Chapter 10. Reforming the Indian apprenticeship system to boost local engagement

India faces what has been called a stupendous challenge in increasing the portion of its workforce with VET qualifications. Most of the Indian workforce does not even have secondary education (70% in 2009-10), and only 2% had VET qualifications at that time. The apprenticeship system in India suffers from the same problems as the Indian VET system more broadly; namely that there are insufficient participants. Young people do not tend to see apprenticeship as a valued career path, and employers have been reluctant to employ apprentices. In 2012, the Indian government embarked upon a significant reform effort of the apprenticeship system in particular and the VET system more generally. This chapter describes and evaluates the elements of that reform.

Key findings

The Indian VET system was implemented in the 1960s but has remained relatively static and unresponsive to changes in the broader industrial structure and development of India’s economy.
Apprenticeship has very poor reach in India, despite a large workforce and an economy with current and forecast skills shortages.
Building employer engagement in the Indian system involves removing punitive punishments and existing legislative burdens. The legacy system disincentivised participation from both small and large employers due to a combination of high reporting requirements and systemic fragmentation.
Legislative reforms have aimed to improve the ease and function of the apprenticeship system for both apprentices and employers. Increased efforts to raise awareness about apprenticeships will continue to improve the scope and penetration of apprenticeship in India.

Introduction

India is the world’s second-most populous country with over 1.3 billion people. Its population grew at 1.76% per annum between 2001 and 2011, a somewhat slower rate than 2.13% per annum in the previous decade (1991-2001). If population growth continues at the current rate, India will overtake China’s population by 2022, according to UN estimates. The labour force is estimated at 487 million of which 256 million are in the non-farm sector (Ministry of Skill Development and Entrepreneurship, 2015).

India is also one of the world’s fastest-growing economies, with an annual GDP growth rate of 5.8% over the past two decades. The growth rate peaked at 6.1% during 2011-12 and then slowed in 2012-14 (Mohan and Kopur, 2015). The Indian economy is worth USD 1.676 trillion and is the eleventh-largest economy by market exchange rates. Economic growth in recent years has been driven by the expansion of services (communication, business, financial and community sectors), which have consistently grown faster than other sectors. The public sector is the leading investor in infrastructure (Mohan and Kapur, 2015).

It has been argued that the pattern of Indian development has been unique and that the country may be able to skip the intermediate industrialisation-led phase in the transformation of its economic structure. But concerns have been raised about what has been depicted as the jobless nature of the economic growth (Virmani, 2004). It is argued that there are impediments (such as overly restrictive regulatory frameworks) to the growth of manufacturing in India in comparison to other competitor countries (Mohan and Kapur, 2015).

Policy Context

The Indian labour force is the world’s second largest (Economist, 2011) with 487.6 million workers in 2011. The agricultural sector employs most of the national workforce and produces the second largest national farm output worldwide. For the economy to continue to grow and expand, it is assumed that a large portion of the workforce will migrate from the primary sector (agriculture) to the secondary and tertiary sectors. The service sector provides 55.6% of GDP, the industrial sector 26.3% and agricultural sector 18.1% (IMF, 2011).However, the skills that are required in the secondary and tertiary sectors are quite different from those required in the agricultural sector (Federation of Indian Chambers of Commerce and Industry [FICCI], 2010), implying that there will inevitably be a large skill gap when such a migration occurs. India has set an ambitious policy aspiration of developing a skilled workforce of 500 million by 2022 (Ministry of Labour and Employment [MOLE], 2010).

The Indian Government’s Twelfth Five Year Plan for 2102-17 (Planning Commission, 2013) includes workforce development matters in its third volume (Social Sectors) which includes a section on Education and one on Employment and Skill Development. According to the plan, the mission of TVET in India is to help the country’s economic and social development, and specifically transform its increasing manpower to a skilled and competent workforce.

A useful summary by UNESCO-UNEVOC (2015) provides an overview of the TVET provisions of this Plan. These include aspirations to:

Link secondary, and specifically vocational and technical programmes, to the needs of the labour market in collaboration with industry and the Ministry of Labour;
Improve residual access and equity gaps to TVET programmes by for example targeting out-of-school children;
Expand the number of TVET programmes;
Encourage and facilitate students to take pre-vocational programmes in the secondary education level;
Develop a mechanism for convergence of vocational programmes offered by various ministries, private institutions, and vocational educational institutions;
Improve TVET teacher training programmes to ensure a high quality of education; and
Integrate and closely align vocational programmes with the academic curriculum. TVET programmes should contain modules on various generic and specific vocational skills with the involvement of industry.

The Indian education and training system

Figure 10.1 (UNESCO-UNEVOC, 2015) indicates the relationship between TVET and the wider Indian education system.

The numbers enrolled in VET are very small compared with secondary and higher education systems. For example, in 2010, 227 million students were enrolled in schools, 14 million in higher education (including 690 000 in Polytechnics) and only just over 1 million students in the Industrial Training Institutes (ITIs) and Industrial Training Centres (ITCs) in the VET system (MOLE, Annual Report 2009-10). ITIs are state-owned and ITCs are privately-owned.

Many students do not complete primary education, mainly in the state-regulated schools. Approximate 12-13 million school leavers, either those completing education or leaving early, move to the education and job market yearly (FICCI, 2010). India has 241 million young people aged 14-25 (UNESCO-UNEVOC, 2015). The Twelfth Five Year Plan noted that young people did not consider VET as an aspirational pathway. Consequently, the perceived quality and status of VET needed to be enhanced in order to increase the proportion of young people pursuing VET.

