India’s employment growth now depends on how quickly the country can strengthen skills and boost the productivity of its smallest enterprises. A new NCAER study argues that India stands at a decisive point, where better skilling and stronger small firms could transform the labour market over the next decade.
Skilling will shape India’s employment growth
To begin with, the report stresses that India still lacks a workforce prepared for a tech-driven economy. Although the country enjoys a young population, skill levels remain low. As a result, medium-skilled jobs in services are set to dominate the next wave of hiring. Meanwhile, manufacturing continues to rely heavily on low-skill labour.
Moreover, NCAER finds that even modest improvements can deliver strong gains. A 12-percentage-point rise in formally trained workers could lift job creation in labour-intensive industries by more than 13 percent by 2030. Under a moderate growth path, a 9-percentage-point increase in skilled workers could generate 9.3 million new jobs.
Small enterprises hold the key
India’s employment growth, the report notes, is tied closely to the productivity of small firms. Most small businesses still operate at subsistence levels. Limited credit, weak technology adoption and low capital investment restrict their ability to scale.
However, the study also shows how quickly things can change. Enterprises using digital tools employ 78 percent more workers. Even a 1 percent rise in credit access can boost hiring by 45 percent. Therefore, improving access to finance and technology becomes essential if India wants sustained employment expansion.
Self-employment dominates, but not by choice
NCAER highlights a clear concern: recent job gains have come largely from self-employment. Yet most of these workers are not entrepreneurs by choice. They are pushed into self-employment due to the lack of stable wage opportunities. According to the study’s authors, this mirrors the struggles of small farmers who work to survive, not thrive.
Sectors poised for strong gains
Despite these challenges, the outlook remains promising. The report identifies areas that could deliver substantial employment. By 2030, job creation may rise 53 percent in textiles, garments and related manufacturing. In trade, hotels and allied services, the increase could reach 79 percent.
Furthermore, the authors argue that India must shift its production-linked incentive (PLI) schemes. They recommend directing support toward labour-intensive sectors such as textiles, footwear and food processing. In services, tourism, education and healthcare can become engines of inclusive growth.
A moment of opportunity
NCAER leaders believe India is at a rare economic moment. Even as the nation moves toward becoming the world’s third-largest economy, its per capita GDP rank—128th—reveals how much progress remains. This gap, they say, opens a valuable opportunity to focus on quality employment and inclusive prosperity.
Ultimately, India’s employment growth will rise only if the country strengthens its workforce and upgrades its smallest enterprises. With the right policies, India can unlock millions of new jobs and support its long-term growth vision.
