Good Morning. Be it automaker Ford's plants in the US or engineering hubs in India, employers seem to be facing a similar problem. The lack of skilled workers is shrinking. Young Indian engineers are steering clear of factory floors, only to flock to IT and government jobs. Salaries are rising in core manufacturing, but the bigger problem isn't job creation; it's employability and reimagining factory shop floors.

Indian equity indices were up again on Wednesday after a brief dip on Tuesday. The BSE Sensex was up 513.45 points or 0.61%, closing at 85,186.47. The NSE Nifty50 was up 142.6 points or 0.55%, closing at 26,052.65.

In other news, European automaker Volkswagen cut electric vehicle (EV) development costs for its India unit as it continues to look for a local partner. Meanwhile, Indian seafood exporters gained on news from China and Japan.

THE TAKE

Rising Pay, Falling Skills: Like The US, India Faces An Employment Paradox

By Govindraj Ethiraj

Ford Motor CEO Jim Farley told a podcast in the US last week that he couldn’t find enough skilled mechanics to run his auto plants.

Ford, Farley said, was finding it difficult to fill 5,000 mechanic jobs that pay $120,000 a year. 

The Wall Street Journal quoted Farley as saying that the automaker was struggling to hire mechanics at salaries that Ivy League grads might envy. 

“We are in trouble in our country. We are not talking about this enough,” Farley said. “We have over a million openings in critical jobs, emergency services, trucking, factory workers, plumbers, electricians and tradesmen.” 

Clearly, the problem isn’t limited to the automotive sector. 

Widening Skill Gap

Elon Musk, who is reportedly back to being buddies with US President Donald Trump, weighed in as well: “America has a major shortage of people who can do challenging physical work or who even wish to train to do so,” Musk said in a post on X.

The post made it to Indian news and social media platforms as well, with reactions split between commiseration and criticism. Some pointed out that they were willing to do any job, but were not getting the opportunity, particularly in the United States.

The problem, of course, is more nuanced. In a rare moment of candour, President Trump summed it up neatly. He told a Fox News interviewer last week that you can’t pull people out of employment lines and make them produce missiles.

In other words, just because a job involves manual labour does not mean you have the specialised skills to do it. You have to develop the skills before you can even pitch for high-skilled roles like this.

Rich Garrity, a National Association of Manufacturers board member, believes that much of the crisis stems from a skill set deficit, due to a lack of concrete foundational training courses available for students in the country’s educational system.

“We’re not just missing bodies, but we’re really missing…skill sets that can connect to 21st-century manufacturing needs,” the Wall Street Journal reported Garrity telling the New York Post. “The community colleges, the career tech programs do a solid job in providing foundational training, but we often see that they’re out of date when it comes to keeping up with how fast things are moving from a technology standpoint.”

Degrees Vs Employability

India faces similar problems. India produces about 1.5 million engineering graduates annually, but only about 10% of these 1.5 million engineers could get a job, according to several reports in recent years. 

The major reason is the skills gap among engineering graduates.

Worse, most engineers have gravitated towards IT jobs, which are obviously less punishing than the shopfloor of a steel factory or a power plant.

Many engineering company leaders I speak to regularly complain that they are unable to find the right-skilled engineers.

The market is forcing a shift here with IT job hiring slowing down and many IT companies also downsizing. AI is accelerating the shift.

Still, traditional engineering jobs may not be the first choice for many young engineers, however desperate the situation might be.

Even those who are not engineers may prefer to keep studying and take up a government job or wait for years till they can land one.

The challenge, and opportunity, is to make such physical jobs more attractive and also make workplaces a little friendlier, even as we step up training, additionally via internships.

Some of this is already happening, but only in big companies.

Like in the US, compensation is steadily rising for such jobs.

For some time to come, the challenge will be less about job availability and more about employability.  

CORE NUMBER

$337 million

That’s the overdue payments that alcohol industry groups representing Heineken, Diageo and Pernod Ricard have urged the Telangana government to clear, warning that further delays could trigger supply shortages and disrupt operations, Reuters reported. Telangana, one of India’s biggest alcohol-consuming states, has a history of delayed payments to liquor makers supplying state-run depots. Earlier this year, Heineken’s United Breweries briefly halted supplies in protest.

