Union Cabinet Approves Rs.60,000 Crore National Scheme for ITI Upgradation and Five National Skilling Centres

New Delhi: In a transformative move to bolster vocational education and address India’s growing demand for a skilled workforce, the Union Cabinet, chaired by Prime Minister Narendra Modi, on May 7, 2025, approved the National Scheme for Industrial Training Institute (ITI) Upgradation and Setting up of Five National Centres of Excellence (NCOEs) for Skilling. Announced under Budget 2024-25 and reinforced in Budget 2025-26, this centrally sponsored scheme carries a total outlay of ₹60,000 crore over five years, aiming to skill 20 lakh youth and reposition ITIs as aspirational, industry-aligned institutes. Additionally, the Cabinet greenlit ₹11,828.79 crore for the expansion of five new Indian Institutes of Technology (IITs), marking a significant investment in India’s education and skilling ecosystem.

Overview of the National Scheme for ITI Upgradation

The National Scheme for Industrial Training Institute (ITI) Upgradation and Setting up of Five National Centres of Excellence for Skilling is a landmark initiative designed to revamp India’s vocational education landscape. Implemented as a Centrally Sponsored Scheme, it focuses on modernizing 1,000 Government ITIs in a hub-and-spoke arrangement and augmenting the capacity of five National Skill Training Institutes (NSTIs) located in Bhubaneswar, Chennai, Hyderabad, Kanpur, and Ludhiana. These NSTIs will also house the newly established National Centres of Excellence for Skilling.

Key Objectives

• Position ITIs as Aspirational Institutes: The scheme aims to transform existing ITIs into government-owned, industry-managed hubs of skill development, working in close collaboration with state governments and industry partners.
• Skill 20 Lakh Youth: Over five years, the initiative will train 20 lakh youth through revamped, industry-aligned courses that address the human capital needs of high-growth sectors like electronics, automotive, and renewable energy.
• Enhance Employability: By bridging infrastructure gaps, updating course content, and fostering industry connect, the scheme seeks to improve the employability of ITI graduates and elevate the perception of vocational training.
• Support MSMEs and Industries: The program ensures alignment between local workforce supply and industry demand, facilitating access to employment-ready workers for micro, small, and medium enterprises (MSMEs) and larger industries.

Funding Structure and Financial Support

The scheme’s total outlay of ₹60,000 crore is distributed as follows:

• Central Share: ₹30,000 crore
• State Share: ₹20,000 crore
• Industry Share: ₹10,000 crore

To bolster the financial framework, 50% of the Central share (₹15,000 crore) will be co-financed equally by the Asian Development Bank (ADB) and the World Bank, ensuring robust funding for the ambitious initiative. This co-financing model underscores the global recognition of India’s skilling efforts and its importance in fostering economic growth.

Unlike previous schemes, where financial assistance for ITI upgradation was deemed suboptimal, this program introduces a need-based investment provision. This flexible funding model allows institutions to allocate resources based on specific requirements for infrastructure, capacity expansion, and the introduction of capital-intensive, new-age trades.

Implementation Strategy: Industry-Led SPV Model

A standout feature of the scheme is its adoption of an industry-led Special Purpose Vehicle (SPV) model, marking a significant departure from earlier government-centric approaches. The SPV model ensures:

• Deep Industry Connect: Industry partners will play a pivotal role in curriculum planning, infrastructure upgrades, and ongoing management of ITIs, ensuring courses are aligned with current and future industry needs.
• Outcome-Driven Approach: The SPV framework emphasizes measurable outcomes, such as improved employability and industry readiness, making the scheme distinct from past efforts to enhance the ITI ecosystem.
• Hub-and-Spoke Arrangement: The upgradation of 1,000 Government ITIs will follow a hub-and-spoke model, where select ITIs act as hubs, offering advanced training facilities and coordinating with smaller spoke ITIs to ensure widespread impact.

This collaborative model fosters synergy between government, industry, and state stakeholders, positioning ITIs as dynamic institutions capable of meeting the demands of a rapidly evolving industrial landscape.

Focus Areas of the Scheme

1. Upgradation of 1,000 Government ITIs

The scheme targets the modernization of 1,000 Government ITIs across India, which will:

• Introduce revamped trades aligned with industry requirements, replacing outdated courses with training in emerging sectors like renewable energy, electronics, and automotive technologies.
• Address infrastructure gaps by upgrading facilities to support capital-intensive training programs.
• Enhance the perception of vocational training, making ITIs aspirational institutes for youth seeking high-demand skills.

