Bridging the skills gap: How rural youth can power India’s MSME growth story

The continued growth of India's MSME sector, a key employment driver, could shift focus from job creation to ensuring young Indians possess the required skills. In a conversation with Economic Times Digital, Gagan Arora, Founder & President, Vertex Group, argues that rural India could power the next MSME revolution, provided skilling moves beyond certificates to industry-ready capabilities, apprenticeships and real-world experience. Arora details how India can leverage its demographic dividend for competitive advantage by 2047, covering AI fluency, digital literacy, women's workforce participation, and the future of rural entrepreneurship. Edited excerpts.

Economic Times (ET): India's MSMEs contribute nearly 30% of GDP and employ over 28 crore people, yet many businesses continue to struggle with hiring. Is India's biggest employment challenge today job creation, or the lack of industry-ready talent? What does the data tell us?

Gagan Arora (GA): Despite the impressive footprint of MSMEs in India’s economy, the central challenge remains the shortage of industry-ready talent rather than the mere creation of jobs. The experience at Vertex Group echoes what national data reveals: there is no dearth of opportunities, but a persistent skills gap. The India Skills Report 2026 confirms this: national employability stands at just 56.35%, meaning barely one in two graduates is considered job-ready, and for ITI and polytechnic graduates, the very talent pool MSMEs draw from, employability drops to 45.95% and 32.92% respectively. MSMEs across sectors- manufacturing, services, and digital seek candidates who are not only technically proficient but also adaptable and able to thrive in dynamic environments shaped by technology. The real bottleneck is employability, particularly in rural India, where access to market-relevant training remains limited. To fully harness our demographic dividend, India must invest in skilling programs that are closely aligned with business needs and technological evolution, transforming available jobs into meaningful careers.


ET: You argue that rural India will power the next MSME revolution. Which sector—manufacturing, services, agritech, electronics, or digital businesses—do you believe will benefit the most from a skilled rural workforce over the next decade, and why?

GA: Drawing from our journey of digital innovation, manufacturing, agritech, and digital businesses are set to benefit most from a skilled rural workforce in the next decade. With MSMEs expanding into Tier II and rural regions, the united ambition and resilience of rural youth can become India’s greatest growth engine. Rural India today has more internet users than urban India, which means the digital rails for this revolution already exist; what is missing is the skilling layer on top of them. Agritech, in particular, can leverage deep-rooted agricultural knowledge alongside new technologies to revolutionise food production and supply chains. Manufacturing needs hands-on, tech-savvy talent ready to meet global standards, while digital businesses are looking for adaptable workers who can manage e-commerce, payments, and data. As advanced skilling and digital tools, including those from platforms like Vertex Learning, reach deeper into rural India, these sectors are poised for a surge in innovation, productivity, and scale, helping build a more inclusive and competitive MSME ecosystem.

ET: The government has invested significantly in skilling initiatives through programmes like Skill India and PMKVY. Where do you think these initiatives have succeeded, and where do you see the biggest gaps between training and actual employment outcomes?

GA: Government initiatives such as Skill India and PMKVY have been instrumental in democratising access to skill development, especially for rural youth and underserved communities. These programs have laid the groundwork for a national skilling ecosystem, enabling millions to gain new capabilities and aspire to better livelihoods. However, in practice, a crucial gap persists between training and actual job readiness. Many candidates’ complete certifications yet lack practical, industry-aligned experience. The curriculum often remains disconnected from rapidly changing business requirements, especially in technology-driven sectors. Bridging this gap requires deeper partnerships between industry, government, and training institutions, co-developing curricula, expanding apprenticeships, and ensuring continuous feedback. At Vertex, we believe industry should co-own not just the curriculum but the assessment itself, so that a certificate reflects what an employer will actually test for on day one. Only then can skilling initiatives deliver lasting employment outcomes and power India’s economic ambitions.

ET: Vertex Group works closely with enterprises across industries. From your own experience, what are the three most critical skills employers are looking for today that many young job seekers, particularly from rural India, still lack?

GA: Over the past decade, across multiple business verticals, three skill gaps have consistently emerged among young job seekers, especially those from rural areas. First, digital literacy: with the proliferation of AI and enterprise software, proficiency with digital tools is now fundamental across all functions. In 2026, digital literacy increasingly means AI fluency; with over 90% of employees across sectors already using generative AI tools, the ability to work alongside intelligent systems is the new baseline. Second, communication skills, both written and verbal, are vital for effective collaboration, customer engagement, and career advancement, yet are often underdeveloped among rural youth. Third, robust problem-solving and adaptability are essential, as the modern workforce must be agile and ready to navigate new challenges. Addressing these gaps through practical, blended learning is key to making rural youth industry-ready and fueling the MSME growth story.

