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With an 8.2% GDP growth during the financial year 2023-24, India has secured its position as the fastest-growing major economy in the world. As the world's fifth-largest economy, India is experiencing rapid growth across sectors, including the proliferation of global GCCs, manufacturing giants and semiconductor companies. This growth is further fueled by the dynamic startup ecosystem and the expansive micro, small, and medium enterprises (MSMEs) sector, which together form the backbone of India's economic dynamism.

The Role of MSMEs in India’s Economic Growth

The startup and MSME sectors have been pivotal in driving innovation, agility, and job creation, particularly in niche and emerging sectors. India hosts 1,17,254 recognized startups, creating over 12.42 lakh direct jobs. MSMEs, with their vast presence and diverse offerings, employ nearly 23 percent of India’s workforce, contributing significantly to GDP growth and supporting local economies.

As of 2023, approximately 64 million MSMEs operate in India, employing nearly 190 million individuals. This remarkable increase from 90 million in 2022 underscores the critical role of MSMEs in fostering employment opportunities and sustainable development.

Apprenticeship Programs for MSMEs

With rapid expansion comes an increased demand for skilled workers. Apprenticeships have emerged as a proven pathway to address skill deficits, offering the dual advantage of on-the-job training combined with theoretical knowledge. India's apprenticeship programs, covering major industries and latest technologies like AI, robotics, and automation, have been growing at an impressive rate of 30% to 35% annually.

Driving Scale: Apprenticeships as Catalysts for MSME and Startup Expansion

Apprenticeship programs for MSMEs serve as a pivotal strategy, offering practical training and industry-specific skills that bridge the gap between theoretical education and practical workplace requirements. For MSMEs and startups, these programs present a strategic opportunity to address current challenges and future growth prospects effectively.

Sustainable and Cost-Effective Talent Acquisition

Apprenticeships provide a sustainable means to cultivate talent internally by offering structured training and hands-on experience. This approach reduces reliance on expensive recruitment processes and mitigates turnover rates. Companies can potentially cut hiring costs by up to 50 percent and decrease attrition costs by 10 to 25 percent. The immediate integration of apprentices into operations can boost productivity by 20 to 25 percent, enhancing the return on investment in apprenticeship programs. Furthermore, companies can leverage CSR benefits by hiring apprentices above the mandated 2.5 percent of the workforce, promoting sustainable growth and reducing labor costs.

Customized Skill Development to Meet Workforce Demands

In the face of challenges posed by AI and automation, apprenticeships provide structured pathways for individuals to gain hands-on experience and specialized training. Government initiatives like the MSME Digitalization Scheme and Niti Aayog's AI for India strategy are pivotal in integrating these technologies effectively. This fosters a skilled ecosystem essential for sustainable growth across sectors.

Promoting Inclusivity and Diversity

Apprenticeship programs play a crucial role in the skill development and capacity-building of the female workforce within the MSME sector. Currently, women represent approximately 21 percent of apprentices, highlighting a significant opportunity for MSMEs to enhance female participation and foster economic empowerment. Government initiatives, including special drives under the Udyam Registration Portal (URP) and schemes like SAMARTH, support women-owned MSMEs and women entrepreneurs.

Creating a Talent Supply Chain

Apprenticeships are a robust mechanism for creating a continuous pipeline of fresh talent into organizations. These programs bring in individuals with diverse backgrounds and perspectives, often injecting innovative ideas and fresh thinking into the business. By nurturing young talent through hands-on training and practical experience, apprenticeships fulfill immediate skill requirements and prepare the workforce for future challenges and technological advancements.

Apprenticeship programs for MSMEs represent a transformative strategy for India's economic growth. By bridging the skills gap, fostering innovation, and promoting inclusivity, apprenticeships drive sustainable development and empower diverse segments of the population. As India strives to achieve ambitious employment targets and integrate emerging technologies into its workforce, scaling up apprenticeship initiatives will be crucial. Through concerted efforts, India can harness its entrepreneurial spirit and technological prowess, ensuring equitable and sustainable economic progress for all.

The blog is an excerpt from the article authored by our Chief Executive Officer and published in BW Businessworld

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