Thursday, February 13, 2014

Indian Education Sector: In the pink of health

India has emerged as a strong potential market for investments in training and education sector, due to its favourable demographics (young population) and being a services-driven economy. Further, India's expanding role in sectors such as software development, generic pharmaceuticals and healthcare, would require the country to invest into learning and training segment as well.

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

The Ministry of Human Resources Development (MHRD) controls this segment. It requires affiliation or accreditation from either of the following bodies: ICSE (Council for the Indian School Certificate Examinations), CBSE (Central Board of Secondary Education), IGCSE (International General Certificate of Secondary Education), IB (International Baccalaureate from Geneva) and the State Boards.

Market Size
The market size of Indian education sector is expected to increase to Rs. 602,410 crore (US$ 97.03 billion) by FY15 on back of strong demand for quality education, according to a report by India Ratings.

The private education segment alone is expected to cross US$ 45 billion mark by 2015 from the present US$ 35 billion, according to a research report. 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.

India's online education market size is set to grow to US$ 40 billion by 2017 from the present US$ 20 billion.

Investments 

The education sector has attracted foreign direct investments (FDI) worth Rs. 4,596.96 crore (US$ 740.35 million) during April 2000 to September 2013, according to the data released by the Department of Industrial Policy and Promotion (DIPP).

Government Initiatives
The Centre plays a vital role in the evolution and monitoring of educational policies and programmes. The Government of India has prepared the University Grants Commission (UGC) for implementing the Establishment and Operation of Campuses of Foreign Educational Institutions Rules, 2013. Under the proposed Rules, Foreign Educational Institutions (FEIs) can set up campuses in India, once the FEIs have been notified as Foreign Education Provider (FEPs) by the UGC, subject to fulfillment of certain eligibility conditions.

The Road Ahead
President Pranab Mukherjee has stressed the need for focussing on skill development and vocational training for capitalising on the 'demographic dividend' and boosting country's economic growth. India is expected to achieve demographic dividend by 2030 with half the population in its workforce and the largest workforce in the world.

There is clearly an opportunity for private players to enter the education space. This opportunity exists in all three segments – schooling, higher education and vocational training. Public-private partnerships (PPP) arrangements, tax concessions for education and encouraging foreign capital to build infrastructure in India would encourage the creation of new capacities by the private sector.

India's education sector is expected to witness huge investments from PE funds over the next couple of years on the back of increased government spending and expansion plans of private players.

Major Initiatives of the Government for Infrastructural Development of Education Sector

  • The MHRD has proposed to provide for 5,000 faculty positions in higher education under the Rashtriya Uchchatar Shiksha Abhiyan (RUSA) during the current Five Year Plan (2012-17). 
  • India and Mauritius have signed two MoUs in order to boost educational ties. The first MoU is between IIT, Delhi and Mauritius Research Council for setting up of an International Institute of Technology Research Academy (IITRA) in Mauritius and the second MoU is between Association of Indian Universities (AIU) and Tertiary Education Council (TEC) of Mauritius for mutual recognition of educational qualifications.
  • The Government of India plans to set up a framework of community colleges on the North American model.
  • The MHRD plans to launch 50 direct-to-home (DTH) educational channels.
  • The Cabinet Committee on Economic Affairs (CCEA) has approved Rs. 1 trillion (US$ 16.18 billion) Rashtriya Uchchatar Shiksha Abhiyan (RUSA). It is a new centrally sponsored scheme for higher education which will spread over 12th and 13th Five Year Plan.
Source: The Economic Times, February 13, 2014

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