PM-SETU Scheme

PM-SETU stands for Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs. It is a Government of India scheme to modernise 1,000 government Industrial Training Institutes (ITIs) with the help of industry. It has a total outlay of ₹60,000 crore over five years. The main idea is simple: let companies that actually hire skilled workers help decide what ITIs teach and how they are run.

Why was it needed?

ITIs are India's main public institutions for training young people in practical trades like electrician, fitter or welder. But many government ITIs have old machines, empty teaching posts and courses that do not match what factories need today. A NITI Aayog study of ITIs in 2023 found many seats lying unfilled and only about 36% of sanctioned instructor posts filled.

So students finish training but still struggle to get good jobs, and industry complains that it cannot find skilled workers. PM-SETU tries to close this gap between training and jobs.

Where did it come from?

The idea of upgrading ITIs in a hub-and-spoke model with industry was announced in the Union Budgets of 2024-25 and 2025-26. Here is how it moved forward:

• 7 May 2025: The Union Cabinet approved the "National Scheme for ITI Upgradation and setting up of five National Centres of Excellence for Skilling", with ₹60,000 crore.
• 4 October 2025: The scheme was launched as PM-SETU at the Kaushal Deekshant Samaroh (a national skill convocation) at Vigyan Bhawan, New Delhi.
• Pilot phase: The scheme first ran as a pilot in selected clusters. The first Strategic Investment Plan approved was for a Visakhapatnam (Andhra Pradesh) cluster.
• 7 July 2026: The National Steering Committee extended the scheme from pilot to a nationwide rollout across all 200 identified ITI clusters.

What kind of scheme is it?

PM-SETU is a Centrally Sponsored Scheme. This means the Centre and the states share the cost, and the states help run it. It is run by the Ministry of Skill Development and Entrepreneurship (MSDE), mainly through its Directorate General of Training (DGT).

Who pays how much?

The ₹60,000 crore is shared three ways:

• Central Government: ₹30,000 crore
• State Governments: ₹20,000 crore
• Industry partners: ₹10,000 crore

Half of the Centre's share is co-financed equally by the World Bank and the Asian Development Bank (ADB). In simple words, two international lenders give loans to support part of the Centre's spending.

How does the hub-and-spoke model work?

Think of a big hospital in a district town and the small health centres in nearby villages. The big hospital has advanced machines and specialists; the small centres are close to people and send serious cases to it. PM-SETU uses the same idea:

• 200 hub ITIs get advanced labs, innovation and incubation centres, production units, trainer-training facilities and placement services.
• 800 spoke ITIs are linked to these hubs, on average four spokes per hub. They use the hub's facilities and extend training to more places.
• One hub plus its spokes is called a cluster. So there are about 200 clusters covering 1,000 ITIs.

For example, an Odisha cluster approved in July 2026 has Government ITI Barbil as the hub and the ITIs at Anandapur, Koira, Karanjia and Barkote as spokes.

How is a cluster run? (The industry-led model)

This is what makes PM-SETU different from older ITI schemes:

1. A company becomes the Anchor Industry Partner (AIP) for a cluster.
2. The cluster is managed through an industry-led Special Purpose Vehicle (SPV), a separate body set up only for this job, with the state and the ITIs as partners.
3. The anchor partner prepares a Strategic Investment Plan (SIP): what to build, what new courses to start, which trainers to hire, and how many students to place in jobs.
4. The State Steering Committee checks and recommends the SIP.
5. The National Steering Committee, chaired by the MSDE Secretary, gives final approval.
6. The plan is then put into action, with a focus on outcomes such as placements, not just buildings.

What are the targets?

• 20 lakh youth to be trained over five years in new, demand-based courses and revamped existing trades.
• Five National Skill Training Institutes (NSTIs) at Bhubaneswar, Chennai, Hyderabad, Kanpur and Ludhiana will be upgraded, including as National Centres of Excellence for Skilling with global partners.
• 50,000 trainers to get pre-service and in-service training, with better Training of Trainers (ToT) facilities at these five NSTIs.

Commonly confused concepts

• PM-SETU vs PMKVY: The Pradhan Mantri Kaushal Vikas Yojana (PMKVY), started in 2015, funds mostly short-term skill courses (a few weeks or months) through training partners. PM-SETU is about upgrading the institutions (government ITIs) that run long-term trade courses of one to two years.
• PM-SETU vs Skill India Mission: The Skill India Mission (2015) is the umbrella campaign for all skilling in India. PM-SETU is one scheme inside this larger effort.
• PM-SETU vs the Apprenticeship scheme (NAPS): Apprenticeship schemes pay part of the stipend so that students learn on the job inside a company. PM-SETU improves training inside the ITI, with industry help.
• Centrally Sponsored vs Central Sector scheme: In a Centrally Sponsored Scheme (like PM-SETU), the Centre and states share the cost and states implement it. In a Central Sector Scheme, the Centre pays 100% and runs it itself.

Issues, criticism and the way forward

• Trainer shortage: New machines are of little use without good instructors. Experts say filling vacant instructor posts and training trainers must come first.
• Uneven industry interest: Big companies near industrial areas are keen to adopt clusters, but ITIs in remote or less industrial districts may not find strong anchor partners.
• State capacity and funds: States must put in ₹20,000 crore. Poorer states may find it hard to pay their share on time, which can slow work.
• Measuring success: The real test is placement and wages, not the number of buildings. Regular tracking of how many trainees get jobs, and at what pay, is needed.
• Way forward: Use industry-recognised certification, add new-age trades (electric vehicles, solar, robotics), include WorldSkills-standard training, and make sure spoke ITIs, not just hubs, actually improve.

Concepts to Know

• Industrial Training Institute (ITI): A post-school training institute that teaches practical trades, like electrician, fitter or mechanic, usually for one or two years.
• Hub-and-spoke model: A system where one well-equipped central unit (the hub) supports several smaller linked units (the spokes), like a big bus depot serving small bus stops.
• Special Purpose Vehicle (SPV): A separate legal body created for one specific project, so that its money, management and responsibility stay clearly separate.
• Anchor Industry Partner: The lead company that adopts a cluster, invests in it, shapes the courses and helps place students in jobs.
• Strategic Investment Plan (SIP): The detailed project plan for a cluster: what money will be spent on what, and what results are expected.
• WorldSkills: An international organisation that holds a global skills competition every two years and sets world-level standards for trades.
• Employability: How ready a person is to get and keep a job, based on their skills and work habits.