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Breaking Development – SME Friendly Fresh Reforms in Apprenticeship Act to Drive Up Numbers

In an extremely gratifying development, giving apprenticeships a robust shot in the arm, the Central Apprenticeship Council (CAC), under the aegis of the Ministry of Skill Development and Entrepreneurship (MSDE), has proposed new reforms through amendments to the Apprenticeship Rules 1992. The CAC chaired by Cabinet Minister for Skill Development and Entrepreneurship, Mahendra Nath Pandey, laid out the following.

For more on earlier amendments to the Apprentice Act, click here


  • To raise the current apprenticeship engagement upper limit from 10% to 15% for organisations with more than six employees. A minimum of 5 % of the total engagement will be reserved for graduate apprentices to boost employability of youth. 

In addition, to bring more SMEs into the apprenticeship fold, the CAC proposes the upper limit employee strength for mandatory engagement in apprenticeships for businesses to be lowered from 40 to 30, and to lower the minimum employee strength from 6 to 4 for businesses interested in engaging apprenticeships (optional category). 

Existing Apprenticeship engagement bands

We note that the proposals are in line with industry opinion but perhaps could have gone lower with the entry point to rope in more SMEs. Sandip Somany, President FICCI, in offering his reasoning recently stated,

There are 76 million small scale firms in India. The average employment is less than six people. So, they should change the [Apprenticeship] Act and say that a small scale firm can hire even one apprentice. If half of the companies hire one apprentice each, you will create 35-40 million jobs immediately.”

  • The 2014 amendments to the Apprentice Act which saw a slew of industry-friendly changes, introduced a new demand-based category ‘optional trade’. This was done to pass the baton to employers to design and execute skills training in any trade or occupation, in engineering or non-engineering, technology or any vocational course in accordance with business needs. To rationalize the length of training of an optional trade the CAC recommends increasing the maximum duration of training under this category from two to three years. In the absence of specific reasons for this proposal, we presume the longer duration of training will allow employers to develop more comprehensive training programmes thereby enhancing skills of apprentices.  
  • The current stipend model for apprenticeships is tied to government-stipulated minimum wage rates for semi-skilled workers in respective states. 
Minimum rate of stipend

Also see: Apprentice Act Reform – Need of the Hour?

Under new proposals of rationalisation of monthly stipend pay, the current broad-based stipend model is to be replaced by minimum stipend rates for each category of apprentices (Trade, Graduate, Technician, and Technician (Vocational). Furthermore, a proposal for an annual increment in stipend pay is being tabled along with a needs-based annual or biennial revision of the minimum stipend wage bands. 

Stipend model
  • At the CAC meeting, Minister Mahendra Nath Pandey elucidated that re-imagining current apprenticeship provisions through these proposed reforms will serve to boost abysmally low participation of employers in apprenticeships. Further, boosting stipend pay will motivate more youth to consider an apprenticeship route to employment. 

Apprenticeship training will give confidence to potential employers by filling current or predicted skill shortages by nurturing their own in-house talent along with ensuring increased employee retention,” the Minister further added.

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