Policy Update
Gowri Kodali
Introduction
The Government of India has stepped up various initiatives to build India’s position in the global innovation and manufacturing landscape by boosting the country’s skills development system including strengthening of technical education. It is acknowledged that just improving the quality of education at colleges may not ensure that the graduates of the colleges acquire the knowledge and skills for the jobs of the future. The Union Cabinet approved the MERITE Scheme on 8 August 2025.
The scheme provides for an outlay of ₹4,200 crore over five years, including ₹2,100 crore in World Bank loan assistance, to implement quality and equity reforms in centrally and state-aided technical education institutions. Aligned with NEP 2020, MERITE marks a shift from infrastructure-focused investments towards strengthening institutional governance, academic quality and industry collaboration (Ministry of Education, 2025).
This Scheme provides greater emphasis on reforming governance and other aspects of institutions and interaction with industries and research compared to earlier reforms focused on infrastructure of institutions (Ministry of Education, 2025).
Background
Integrating skill development with technical education has been a challenge for the Indian technical education system. As per the World Bank (2023), the gaps in a range of skills, including reasoning, communication and interpersonal skills exist in the technical education system, despite some improvements. The earlier World Bank-supported Multidisciplinary Education and Research Improvement in Technical Education project, approved in June 2023, focused on improving engineering education, research, innovation and institutional governance in selected states. It was expected to benefit over 3,50,000 students annually. In contrast, the Cabinet-approved MERITE Scheme of 2025 envisages wider national coverage, subject to institutional eligibility (World Bank, 2023; Ministry of Education, 2025).
This subsequent national scheme covers priority areas of the National Education Policy (NEP) 2020, including multidisciplinary education, revised curriculum and textbooks, new assessment, research and scholarly activities, faculty development and training, and widening the opportunities for diverse participation. However, this expansion raises a critical policy question: can regional administrative capacity keep pace with the nationwide scaling of institutional reforms (Ministry of Education, 2025; World Bank, 2024)?
Improving the quality of education offered in engineering colleges means improving the quality of technical universities and polytechnics, as well as the State level boards and Departments of Technical Education. Together, these institutions can help improve both degree and diploma level education and vocational training (Ministry of Education, 2025).
Functioning
MERITE is a Cabinet-approved Central Sector Scheme with an estimated financial outlay of ₹4,200 crore for 2025–26 to 2029–30. Of this, ₹2,100 crore, representing 50% of the total outlay, is envisaged as World Bank loan assistance under the approved financing arrangement (Ministry of Education, 2025). The funds will be released by the Central Nodal Agency and state and UT authorities will be important partners for the implementation of the scheme (Ministry of Education, 2025).
The scheme includes modernization of curricula, multidisciplinary programs and internships, development of faculty, researchers and innovators, makers and skill labs, and foreign language workshops, among others. It seeks to strengthen quality of accreditation and institutional assurance, and digitalize higher education. A key institutional priority is developing future academic administrators and empowering women faculty through leadership and professional development opportunities. Institutions and bodies such as IITs, IIMs, AICTE and the National Board of Accreditation are expected to support these broader reforms (Ministry of Education, 2025).
The World Bank project framework classifies reforms into three major areas: improving equity and quality in engineering education, strengthening research and innovation, and improving governance and quality assurance. Improving governance and quality assurance emphasizes that the outcomes of a higher education system cannot be attributed solely to the available funding, but rather on the leadership of institutions and the professionalism of faculty and teaching staff (World Bank, 2024).
Performance
Following cabinet approval of the MERITE scheme in August 2025, its early performance will have to be assessed against the planning and documentation process as against anticipated benefits. Records maintained by the Ministry of Education show that a recruitment notice for a Central Project Advisor was issued in March 2026 (Ministry of Education, 2026).
The Union Budget 2026–27 allocated ₹300 crore to MERITE, an increase of ₹80 crore (36.36%) over the ₹220 crore budget estimate for 2025–26. While this indicates increased budgetary provision, it does not establish actual expenditure or institutional outcomes. The March 2026 recruitment notice for a Central Project Advisor also reflects ongoing administrative preparations rather than evidence of completed implementation (Ministry of Education, 2026; Press Information Bureau, 2026)..
There are a few relevant aspects of the World Bank’s restructuring documents that deserve attention. Approval for the first phase of the project was granted in June 2023. However, the World Bank’s September 2024 restructuring document recorded that the loan agreement remained unsigned, highlighting a delay between project approval and financing effectiveness. Consequently, project approval in June 2023 should not be interpreted as evidence of financial disbursement or implementation progress (World Bank, 2024).
The reviewed documents show approval of policies and financing arrangements as well as administrative preparations. In and of themselves, these do not indicate that the 275 institutions have received support and the 7.5 lakh students expected to benefit from the program have benefitted (Ministry of Education, 2025).
Impact
There are considerable opportunities for improvement in equity in the provision of engineering and technical education, access to classroom resources for women students and faculty, and use of digital resources. The program may stimulate changes in equity and improvement in the infrastructure and innovation systems in education and science, as well as encourage collaboration between different stakeholders and institutions (Ministry of Education, 2025; World Bank, 2024).
The programme is expected to strengthen institutional research, innovation and industry partnerships. However, these remain anticipated benefits rather than demonstrated outcomes. Its actual impact should be assessed through measurable improvements in student retention, verified industry placements, accreditation outcomes, research collaboration and women’s access to digital and classroom learning resources. Such indicators would provide stronger evidence of educational quality and employability than the number of institutions receiving financial support.
