India's degree dilemma: Why millions of graduates can't find jobs

In a nation overflowing with a youthful, ambitious population, why are so many businesses struggling to find the talent they desperately need? India's 'skill gap' isn't just a buzzword, it's a perplexing paradox silently shaping our economic future. When you consider the staggering number of graduates India has, you realise how urgently this skill gap needs to be addressed. In fact, employability has fallen to 42.6% in 2024 due to this skill gap, according to India’s Graduate Skill Index 2025 by Mercer-Mettl. That's an alarming low number percentage. This means only 4 out of every 10 graduates are employable.

According to the 2023 World Bank data, India is the only country where more than 100 million people aged 25 and above hold a graduate or equivalent degree. We have even surpassed China in this respect. But have the degrees the graduates hold prepared them for the job market? Apparently not.

Where are the skilled employees?

According to the World Economic Forum’s Executive Opinion Survey 2025, India falls behind when it comes to the “ease of finding skilled employees in the local labour market”. The biggest challenge is a widening chasm between the skills employers desperately need and what our graduates actually possess.

While the demand for cutting-edge technical skills like AI and data analytics is skyrocketing, non-technical skills like communication, problem-solving and creativity remain equally important. But very few graduates are learning these in the colleges. This imbalance isn't just an abstract problem, it's a very real roadblock making it increasingly difficult for bright, young graduates to land their first jobs.

As industries rapidly transform, the demand for a workforce proficient in emerging technologies is growing. The Fourth Industrial Revolution, as highlighted by the World Economic Forum, has ushered in widespread automation, artificial intelligence and digitalisation. This shift has created an urgent need for workers skilled in these new domains, a need that our current educational systems and training programs are struggling to meet.

Moreover, India's brightest tech graduates are increasingly heading to the US and Europe, drawn by the promise of greater career advancement, higher salaries, better work-life balance and quality of life.

The academia-industry divide

Beyond the immediate skill shortages, a deeper issue lies in the fundamental mismatch between what students learn in universities and the practical skills industries actually demand. Traditional education often prioritises theoretical knowledge over practical competencies. This means that despite earning advanced degrees, many graduates arrive in the workforce lacking the crucial hands-on experience and real-world problem-solving abilities needed to succeed. The result is a growing pool of highly educated individuals who, through no fault of their own, are unprepared for the challenges of today's dynamic job market.

The demands for non-technical skills are also not getting met. Only 43.5% of graduates are employable in fields like sales, marketing, HR, and business development, according to India’s Graduate Skill Index 2025 by Mercer-Mettl.

India Inc. is naturally worried. It is seeking individuals who can learn, unlearn and quickly adapt to changing work environments. They are investing in learning and development programmes for employees, focusing on data and digital skills. According to Great Learning’s Workforce Skills Evolution Report, 58.5% of India companies committed funds in FY25 towards Learning and Development budgets.

Government’s initiatives to close the skill gap

India faces a critical paradox of increasing youth unemployment amid skills deficiencies. In response, the government launched initiatives like the Skill India Mission which was formalised in 2015. Pradhan Mantri Kaushal Vikas Yojana launched in 2015, targets school dropouts, unemployed youth and underprivileged groups to boost employability. It emphasises industry-aligned courses, digital skills and green jobs. The National Apprenticeship Promotion Scheme (NAPS) was launched in 2016, to promote on-the-job training via apprenticeships in industries and MSMEs. PM Vishwakarma Yojana, launched in 2023, focuses on Skill Upgradation for traditional artisans and craftsmen such as carpenters, weavers and blacksmiths.

What’s not working for India?

Summary

Despite various government initiatives India is a long way off from closing the skill gap in the country. Forging a unified, demand-driven skilling ecosystem with strong private-sector collaboration is critical to boosting employability. Only then can India truly transform its vast youth potential into sustained economic growth.