India’s Graduate Skill Gap Widens in the AI Era: Why Education Must Align with Industry

• Chinmay
• May 23, 2025
• Artificial Intelligence, India, News
• AI and job readiness India, AI disruption in banking, coding automation threat, education and workforce gap, future skills for graduates, graduate skill index, India graduate employability 2024, Mercer Mettl skill report, reskilling in AI era, unemployability in Tier-I colleges
• 0 Comments

As artificial intelligence redefines job roles across industries, India faces a paradox: unemployment is falling, but employability is too.

A new report by Mercer | Mettl shows that while more graduates are finding jobs, fewer are truly ready for them. According to the India Graduate Skill Index 2025, employability has dropped from 44.3% in 2023 to 42.6% in 2024 — exposing a growing mismatch between what employers need and what graduates offer.

The Skills Mismatch Is Real

• Youth unemployment (ages 15–29) fell from 17.8% to 10.2% over the last five years
• But job readiness is declining — even among Tier-I college graduates, only 48.4% meet industry expectations
• The gap isn’t just technical; employers are seeking communication, critical thinking, and AI fluency — and not finding enough of it

While graduates do show strength in soft skills like communication (55.1%) and critical thinking (54.6%), they lag behind in job-specific abilities, especially in AI, data analysis, and domain adaptability.

Automation Is Coming — Fast

The report coincides with rising anxiety over AI-driven disruption in white-collar sectors:

• A Citi report estimates that 54% of banking jobs are at high risk of automation
• Entry-level coding roles in software are being replaced by AI-powered tools
• Even core IT services are seeing transformation, threatening low-skill tech roles

In this context, experts argue that upskilling is no longer optional — it’s survival.

Reskilling Is the Way Forward

Despite the gloomy numbers, the report points to a path forward.

• Industries like biosciences, energy, and AI system development still require deep human expertise
• Communication and problem-solving — human-first skills — are in demand and resilient
• With the right interventions, AI can create more jobs than it displaces

But to make that leap, India needs a national-level response:

• Faster integration of AI skills into college curricula
• Stronger industry-academia collaboration
• Localized training models for Tier-II and Tier-III cities

Not All Degrees Are Equal — But All Are Affected

Delhi graduates top the employability chart at 53.4%, but the decline is visible across every college tier:

• Tier-I colleges: 48.4% employability
• Tier-II: 46.1%
• Tier-III: 43.4%

Even premium education doesn’t guarantee job readiness in the AI age.

From Cost-Driven to Capability-Driven

India’s traditional edge as a low-cost IT hub is under threat.
But with targeted upskilling, the country can pivot toward becoming an AI-powered innovation leader.

The challenge isn’t just about finding jobs.
It’s about making graduates future-ready — across every tier, every region, and every domain.