ET: Artificial Intelligence and automation are reshaping workplaces rapidly. How should MSMEs, which often have limited resources, prepare their workforce for this transition without making existing jobs redundant?

GA: AI and automation present a tremendous opportunity for MSMEs, but they must be harnessed as tools for workforce empowerment rather than displacement. The lesson is clear: successful adaptation hinges on upskilling, not downsizing. MSMEs should focus on equipping their teams with the digital and analytical skills necessary to work alongside intelligent systems, leveraging public and private skilling initiatives, digital learning platforms, and peer mentoring. At Vertex Group, we are backing this belief with a Rs 100 crore investment in AI, building capabilities that help MSMEs and enterprises integrate emerging technologies into their operations without disrupting livelihoods. Encouraging a culture of lifelong learning and adaptability ensures that employees transition into higher-value roles as automation handles repetitive tasks. This approach not only secures livelihoods but enhances innovation and productivity, enabling MSMEs to remain competitive and resilient in a rapidly evolving market.

ET: Digital platforms have made high-quality learning accessible across geographies, but access alone doesn't guarantee employability. What role should industry play in creating apprenticeship models, internships, and on-the-job training that genuinely improve employment outcomes?

GA: The responsibility to bridge the gap between learning and employability increasingly rests with industry. Our work across global markets shows that classroom instruction alone is not enough; real-world experience is what truly prepares youth for the workforce. This conviction shapes our own work: through Vertex Learning, we have trained over 100,000 people globally using blended and customizable learning models, and our focus now is on deepening the placement and mentorship linkages that convert training into employment. Industry must lead by co-designing apprenticeships, internships, and on-the-job training programs that are closely aligned with market realities and evolving business needs. Structured mentorship, hands-on exposure to live projects, and ongoing feedback are vital for fostering both confidence and practical skills, especially among young talent from rural areas. By investing in these models, the private sector not only ensures a robust talent pipeline, but also drives stronger MSME growth and measurable improvements in national employment outcomes.

ET: Women remain significantly underrepresented in India's formal workforce, particularly in rural areas. What specific interventions, whether in skilling, infrastructure, financing, or workplace policies, could dramatically increase women's participation in the MSME economy?

GA: Increasing women’s participation in the MSME economy, especially in rural areas, demands a comprehensive approach. The encouraging news is that the talent is ready: women's employability has risen to 54%, surpassing men's for the first time in five years, and rural female labour force participation continues to climb. The barriers that remain are structural, not aspirational. Skilling programs designed specifically for women, delivered through flexible schedules and local community centres, can overcome traditional barriers. Infrastructure improvements, such as safe transportation and accessible childcare, are crucial for enabling sustained participation. Access to microfinance and targeted mentorship will empower women to launch and scale businesses. Scaling these interventions across MSMEs will not only boost household incomes and economic independence for women but also unlock a powerful engine of inclusive growth and innovation for India’s future. As we have witnessed at Vertex Group, incremental progress is possible: the share of women in our workforce has increased to 35%, and we are working towards achieving a 50:50 gender ratio by the end of 2026.

ET: Looking ahead to India's vision of becoming a developed nation by 2047, what measurable milestones should policymakers and industry leaders aim for in rural skilling? How should success be evaluated, through employment rates, MSME productivity, entrepreneurship, or some other metric?

GA: To realise the vision of a developed India by 2047, rural skilling efforts must focus on measurable, outcome-driven milestones. Success should be tracked not just by the number of people trained, but by tangible improvements in rural youth employment, MSME productivity, and the creation of new businesses. Increasing women’s workforce participation, boosting wage growth, and tracking the contribution of rural MSMEs to GDP are critical metrics. Our own growth at Vertex Group spans eight business verticals, including Vertex Global Services, Vertex Next, Vaani Infosystem, Vertex Tech, Vertex Learning, ILC Solutions, VSilverleaf, and DKVertex. We are now expanding further into consultancy and travel, maintaining our unwavering focus on impact and global competitiveness. Policymakers and industry leaders should prioritise not just the scale but the quality of skilling, empowering rural talent to drive innovation and entrepreneurship, and transforming villages into vibrant economic centres for a truly developed India.