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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May 30, 2012

Investment Opportunities in Indian Education Sector

India has the third largest education system globally, after China and the US, with one million schools and 20,000 institutes for higher education. The common man’s dream of making a better life for himself has made him focus more and more on education. Due to rising income level in India, middle class is focusing more on providing quality education to their children.

The education sector is divided into two main segments; the core segment comprises of schools and higher education, while the non-core comprises of coaching classes, pre-schools and vocational trainings.

There is a huge demand-supply gap in the Indian education sector. This has attracted many private players to invest in education and training institutions with the aim of making the candidate employable by training them in the right courses.

Importance of Private Investment in Education Sector

Education sector in India is finding it increasingly difficult to cope with the rising market demands and competition from global educational institutions due to low investments. It has become very imperative to have increased private investment to improve the infrastructure. The sector offers opportunities to increase capital because education still lacks good-quality infrastructure in the country and investors have the opportunity to build it. So, it is very beneficial to invest in Indian education sector for the private players.

Private Equity Investors have already started investing in educational projects due to increasing demand trend. India’s private banking giant HDFC (Housing Development Finance Corporation Limited) has confirmed that Private Equity investment have seen a tremendous growth since year 2005. HDFC has announced strategic plans to enter the education sector in India and approved an investment of 100 crores.

Government Initiatives

Initiatives taken by the government for the infrastructural development of education sector are:

  • Rise in budget allocation for education sector by 17% i.e. Rs 150 crore for establishing new IITs and IIMs in India.
  • A proposal was proposed for setting up 6000 schools at block level as model schools in the 12th Five Year Plan.
  • Fund of Rs 1000 crore has also been allocated to National Skill development Fund as an initiative.
  • Provide incentives to private sector for creation of infrastructure for higher education
  • The government initiated measures to establish four regional centers of Indian Institute of Mass Communication (IIMC) to promote excellence in journalism.
  • The Budget provisions earmarked for education of girl children should be enhanced from Rs 1,265 to Rs 3,000 in 2012-13.
  • The allocation of Rs.636215 crore to UGC (University Grants Commission) which involves the finances for deemed and central universities across India.
  • Survey by apex industry body, ASSOCHAM, predicts an investment of Rs. 4,500 crore over next three years
  • To increase the IT spending from an estimated $356 million in 2008 to $704 million by 2012, reflecting in a Compounded Annual Growth Rate (CAGR) of 19 percent during 2007-2012

February 20, 2012

The Indian education sector offering great investment opportunities and teaching jobs

With the rising population in India, the demand for educational institutes has also risen along with it. The Indian education sector is one of the biggest education systems in the world today. According to reports, the education sector in India is one of the leading areas for investment opportunities. This is because the whole education system is being overhauled. The private equity investment in the education sector has been to known to have reached US$ 190 million in the year 2010. The private companies have understood the vast opportunity brought about by the difference between demand and supply, since education is very important for Indians and enjoys a great status in India.

Surveys have underlined the fact that India is one of the youngest countries in the world, with 60% of the population below 24 years of age. This is very good news and promises investment opportunities in the already thriving
. With the growth in economy and improved technology, it has become a necessity to really develop the Indian education system. Funds are still the chief worry in the market. The Indian Government has forwarded many proposals for the developing the infrastructure of the education system, which can be successful with the help of private industries.

The Indian education sector is divided into two main segments, mainly the core and the non -core groups. The core segment contains schools and higher education, while the non-core consists of coaching classes, pre-schools and vocational trainings. The education network in India consists of around one million schools and 20,000 institutions for higher education. The common man’s dream of making a better life for himself has made him focus more and more on education. The Indian education sector is indeed one of the most promising and profitable sectors, offering huge investment opportunities, according to industry surveys.

With both formal and non formal education showing an increase in growth, along with a young population with years of education ah in front of them, there is sure to be a big demand for education in the years ahead. It Is this growing numbers which has made the Indian education sector a potential field for investment opportunities. It has been reported that Indian education sector is finding it increasingly difficult to cope with the rising market demands and competition from global educational institutions due to low investments. It has become very imperative to have increased private investment to improve the infrastructure in this sector.

In the tuition oriented education system in India, small and medium size institutions have found a lot of success. However, since the young population is more than capable of paying good money for higher education, the big and reputed private companies have started taking an interest in the Indian education sector. The big companies have started coaching classes for MBA, IAS and other entrance exam, throughout the country. This has helped in producing a lot of teaching jobs all over the country. Many of the biggest corporate companies like Reliance, Nirma, Tata and Zee Learn have taken advantage of the investment opportunities in this sector and made very heavy investments.

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