Apart from the Five Year Plan, the most important regulatory and policy provisions that have relevance for apprenticeship are:

Apprentices Act (1961) (discussed further below);
Institutes of Technology Act (1961);
National Policy for Skill Development (2009 and 2015); and the
National Youth Policy (2012).

Figure 10.2 shows the basic structure and the responsibilities of the various components of the Indian educational and training systems in 2010. There has since been a realignment of responsibilities, which is explained in further depth below.

Education, including all aspects of higher and college education, is overseen by the Ministry of Human Resource Development (MHRD) The University and Higher Education arm of MHRD is responsible for college education (Arts, Science, Commerce etc.), while engineering education and polytechnics are categorised as Technical Education.

The technical education bureau is responsible for TVET in each State and also the quality of TVET teachers and the curriculum. The All India Council for Technical Education (AICTE) is the regulatory body for Technical Education in India. Its objectives are:

The promotion of quality in technical education though accreditation of programmes;
The planning and co-ordinated development of technical education system through establishment of new ITIs and ITC; and
Overall administration of TVET programme.

The National Council on Vocational Training (NCVT) plays a key role in the formation of training curricula and policy standards, as well as the certification of apprentices by means of the “trade test”. TVET teachers and trainers are trained at a variety of teacher-training institutes. There are also Central Training Institutes which are responsible for the professional development of TVET teachers and trainers.

The nature of the Indian apprenticeship system before the current reforms

As in most countries, apprenticeship in India means a system of training in which an employer engages a person as an apprentice and agrees to train him/her systematically in the designated trade for a prescribed period. The Indian National Apprenticeship Scheme began in 1959 on a voluntary basis. However the Scheme did not achieve the expected results, so the Apprenticeship Scheme was brought under the ambit of the Apprentices Act (1961). It had two primary objectives:

To regulate the programme of training of apprentices in the industry so as to conform to the prescribed syllabi, period of training and other requirements laid down by the Central Apprenticeship Council; and
To fully utilise the facilities available in industry for imparting practical training with a view to meeting the requirements of skilled manpower for industry.

While apprentice opportunities are available at higher levels (Graduate and Technician apprentices) this paper only addresses apprentices under two specific schemes: the “Craftsman Training Scheme” and the “Apprenticeship Training Scheme”. These schemes do not require entry qualifications beyond school-leaving certificates and are similar to apprenticeship schemes in other countries.

The Apprenticeship Act (1961) has been amended multiple times over the years to address the concerns of employers, industry, candidates and Government. But it is generally agreed that these changes have hitherto not had the desired effect of increasing the participation of employers and school leavers. The number of apprentices in the country remained stagnant and has not increased in numbers over the years. Only 215 000 persons were undergoing apprenticeship training in 2008-09, despite a total seating capacity of 320 000 (Directorate General of Employment and Training [DGET], 2009).

Figure 10.3 shows the numbers of participants and the coverage by numbers of occupations, of trade apprentices in 2009, including those in the Craftsman Training Scheme (which is at lower secondary level) and the Apprenticeship Training Scheme.

The Directorate General of Employment and Training (DGET) in the Ministry of Labour was, until 2015, responsible for implementation of the Act in respect of Trade Apprentices in the Central Government Undertakings and Departments. This was (and still is) operationalised through six Regional Directorates. The Department of Secondary and Higher Education in the Ministry of Human Resource Development was responsible for implementation of the Act in respect of Graduate, Technician and Technician (Vocational) Apprentices. A Central Apprenticeship Council acts as a peak statutory body with responsibility for apprenticeship policies and standards.

Employers in both the public and private sectors are obliged to have a training infrastructure, as laid down in the Act, before they can engage apprentices.

According to the annual report (2008-09) of Ministry of Labour and Employment (http://dget.nic.in/), 254 groups of industries are covered under the Act, and about 23 900 establishments engage apprentices.

Apprenticeships are time-based, with the duration specified at six months, one year, 18 months, two years, three years or four years. The assessment of apprentices at the end of their training is undertaken using the All India Trade Test, administrated by the National Council for Vocational Training. The number of apprenticeship places available in each occupation and region is officially set. “Seats” for trade apprentices are determined by the Apprenticeship Adviser on the basis of the prescribed ratio of Apprentices to workers, and the availability of training facilities. Every apprentice and employer needs to enter into a contract of apprentice training which is registered by the Apprenticeship Advisers.

Educational prerequisites apply to entry into each of the apprenticeship categories. Trade apprentices may enter by two routes, depending on their prior qualifications. If they have completed only basic education, they enter the “Apprentice Training Scheme”; these apprentices are known as “full-term apprentices”. If they have completed training and certification at an ITI or ITC, they enter the “Craftsman Training Scheme”, which considerably shortens the term of training. The training terms, and the trades covered by apprenticeships (188 in 2009) are contained in the Schedule to the Act. Regardless of route, successful completers receive the “National Apprenticeship Certificate”. (Directorate General of Training, 2015a).

