India enjoys many positives as compared to many countries of the world such as it is the frontrunner in terms of consistent economic growth and set to be the third economic power by 2030(IMF Standard Chartered Research 2011), the country is also the 7^th in terms of area and 2^nd in terms of population. This population is not the aging population but the youth population wherein about 65 percentage of population is below the age of 35. This young population has given the government and policy makers a huge opportunity to channelize the young potential in productive avenues and thereby achieve higher economic growth and achieve better happiness index and improve the quality of life, making India a better place to live in. However, this is not as easy to be achieved as said rather there are many challenges that have to be dealt with. India with a population of 1.2 billion faces huge unemployment problem which is pulling back the economic growth rate from expectations and the situation is not getting any better with increasing number of youth entering the job market every year. Given the job scarcity, this would mean more and more of unemployed youths in days to come. Add to it, our education system is also a big culprit for the demand-supply imbalance in the job market. The education provided is often found of substandard quality and also very generalistic in nature; thereby creating a gap between what universities and colleges are supplying and what actually is needed by the industry. As per AICTE report around 60 percentage of the 8 lakh engineers graduating from technical institutions across the country every year remain unemployed, 39 percentage employers state that attracting and finding quality talent is one of the most challenging aspects, around 90 percentage of jobs are skill-based, only 2% of the population (in the 15-25 age group) is currently enrolled for vocational training (vs.60-80% worldwide).   It is evident that an enormous gap exists between skills and employability. A Planning Commission Report (2008) estimated that only 10% of the workforce in India has undergone formal skill training as compared to 68% in the UK, 75% in Germany, 52% in USA, 80% in Japan and 96% in South Korea. Despite having low dependency rates and a large proportion of population in the workforce, especially the youth, India has been unable to create suitable job opportunities, develop skill to participate in a competitive job market and improve the standard of living of the masses. The paper tries to highlight various issues and challenges which young India faces in terms of converting its demographic advantage into dividend, in particular, highlighting the existing and future employment scenario, deficiencies in existing education system and also taking an account of various government initiatives and policies in this regard. The paper is based on insight gathered from secondary sources of published authentic data.