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Education and Training

March, 2012

Brief Introduction

With a growth rate of 10 to 15 per cent expected over the next decade, the Indian education market has witnessed a series of developments and changes in the last few years, which has resulted in a significant increase in the market size of the education industry compared to previous years. With a combined market size of US$ 50 billion per annum with more than 450 million students, and investment requirement of approximately US$ 100 billion by 2014 to meet growing demands of the sector, education industry is one of the largest service sector industries in India.

Market Size

The education industry in India can be broadly classified into the Regulated segment (K12 and higher education) and the Un-regulated segment (pre-school, multimedia, ICT, coaching cases, vocational training and books). The expected market size of K-12 sector in 2012 (E) is US$ 34 billion, with a rise of 14 per cent as compared to US$ 20 billion in 2008. The corresponding figures for the higher education sector are US$ 10.3 billion in 2012 (E) with a rise of 12 per cent as compared to US$ 6.5 billion in 2008. The coaching institutes in India will witness a 17 per cent increase from US$ 0.3 billion in 2008 to US$ 0.6 billion in 2012 (E). Similarly, the Pre-schools market in the country will witness a rise of 36 per cent from US$ 0.3 billion to US$ 1 billion and the vocational training from US$ 1.6 billion to US$ 4 billion in 2012 (E).

"The Indian pre-school market is set to become the largest in the world. In India, the pre-school segment is currently worth US$ 750 million and is expected to reach US$ 1 billion by 2012," as told by Arun Arora, Chairman,Serra International Pre-Schools.

Private Equity (PE) Investments

The Private equity and venture capital investors have pumped US$ 93 million into 10 education companies by July 2011, and are bullish about the sector's prospects going forward according to Venture Intelligence. PE investment in the education sector increased from US$ 129 million in 2009 to US$ 183 million in 2010. The other large deals in the country include PremjiInvest's US$ 43 million investment in Manipal Education and India Equity Partners' US$ 37 million investment in IL&FS Education and Technology Services.

Government Initiatives/Policies

Union Budget 2012 - 2013 Highlights

Education

  • For the year 2012-13, Rs 25,555 crore (US$ 4.98 billion) have been allotted for RTE-SSA (Right to Education - Sarva Shiksha Abhiyan) which represents an increase of 21.7 per cent over the previous year allotment in 2011-12
  • 6,000 schools have been proposed to be set up at block level as model schools in the Twelfth Five Year Plan (2012-17)
  • Rs 3,124 crore (US$ 0.61 billion) have been provided for the RMSA (Rashtriya Madhyamik Shiksha Abhiyan) which is an increase of 29 per cent over BE 2011-12
  • In order to ensure a better flow of credit to students, a Credit Guarantee Fund has been proposed

Skill Development

  • National Skill Development Corporation has approved projects that are expected to train 6.2 crore people at the end of 10 years
  • The National Skill Development Fund has been allocated Rs 1,000 crore (US$ 0.19 billion) for the period 2012-13
  • To improve the flow of institutional credit for skill development, a separate Credit Guarantee Fund will be set up
  • "Himayat" scheme introduced in Jammu and Kashmir (J&K) to provide skill training to 100,000 youth during the next 5 years and the entire cost will be borne by the Government of India