India’s employability rises to 56.35% in 2026, driven by AI and digital skilling

India’s workforce is becoming more skilled and future-ready, with employability levels rising to 56.35% in 2026 from 54.81% last year, according to the 13th edition of the India Skills Report 2026.

The study, released by the Educational Testing Service (ETS) in collaboration with the Confederation of Indian Industry (CII), the All India Council for Technical Education (AICTE), and the Association of Indian Universities (AIU), reflects data from over one lakh candidates and 1,000 employers across seven key sectors.

The findings highlight India’s growing position as a “preferred global source of skilled talent,” signaling its increasing role in the international labor market.

A major driver of this shift is the country’s strong adoption of artificial intelligence (AI), digital tools, and skill-based education.

India now accounts for 16% of the global AI talent pool, which is expected to grow to 1.25 million professionals by 2027.

The report points out that “India leads globally in AI skill penetration, with AI now a baseline competency in most digital roles.”

Over 90% of employees across industries use Generative AI tools, while 70% of IT firms and 50% of Banking, Financial Services, and Insurance (BFSI) companies have integrated AI-based hiring systems.

The improvement in employability is also attributed to the rapid rise of digital learning, a stronger presence from tier-2 and tier-3 cities, and increasing participation of women in the workforce.

For the first time, female employability (54%) has surpassed male employability (51.5%), a shift supported by hybrid work models and online upskilling opportunities.

Employer sentiment also remains strong, with hiring intent for FY 2026–27 reaching 40%, compared to 29% last year.

The technology, BFSI, manufacturing, renewable energy, and healthcare sectors are projected to drive most of the new employment opportunities.

The BFSI and fintech segments alone are expected to create 2.5 lakh new jobs by 2030, growing at an annual rate of 8.7%.

India’s gig and freelance economy continues to expand, reflecting a shift toward flexible employment structures.

\ The country’s gig workforce is expected to reach 23.5 million by 2030, after recording a 38% rise in project-based hiring last year.

While 72% of jobs remain permanent, gig and third-party roles have increased to 16%, underscoring the evolution of a more adaptable employment landscape.

Education reforms and policy initiatives have also played a crucial role in shaping the skilling ecosystem.

AICTE’s Project PRACTICE, along with the creation of AI and Climate Cells, is modernizing technical education through project-based learning and deeper industry collaboration.

The report highlights the importance of “co-designed curricula, stackable credentials, and R&D integration” to align academic programs with future skill requirements.

Nirmal Singh, CEO of Wheebox ETS and chief convenor of the India Skills Report, said, “The 2026 edition shows India standing at the intersection of scale, skill, and technology. The next decade will cement India’s leadership in global talent mobility through modular, AI-integrated skilling and internationally recognized certifications.”

The report concludes that India’s long-term progress will depend on how effectively it connects education, enterprise, and policy.

“The future of work is not defined by how much technology can do, but by how much humans can grow alongside it,” it states.