Education is an important means of modernisation. The importance of education can be realized from the fact that all modernised societies tend to emphasise on universalisation of education as a mode for sustained economic development. There is a huge demand for upgradation of education as India is expected to have a surplus of 47 million people in the working age group by 2020. As a result, both the formal education sector (including K-12 and higher education) as well as informal sector (including coaching institutions, pre-schools and vocational institutions) are witnessing rapid growth in India.
The Indian education system, considered as one of the largest in the world, is divided into two major segments of core and non-core businesses. While, schools and higher education for the core group, the non-core business consists of pre-schools, vocational training and coaching classes.
India Ratings expects the Indian education sector’s market size to increase to Rs 602,410 crore (US$ 111.16 billion) by FY15 due to the expected strong demand for quality education. The sector grew at a compounded annual growth rate of 16.5 per cent during FY05-FY12.
The private education sector is estimated to reach US$ 70 billion by 2013 and US$ 115 billion by 2018, according to consulting firm Technopak. Technopak sees enrollments in Kindergarten-12th grade (K-12) growing to 351 million, requiring an additional 34 million seats by 2018.
Further, according to the report ’40 million by 2020: Preparing for a new paradigm in Indian Higher Education’ released by Ernst & Young, the higher education sector in India is expected to witness a growth of 18.0 per cent CAGR till 2020. At present, the sector witnesses spends of more than Rs 46,200 crore (US$ 8.52 billion), which is estimated to grow at an average rate of more than 18.0 per cent to over Rs 232,500 crore (US$ 42.89 billion) in 10 years.
The education sector in India is also considered as one of the major areas for investments as the entire education system is going through a process of overhaul, according to a report ‘Emerging Opportunities for Private and Foreign Participants in Higher Education’ by PricewaterhouseCoopers (PwC).
The education sector has attracted foreign direct investments (FDI) worth Rs 3,239.76 crore (US$ 597.68 million) during April 2000 to December 2012, according to the data released by the Department of Industrial Policy and Promotion (DIPP).
Public-private partnerships (PPP) can revolutionise education in India and facilitate growth. They can raise the standards of education provision in India and help meet the demand for quality education from a growing middle class with increasing incomes.
Some of the major investments in Education and Training Sector in India are as follows:
- BSE Institute has announced the commencement of its two-year, full-time post-graduate programme in Global Financial Markets (PGP-GFM). The course is spread across four semesters and comprises 20 modules
- Thapar University, Patiala, has signed a memorandum of understanding (MoU) with Groupe ISA, Institute of Life Sciences, France. The MoU will focus on topics related to food and environmental biotechnology
- Infinity Group plans to build a Rs 4,000 crore (US$ 737.95 million) Education City in Bhutan and has formed a 50:50 joint venture (JV) with Infrastructure Leasing & Financial Services Ltd (IL&FS)
- US-based Texas Instruments (TI) has launched a centre of excellence at Netaji Subash Institute of Technology (NSIT), New Delhi. This is the first centre for embedded product development that TI is setting up in any educational institution in India
- Accenture has set up an innovation centre for enterprise resource planning (ERP) at Mukesh Patel School of Technology Management and Engineering (MPSTME), under Narsee Monjee Institute of Management Studies (NMIMS). The initiative will strengthen the partnership with NMIMS University, as per Mr Shantiprakash Motwani, Vice President, Accenture
- The Shiv Nadar University has tied up with Duke University of North Carolina. The alliance will pave way for the two institutions to partner in academic programmes and experiential learning opportunities
The Central Government plays a vital role in the evolution and monitoring of educational policies and programmes.
Some of the initiatives taken by the government for the infrastructural development of education sector are:
- Rs 160 crore (US$ 29.51 million) is allocated in the Union Budget 2013-14 to the corpus of Maulana Azad Education Foundation to raise its corpus to Rs 1,500 crore (US$ 276.64 million) during 12th Plan period
- Rs 4,727 crore (US$ 871.68 million) is allocated in the Budget 2013-14 for medical education, training and research
- Government of India is committed to the creation of Nalanda University as a centre of educational excellence
- Hewlett-Packard (HP) India has won a contract from the Government of Uttar Pradesh (UP) to supply 1.5 million laptops worth Rs 2,858.70 crore (US$ 527.14 million)
- The NASSCOM Sector Skills Council (SSC) has signed a memorandum of understanding (MoU) with NIIT for three years, to offer enhanced training programmes to students, through its training campuses across India
- India and Republic of Korea have signed a memorandum of understanding (MoU) for cooperation in the field of education
- The Ministry of Human Resource Development (MHRD) plans to set up ten community colleges in collaboration with the Government of Canada in 2012. The Government of India has decided to set up hundred community colleges this year
Digitisation and adoption of information and communication technology (ICT) is modernising the traditional way of classroom learning. The Government of India plans to invest US$ 20 billion on ICT and vocational training in the 12th Five Year Plan.
The private education and training sector market is estimated to be about US$ 40 billion and is expected to grow at 16 per cent compound annual growth rate (CAGR) for the next five years. Realising the fast growth of education sector in India, many private companies are looking for relevant acquisitions and alliances in this space. Major investments are being seen in the areas of pre-schools, private coaching and tutoring, teacher training, the development and provision of multimedia content, educational software development, skill enhancement, IT training and e-learning.
Education sector in India is expected to continue to attract significant private equity investments.
Exchange rate used INR 1= US$ 0.018 as on March 18, 2013
References: Ministry of Finance, Press Information Bureau (PIB), Media Report, Ministry of Education, Department of Industrial Policy & Promotion (DIPP)
Disclaimer: This information has been collected through secondary research and NICCT is not responsible for any errors in the same.