This paper will take on the ongoing discrepancy between the competencies that are taught to engineering graduates and competencies that the industry is placing on such a graduate in which the focus of the institutions is still heavily on theoretical knowledge yet the industry requires a balance between technical, cognitive, organizational, and ethical skills to be learned. The study will focus on identifying how competency mapping and employability of engineering students in select colleges in India are connected, and how different dimensions of competencies affect the outcome of employability. Eight levels of competency mapping: core technical competencies, cognitive skills, behavioral competencies, functional competencies, personal attributes, professional ethics and attitude, learning agility and continuous improvement, and industry relevance and application are considered independent variables whereas the employability is measured by job-specific technical skills, generic soft skills, work experience, career management skills, adaptability, professional attitude and overall employability outcomes. The subjects included 435 engineering students in the study through structured questionnaires and analysis was performed. Findings demonstrate that competency mapping has a strong and positive association with employability, and behavioral competencies, core technical competencies, and learning agility are the most effective predictors of the outcomes of employability. The paper gives theoretical justification to Human Capital Theory, Employability Skills Framework and training based on competencies as well as underlines practically that curriculum change, increased academia industry collaboration and special purpose training to ensure graduates match labour requirement. All in all, the confirmed model created in the study will help cover the skills gap issue in the engineering industry and provide valuable experience to institutions, policymakers, and industry stakeholders who must produce industry-ready graduates in engineering.