Apprentices are paid a stipend, which is specified in government regulations and revised every two years based on the consumer price index (DGET, 2007). The arrangements vary with the category of apprenticeship. The stipend of trade apprentices is paid by the employer and increases over the period of the training programme. The monthly rates prior to the reforms were IND 1 490 in the first year, IND 1 700 in the second year, IND 1 970 in the third year and IND 2 220 in the fourth year (taking effect from 18 October 2010). The stipend of graduate, technician and technician (vocational) apprentices is shared equally between the employer and the Government. In 2008 it was IND 2 600 per month for graduate apprentices, IND 1 850 for technician apprentices and IND 1 440 for technician (vocational) apprentices (MOLE Annual Report, 2009). Stipends are partly refunded to employers of graduate, technician and vocational apprentices, but not to employers of trade apprentices. As will be explained later, stipend rate and distribution have changed.

Legislation

Legislation, and the ways in which the legislation is enacted, has a powerful influence on the environment in which apprenticeships are conducted. Legislation can enable or constrain the expansion of apprenticeships by facilitating or inhibiting the involvement of all stakeholders. The level of legislative responsiveness to changes in the economy, the demography and the “voices” of industry is a crucial factor in the continuing success of apprenticeships as a way of providing skilled labour for a country.

In India, the Apprentice Act (1961) governs the employment, conditions, training and wage structures that apprentices and employers operate within in India.

The goals of the Act are:

To regulate the training programme of apprentices in industry, according to the prescribed curriculum, period of training and other requirements, as set down by the Central Apprenticeship Council;
To utilise the facilities available in industry for practical training.

The Act covers the four categories of apprenticeship mentioned earlier, and also outlines a number of apprenticeship requirements, as follows:

The number of apprentices for a designated trade
- The central government determines the ratio of trade apprentices to workers in that trade.
- The central government determines the appropriateness of the facilities for apprentice training inside the particular industries.
- The Apprenticeship Adviser may require employers to engage trade apprentices within the ratio determined by the government.
- Several employers may join together for the purpose of providing practical training to the apprentice.
- The government may require employers to train additional numbers of apprentices.
The practical and basic training of apprentices
- Employers must make arrangements for practical training in the workplace.
- Central Apprenticeship Advisers have the right of inspection.
- If employers have more than 500 workers, a separate area must be set up for apprentice training and some government loans are available for this.
- Basic training for the apprentices is provided in training institutes set up by the government.
- Complex arrangements for various categories of apprentices for the provision of basic training and the funding of this.
- The costs of training are to be carried by the employer.
Related instruction of apprentices
- An apprentice is to receive theoretical training approved by the Central Government.
- This related instruction is to be financed by the appropriate government but the employer must provide the facilities.
- Training is included in the calculation of work time for the apprentice.

Apprenticeship contract

The Apprenticeship Contract is registered with the Apprenticeship Adviser whose decision is final in the event of a dispute. If a business closes, the Apprenticeship Adviser can move the apprentice to another employer. The apprentice is required to undergo an All India Trade Test conducted by the National Council for Vocational Training and a practical test at the end of the apprenticeship.

Offences and penalties

These occur when an employer:

Engages an ineligible apprentice;
Does not carry out the terms and conditions of the contract of apprenticeship;
Contravenes the Act in terms of the number of apprentices which he is required to engage; he will be punished with a term of imprisonment which may extend to 6 months and accompany a fine; or
Does not complete the mandatory documentation, or provides incorrect information or refuses to answer certain questions or employs an apprentice to undertake work that is not connected with his training, or pays according to a piece rate, or requires the apprentice to be part of a bonus scheme; the employer will be punished by imprisonment.

The Act has been amended many times to meet criticisms and suggestions from employers, businesses, Chambers of Commerce and other stakeholders.

Coverage of the Act

The Act specifies the groups of industries to which the Act applies. Currently there are 254 groups of industries covered under the Act and 24 815 establishments engage trade apprentices (http://dget.nic.in/schemes/ats/ATSOverview.htm, accessed 7/8/2012).

In 1997, the groups of industries were clustered into the following industry groupings:

1. Primary production and agricultural production

2. Forestry and logging

3. Fishing

4. Mining

5. Manufacture of food products

6. Manufacture of beverages

7. Manufacture of cotton and other textiles and textile products

8. Manufacture of wood products such as furniture

9. Manufacture of paper and paper products

10. Manufacture of leather and leader products

11. Chemical production

12. Plastics production

13. Manufacture of non-metallic mineral products

14. Manufacture of machinery and parts

15. Transport equipment and parts

16. Repair of capital goods

17. Electricity generation and gas and steam generation

18. Construction

19. Wholesale trade

20. Retail trade in textiles

21. Restaurants and hotels

22. Land, air and water transport

23. Warehousing

24. Communication services

25. Banking and insurance

26. Real estate

27. Business services

28. Public administration and defence

29. Sanitary services

30. Community services

31. Recreational and cultural services

32. Personal services

Source: DGET.

Implementation of the Act

There are six Regional Directorates of Apprenticeship Training located throughout India. These are responsible for the implementation for the Act. State Apprenticeship Advisers have legislated powers and they are responsible for the implementation of the Act in relation to Trade apprentices in State government departments and private establishments.

The Central Apprenticeship Council is a statutory body and advises the government on policies relating to the Apprenticeship Training Scheme. The Central Apprenticeship Council has representatives from both central and state governments, employers and trade unions.

Problems with the Indian apprenticeship system prior to the current reforms

In recent years, a number of assessments of the apprenticeship system in India have been conducted by national and international stakeholders to examine the issues that confront India in its attempts to solve the dual problem of high youth unemployment and skill shortages in critical industries through the expansion of the apprenticeship system. Five of these documents were analysed in greater detail in order to inform the analysis of the issues faced by the Indian apprenticeship system.

