The present paper attempts to study the present skill capacity, challenges in front of skill development initiatives in India along with their solutions. The skill capacity has been assessed in the form of general education and vocational training level of the Indian workforce in the age group of 15-59 and which was found to extremely low i.e. around 38% of the workforce are not even literate, 25% are having below primary or up-to primary level of education and remaining 36% has an education level of middle and higher level whereas only 10% of the workforce is vocationally trained (with 2% formal and 8% informal training). The study also found that both the Government and its partner agencies have undertaken various measures/initiatives for the effective implementation of the skill development system in the economy, but still faces a number of unresolved issues/challenges that need immediate attention of the policy makers.