Key Challenges
There are some challenges and issues related to the implementation of the program including concerns around delays between the World Bank’s approval and the financing arrangements documented in its restructuring paper. Timely implementation of the project hinges on effective coordination between the central and state governments, financing institutions, and the colleges involved (World Bank, 2024).
Differences in institutional capacity: Variation among participating colleges, including faculty and staff, available resources, and governance, has been documented by the Ministry during consultation with stakeholders. A one-size-fits-all implementation model is therefore unlikely to succeed, as participating institutions differ substantially in baseline faculty strength, infrastructure and governance capacity (Ministry of Education, 2022).
Equity vs. expansion: Extending the Scheme nationwide may improve access, but geographical expansion alone does not guarantee equity. Without targeted support for institutions with weaker resources and administrative capacity, already well-established colleges may capture a disproportionate share of the benefits, potentially widening existing educational disparities.
Employability vs. measure: The potential of maker laboratories and redesigned curricula hinges on students’ acquisition of employability skills and competencies. The quality and relevance of the activities to the world of work should be of primary concern as opposed to the number of participants.
Sustainability: Research laboratories, digital infrastructure and faculty development require continued financial and institutional support. Without adequate funding for maintenance, training and periodic upgrades, the expected benefits may weaken after the scheme’s financing period.
Way Forward
- Establish a public implementation dashboard: The Ministry of Education should publish institution-wise data on funding allocations, actual expenditures, implementation milestones, accreditation, faculty training and student outcomes. Periodic updates would enable stakeholders to track financial utilisation against measurable progress.
- Focus on institutions with larger gaps in capacity: Faculty, infrastructure and equity of access (e.g. regional) differences of student population should be considered when prioritizing institutions for further improvement.A quarterly employer feedback mechanism could assess whether maker laboratories, internships and practical training are developing industry-relevant skills among graduates.
- Strengthen employer participation: Partnership agreements with engineering colleges and polytechnics to involve the industry for provision of equipment, practical training and other related activities of the curriculum, should be reviewed and evaluated.
- Track graduate outcomes: Participating institutions should evaluate improvements in learning and graduation, employment, further education and student transition. This would indicate whether the programme has improved equity and employability.
- Foster long-term sustainability of participating institutions: Beyond the duration of funding of the Scheme, participating institutions should evolve and implement policies to sustain improvements in faculty, research, governance and infrastructure. Regular independent evaluation of higher education institutions should be conducted to identify interventions with maximum potential for wider implementation.
Conclusion
The purpose of the MERITE scheme is to comprehensively reform public technical education in India through reforms in teaching, research and scholarly work, employability and institutional governance. Other features of the scheme (an approved financial outlay of ₹4,200 crore) also hint at the presence of a substantive policy framework (Ministry of Education, 2025).
Some barriers related to financing and administration documented in the World Bank’s restructuring record indicate that the Scheme should have a mechanism for transparent monitoring, and demonstrate progress to stakeholders to achieve its objectives (World Bank, 2024). The Scheme’s aims should be evaluated by improvements in learning outcomes and equality in participation, and research and employment outcomes. The key policy challenge for the Scheme would be to address national aspirations for improvement of the technical education system of the country.
Selected References
1. Press Information Bureau, Ministry of Heavy Industries, Government of India (26 November 2025). Cabinet Approves Rs. 7,280 Crore Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets. Official Cabinet approval covering outlay, 6,000 MTPA capacity and integrated manufacturing objective.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2194687
2. Ministry of Heavy Industries, Government of India. Scheme Notifications – Sintered Rare Earth Permanent Magnet Scheme. Official page containing the Scheme notification, Request for Proposal, addenda and pre-bid documents.
https://heavyindustries.gov.in/en/scheme-notification
3. Press Information Bureau, Ministry of Heavy Industries (16 December 2025). Promotion of Manufacturing of Sintered Rare Earth Permanent Magnets. Official details on the five envisaged beneficiaries, global competitive bidding, ₹6,450 crore sales-linked incentive and ₹750 crore capital subsidy.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2204625
4. Press Information Bureau, Government of India (27 December 2025). Powering India’s Next Tech Leap through Rare Earth Permanent Magnet Manufacturing Ecosystem. Official backgrounder on REPM manufacturing, demand and strategic importance.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2209065
5. Press Information Bureau, Government of India (3 February 2026). India’s Rare Earth Strategy: Manufacturing, Corridors, and Global Integration. Official details on the Dedicated Rare Earth Corridors and integration with the REPM manufacturing strategy.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2222413
6. Press Information Bureau, Ministry of Heavy Industries (21 July 2026). Assessment of Rare Earth Permanent Magnet Scheme. Official 2030 sector-wise demand estimate of 8,220 MTPA, 767 million tonnes of REE ore resources and confirmation of India’s current sintered NdFeB import dependence.
https://www.pib.gov.in/PressReleasePage.aspx?PRID=2287130
7. Ministry of Heavy Industries / Press Information Bureau (13 August 2026). The Ministry of Heavy Industries receives 20 bids under the Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets. Latest official implementation update on the global tender.
https://www.pib.gov.in/newsite/erelcontent.aspx?lang=2®=48&relid=293457
About the Author
Gowri Kodali is pursuing a Master’s in Economics and currently serves as a Research and Editorial Intern at the Impact and Policy Research Institute (IMPRI). She is also actively preparing for the UPSC Civil Services Examination, with a keen interest in public policy, governance and socio-economic development.
Review by Manisha & Anushree Khare
