Education sector urges tax reforms and measures to address skill gap ahead of Budget 2025

Startups in India's education sector are hopeful that Union Finance Minister Nirmala Sitharaman's upcoming proposals will strengthen their efforts to meet the growing demand for job opportunities and skill development as the Union Budget approaches.

Following the announcements in Budget 2024-25, which emphasized job creation and skill development for youth, there is strong anticipation for continued progress.

As this year’s budget approaches, education companies are calling for more action.

The widening gap between education, skilling, and employability remains a significant challenge, and the industry is urging bold measures to bridge this divide and empower India’s future workforce.

To propel the sector's growth, the education industry is requesting tax incentives, more work-integrated learning programs, improved digital infrastructure, increased funding, and a focus on innovation.

According to Mayank Kumar, co-founder of upGrad, companies are increasingly recognizing the importance of upskilling their employees as artificial intelligence (AI)-driven innovation takes center stage.

This approach not only aids long-term talent retention but also prepares an AI-first workforce for global opportunities.

“India is at a prime stage where its human capital could translate into overall economic progress and elevate its global standing,” said Kumar.

He recommends that the next budget focus on providing attractive tax incentives, similar to those under Section 80C, for Indian companies investing in AI training.

Kumar also suggests that granting tax exemptions or interest rate deductions for education loans from Non-Banking Financial Companies (NBFCs), in addition to those from established banks, could help families and individuals pursue international education.

Expanding work-integrated learning programs and internships is critical to closing the gap between education and employment, according to Sumit Kumar, Chief Strategy Officer of TeamLease Degree Apprenticeship, who emphasizes the need for skill development.

“We recommend that the budget significantly enhance the PM Internship Scheme (PMIS), providing youth—especially those from disadvantaged educational backgrounds—with opportunities to gain industry-relevant experience,” he said.

Kumar of TeamLease further argues that by offering targeted skill development opportunities such as degree apprenticeships, work-integrated learning programs, and industry-specific certifications, the government can help school dropouts and undergraduates enter the workforce, reduce dropout rates, and create pathways to long-term employment.

He also suggests that aligning the PMIS with the National Education Policy (NEP) could strengthen practical learning outcomes.

The NEP 2020 encourages institutions to adopt a multimodal strategy that includes learning through text, videos, and activities, moving away from the traditional textbook approach.

The approval of the NEP paved the way for large-scale, transformative changes in school and higher education, replacing the National Policy on Education (NPE) of 1986.

A key step in aligning educational outputs with industry demands will be the implementation of industry-friendly University Grants Commission (UGC) recommendations for work-integrated education programs.

According to Kumar of TeamLease, these recommendations will help recognize industries as valuable learning environments for future-ready education.

A statutory authority in India, the UGC regulates higher education standards and provides recommendations to help institutions design curricula that ensure quality, meet national norms, and improve employability.

“While last year’s focus was on employment-linked skilling schemes, the true challenge lies in driving systemic change that integrates skilling into the DNA of higher education,” said Varun Satia, Founder and CEO of Kraftshala, an online skilling institution.

Furthermore, work-integrated learning programs and apprenticeships can help Micro, Small, and Medium Enterprises (MSMEs), which are vital to the Indian economy, grow and contribute to larger economic objectives.

Kumar of upGrad stresses the importance of cooperation between the government and skilling providers to supply MSMEs with AI training and certifications, helping to build an AI-powered ecosystem.

“To establish India as a creator’s economy, robust AI infrastructure and an expanded network of AI ‘Centres of Excellence,’ supported by public-private-global collaborations, are crucial,” said Kumar.

Kraftshala’s Satia agrees, emphasizing that funding for AI hubs, edtech regulations, and a national movement toward digital-first classrooms are "non-negotiable for future-proofing our workforce."

The challenges India faces in ensuring equal access to digital learning underscore the need for these measures.

“We need better support for digital learning tools and platforms to bridge the digital divide and enhance learning experiences,” says Anil Kapasi, Co-founder and Managing Director of Arihant Academy.

The budget should allocate funds for developing robust digital infrastructure that improves skilling platforms, enabling the smooth operation and scalability of apprenticeships and other skilling programs, such as a mobile application, according to Kumar of TeamLease.

Sujatha Kshirsagar, President of Career Launcher, adds, "Supportive policies and grants in digital education and skill development would significantly accelerate the mission of skills training and coaching institutions that empower students preparing for careers, exams, and study-abroad programs."

“We urge the government to prioritize increased funding for STEM research and innovation, as well as introduce targeted subsidies for international students studying in India, positioning the country as a global education hub,” Kshirsagar added.

With a greater focus on the state-wise distribution of funding, Ankit Aggarwal, Founder and CEO of Unstop, a platform for skill-based hiring, anticipates a higher allocation this year to further boost job creation and skill development.

Ashish Munjal, Co-founder and CEO of Sunstone, believes that financing for educational infrastructure should be increased, digital education should be supported, and higher education research and development should receive funding to provide students with future-ready skills.

“We believe a significant allocation of funds is needed to improve infrastructure, resources, and teacher training in government schools, ensuring quality education reaches every child,” said Arihant’s Kapasi.

Kshirsagar of Career Launcher concludes, “Funding that prioritizes technological innovation and comprehensive educational development would be essential in equipping Indian students to thrive in a rapidly changing world.”