Catch Up Quick: The pending dues, dating back to May 2024, are straining companies ahead of the festive season, when demand typically jumps by up to 75%. They cautioned that many firms may not be able to continue operations without immediate payment clearance.

Context: The sector already faces increasing regulatory pressure in India, including proposed tougher advertising rules and ongoing antitrust investigations.

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FROM THE PERIPHERY

India Awaits Sanctioned Crude.

India-bound tankers carrying millions of barrels of Russian crude from newly sanctioned suppliers Rosneft and Lukoil face uncertainty as the US wind-down period ends this Friday. According to Bloomberg, data from Kpler shows about 7.7 million barrels of Urals crude tied to the blacklisted firms are due to arrive in India after November 21, raising questions about whether they can discharge without delays.

Fast Facts: Most vessels are headed either to Reliance’s Jamnagar refinery or to Vadinar, operated by Nayara Energy, a Rosneft-backed company that is also under EU sanctions. Shipments are scheduled to arrive through late November and December, and traders are watching closely as India, under US pressure, reassesses Russian crude purchases.

Critical Moment: Several refiners have pledged to halt Russian deliveries after the deadline, though Nayara and Indian Oil will continue buying non-sanctioned grades. If tankers miss the cutoff, they may idle offshore or divert to alternate destinations.

Air India’s China Plea.

Air India is urging the Indian government to secure access to a sensitive Chinese military airspace corridor in Xinjiang to shorten long-haul routes, as Pakistan’s airspace ban continues to inflict heavy operational and financial damage, Reuters reported.

Why It Matters: The carrier, already rebuilding its global network and reputation after the fatal June crash in Gujarat, faces fuel cost increases of up to 29% and flight times extended by as much as three hours. For India’s only major international airline, this threatens competitiveness: passengers are shifting to foreign carriers with shorter routes, while several US services have become unviable.

Outcome: Securing the Hotan route is crucial for Air India because it would cut fuel burn, restore capacity on key Western routes, and reduce weekly losses, helping stabilise the airline at a moment of high costs, fleet expansion and mounting financial pressures.

VW Seeks Local Tie-Up

Volkswagen AG is cutting the cost of developing electric vehicles in India by nearly one-third and is seeking a local partner to strengthen its small presence in the country, Bloomberg reported. The automaker has reduced spending on its India EV platform to about $700 million from $1 billion as it grows cautious about investing heavily in a market where it holds only a 2% share after nearly two decades.

Context: Talks with Mahindra & Mahindra fell through last year, prompting Volkswagen to look for a new partner to share costs and risk. Skoda Auto Volkswagen India is now in discussions with multiple firms, including an Indian contract manufacturer, and has approached JSW Group to explore a possible tie-up.

Overview: With tighter emission norms kicking in from 2027 and its EV launch slated for 2028, Volkswagen may also consider importing EVs if an EU–India trade deal progresses. Volkswagen Group’s portfolio spans Skoda, Volkswagen and luxury brands like Lamborghini, Audi and Porsche.

Seafood Catch From China

Indian seafood exporters jumped up to 11% on Wednesday after reports that China plans to suspend imports of Japanese seafood, potentially redirecting demand to suppliers like India. According to Reuters, the move follows rising diplomatic tensions between Beijing and Tokyo, with China warning of “stern” countermeasures unless Japan retracts recent comments on Taiwan.

Backstory: A renewed Chinese ban would hit Japan hard, as the market once accounted for over 20% of its seafood exports. For India, however, the shift could offer relief. Exporters have been squeezed by steep US tariffs of up to 50%, which dragged October shipments nearly 9% lower.

What’s Next? With seafood exports at $7.4 billion — shrimp making up 40% —Indian firms have been seeking new markets. Analysts say any increase in Chinese demand would provide timely support as the government rolls out incentives for the sector.

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