The first document was the National Policy on Skill Development (MOLE, 2009) which looks at national skill development as a whole, of which apprenticeship forms one, currently minor, part. The second document, the Planning Commission Sub-Committee on Remodelling India’s Apprenticeship Regime (2009) was the most recent high level government endorsed effort to propose change. The third document was an analysis of Indian apprenticeship law commissioned by the ILO and the Kamataka Employers’ Association (Akhilesh, 2010). The fourth document consisted of input from the Confederation of Indian Industry (CII) into a consultation process convened by the Ministry of Labour and Employment (2011a); the CII document gives an industry perspective, including some issues raised elsewhere. The fifth was the Ministry of Labour and Employment’s report “Trade Apprenticeship Training in India under Apprenticeship Training Scheme” (October 2011). This publication was the 13th in its series and reflected an attempt to create a reliable database for planning and taking corrective action in apprenticeship training under the Apprentices Act, 1961. This publication “presented statistics on establishments engaged in apprenticeship training, intake capacity, output and their employability in the labour market along with a brief analysis of the current status of the scheme” (Preface).

It is notable that many identified problem areas, and many recommendations, were common among the documents. Underpinning all of the discussions and reports were the issues of disparities among regions and groups of people, high unemployment, the rapidly growing economy, and the large informal economy. Apprenticeships were regarded as a part of a much broader policy thrust to improve the skill levels of the population while simultaneously addressing some of the social, economic and educational problems that confront India.

Thirteen issues were identified from telephone interviews with major stakeholders, analysis of the reports mentioned above, and other literature (see Box 10.1). The current case study directly engages with many of these issues.

Box 10.1. Issues identified by stakeholders as needing reform

Lack of enterprise engagement in the system: Considering the size of the Indian economy, the number of enterprises taking on apprentices was extremely low – around 24 000 establishments. In comparison, there are 120 000 sites in the United Kingdom that employ apprentices.
Inappropriate requirements for in-company training: Indian employers were required to provide trade apprentices with basic training and “related instruction training” as outlined by the Apprentices Rules, in addition to practical training gained through working. It is unusual among national apprentice systems for employers to be required to provide formal classroom-based training. The in-house classroom training could not be outsourced except in exceptional circumstances. The qualifications of the training staff and the facilities for the in-company training were mandated, with stringent requirements oriented to manufacturing companies with large workforces, and limited relevance to the growing service skills sector.
Concerns about quality of workplace curriculum: Indian companies, under the Act, needed to take apprentices where directed; but there was no guarantee that the training was relevant or of high quality. One of the major reasons for the lack of uniform quality was the absence of a workplace curriculum that was current, accessible and able to be implemented in the workplace. The training curriculum was recognised as outdated and there were concerns that there was an insufficient theoretical component.
Lack of external off-the-job training: Once people commenced an apprenticeship, having completed either ITI/ITC vocational qualifications or basic training, they did not undergo any further external training. This contrasts with the ‘dual system’ in many countries.
Limited occupational coverage: The Indian formal apprenticeship system had a limited, and sometimes outdated, list of designated trades in which apprenticeships could be offered. Numbers in most trades were small; in 2009 only nine occupations had an intake of more than 1 000 apprentices. Many trades had just a handful, or nil, entrants, and there was under-representation of the service and business sectors in the lists of trades in which apprenticeships could be offered. While it was possible for new occupations to be added by the government on request from enterprises, the system for doing this was cumbersome and slow.
Limited employer and industry involvement: The complexity of the apprenticeship system, the absence of public knowledge about its operation and the lack of branding all contributed to a lack of industry involvement in the formulation of apprenticeship policies and practices. Under the National Policy on Skills Development, Sector Skills Councils were being slowly established; however, industry still did not feel that it had a “voice” in the formulation of policy or in the practical day to day implementation of the apprenticeship system. Individual employers also faced obstacles; for example, companies that employed apprentices in more than four Indian states had to negotiate state and central government instrumentalities.
Overly strict and burdensome regulation and compliance: Compliance was onerous for employers, involving extensive and expensive reporting requirements, and penal consequences and fines for breaches of the legislation and the accompanying Schedule of Rules. Enforcement of the rules was said to be lax, but this was unlikely to comfort employers who were afraid to participate in the formal system because of strict penalties associated with any legal breach, including imprisonment. Apprentices received more favourable employment conditions (apart from a low stipend) and employment protection than other employees.
Low status of apprenticeship training: India has had a very long tradition of informal training and workplace learning. This tradition is preserved in the “informal apprenticeship system” that exists alongside the formal system. However the formal system appeared to have been beset by a range of problems that have resulted in a low level of esteem and status. The perceived low status of vocational education meant that the better graduates of secondary schools were unlikely to choose to undertake apprenticeships.
Responsibilities of parties unclear: The overly complex administrative systems meant that it was difficult for apprentices, employers and other stakeholders to understand the system and their roles in it. There was a relative lack of easily accessible information. At a higher level, there was a willingness among stakeholders such as industry bodies to help to grow the apprenticeship system but the points of intervention were difficult to pinpoint. In most if not all other countries, apprenticeship systems are regarded as complex; so in itself complexity is not necessarily an issue. However there were few identifiable ‘nodes’ of expertise in the system where people can receive advice, information and support.
Need to involve more diverse participants: Apprentices were predominantly young people, with no system for mature-aged people to access apprenticeships. In India, a large proportion of the adult population is unskilled, and apprenticeship could offer these people the possibility of upskilling. Gender was identified as an issue, with women being under-represented. This is a common feature of countries with relatively small apprenticeship systems, and was partially due to the fact that most apprenticeships are in male-dominated industries and occupations. An under-representation of rural areas in apprenticeships could also be related to the type of occupations involved, rather than any specific urban bias. There were physical fitness requirements of the Apprenticeship Rules, which limited the opportunity for some people to participate; but there was provision for people with specific disabilities.
Inadequate stipend: The stipend paid to apprentices was very low and was insufficient to live on, thus discouraging participation by potential apprentices. While employers might choose to pay more to their apprentices, there was no obligation to do so. Unlike in other countries, low wages were not compensated for by the certainty of post-apprenticeship employment.
Lack of progression into higher qualifications: In the continuing absence of a well-developed national qualifications framework, it was difficult for apprenticeships to offer progression into higher level qualifications. Apprentices who passed their trade tests (All India Trades tests) obtained a National Apprenticeship Certificate, which, however, stood outside the formal educational system.
Limited progression into permanent employment: Apprenticeships tended not to lead to permanent employment. Apprentices were not often retained by the employer who provided them with the apprenticeship, nor were they greatly in demand in the labour market among other employers. There was also no provision for finding alternative places for apprentices who lost their jobs through no fault of their own.

