How budget 2025 can address India’s skill gap

Highlights

As the Union Budget 2025 approaches, all eyes are on how the government will fuel economic growth, drive investments, and address critical challenges....

As the Union Budget 2025 approaches, all eyes are on how the government will fuel economic growth, drive investments, and address critical challenges. One such challenge, often discussed but inadequately tackled, is India’s growing skill gap.

For years, we have obsessed over education - the 15-20 years spent in school and college. But what about the next 30-40 years of a person’s working life? In a world where industries are being reshaped by technology, new business models, and AI, skills have a shelf life. What you learned at 20 may be irrelevant by 40. Yet, our policies have largely treated professional upskilling as an afterthought, rather than as a necessity on par with, if not more crucial than, formal education.

Budget 2025 presents an opportunity to change that. If India wants to maintain its economic momentum and ensure that its workforce remains globally competitive, the government must take bold steps to bridge the skill gap. Here’s how:

A National Upskilling Mission with Tax Benefits for Individuals and Companies

We already have several government-run skilling programs, but many are fragmented and underfunded. Budget 2025 must establish a National Upskilling Mission - a structured, long-term initiative that supports continuous learning for working professionals.

A key part of this mission should be tax incentives. Today, individuals get tax breaks for education loans but not for professional upskilling. Why not allow tax deductions for upskilling courses, certifications, and leadership development programs? This will encourage more professionals to invest in their growth, just as they do in housing or health insurance.

Similarly, companies should be rewarded for investing in employee upskilling. Currently, corporate training expenses are often discretionary, with learning and development (L&D) budgets among the first to be cut in economic downturns. Providing additional tax incentives or subsidies to organizations that invest in skilling their workforce can shift this mindset.

Additionally, vocational education needs an image makeover. In countries like Germany and Singapore, vocational training is not seen as a second-tier option compared to a college degree, but as a mainstream, respected career path. Budget 2025 should incentivize industry-led apprenticeships and vocational education, linking them directly to employment opportunities.

MSME-Specific Skilling Support

India’s 63 million MSMEs (Micro, Small & Medium Enterprises) are the backbone of the economy but often lack the resources to upskill their workforce. A large enterprise might have a structured L&D program, but a small manufacturing unit or logistics firm does not.

Budget 2025 must introduce a dedicated MSME Upskilling Fund - providing direct grants or co-funded skilling vouchers that allow small businesses to train employees in digital tools, automation, and productivity enhancement techniques.

Leadership & Soft Skills for India’s Next-Gen Workforce

Technical skills are essential, but soft skills - such as problem-solving, critical thinking, collaboration, and leadership - are what truly differentiate a high-value workforce.

One of the biggest mindset shifts we need is to move beyond job placement-focused skilling. Many government programs focus on quick, entry-level skill development to help fresh graduates find employment. But what about mid-career professionals? Many industries - IT services, banking, and even manufacturing - are seeing significant job redundancies due to automation.

A national Lifelong Learning Index - which tracks India’s working population’s participation in upskilling - could help measure and drive policy decisions.

Conclusion: Time for Bold Action, Not Small Tweaks

For years, India’s skilling initiatives have focused on quantity over quality - training millions without ensuring long-term employability. Budget 2025 must take a future-focused approach, treating professional upskilling as essential national infrastructure, much like roads and power.

If we get this right, India can build a globally competitive workforce, attract higher-quality investments, and ensure that economic growth translates into meaningful, high-value jobs.

(The article is written by Srinivasa Addepalli, Founder and CEO, GlobalGyan Leadership Academy)