A new study by the National Council of Applied Economic Research (NCAER) warns that India’s next wave of job growth hinges on two urgent priorities: upgrading workforce skills and boosting the productivity of its millions of small enterprises. The report — India’s Employment Prospects: Pathways to Jobs — was released on December 11 by NCAER Vice Chairman Manish Sabharwal.

Self-employment rising, but skills lag behind

The report finds that much of India’s recent rise in employment comes from self-employment — often driven by necessity rather than entrepreneurship. Professor Farzana Afridi, who led the study, said India must confront the fact that its employment future depends on transforming the productivity of small firms that currently operate with low capital, weak technology adoption and minimal growth potential.

Enterprises using digital tools hire 78% more workers, and even a 1% rise in access to credit increases employment by 45%, the study shows.

India’s demographic window needs stronger skills

NCAER warns that India’s demographic advantage will be wasted unless skill levels rise sharply. Medium-skilled jobs, especially in services, are driving most of the current employment expansion, while manufacturing remains dominated by low-skill work.

The study estimates that:

  • Raising the share of skilled workers by 12 percentage points could boost jobs in labour-intensive sectors by over 13% by 2030.
  • A 9 percentage-point rise in skilled workers could generate 9.3 million new jobs by 2030.

Huge job potential in textiles, services and tourism

NCAER Senior Advisor Dr G.C. Manna said the report maps sectors with the strongest job-creation multipliers. Its projections show employment could rise:

  • 53% in textiles, garments and allied manufacturing
  • 79% in trade, hotels and related services

by 2030, driven by moderate sectoral growth.

Policy push: labour-intensive manufacturing and people-centric services

To unlock this potential, the report recommends:

  • Redirecting production-linked incentives (PLIs) toward labour-intensive sectors such as textiles, footwear, food processing and garments
  • Boosting policy support for high-employment services like tourism, healthcare and education

Professor Aditya Bhattacharjea noted that the study places India within a global context and highlights opportunities to adopt international best practices.

Strong small enterprises + skilled workers = faster GDP growth

With India on track to become the world’s third-largest economy, Manish Sabharwal said low per capita GDP offers “a powerful opportunity” to make job creation central to growth strategy.

The report’s message is clear: India can sustain 8% GDP growth only if it builds a skilled workforce and strengthens the country’s smallest enterprises — the engines of mass employment.