Home > Home Page > The second coming of ITIs

New Delhi: For decades, the government’s efforts to build an efficient workforce have failed to keep pace with the country’s rapidly changing industrial needs: outdated syllabi and prehistoric training labs could barely equip the country’s unemployed youth—the foot-soldiers of Indian industry—with better employable skills and wage opportunities.

But the beginning of a slow and silent revolution may be sweeping across Industrial Training Institutes (ITIs), the behemoths that came into existence in the mid-1950s when India’s first industrial policy was laid out by then prime minister Jawaharlal Nehru.

As part of a new skill development public-private initiative launched three years ago, at least 600 firms have signed memoranda of agreements with state governments under the public-private partnership (PPP) model.

About Rs5,291 crore will be spent through a combination of a phased PPP plan, a long-term World Bank loan and direct Central funding. Sandeep Bhatnagar / Mint

Companies such as ITC Ltd and Tata Motors Ltd will modernize at least two institutes each in Andhra Pradesh and Uttarakhand, respectively, along with local industry partners. NTPC Ltd, on the other hand, plans to revamp at least half a dozen ITIs, while Educomp Solutions Ltd has already started upgrading courses to train IT instructors in several of the 16 ITIs. It has signed agreements in Haryana, Rajasthan, Punjab and Uttar Pradesh. Hospitality firms Indian Hotels Co. Ltd, which owns the Taj brand, and EIH Ltd, which runs the Oberoi chain of hotels, have also taken up similar initiatives. So have steel companies such as JSW Steel Ltd and Ispat Industries Ltd.

“We are working on improving the skills and motivation of teachers. We also plan to train students to become IT entrepreneurs by offering courses such as website designing, so that they can generate revenue by serving small medium enterprises," said Sharad Talwar, president of Educomp Solutions. At present, the firm has entrusted five employees to look after its ITI activities.

The government plans to modernize 1,896 ITIs to train one million workers in the next four years and an additional one million every subsequent year. About Rs5,291 crore will be spent through a combination of a phased PPP plan, a long-term World Bank loan and direct Central funding.

On its part, the government sees skill development as a way to reduce regional disparity and poverty.

Last year, Prime Minister Manmohan Singh reaffirmed the government’s commitment to skill development and said any programme to train the country’s youth—who constitute 30% of the population—must begin with investment in education.

The Centre has already provided Rs160 crore to revamp 100 ITIs, while the World Bank’s long-term credit of Rs1,581 crore is paying for 400 other institutes.

But a majority of these institutes—1,396—are being revamped in partnership with the private sector with an outlay of Rs3,550 crore, and that’s generating fresh interest.

While it’s too early to gauge the exact contribution of companies in terms of investment commitment or capacity to offer employment, at least one company, Bharat Forge Ltd, the world’s largest forging firm, has invested its own money—Rs7.6 crore—for a complete overhaul of the institute at Khed in Maharashtra, where three of its industrial plants are located. About 99 students have already received training in handling manufacturing tools and plans are afoot to scale up recruitment to 500 within three years, said Leena Deshpande, senior human resource manager at Bharat Forge.

The government is offering Rs2.5 crore per institute to upgrade obsolete machinery and introduce new training modules, and turn each of them into self-sustaining units by handing over management control to industry.

The institutes, which dwindled in importance after their control was transferred to the states in 1968, have also been allowed to set up a production and service centre, and charge fees for specialized courses. The interest-free loan is repayable in 30 years, and will be managed by a panel consisting of industry and government.

Many say the new effort has the potential to produce spectacular results: It will shave off training costs and improve productivity in the long term. Despite witnessing quick-paced growth through the reform decades, India suffers from a severe shortage of skilled workers.

According to Sunil Kandlikar, chief executive of Bangalore-based TeamLease Staffing Solutions, companies spend close to 28% of their annual compensation to train workers to become productive. “It’s a two-way street. Companies have vested interest in developing these institutes while trainees gain industrial exposure," he said.

“It’s a positive sign. Industries can train according to their requirement and the trainees get placement in these establishments," said Sharda Prasad, director general (employment and training) in the ministry of labour and employment, whose challenge is now to select industry partners for the remaining 696 ITIs.

The ITIs were originally set up to assist school dropouts to find employment. A range of courses are offered—from machine automation to tool maintenance.

New skills such as personality development and fashion designing are being introduced now. Indian Hotels, for example, will start a baking skills course this month with a batch of 20 at the Channarayapatana ITI, located 100km from Bangalore; imported machinery such as spiral mixers and three-deck ovens have already been purchased at a cost of Rs18-20 lakh, said Ramesh Subramanian, welfare manager at Bangalore’s Taj West End Hotel.

“Companies are coming forward to offer management expertise because it serves everyone’s interest. What is missing in these institutes right now is management and a framework," said B. Santhanam, managing director of Saint-Gobain Glass India Ltd and chairman of the Confederation of Indian Industry’s skill development committee.

Many of these institutes, located in remote outposts such as Sirpur, in the tribal belt of north Maharashtra, say they are already turning into profit centres. The Sirpur ITI tied up with Animation Film Institute to set up an in-house production centre a year ago. In the last six months, at least 15 students have found private employment, earning Rs15,000-20,000 a month. The production centre has earned Rs1.5 crore in turnover through outsourced contracts, and is about to execute a 22-part children’s animation programme for government-owned television channel Doordarshan, said its principal, S.A. Pawar.

“A few years ago, we barely had 90 students. After introducing new courses, we have 400. We have also started seeing campus recruitment, which was unheard of a few years ago," he added.

But the public-private endeavour has challenges ahead. Experts say companies prefer ITIs located in bigger towns to those deep in the countryside. Many regions have far fewer institutes, leaving out a large swathe of backward regions that need these programmes the most, such as Chhattisgarh and states in the North-East, which are in the grip of extremist violence. In the last three years, 90 new ITIs have been set up.

In many ways, skill development is filling in where the formal education system has failed. Only 7% of Indian students apply for higher education, according to the National Knowledge Commission website.

Many of the higher education courses are beyond the pale of students because of high education costs, such as, capitation fees, said R.T.T. Ram Mohan, who teaches finance at the Indian Institute of Management, Ahmedabad.

“There is a role for skill development in far-flung areas," said Mohan. “But the aspiration of the youth is much larger today."

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