Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs (PM‑SETU) : Component I

> Financial Outlay and Financing Structure:

The total outlay of the scheme is ₹60,000/- crore over five years. This cost is shared among

the Central Government, State Governments, and Industry, as shown below:

ParticularsTotal (₹ Crore)Central (₹ Crore)State (₹ Crore)Industry (₹ Crore)Total Scheme Outlay (5 years)60,000/-30,000/-20,000/-10,000/-This corresponds to a funding pattern of approximately 50% Central: 33% State: 17% Industry. Each Hub-and-Spoke cluster will maintain this cost-sharing ratio in its funding plan as indicated in the Strategic Investment Plan (SIP).

> Indicative Investment per ITI and Cluster:

• Under the Scheme, support will be provided for the upgradation of Hub ITIs with an outlay not exceeding ₹81 crore (over five years) and for Spoke ITIs with an outlay not exceeding ₹40 crore.
• In cases where the overall cost of upgradation exceeds the prescribed outlay, the contribution of the Central Government shall be capped at 50% of the above ceiling amounts and limited strictly to capital expenditure (exceptions apply for North-Eastern and Hilly States and Union Territories without legislature).

> Indicative Cost for Cluster:

• One Hub + Four Spokes (cluster total): ₹241 crore per cluster
• Annual cost for one cluster (5-year average): ~₹48.2 crore per year

> Component-wise Outlay (1000 ITIs):

• Upgradation of 200 Hub ITIs: ₹20,220 crore
• Upgradation of 800 Spoke ITIs: ₹36,680 crore
• Subtotal – ITI Upgradation (Component I): ₹56,900 crore

> Central Support for Scheme Management:

• ₹1,600 crore is earmarked for governance, project management, and capacity-building activities over five years, including:

• Capacity building of central and state agencies: ₹200 crore
• Office expenditure: ₹100 crore
• IT and digital infrastructure (including LOMS): ₹600 crore
• Technical assistance: ₹100 crore
• Media, awareness, and advocacy: ₹100 crore
• Evaluations, studies, and research: ₹100 crore
• Project Management Unit (PMU) support: ₹400 crore

> Fund Flow Mechanism:

• Each approved cluster SPV will operate an escrow bank account to collect funds from all sources. All contributions – Central, State, and Industry – are deposited into this escrow account, and funds become available only after all three parties have contributed their respective shares.

> Fund Disbursement:

• Initial Advance (Year 1):

• An advance of up to 10% of the total project outlay shall be released upon approval of the Strategic Investment Plan (SIP).

• Annual Instalments (Years 2–5):

• The remaining funds are disbursed in annual instalments in two tranches of 50% each, subject to:

• Utilisation of at least 75% of previous funds
• Approval of Annual Operational Plan (AOP)
• Achievement of at least 80% of Key Performance Indicators (KPIs)

> Validity:**** The scheme is implemented over a period of five years.

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> For Government ITIs:

1. The ITIs should be Government Industrial Training Institutes.
2. The selection of ITIs shall be carried out by the respective State or Union Territory.
3. The selection should be based on factors such as emerging skill requirements, local industry demand, and potential for industry participation.

> For Anchor Industry Partner (AIP) / Industry Partner:

1. The applicant should be a credible company or manufacturer with established operations in India.
2. The applicant may be an industry association, consortium, industry-led foundation, or an academic institution promoted by industry.
3. The applicant should have the capability to participate in governance, curriculum design, and training delivery.

> Minimum Eligibility Conditions (As Defined by State/UT):

1. The applicant should meet the minimum eligibility criteria such as turnover, number of employees, and sectoral experience, as defined by the State or Union Territory.
2. The applicant should demonstrate the ability to ensure meaningful industry participation.
3. The applicant should not be a small or non-serious operator.

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Step 1: The State or Union Territory identifies Government Industrial Training Institutes (ITIs) for upgradation and prepares the Request for Proposal (RFP) along with defined eligibility criteria.

Step 2: The State or Union Territory issues the RFP to invite proposals from eligible Anchor Industry Partners (AIP) or industry partners.

Step 3: The applicant submits the proposal along with the Strategic Investment Plan (SIP), including details of infrastructure, courses, human resources, financials, and implementation strategy.

Step 4: The submitted proposals are evaluated through pre-qualification, technical assessment of the SIP, and financial evaluation.

Step 5: The State Government selects suitable proposals and forwards them to the National Steering Committee (NSC) for final approval.

Step 6: Upon approval, a Special Purpose Vehicle (SPV) is formed for each cluster, and agreements such as the Shareholder Agreement (SHA) and License Agreement (LA) are executed.

Step 7: An escrow account is established for the SPV, and contributions from the Central Government, State Government, and Industry are deposited into it.

Step 8: The SPV prepares the Annual Operational Plan (AOP) aligned with the approved Strategic Investment Plan (SIP).

Step 9: Funds are released in stages, starting with an initial advance and followed by instalments based on utilisation, performance, and approval of the AOP.

Step 10: The SPV undertakes the implementation of ITI upgradation, including infrastructure development, course delivery, and provision of training and student services.

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