Source: Smith and Brennan Kemmis (2013b).

These identified problems were set against the background of contextual matters relating to the TVET system and the economy more generally. The broader economic context in India indicates an imperative for an expanded apprenticeship system, including: Requirements for large numbers of skilled workers; limited capacity of institutional training to provide larger numbers of qualified and skilled workers; high unemployment and high youth unemployment in particular; and oversupply of graduate-qualified people versus trade-qualified people.

Some contextual factors that made expansion of apprenticeships difficult were also identified, including: Low status of VET; low social status of apprenticeships in particular; the large informal economy; large proportion of population in rural areas; and the limited capacity of government to administer a larger system of the current level of complexity.

Options for development of the system were developed as part of the project, and presented to a group of 81 senior stakeholders in New Delhi in late 2012. The options were grouped under four major headings:

Simplification of access
Improvement of training quality
Harmonisation of the system
Increased participation in the system.

Table 10.1 shows the options under these headings. Some proposed methods were suggested for each option, involving major changes and/or minor changes to the system. The stakeholders supported the methods proposed for the shaded options below. Their views are important as the major players in the system attended the meeting and any major changes would need their support.

Table 10.1. Proposed options for changes to the Indian apprenticeship system
The shaded items were supported by stakeholders
Themes	Proposed options
1. Increase access	i. Replace compulsory participation requirements with voluntary registration. ii. Reduce the regulatory burden on employers. iii. Introduce new third parties to the system to help manage economic ebbs and flows, and to provide support for some groups and employers.
2. Improve training quality	i. Introduce off-the-job training throughout the period of an apprenticeship ii. Upgrade quality and recognition of apprentice certification iii. Improve workplace curriculum iv. Improve skills and expertise of those delivering training
3. Harmonise the system	i. Greater involvement of stakeholders in system ii. Simplify and harmonise the system iii. Increase “market currency” of apprentice qualifications
4. Increase participation	i. Cover more of the economy. ii. Provide financial incentives to participants, enterprises and training providers iii. Introduce non-financial strategies to increase participation among more people.
Source: Adapted from Smith and Brennan Kemmis (2013b).

Many of the proposed options and associated methods were supported at a system level, but stakeholders seemed not to support potential changes that involved the introduction of new bodies at the local level or an increased flow of government money to employers and especially to training providers.

Changes in the apprenticeship system from 2013

Several separate but related changes have taken place in the Indian apprenticeship system since the project in 2012. The momentum for change has been maintained and there have been changes to the apprenticeship system itself, to the VET system more generally, and in the government’s overall economic development program.

Context

The reforms to the apprenticeship systems need to be seen in the context of two related initiatives. One is the “Make in India” initiative which is about boosting manufacturing; and the other is “Skill India” which aims for a rapid increase in skill levels in the population.

In September 2014, Prime Minister Modi and the Department of Industrial Policy and Promotion (DIPP, 2015) launched the “Make in India” initiative to transform India into a global design and manufacturing hub. The programme involved significant consultation with trade unions (DIPP, 2015) and collaboration between a number of stakeholders, including Union Officials, Ministers and Secretaries, state government, industry leaders and knowledge partners. A National Workshop in December 2014 brought together leaders to create an action plan with the aim of increasing manufacturing to 25% of GDP by 2020 (DIPP, 2015).

The “Skill India” initiative was launched in July 2015 and contained four major initiatives:

National Skill Development Mission. This is the institutional framework for the proposed rapid development of the Indian VET system. There are 13 key objectives with seven foci: i) Institutional Training, ii) Infrastructure, iii) Convergence, iv) Trainers, v) Overseas Employment, vi) Sustainable Livelihoods, vii) Leveraging Public Infrastructure. The Mission Directorate will work with the National Skill Development Agency, the National Skill Development Corporation, and the Directorate General of Training.
National Policy for Skill Development and Entrepreneurship, discussed in more detail below.
The “PMKVY” scheme which provides financial rewards to young people who complete training programmes, including Recognition of Prior Learning.
The Skill Loan scheme, providing loans for young people to attend training.

The “Skill India” initiative was launched on World Youth Skills Day and the last two initiatives were confined to young people. The programme is intended to focus on both vocational and general education.

