Budget 2024: Want additional tax breaks or govt contracts? Train your workers

The government plans to facilitate a collaborative effort between itself and the industry to bridge the skill gap among workers and ensure that India's workforce is future ready. (Photo: ANI)
The government plans to facilitate a collaborative effort between itself and the industry to bridge the skill gap among workers and ensure that India's workforce is future ready. (Photo: ANI)


India Inc. might receive an unexpected incentive in Budget 2024—financial incentives to upgrade the skills of their workforce

NEW DELHI : Private companies spending lakhs of rupees on training their employees may receive an additional boost in the upcoming budget to ensure their workers are skilled enough to be among the world's finest. 

The finance ministry is evaluating a proposal to incentivise private companies to train and upgrade the skills of their workers, two officials aware of the development told Mint.

The incentives may include tax benefits, financial assistance, or preference in government contracts to bidders with a higher percentage of skilled and certified workforce, one of them said.

The proposals originated from the ministries of labour and employment, and skill development and entrepreneurship, along with government bodies such as the National Productivity Council, the officials said, requesting not to be named.

The plan is to facilitate a collaborative effort between the government and industry to ensure that India’s workforce is future-ready.

“Private stakeholders train their workers at their own expense and for their own use, but skilled workers generally don’t stay long and often switch to different companies," the second official said. “The proposed incentive scheme will not only help in reducing the widening gap in skilled manpower but also create a pool of skilled workers available for their units.

Mint reported in May that the government was looking to “create a high-quality skilled workforce for the world", aiming to cater to a projected demand for millions of jobs in developed economies over the next five years.

The finance, labour and skill development ministries did not immediately reply to queries.

Global opportunities

A 'Global Skill Gap Study' prepared by the National Skill Development Corporation (NSDC) reveals a growing demand for Indian talent across diverse sectors worldwide. Official projections indicate that 3.58 million job openings will be available in 16 countries, including the US, the UK, Canada, Singapore, and the UAE.

Saudi Arabia and the UAE were projected to have the highest job openings for Indian workers over the next five years, at 1 million each, according to NSDC. The US is expected to have 390,000 potential jobs, followed by Canada and Qatar with 320,000 each, and Kuwait with 223,000.

Also read: India needs a data-driven strategy to plug skill development gaps

The study highlighted a significant demand for skilled workforce in the healthcare, manufacturing and information technology sectors across Europe, Asia and Australia.

With a young population, India has a significant opportunity to leverage its demographic advantage and create a high-quality skilled workforce for global markets, NSDC said in its study.

About 65% of Indians are below the age of 35, and the share of working-age population (between 15 and 59 years) is set to increase from 62% to 68% by 2030, it added.

Horses for courses

“Industries have been encouraged to train a surplus of workers to build a skilled workforce capable of meeting both domestic and global demands," said Ashwani Mahajan, a member of Delhi Productivity Council. “The incentivization scheme will be beneficial for the industry and will bridge the gap between the demand and supply of skilled manpower."

Upgrading skills would involve refining the skills of workers to meet the specific standards and practices of the respective industry or country they want to work in. For example, an electrician or a pathology lab technician would need to be updated about the latest requirements of the country they want to work in.

Also read: Government committed to developing skills among youth: Nirmala Sitharama

“In today's rapidly evolving business landscape, it is crucial for the government to incentivize industry-led initiatives for skilling workers. By offering tax breaks or other financial benefits to companies that invest in training their workforce, the government can create a win-win situation," said Ajay Rao, founder and chief executive of Emiza Inc., a Mumbai-based warehousing company providing third-party logistics services.

“Companies will be more inclined to develop their employees' skill sets, leading to a more productive and competitive workforce. This, in turn, will fuel economic growth and innovation," Rao added.

Also read: Electronics, EV makers bank on apprentices to bridge skill gap; boost stipends

Industry bodies have been lobbying for increased support from the government to upskill workers, said Aditya Ghosh, chairman, CII national committee on skill development and livelihood, and co-founder of Akasa Airlines. 

“The Confederation of Indian Industries (CII) is working with the government to create a positive skills ecosystem. We have recommended to the government that greater weight be given in all government contracts to bidders with a higher percentage of skilled and certified workforce," Ghosh said.

“Additionally, to enhance the international mobility of Indian youth, we emphasise the need for mutual recognition of standards for new and emerging job roles."

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