This paper presents the need and importance of productive employment, which is a significant issue in India. The government is currently considering sustained scientific efforts such as technological innovation, creativity, and start-ups in hi-tech through higher education to generate jobs. The education offered by universities follows traditional methods and does not align with the changing world. Governments are now exploring opportunities and scopes to generate productive employment through innovation, incubation, and research parks, among others. It is observed that a strong, innovative university system is a prerequisite for increasing the employability of graduates and for employment generation and development. It is recommended to urgently take steps to create entrepreneurs, new knowledge, new technology, patents, and intellectual property rights, and establish technology-based firms in partnership with the industry. This paper presents the new role and responsibility of universities and colleges in imparting education in an innovative way, fostering synergy with industry, and keeping up with fast-advancing technology. This has become essential in these changing times, especially under globalization pressures. Case studies from developed countries are presented in support of this. It is recommended that funding agencies such as the World Bank, UNESCO, the Asian Development Bank, and developed countries prioritize reforms in higher education and guide India in increasing employability for productive jobs. This paper briefly presents problems in the adoption and implementation of innovation methods. Policy implications in this effort to generate jobs are identified and presented to facilitate the government's adoption of new approaches to fulfill the growing aspirations of the people. Conclusions are drawn to enhance the employability of graduates by making them creative and innovative for job generation.