Governance and administrative arrangements for VET

In April 2015, a Ministry of Skill Development and Entrepreneurship (MSDE) was established which absorbed the Training and Apprenticeship responsibilities from the Directorate General of Employment and Training (DGET) and the Ministry of Labour and Employment (MoLE). They are known as the Directorate of Training and the Directorate of Apprenticeship Training. Through these Directorates, MSDE is responsible for a range of activities and bodies in the vocational education and training (MSDE, 2015). These include the National Vocational Qualifications Framework and the Sector Skills Councils.

The National Skill Development Corporation (NSDC) is a public-private partnership which aims to promote skill development through equity and grant funding to enterprises, companies and organisations that provide skill training. It also administers quality assurance and information systems for the training programs that it funds. It has also helped to establish a number of new training institutions, including some that train the training academies. The NSDC has also overseen the development of the Sector Skills Councils and has commissioned “Skills Gap” studies for a number of States.

The majority of the state governments have created State Skill Development Missions (SSDMs) that prioritise skill development based on local industry needs, allowing sectors to create employment opportunities and promote skills required with industry, government bodies and training organisations. There has also been an attempt to integrate the activities of the State Missions with the National Skill Development Mission. Apprenticeships feature among the activities of these missions; for example, Uttar Pradesh has an explicit objective of “Strengthening Apprenticeship Programme” with two activities:

The Department of Technical and Vocational Training, in consultation with the UPSSDM, will formulate and plan schemes to increase the current number of apprentices in the State
Collaborations will be made with industries and large companies of the State for increasing the number of trainees under the scheme.

The web site includes information about the number of students enrolled in VET, the number of Training Centres and so on.

New National Policy for Skill Development and Entrepreneurship

The “National Policy for Skill Development and Entrepreneurship” (Ministry of Skill Development and Entrepreneurship [MSDE], 2015) is the second National Policy on Skill Development. The inclusion of “Entrepreneurship” in the title of the policy, as with the Ministry, indicates a drive towards the creation of new businesses.

The National Policy for Skill Development and Entrepreneurship (MSDE, 2015) set out to increase apprenticeship by ten-fold within five years through the following initiatives:

Work with industry including the Micro, Small and Medium-sized Enterprises (MSME) sector to increase apprenticeship places;
Include the service sector into the apprenticeship system;
Raise awareness of VET, including apprenticeship, among young people (MSDE, 2015).

More specific plans in relation to apprenticeship include the establishment of new Training Institutes (Multi-Skill Institutes) which were to be designated as Skill Hubs. Links between all training providers and industry were to be encouraged. A quality Assurance Framework for the VET sector was to be developed, to which all Institutes would be required to align. The National Skills Qualifications Framework would be further rolled out, and Sector Skills Council would be strengthened in their work.

To increase the formal qualifications of those in the informal sector, MSDE proposed using Recognition of Prior Learning (RPL) to assist those with skills in unorganised sectors by incorporating the informal sector into the formal realm of skilling. This was aimed at providing an opportunity to allow those with skills to obtain relevant certification of competency.

The policy set out ambitious plans to improve the quality and supply of trainers and assessors. These included setting up a national trainer/assessor portal; registration for trainers and assessors; upskilling programs for people moving from industry or the Defence Sector, and benchmarking pay scales with secondary school teachers. There was also a proposal for setting up specialised Institutes for VET teacher-training (at least one per State).

Apprentice Protasahan Yojana Scheme

The National Policy for Skill Development and Entrepreneurship proposed sharing the cost of the apprentice stipend between employers and the government in the MSME sector. The Apprentice Protsahan Yojana (APY) scheme, which began in October 2014, enacted this policy, and was implemented through the Regional Directorates of Apprenticeship Training (Directorate General of Training, 2015b). The scheme aimed to increase the number of employers, particularly MSME employers, involved in apprenticeships, and hoped to create 100 000 extra apprenticeship places. The scheme covers all apprentices (those in trades and also in “optional trades”) and any company with six or more employees, but only two apprentices per employer can be covered at any one time. In assessing applications, manufacturing is given preference above other sectors, and within sectors, registered MSMEs are given preference above non-MSMEs.

The government pays 50% of the stipend following registration of the apprentice on the web-based portal and details of payment made by the employer to the apprentice and of attendance by the apprentice. The government’s payment is made directly into the apprentice’s bank account, although for the first six months of the scheme the government payment was made via the employer. The scheme covers the first two years of apprentice training.

Changes in the legislative framework for apprenticeships

Long-awaited changes to the Apprentices Act 1961 were enacted in 2014. An Inter-Ministerial Group was convened in late 2013 by the then DGET to work on all the schemes managed by the DGET. It made recommendations on 17 issues. These recommendations were informed by submission from relevant stakeholder groups.

The 17 issues, with associated recommendations, were as follows (CII, 2014). In some instances, the eventual provisions of the Act were not the same as those recommended by the Inter-Ministerial Group but were “toned down”.

The most significant changes to the amended Act and associated Rules, from both the employer and apprentice’s point of view, include:

To assist apprentices: The minimum age of apprenticeships undertaken in hazardous industries is 18 years of age. For other industries not considered hazardous, the minimum age to undertake an apprenticeship remains 14 years of age. The minimum stipend is increased. The stipend is increased. Employers are required to formulate policies about recruiting completed apprentices. Apprenticeships extended to new “optional trades”.
Better data collection: Amendments to section 4 include the development of a portal site by the government to register and verify apprenticeships, to be sent by the employer within 30 days to the Apprenticeship Adviser.

