The provisions of the Act prevalent at the time were not conducive for the service industry to comply with the Act. This necessitated certain changes to the framework governing apprenticeship. Services industries such as accounting, book-keeping and auditing activities, data processing, software development and computer consultancy services; engineering and other technical consultancy activities were specifically notified and brought under the purview of the Act. An all-encompassing entry of ‘activities not adequately defined’ was also introduced in the list of notified industries. Further the number of designated trades evolved to create corresponding trades for IT/ ITES and other notified service sectors.

Subsequent to the inclusion of other industries within the ambit of the Act, a significant amendment to the Act was introduced in 2014. The amendment placed additional importance on promoting apprenticeships in trades related to services sectors, alongside the existing trades oriented towards manufacturing. Introduction of ‘optional trades’ enabled industries to tailor courses according to their sector-specific needs and expectations. The penal provisions in respect of imprisonment were removed and replaced with monetary penalty. The amended provisions as they stand today allow flexibility to employers on the manner of engagement of apprentices and compliance with the legal obligations under the Act.

In addition to the above progressive reforms, the National Apprenticeship Promotion Scheme (NAPS) and National Apprenticeship Training Scheme (NATS) have been introduced under the apprenticeship framework as an enabling step for ease of compliance and encouraging number of organizations to comply with the Act. These schemes offer financial incentives to businesses and sectors for hiring apprentices. The other advantages of the schemes are that it facilitates registration on the apprenticeship portal, selection of suitable apprentices and designing the curriculum. The schemes also permit the employer to engage third-party aggregators (TPAs) for (a) selection and engagement of apprentices on the apprenticeship portal; (b) developing a course curriculum for the apprentices; and (c) filing of all necessary returns and documents under the Act. On-the-job training obligation under the Act can also be outsourced to a third-party service provider or TPA in case the employer does not have adequate expertise or infrastructure to provide the training.

Furthermore, the National Skill Development Corporation has established a body namely the Sector Skill Councils (SSCs) to provide guidance on matters relating to (a) identification of skill development needs; (b) sector skill development plan; (c) determination of skills/competency standards and qualifications; and (d) setting up of affiliation, accreditation, examination and certification norms.

Thus the approach of the apprenticeship authorities has evolved from strict compliance with the Act to engagement of apprentices for the purposes of the skill building. This was followed by a flurry of notices received by companies to commence engagement of apprentices.

Due to the steps taken by the authorities on implementation of the Act, businesses have become conscious of the requirement of engaging apprentices. This has necessitated devising innovative approaches towards apprentices’ engagement and management. Apprenticeship can play a vital role in the task of up-skilling India’s workforce involving governments, employers and workforce in partnerships. The government’s endeavour is to bridge the skill gaps, create a steady talent supply chain and lock in talent for the future.

A company looking to initiate compliance with the Act would need to undertake the following:

• Registration: Registration of the establishment on the apprenticeship portal is required to be obtained upon the Act becoming applicable to an establishment. The relevant registration portal, i.e. NAPS or NATS would depend on the category of apprentices and the trade in which the apprentices would be engaged. For graduate apprentices and designated trades, NATS would be the applicable portal and for undergraduate student apprentices and optional trades, the establishment would need to register on NAPS. It is the prerogative of the employer to register either with NATS, NAPS or both. For establishments with offices in 4 or more states, central registration can be obtained.
• Engagement of apprentices: Establishments with 30 or more workers required to engage apprentices in a band of 2.5% to 15% of the total strength of the establishment including contractual staff, within a financial year either in ‘designated trades’ or ‘optional trades’. Apprentices can be selected from the apprenticeship portal or institutions enrolled on the apprenticeship portal.
• Course Curriculum: There are certain pre-approved curriculums available on the website of the Directorate of General Training for both optional and designated trades, which an establishment is free to use. However, if an establishment is desirous of formulating its own training module, it can, using the guidelines prescribed for formulating courses/curriculum under NAPS and NATS for designated trade and for optional trade courses. TPAs can assist establishments in developing a course curriculum for the apprentices.
• Training: The training has to be conducted in accordance with the designated/optional trade course curriculum for apprenticeship training implemented by the employer. The employer is required to ensure that adequate infrastructure and qualified trainers are available to impart the apprenticeship training in accordance with course curriculum adopted by the employer. On-the-job training can be provided remotely and can be outsourced to a TPA or external service provider having the requisite expertise and qualifications.
  The developments in the apprenticeship regulatory regime aim at accommodating the service sector so that all sectors can collectively contribute to build a skilled workforce as part of the ‘Skill India’ initiative. According to reports, there has been a consistent rise in the involvement of apprentices in the IT/ITES industry.

There is a stark transition from a regulatory framework of stringent compliances under the Act to one of self-regulation by the industry. Now, industries have the power to not only decide the number of apprentices required (subject to minimum threshold requirements) but also determine the duration, curriculum, assessment, and certification processes. While there is still a considerable journey ahead, industries have started to be more receptive to the concept of involving apprentices in their businesses.

This article was originally published in Mondaq on 17 January 2024 Co-written by: Pooja Ramchandani, Partner; Suryansh Gupta, Senior Associate. Click here for original article

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