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Education Sector in India

September, 2012


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 of schools and higher education, while the non-core comprises of coaching classes, pre-schools 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)
  • State Board

Market Size

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.

According to an industry chamber study, the size of the education sector is expected to double to US$ 50 billion by 2015. According to the report, the size of the sector currently is pegged at US$ 25 billion, with higher education market estimated at US$ 15 billion. The Government is planning to spend about five per cent of gross domestic product (GDP) in the next five years on education, as per the study.

In India, the pre-school segment is currently worth US$ 750 million and is expected to reach US$ 1 billion by 2012, said Arun Arora, Chairman, Serra International Pre-Schools.

The market size of K-12 sector is expected to reach US$ 34 billion in 2012, with a rise of 14 per cent, as compared to US$ 20 billion in 2008.

Vocational education/training is gathering 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.


The Indian education sector is also considered as one of the major areas for investments as the entire education system is going through a process of renovation, according to a report ‘Emerging Opportunities for Private and Foreign Participants in Higher Education’ by PricewaterhouseCoopers (PwC).

The Government of India has allowed foreign direct Investment (FDI) up to 100 per cent through the automatic route in the education sector.

According to data released by the Department of Industrial Policy and Promotion (DIPP), the education sector has attracted FDI worth Rs 1170.09 crore (US$ 221.38 million) in the month of 2012.

The PE and venture capital investors have invested US$ 93 million into 10 education companies by July 2011, and are bullish about the sector's prospects going forward, according to Venture Intelligence. Some of the major developments in education and training sector in India are as follows:

  • Biocon has entered into a partnership with Manipal Education Malaysia (MEM) for an internship and graduate employment program for students of Manipal International University, who will be trained and employed in Biocon's Malaysian factory
  • Nokia and Oxfam India have launched a fellowship to engage with youth on the theme of sustainable consumption. The initiative 'Create to Inspire' aims to bring together 300 youth from Delhi and Hyderabad and provide them a platform to use music, dance, theatre, drama, film and photography to redefine the consumption of limited resources
  • Tata Consultancy Services (TCS) and HDFC Bank have come together to invest in a sports education startup - Kids Out Of Home (KOOH). Both the firms have invested 15 per cent each in KOOH
  • Ma Foi Strategic Consultants plans to acquire Chennai-based e-learning company Axis-V, a 10-year-old company which provides e-learning solutions, language training and life skills training to the IT industry. Some of its clients include Acer, Cognizant and Ramco Systems
  • Hyderabad-headquartered Next Education Private Limited, a technology-driven education enterprise, is planning to raise Rs 150 crore (US$ 28.38 million) PE fund in 2012. The company, which was started in 2007, has so far invested Rs 300 crore (US$ 56.76 million) in research, content development and in rolling out its pan-India operations