A new report by the National Council of Applied Economic Research (NCAER) has found that boosting workforce skills and improving the productivity of small enterprises could significantly accelerate job creation in India, helping sustain GDP growth of around 8% in the coming years. The study, “India’s Employment Prospects: Pathways to Jobs”, authored by Professor Farzana Afridi and her research team, was released on December 11 by NCAER Vice Chairman Manish Sabharwal.
The report highlights that India’s recent employment rise has been driven largely by self-employment, but the shift toward a skilled workforce has remained slow. It warns that most small enterprises still operate at subsistence levels due to low capital, weak productivity and minimal adoption of modern technologies.
“India is on track to become the world’s third-largest economy, and its low per capita GDP ranking presents a strong opportunity to prioritise employment and inclusive growth,” Sabharwal said at the launch.
Afridi noted that India’s self-employment dominance is shaped more by necessity than entrepreneurship. “India must confront the reality that its employment future is tied to the productivity of its smallest enterprises,” she said. According to the study, enterprises that use digital technologies hire 78% more workers compared to those that do not, while even a 1% increase in access to credit boosts the number of hired workers by 45%.
The report emphasises that India’s demographic advantage can only be fully realised by significantly improving skill levels. With new technologies and AI reshaping industries, medium-skilled jobs – especially in services – are driving most of the employment growth. Manufacturing remains predominantly low-skill.
Increasing the share of formally skilled workers could dramatically improve job creation. The study finds that raising the skilled workforce share by 12 percentage points could increase employment in labour-intensive sectors by more than 13% by 2030; and a 9 percentage-point rise in skilled workers could generate 9.3 million jobs by 2030.
NCAER Senior Advisor Dr. G.C. Manna said the report identifies sectors with the strongest potential for high employment growth, while Professor Aditya Bhattacharjea noted that it places India within a global context and identifies opportunities for alignment with international best practices.
Using multiplier estimates, the report projects substantial job gains from moderate growth in labour-intensive sub-sectors. By 2030, employment could rise by 53% in textiles, garments and related manufacturing, and 79% in trade, hotels and related services.
To unlock this potential, the report recommends targeted policy measures. In manufacturing, it urges reorienting production-linked incentives toward labour-intensive industries such as textiles, garments, footwear and food processing. In services, it calls for greater policy support to tourism, education and healthcare to generate large-scale, inclusive employment.
The findings reinforce that skilled workers and competitive small enterprises will be central to India’s ambition of sustaining high economic growth and expanding job opportunities across the country.
