Education sector awaits tax breaks, measures to bridge skilling-employability gap in Budget 2025

With the Union Budget just around the corner, startups from the education sector in India are hoping that Finance Minister Nirmala Sitharaman’s upcoming proposals will further boost their efforts to address the growing demand for skill development and employment opportunities.  

Following the announcements made during Budget 2024-25, which included initiatives focused on job creation and enhancing skills for the youth, there is a clear expectation for continued momentum.

As we gear up for this year’s budget, education companies are demanding more. The growing chasm between education, skilling, and employability remains a challenge—and the industry is calling for bold measures to bridge the gap and empower India’s workforce of tomorrow.

The education sector is also hoping for tax breaks, expanded work-integrated learning programmes, better digital infrastructure, increased sector funding, and enhanced innovation—all aimed at driving the sector’s growth.

Mayank Kumar, Co-founder of upGrad, believes that with artificial intelligence (AI)-powered innovation taking centre stage, corporates are recognising the real value of upskilling their talent. Not only does it help retain talent in the long term, it also builds an AI-first workforce ready for global opportunities.

“India is at a prime stage when its human capital could translate the overall economic progress and global standing,” says Kumar.

He suggests that the upcoming budget should focus on incentivising Indian organisations investing in AI training by offering effective tax breaks, similar to those available under Section 80C.

Kumar also highlights that enabling tax breaks or interest rate deductions on education loans from NBFCs—alongside those from established banks—could empower families and individuals to achieve their global education aspirations.

Expanding work-integrated learning

Building on this need for skill development, Sumit Kumar, chief strategy officer at TeamLease Degree Apprenticeship, emphasises that expanding work-integrated learning programmes and internships is crucial for bridging the gap between education and employment.

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

TeamLease’s Kumar explains that by equipping school dropouts and undergraduates with targeted skill development opportunities—such as work-integrated learning programmes, degree apprenticeships, and industry-specific certifications—the government can help them enter the workforce, reduce dropout rates, and create clear pathways to long-term employment.

Additionally, linking the PMIS with the National Education Policy (NEP) by recognising the internship component undertaken in industries as part of undergraduate (UG) programmes offered by higher education institutions could strengthen practical learning outcomes, he adds.

The NEP 2020 advocates educational institutes to shift from traditional textbook learning to a multimodal approach—learning through multiple channels (text, videos, activities) for deeper understanding. The NEP, which replaced the National Policy on Education (NPE), 1986, was approved to make way for large-scale, transformational reforms in both school and higher education.

The introduction of industry-friendly University Grants Commission (UGC) guidelines for work-integrated education programmes will be a significant step towards aligning educational outcomes with industry needs. These guidelines will help recognise industries as effective classrooms for future-ready learning, says TeamLease’s Kumar.

The UGC, a statutory body in India, oversees the standards of higher education and provides guidelines to help institutions design programmes that ensure quality, align with national standards, and enhance 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,” says Varun Satia, Founder and CEO of Kraftshala, an online skilling institution.

Moreover, work-integrated learning programmes and apprenticeships can further support the growth of Micro, Small, and Medium Enterprises (MSMEs), which are crucial to the Indian economy, by enabling them to develop a skilled workforce while contributing to broader economic goals.

upGrad’s Kumar emphasises that in the AI-powered ecosystem, collaboration between skilling providers and the government is crucial to equip MSMEs with AI training and certifications.

Strengthening AI, digital infra

“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,” upGrad’s Kumar highlights.

Building on this, Kraftshala’s Satia stresses that investments in AI hubs, edtech regulatory frameworks, and a nationwide push toward digital-first classrooms are “non-negotiable for future-proofing our workforce”.

The need for these initiatives is further emphasised by the challenges India faces in ensuring equal access to digital learning.

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

According to TeamLease’s Kumar, the budget should allocate funds to build robust digital infrastructure that enhances skilling platforms, enabling seamless operations and scalability of apprenticeships and other skilling initiatives, including the launch of a mobile application.

Policies and funds

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 programmes, highlights Sujatha Kshirsagar, President at Career Launcher.

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

Ankit Aggarwal, Founder and CEO of Unstop, a skill-based hiring platform, expects an increased allocation this year to further boost skill development and job creation, with a stronger emphasis on the state-wise distribution of funds.

According to Ashish Munjal, Co-founder and CEO of Sunstone, increasing funding for educational infrastructure, supporting digital education, and investing in research and development within higher education are key to equipping students with the skills needed for the future.

“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,” says Arihant’s Kapasi.

Career Launcher’s Kshirsagar believes that a budget that focuses on holistic educational growth and technological advancement will be pivotal in preparing Indian students to thrive in an increasingly dynamic global landscape.

(Cover image and infographics designed by Nihar Apte)