PM-SETU Scheme 2026: ITI Upgradation, Funding Model, Benefits and Latest Approvals

Key Takeaways

• The scheme has two components: upgrading 1,000 government ITIs through 200 hubs and 800 spokes, and strengthening five National Skill Training Institutes as centres of excellence.
• The total outlay is ₹60,000 crore over five years, split roughly as ₹30,000 crore from the Centre, ₹20,000 crore from States and ₹10,000 crore from industry, and it is co-financed by the World Bank and the Asian Development Bank.
• Each cluster has one hub ITI and about four spoke ITIs, and the capital cost is shared in a 50:33:17 ratio between the Centre, the State and industry in the State plans approved so far.
• The National Steering Committee approved the nationwide rollout across all 200 identified clusters on 7 July 2026 and has since cleared further Strategic Investment Plans for individual clusters.
• An industry anchor partner is central to the model, and the upgraded institute is managed through a Section 8 non-profit special purpose vehicle.
• Finding committed industry partners, especially outside big industrial belts, has been reported as the main implementation challenge.

What PM-SETU is and why it was created

India has more than a decade of experience with Industrial Training Institutes, but many of them still run outdated trades, use old equipment and struggle with placements. Employers complain that trainees need extra training before they are job ready, while trainees often find that their course does not match what factories actually need.

PM-SETU, announced in the Union Budget 2024-25 and rebranded from the earlier ITI upgradation scheme, tries to fix this by making the skilling industry-led. Companies take a direct role in deciding the curriculum, equipment and training methods of the ITI cluster they partner with, instead of the government working alone.

Scheme structure at a glance

How the hub and spoke model works

• A hub ITI gets advanced infrastructure, specialised labs and industry linked training facilities.
• Each hub mentors about four nearby spoke ITIs by sharing equipment, digital learning content and trainers.
• An industry anchor partner co-invests, helps design the curriculum and supports placements.
• A Section 8 company acts as the special purpose vehicle that manages the cluster and brings together State, industry and institute leadership.
• Each State submits a strategic investment plan for its clusters, which the National Steering Committee reviews and approves.

Who benefits from PM-SETU?

• Students and trainees get better workshops, updated trades, new age courses and a stronger link to jobs.
• Industry gets access to a pipeline of trained workers aligned to its own needs and a say in how training is delivered.
• States and ITI staff get funding, technology and trainer development support.
• Local economies gain from a larger pool of employable youth near industrial clusters.

Latest progress in 2026

On 7 July 2026 the National Steering Committee approved the pan-India rollout across 200 clusters and cleared Strategic Investment Plans worth ₹1,237.58 crore for five clusters in Odisha, Gujarat and Telangana.

Haryana approved a roadmap of about ₹2,892 crore to modernise 60 ITIs in 12 clusters, and Maharashtra cleared its plan with the first phase in Nagpur, Chhatrapati Sambhajinagar and Pune.

In October 2026 the Committee approved investments of about ₹1,194.92 crore to upgrade five more clusters across Maharashtra, Odisha and Jammu and Kashmir.

Industry partner selection remains the slowest step, since the scheme needs a committed anchor company for every cluster.

How students, industries and States can take part

• Students can apply to ITIs in the usual way through their State admission portals and should look for upgraded hub and spoke institutes in their district.
• Companies can approach the State Steering Committee or the Ministry to become an industry anchor partner for a cluster.
• States prepare and submit Strategic Investment Plans and set up the Section 8 special purpose vehicles.
• Training providers and instructors can look out for Training of Trainers programmes under Component II.

Frequently Asked Questions

What is the full form of PM-SETU?

PM-SETU stands for Pradhan Mantri Skilling and Employability Transformation through Upgraded ITIs.

What is the budget of the PM-SETU scheme?

The total outlay is ₹60,000 crore over five years, with contributions from the Centre, States and industry.

How many ITIs will be upgraded under PM-SETU?

The scheme aims to upgrade 1,000 government ITIs, made up of 200 hub ITIs and 800 spoke ITIs, and to strengthen five National Skill Training Institutes.

When was PM-SETU launched and rolled out nationwide?

It was approved by the Cabinet on 7 May 2025, launched on 4 October 2025, and cleared for nationwide rollout across 200 clusters on 7 July 2026.

Who funds the PM-SETU scheme?

Funding comes from the Centre, States and industry, and the scheme is co-financed by the World Bank and the Asian Development Bank, with State plans using a 50:33:17 sharing pattern.

Can a student apply directly to PM-SETU?

No, students do not apply to the scheme itself. They benefit by getting admission to upgraded ITIs through the regular State admission process.

Want to partner with an ITI cluster or build a skilling business?

Industry anchor roles, Section 8 company setup and skilling programme compliance all need careful structuring. Book a free consultation with Growthora, and we will help you understand the options and set up the right entity and documentation.