Promotion of apprenticeships

The National Policy for Skill Development and Entrepreneurship contains several proposals to increase the status of VET in general, including apprenticeships.

Promotion to young people: The National Policy states that the network of Post Offices and Citizen Service will be leveraged with industry support to promote career counselling and awareness of training opportunities. The network of 285 000 Youth Clubs/Mahila Mandals of Nehru Yuva Kendras which has wide coverage (in 623 districts) will also be utilised as will the National Service Scheme, a public service scheme under the Ministry of Youth Affairs and Sports. The Policy also proposes a Skill Development Fellow scheme to use talented young people who work in government to raise awareness in local areas and help to build training opportunities in their areas.
Promotion to small and medium-sized employers: Small and medium-sized enterprises will be eligible for incentives to make space in their facility available for the training of apprenticeships. Industry will also be encouraged to actively contribute to the training of youth, enabling young people to access real industry experience (MSDE, 2015). Recent ILO research notes that the benefits of hiring an apprentice exceed the costs for Indian employers within the first year of retention as a full-time employee. Such findings assist in challenging the idea that investing in apprenticeships offers little financial incentive to SME (Rothboeck, 2014).

Summary of changes affecting employer engagement

In the Apprenticeship Act changes and rules

Employers can choose, within certain parameters, how many apprentices they employ. Employers now have the “opportunity of being heard” in relation to breaches of the law that involve the engagement of an apprentice who is not qualified to be engaged, or the failure to meet the terms and conditions of the contract of apprenticeship. The relevant penalty has also been reduced from imprisonment to a fine. Employers are allowed to outsource basic training. Apprenticeships are extended to new “optional trades”, meaning that apprenticeships can be implemented in the service sector. The central registration portal allows registration to be conducted online and does not require individual registration processes for each region. Employers are now required to formulate policies about recruiting completed apprentices, although there is no specific obligation to do so.

In other provisions and developments

The APY program that allows 50% of the apprentice stipend to be paid by the government is an important development for employers. The State Skill Development Missions and the provisions in the National Policy for Skill Development and Entrepreneurship for promotion and marketing of apprenticeships will help to raise awareness of apprenticeships and attract good candidates. The establishment of over thirty Sector Skills Councils will also provide another opportunity for employers to engage with apprenticeships and to seek information.

Strengths and weaknesses of the reform of the apprenticeship system

It is as yet too early to evaluate the impact of the reforms to the apprenticeship system, as the changes have been too recent. However, in a country the size of India it should be seen as a major achievement to implement governance, legislative and regulatory reform as well as to co-ordinate national and State activities in the area of VET.

The changes in the Act and Rules, and more general changes in VET proposed in the National Policy for Skill Development and Entrepreneurship can be mapped against the options proposed in the 2012 “Possible Futures for the Indian Apprenticeship” project.

Table 10.2. Potential changes to the Indian VET system
Themes	Proposed options (shaded options supported by stakeholders at the time)	Addressed since 2010 in Apprenticeship Act changes and the new National Policy?
1. Simplify access	Replace compulsory participation requirements with voluntary registration	-
	Reduce the regulatory burden on employers	Yes (remove imprisonment threat; allow larger employers to deal centrally with government)
	Introduce new third parties to the system to help manage economic ebbs and flows, and to provide support for some groups of apprentices and employers	-
2. Improve training quality	Introduce off-the-job training throughout the period of an apprenticeship	-
	Upgrade quality and recognition of apprentice certification	-
	Improve workplace curriculum	Yes (allow outsourcing of “Basic Training”)
	Improve skills and expertise of those delivering training	Yes (plans for improving VET teacher-training and the status of VET teaching)
3. Harmonise the system	Greater involvement of stakeholders in system	-
	Simplify and harmonise the system	Yes (closer links across States)
	Increase “market currency” of apprentice qualifications	-
4. Increase participation	Cover more of the economy	Yes (allow “optional trades” i.e. apprenticeships in the service sector)
	Provide financial incentives to participants, enterprises and training providers	Yes (financial incentives for apprentices and other VET learners; sharing of stipend for trade apprentices under the APY scheme)
	Introduce non-financial strategies to increase participation among more people	Yes (utilisation of local outlets such as Post Offices to market VET, including apprenticeships; apprentice portal)
Source: Author’s own elaboration.

While this may seem to indicate that changes are incremental only, the changes to the Apprenticeship Act and Rules and to VET more generally reflect the need to compromise due to the conflicting wishes and needs of stakeholders. However, the changes to the Apprenticeship Act have been fairly minor, indicating only conservative reform. Much greater attention has been paid to methods of attracting young people into vocational training, of which apprenticeship is only one form.

Some concerns were raised during the finalisation of the changes to the Apprenticeship Act and the Rules. These included concerns about the apparent lower status of the “Optional Trades” and provisions attached to them. There were concerns about the omission of references to the National Skill Qualification Framework in relation to apprentice certification, and the lack of requirement for recoding training and assessment delivered in the workplace. There are also concerns about the trade-off between what are still seen as overly-punitive attitudes towards employers in the Act (i.e. that participation is not voluntary), and the fact that apprentices can still be used as cheap labour.

More generally, the provisions for public-private funding in some of the proposals in the National Policy have raised concerns, along with the flow of funds to the private training sector. It is reported that the National Skills Development Council has had some of its autonomy removed as a result of its incorporation within the Ministry of Skills.

