The IHDS Forum is a monthly update of socio-economic developments in India by the IHDS research community, based on the India Human Development Survey, jointly conducted by NCAER and the University of Maryland. While two earlier rounds of the survey were completed in 2004-05 and 2011-12, respectively. Fieldwork for the third round was undertaken in 2022-24 and the data is currently being cleaned and processed.
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The National Council of Applied Economic Research (NCAER), one of India’s premier economic policy research think tanks, carried out the 134th Round of its Business Expectations Survey (BES) in September 2025. NCAER has been carrying out the BES every quarter since 1992, covering 484 firms across four regions.
Economic growth depends on innovation and technological progress — a fact highlighted by the 2025 Nobel Prize in Economics which highlighted the role of human capital in driving productivity. In India, this linkage is most visible in the automobile industry, a pillar of manufacturing and employment. Yet, the sector faces widening skill shortages and skill gaps that threaten its global competitiveness.
The automobile industry contributes nearly 49% of India’s manufacturing GDP and employs millions. However, the sector struggles to find workers with the right technical and soft skills. As India shifts towards electric vehicles (EVs), hybrid and flex-fuel systems, and smarter factories powered by automation, AI, and robotics, the demand for skilled engineers and technicians is growing faster than the supply. A recent NCAER National Skill Gap Study (2025) confirmed that both supply- and demand-side mismatches are holding the sector back.
The supply-side problem begins with training. Many candidates lack practical knowledge of working with advanced machinery and digital systems. For most, the first experience of “working with their hands” comes on the factory floor. This lack of exposure leads to high attrition rates.
Soft-skill deficiencies add to the challenge. Poor communication, low discipline, and limited teamwork skills make new recruits less effective. Courses on battery technology, mechatronics, automation, and robotics remain scarce, while there is a shortage of qualified trainers. Even geography plays a role — firms often struggle to find a local skilled workforce willing to relocate.
Large automotive firms fill this gap through on-the-job training, covering technical and interpersonal skills. Some partner with ITIs to co-design curricula, set up labs, or share trainers. These partnerships help but fall short of meeting the industry’s vast needs. Smaller component makers and service workshops hire unskilled labour, training them internally or multi-skilling workers to cut costs.
Automobile industry leaders acknowledge a perception problem. Shop-floor jobs are viewed as low-paying and physically demanding. Graduates trained in automotive trades often prefer better-paying delivery jobs in cities. Meanwhile, high-end engineering talent gravitates to the IT sector, attracted by salaries and cleaner work environments.
Gender imbalance compounds the issue. The automobile industry is overwhelmingly male-dominated, with women making up just 3.4% of the workforce (PLFS 2023-24). Only 1.8% of women are in vehicle manufacturing and 1% in repair and maintenance. Some EV assembly units have pioneered all-female lines, but these are exceptions. Workplaces lack basic facilities and gender-sensitive norms, deterring women from joining or staying in the industry.
Closing the skill gap requires simultaneous action on both the supply and demand sides. Curricula at ITIs and engineering colleges must evolve in line with emerging technologies — from EV design to cybersecurity and data analytics in mobility. Industry-linked training should become the rule, not the exception.
Equally, the automobile industry must make its jobs aspirational. Many young people are unaware that leading automakers offer career paths where technicians can rise to managerial roles through upskilling and reskilling. Awareness campaigns and visible success stories can reset these perceptions.
To attract niche talent — in software, AI, and systems engineering — companies will need to offer competitive pay and better working conditions. At the same time, automation that reduces physical strain and strict enforcement of POSH (Prevention of Sexual Harassment) guidelines can encourage more women to participate.
No single stakeholder can solve the skill crisis. Industry-academia partnerships, especially at the local level, are essential. Firms must continue co-creating courses and offering apprenticeships, while governments can incentivise regional skill mapping to align labour supply with demand.
Regular industry surveys should track evolving job roles and required competencies in real time. This will help design responsive policies for the next generation of manufacturing jobs. A coordinated skilling ecosystem — combining private innovation, public policy, and institutional accountability — is India’s best bet to sustain growth in its most dynamic manufacturing sector.
Isha Dayal is Fellow and Bornali Bhandari is Professor at National Council of Applied Economic Research (NCAER). Views expressed are personal.
The automotive sector contributes significantly to India’s manufacturing output and employment (Bhandari, Pratap and Sahu 2022). Among those employed, most are skilled individuals, having undergone formal or non-formal vocational/technical education and training, according to the Periodic Labour Force Survey (PLFS). Despite this, skill shortages and skill gaps abound, as found through stakeholder consultations for NCAER’s National Skill Gap Study for High Growth Sectors (Bhandari et al. 2025). There are in-demand automotive jobs for which people are difficult to find, across geographies (resulting in overall, as well as spatial skill shortages); and if people are available, they lack the necessary skillsets (resulting in skill gaps) (Green 2013).
Beneath the surface of this demographic story lies a quieter, more human crisis.
India is getting older and faster than most realise. More than 10 percent of our population—over 14 crore people—are already aged 60 years or above. By 2050, this number will double, and for the first time in history, the elderly will outnumber children below 15.
According to the United Nations Population Fund’s India Ageing Report 2023, India’s elderly population by 2046 is expected to surpass its child population.
The report also highlights a worrying 41 percent decadal growth rate among the elderly. Yet, our policies, institutions, and even mindset remain unprepared for this profound demographic shift.
The erosion of family-based care
India’s traditional family structure, once the bedrock of elder care, is eroding. Urbanisation, migration, and the rise of nuclear families have drastically altered how we live and with whom we live. In the past, elders could rely on their children and extended families for physical, emotional, and financial support. Today, that safety net is fraying.
The reasons are structural, not just cultural. Younger generations are moving to cities for education and work. Women, traditionally the primary caregivers, are increasingly participating in the workforce, which is a sign of progress but also a challenge for household caregiving.
The silent crisis at home
Beneath the surface of this demographic story lies a quieter, more human crisis. Increasingly, India’s elderly population is living alone or with only another senior partner.
As per Periodic Labour force Survey (PLFS) 2023-24, across the country, 7.7 percent of households consist solely of elderly members aged above 60 years, with a maximum household size of two. The share is slightly higher in urban India (8.1 per cent) compared to rural India (7.5 per cent), reflecting changing family structures and the gradual erosion of traditional support systems.