India has emerged as a strong potential market for investments in the fields of training and education because of its favourable demographics (young population) and a services-driven economy. The fact is all the more illustrated looking at the country’s global presence in sectors like software, generic pharmaceuticals and other areas which require high level of learning and training.
Education is one of the largest service sector industries in India characterised by a unique set of attributes which are highly favourable for the development of the sector.
Education is one of the largest services market in India with a combined market size of more than 450 million students and revenue worth US$ 50 billion per annum, according to a report by research firm KPMG. The highly fragmented industry is projected to require an investment of about US$ 100 billion by 2014 to meet burgeoning demand. KPMG anticipates the sector to grow by around 10-15 per cent over 2011-2021.
Education comprises three broad segments – schooling (pre-school and kindergarten to class 12 or K-12), higher education (graduate, post graduate and PhD programmes) and vocational education (IT, hospitality, financial services, aviation, retail, etc.) Pre-schools in India are looking for increase in revenue through geographic expansion (Tier I and II cities) and scaling up to K-12 delivery, while forming strategic alliances with large investors for infrastructure support.
The K-12 segment is looking at improving the quality of education through foreign partnerships and evolving hybrid teaching methods while targeting niche growth markets.
Higher Education segment in India is witnessing significant activity in terms of international partnerships and foreign entrants, with Indian players improving upon technology and course content to match the competition.
Vocational education/training is garnering huge investments from corporate and private equity (PE) firms as the methodology and technology pertaining to this sector is witnessing significant improvements. Enhancement in the demand and supply of online and correspondence courses, facilitation by government and quality improvement are the factors driving the vocational training segment.
According to the 2011 census, the total literacy rate in India is 74.04 per cent. The female literacy rate is 65.46 per cent and male literacy rate is 82.14 per cent.
Foreign direct investment (FDI) inflows in the education sector during the period April 2000 to July 2011 stood at US$ 427.85 million, according to the Department of Industrial Policy and Promotion (DIPP).
The Indian government is under a process to pass the Foreign Education Bill which would allow foreign universities to have campuses in India. The Bill, tabled by Mr Kapil Sibal, Union Human Resource Development Minister would 'regulate the entry and operation of foreign educational institutions which are imparting, or intend to impart, higher education in India.' It would also permit international education providers to set up campuses in the country and offer degree courses. The Bill, if implemented, will not only facilitate the much needed investment in the education sector, but will also attract foreign students and help India resolve the issue of brain drain.
Meanwhile, the Government of Australia has strengthened its commitment to India’s education sector wherein it would assist the country to satiate its demand for skilled workforce in the areas of faculty capacity building and curriculum renewal.
Moreover, India wants to set up 14 theme-based universities, encourage research, train teachers and brand a group of leading educational institutes the 'Indian Ivy League' under the Obama-Singh 21st Century Knowledge Initiative (OSI), an Indo-US collaboration in the field of education and training.
The government allows up to 100 per cent FDI in education sector.
India plans to enhance its formally skilled workforce through vocational education and training from the current 12 per cent to 25 per cent by 2017, thereby adding about 70 million people in the next five years. Hence, the higher education segment is expected to undergo intense changes and activities in terms of foreign partnerships and foreign players entering the market in the coming years, with Indian players rejuvenating and improvising their methodology, technology and course content to match the competition.
Consulting firm Technopak is very positive about the growth of the sector and estimates private education sector alone to grow to US$ 70 billion by 2013 and US$ 115 billion by 2018 in its study 'A Report Card on India’s Education Sector'.
Exchange Rate Used: INR 1 = US$ 0.020448, as on September 2011References: Press Releases, KPMG Report, Technopak report, Press information Bureau, Department of Industrial Policy and Promotion document.