Das (2015) reviewed several Indian skills development initiatives from 2007 to 2013 in terms of their benefits for SMEs. He noted that, while some had succeeded, many failed because they did not reach the targeted enterprises. He also points to lack of monitoring mechanisms. It is not clear from the published documents on the current reforms whether these previous shortcomings have been adequately addressed.

Finally, the refashioning of the apprenticeship system also provided an opportunity to consider the incorporation of the informal economy and informal apprenticeships into the broader VET system. There have been attempts to be more inclusive of the informal economy (for example via Recognition of Prior Learning provisions) in the broader VET policy direction of the new National Policy, but this does not specifically address apprenticeships. It could be argued that there was a need to regularise and harmonise the formal apprenticeship system before moving onto the more difficult questions of incorporating the informal system. The favourable provisions for MSMEs under the APY scheme indicates a favourable attitude towards the informal sector but the documentation that is required from employers favours formal and structured enterprises.

Strengths and weaknesses relating to employer engagement

The Confederation of Indian Industry (CII) was pleased with the outcome of the changes to the system. The CII Director – Skills and Affirmative Action, Mr Sougata Choudhury, noted in an interview that there was nothing major that the CII, on behalf of employers, had advocated that had been missed. He cited as the three major achievements:

The removal of requirements for percentage of apprentices, allowing for flexibility and business forecasting;
The removal of the threat of imprisonment for breaches of the legislation;
The central registration portal.

While there are no publicly available figures on the success of the Apprentice Protsahan Yojana scheme, a newspaper article reported that there were almost 300 apprentices were engaged through the scheme in the first three months of operation (The Hindu, 2015). This indicates that the systems for the scheme were functional.

The changes to legislation to enable better administration of the system are certainly favourable to employer engagement. However, more needs to be done to promote the system to employers in order to prepare for the radical expansion of the apprenticeship system to meet the economic and social demands placed upon it. The International Labour Organisation has been active in making suggestions in this area; the Organisation has proposed a tripartite Apprenticeship Network and also pilot programmes to test the elements of the new system in a range of industry areas and locations (ILO, 2013). These proposals were supported by industry but have not yet been adopted by the Government.

Finally, an important issue is whether individual employers are aware of the considerable changes that have been made. In late 2015, the Confederation of Indian Industry (CII) launched a number of industry workshops around India to improve awareness of the changes. The workshops featured speakers from the DGT as well as HR and production managers from industry, and provided employers with the chance to ask questions. There were 150-200 people at each of these eight workshops, and it was reported that employers were excited by the opportunities available. The reforms were also promulgated through CII magazines, online and in hard copy. As Mr Choudhury put it, “it is up to industry now”.

Potential transferability and lessons for other non-OECD countries

India has had a well-established and regulated apprenticeship system. However, while the modern-day Indian apprenticeship system was laid down in the mid-twentieth century, there have been few subsequent reforms. Other Anglophone countries, including the UK and Australia, have been moving towards a mass apprenticeship system with coverage (in non-graduate jobs) across all sectors in the economy. These countries have allowed mature-aged workers and those already employed by a company to undertake apprenticeships. In the UK, for example, apprenticeships have increased ten-fold in less than a decade. On the other hand, countries like Canada have continued to restrict their apprenticeship system to manufacturing and construction jobs, and although their systems are successful, they are narrow in reach. The German system has been struggling with declining numbers which partly result from an increased demand for higher education rather than vocational training among young people (Deissinger and Gonon, 2015).

India has faced a choice about whether to move into mass apprenticeships or to remain with a relatively limited apprenticeship system. In 2012, India only had approximately 300 000 apprentices out of a labour force of nearly 500 million people. This proportion of less than 0.01% of the workforce compares unfavourably with “large system countries” such as Germany and Australia, which both have around 3.7% of their workforces participating in apprenticeships. The achievement of the government’s policy aim of a tenfold expansion will leave India with a comparatively smaller apprenticeship workforce than those in other countries. The contextual issues and economic barriers in India are immense, however, and would make any immediate expansion beyond this problematic. There are inherent risks in over-hasty expansion of apprentice system, as Smith and Brennan Kemmis (2013b) point out.

The most recent policy reforms have aimed to build on the current system rather than refashion it. It has definitely been made easier for employers to participate in the system and it would be expected that as more employers participate, they will bring other employers with them and also play a more active role in the system.

The Indian system reforms that have transferability for other countries are as follows:

Move towards harmonisation across jurisdictions (Federal and State);
Involvement of all stakeholders in consultations around reforms to the system (this was done extensively, including via the Inter-Ministerial Group);
Easily-accessible web portals: for data collection from employers and also for information for would-be employers and would-be apprentices;
A stipend that is affordable for employers but also liveable for apprentices;
Sharing of the stipend between employers and the government in specified cases (APY scheme) and payment of the government share directly to the apprentice rather than through the employer;
The requirement for employers to develop policies for employing ex-apprentices (ensuring that the possibility was at least considered, but not mandating retention);
Consideration of medium and small enterprises in redesigning apprentice systems;
Provision of apprentice opportunities outside traditional engineering and manufacturing trade areas.

For non-OECD countries there are additional lessons:

The use of pre-existing local networks such as Post Offices and Youth Clubs to disseminate and promote information about vocational training;
The provision for out-sourcing ‘in-house training’ in the absence of good facilities in-house;
Balancing protection of apprentice rights against the availability of opportunities.

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