2. Capacity Augmentation of Five NSTIs

The five National Skill Training Institutes (NSTIs) in Bhubaneswar, Chennai, Hyderabad, Kanpur, and Ludhiana will undergo significant capacity augmentation. Key initiatives include:

• Establishment of Five National Centres of Excellence (NCOEs): These centres will serve as premier hubs for advanced skilling, offering specialized training programs and fostering innovation in vocational education.
• Infrastructure Upgradation for Training of Trainers (ToT): The NSTIs will receive upgraded facilities to support pre-service and in-service training for 50,000 trainers, ensuring high-quality and consistent vocational education across ITIs.
• Alignment with Industry Needs: The NCOEs will develop cutting-edge curricula in collaboration with industry partners, ensuring trainers and trainees are equipped to meet modern workforce demands.

3. Addressing Long-Standing Challenges

The scheme tackles systemic issues that have hindered the ITI ecosystem, including:

• Infrastructure Deficiencies: Previous financial assistance was insufficient to meet the needs of new-age trades and capital-intensive training. The new scheme’s flexible funding model addresses this gap.
• Outdated Course Content: By introducing industry-aligned trades, the scheme ensures ITI graduates are equipped with relevant skills.
• Low Employability: Enhanced industry connect and modernized training facilities will improve job prospects for ITI graduates.
• Perception of Vocational Training: By positioning ITIs as aspirational institutes, the scheme aims to make vocational education a desirable career path.

Alignment with Viksit Bharat Vision

The scheme aligns with Prime Minister Narendra Modi’s vision of Viksit Bharat (Developed India) by 2047, where skilling is a key enabler of inclusive growth and global competitiveness. With India’s ITI network currently comprising 14,615 institutes (78% privately owned) and 14.4 lakh enrolled students, this initiative is a timely intervention to create a future-ready workforce. By addressing skill shortages in high-growth sectors, the scheme positions India as a global manufacturing and innovation powerhouse.

Expansion of Five New IITs

In addition to the ITI scheme, the Union Cabinet approved ₹11,828.79 crore for the expansion of five new Indian Institutes of Technology (IITs) over four years (2025-26 to 2028-29). The IITs targeted for expansion are:

• IIT Tirupati (Andhra Pradesh)
• IIT Palakkad (Kerala)
• IIT Bhilai (Chhattisgarh)
• IIT Jammu (Jammu & Kashmir)
• IIT Dharwad (Karnataka)

Key Details of IIT Expansion

• Purpose: The funds will support Phase B of construction, focusing on academic and infrastructure capacity expansion.
• Student Strength Increase: The five IITs will see an increase of 6,576 students over four years, raising the total student capacity from 7,111 to 13,687. The phased increase includes:
  • Year 1: 1,364 additional students
  • Year 2: 1,738 additional students
  • Year 3: 1,767 additional students
  • Year 4: 1,707 additional students
• Faculty Posts: The Cabinet approved the creation of 130 faculty posts at the professor level to support academic growth.
• Research Parks: Five state-of-the-art research parks will be established to strengthen industry-academia linkages, fostering innovation and collaboration.

This expansion underscores the government’s commitment to enhancing higher education and research, complementing the vocational skilling efforts under the ITI scheme.

Background: The Role of ITIs in India

Industrial Training Institutes (ITIs) have been the backbone of Vocational Education and Training (VET) in India since the 1950s. Operating under state governments, ITIs are accredited by the Directorate General of Training (DGT) under the Ministry of Skill Development & Entrepreneurship. The ITI network has grown significantly, expanding by 47% since 2014 to 15,034 institutes, of which 78% are privately owned.

Despite this growth, ITIs have faced challenges, including:

• Lack of Systemic Interventions: Infrastructure and course content have not kept pace with industry needs.
• Perception Issues: Vocational training is often seen as less aspirational compared to academic education.
• Suboptimal Funding: Previous schemes like Skills Strengthening for Industrial Value Enhancement (STRIVE), Model ITI, and Enhancing Skill Development Infrastructure in NE States (ESDI) provided limited financial support.

The new national scheme builds on these incremental efforts, introducing a scalable, industry-aligned program to reimagine ITIs as key enablers of India’s economic growth.

Why This Scheme Matters

The National Scheme for ITI Upgradation and NCOE establishment is a game-changer for India’s skilling ecosystem. By addressing infrastructure gaps, modernizing curricula, and fostering industry collaboration, the scheme ensures ITIs produce a pipeline of skilled workers ready to meet the demands of high-growth sectors. Its focus on trainer development, employability, and aspirational branding positions vocational training as a central pillar of India’s industrial and economic growth.

Coupled with the IIT expansion, this dual investment in vocational and higher education signals India’s commitment to building a robust, future-ready workforce. As the nation progresses toward Viksit Bharat, initiatives like these will play a critical role in achieving inclusive growth and global competitiveness.

Frequently Asked Questions (FAQs)