Investment Opportunities in India

March 4, 2013

Investments Prospects in Indian Education Sector

Education in India is provided by the public sector as well as the private sector, with control and funding coming from three levels: central, state, and local. The Nalanda University was the oldest university-system of education in the world. Western education became ingrained into Indian society with the establishment of the British Raj.

Education sector in India falls under the control of both the Union Government and the states, with some responsibilities lying with the Union and the states having autonomy for others. The various articles of the Indian Constitution provide for education as a fundamental right. Most universities in India are controlled by the Union or the State Government.

Investments opportunities in Indian education sector

The Indian education sector has been recognised as a “Sunrise Sector” for investment in the recent past. This recognition stems from the fact that the sector offers a huge untapped market in regulated and non-regulated segments due to low literacy rate, high concentration in urban areas and growing per capita income. The Government has also been proactively playing the role of facilitator in this sector.

The higher education sector, owing to its huge potential, holds very promising prospects. With an estimated 150 million people in the age group of 18-23 years, the sector offers one of the most attractive yet highly complex market for the private/foreign players.

The Indian Education sector is characterized by a unique set of attributes:

  • Huge market size both in terms of number of students and annual revenues
  • A potential growth rate of 16% is expected over thenext 5 years
  • Significant activity in terms of new foreign entrants and participation is expected to be witnessed in the years ahead
  • Accreditation is still not mandatory, however, reforms are in the pipeline to address this issue

The Indian education sector is evolving, which has led to the huge investments options for non-resident Indians (NRI) and emergence of new niche sectors like vocational training, finishing schools, child-skill enhancement and e-learning among others. Growth is driven by the increasing propensity of the middle class to spend on education and more aggressive initiatives by private entrepreneurs.

Private sector investment options in Indian education

The Government of India has set itself an aggressive target of achieving 30 per cent gross enrollment ratio (GER) in Higher Education by 2020, which translates into doubling the GER in the next 8 years.

As per recent estimates by National University of Educational Planning and Administration (NUEPA), in order to achieve this target an additional investment of Rs 9.5 lakh crore, which includes capital expenditure and operating expenditure, has to be made in the next 8 years. To give a perspective, the total allocation to the education in India under the 11thFive Year Plan (2007-12) was Rs 2.7 lakh crore out of which higher education’s share was only about 30 per cent.

The private sector’s role in the higher education sector has been growing at a rapid pace over the last decade and needs to further expand at an accelerated rate in order to achieve the GER target.

Despite the huge potential in the higher education sector, not everyone has been able to achieve success. The challenges/threats, which the private sector players face in India are significant and therefore, approaching the market with a well thought-out strategy is advisable.

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April 28, 2011

Government lays greater stress on education in India

Education in India is primarily handled by the government. The government’s large Union Budget outlays allot sufficient funds for setting up school infrastructure in the country. Elementary education is guaranteed to every child between the age of 6 and 14 years and whatever possible is being done to improve the quality of education and increase access to education for every child. Since the Eleventh Five-Year Plan greater emphasis is given to the quality of education in India.

Poor quality education reduces academic achievement by the students and lack of proper training in soft skills reduces their employability opportunities. Steps taken by the government to improve quality and access to education in India include programmes such as Sarva Shiksha Abhiyan (SSA), Mid-day meal schemes and Kasturba Gandhi Balika Vidyalayas. These schemes emphasise on increasing the number of schools to provide access to a larger population, and on improving infrastructure of existing and new schools by providing greater amenities and building more classrooms.

Increasing enrolment rates and reducing dropouts and gender inequality are two other aspects which the government of India aims to lay stress on. Recruitment of quality teachers forms one of the most important aspects of consolidating the education sector in India. These teachers also need to be properly trained to impart education more effectively to children.

Private-Public Partnership
The task is so enormous in a country of India’s size and population that the government has to turn to Public-Private Partnership (PPP) to run the schemes effectively. The PPP initiative will be primarily used to provide IT-based education to a majority of India’s student population. Private companies will contribute by providing infrastructure in the form of computer labs and content at government schools. It will also train teachers how to use their content and infrastructure. Training is also being provided to the teachers to enhance their education imparting capabilities.

Soft skills
Soft skills such as communication, IT skills, computer proficiency etc are also very important in making a student employable. Private enterprises are coming forward in this area and providing short and medium-term courses and induction trainings. Many organizations like Everonn and NIIT are coming out with innovative approaches to get a share of the market.

This, however, is not enough, and more involvement of the private sector is called for. According to a NASSCOM report, there will be a requirement for 2.3mn IT professionals by 2011 and a shortage of 5, 00,000 personnel required. Therefore, it is more important to emphasise on quality of education in India, rather than the number of educated students. This reflects the strong growth potential that the IT Training Industry has and its ever-increasing relevance for the IT Sector.

Problem areas
The large sizes of classes in private schools prevent teachers from giving individual attention to students. This results in considerable waste of time, effort and money. Companies like Educomp and Everonn have introduced innovative products which would solve this problem. These are online products, available 24/7, and do not require the student to travel to the location where the classes are held. However, these products require broadband connectivity, the availability of which is very poor in India. India’s broadband penetration has to improve substantially to make these products successful.

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