational skills as a part of its Skills India Hub. It is also working on a Skill India Digital Hub, a way for people and organisations to discover skilled workers on a digital platform. They’re also looking at a QR code system where a skill of a person can be identified via a digital skills passport.

“If a person wants to hire a plumber, they can go to the hub and search for one within 20 kms, just like an Uber driver. This has to be done in a mission mode. Both individuals and corporations have to start investing into skill certification of these people,” Tiwari said.

Design Your Own Degree

To popularise the certification process, NSDC is attempting its fourth and most important strategy — to bring academia and private organisations on the same plane. One of its achievements is the system of academic credits, wherein an employee who receives corporate training will be able to ‘show’ it in the form of academic credits.

“The world operates with the incentive principle. Academic institutions aspire for high global rankings which is a result of good quality research work. Private sector is incentivised by quarterly results they declare. You need an intermediary and that role that NSDC is trying to play. I converse with private companies and academic institutions,” he said.

In addition, NSDC Academy works with universities as well as tech majors like Microsoft, NVIDIA, Apple, and Google for certified courses within the academic curriculum. It brings future skill labs into the academic institution.

“IT companies hire freshers who are like raw material and invest in them. Imagine if these people were skilled in colleges and ready from day one. That’s where productivity gains will happen,” said Tiwari.

NSDC also works with IITs and IIMs to design minor programmes for students in tier-2 and tier-3 institutions. For example, an undergraduate student can major in any subject of an institution, but can minor in a course provided either by a tech major or an IIT or II.

Virtually, students can design their own degree, and one lakh students have enrolled in this programme that started a year back. It also democratizes access via digital platforms, and a student from a remote area can access it too.

NSDC is also looking to devise similar programmes for commerce students by talking to global accountancy course providers like ACCA in UK, CPA, CFA in the US, like chartered accountancy in India.

In its own way, NSDC is attempting to solve the trifecta of jobs, wages and skills by connecting academia and corporations together. To ensure that India’s much-valued youth are gainfully employed and create wealth and value to the country as they upskill themselves.