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Education Sector in India

September, 2014

Introduction

Education is one of the most important requirements for a nation. The Government of India realises its importance and hence has taken several initiatives to boost the growth of this sector, including setting up of several universities, deregulating policies and making significant pacts with foreign nations.

A Deloitte study has recognised the Indian education sector as a 'sunrise sector' for investments. This is because this sector offers huge potential to investors in the regulated as well as non-regulated markets. The vast diversity in ethnicities coupled with varying demographics has prompted different players to invest in the sector.

The education sector in India is making rapid strides towards providing quality education. Ten Indian institutes have made it to the top 100 in the Asia University Rankings 2014 published by Times Higher Education as compared to three in 2013. Also recently, Indian Institute of Management Bangalore (IIM-B) became the first B-school from India to join edX as a new 'Contributing Member'.

Market size

According to a report by rating agency CARE Ltd, the market size of the Indian education industry was pegged around Rs 3.83 trillion (US$ 62.34 billion) in FY14. Higher education contributes 59.7 per cent of the market size, school education 38.1 per cent, pre-school segment 1.6 per cent, and technology and multi-media the remaining 0.6 per cent.

Presently, India has around 1.4 million schools and more than 35,000 higher education institutes. It has also been estimated that more than 85 per cent of the students are enrolled in bachelor's degree programmes and about one-sixth of all Indian students are enrolled in Engineering/Technology degree programmes.

According to the Department of Industrial Policy and Promotion (DIPP), the Indian education sector received foreign direct investment (FDI) amounting to US$ 960.82 million in the period April 2000 - July 2014. The deregulation of FDI norms has also encouraged many foreign institutions to come and establish vocational training institutes in the country.

Investments

As private universities look to invest in the Indian higher education system, they have ushered in a wave of big money. Some notable names include Ashoka University, Shiv Nadar University, BML Munjal University, OP Jindal Jindal Global University, and many more.

Some of the other noteworthy investments in the recent past in the education and training sector are as follows:

  • National Geographic, through the Explorer magazine for children, is looking at Indian schools to increase its global footprint and excite students in science. The magazine had a soft launch in early 2013 and since then has roped in 55 schools which are using content provided by National Geographic Explorer.
  • Yamaha Motor India Ltd inaugurated its technical school at the Don Bosco Technical School (DBTS), Liluah. The move is part of Yamaha's CSR activities and aims to provide training to underprivileged youth and those from the economically weaker sections of society. The youth will be imparted technical training and later employed across Yamaha dealerships as two-wheeler technicians.
  • Tech Mahindra has inked a pact with US-based Wichita State University and will collaborate with its National Institute for Aviation Research (NIAR), the largest academic aviation research and development (R&D) institution in the US, on multiple areas of engineering including composites, advanced materials and structural testing. Tech Mahindra would gain access to the university's extensive research and test lab capabilities and have the opportunity to train students before they enter the workforce.
  • NIIT University (NU) has entered into a Memorandum of Understanding (MoU) with the University of Missouri-Kansas City's (UKMC) School of Computing and Engineering (SCE) to offer a five-year programme, which includes B.Tech degree from NU and Masters of Science in Computer Science (MSCS) from SCE. The two institutions will also carry out research activities through student and faculty exchange in the area of computer science and computer engineering.
  • Great Lakes Institute of Management has launched a nine-month course for healthcare management to teach administration to doctors running their own health centres. The programme is also aimed at non-medical professionals in healthcare.

Government Initiatives

The Government of India has allocated Rs 500 crore (US$ 81.38 million) in the Union Budget 2014-15 to set up five more IITs in Jammu and Kashmir, Chhattisgarh, Goa, Andhra Pradesh and Kerala; and five new IIMs in Himachal Pradesh, Punjab, Bihar, Odisha and Maharashtra.

Various state governments have also changed their laws to attract private funds into education. For instance, the Uttar Pradesh government established the Amity, Sharda and the Galgotias universities by amending state laws.

Some of the other recent initiatives taken by the government in recent times are as follows:

  • The Ministry of Railways has taken some initiatives to help its staff continue their education. It has proposed to set up an innovations incubation centre to harness the ideas generated from the staff and convert them into practical solutions. As part of this exercise, it has also proposed to set up summer internships for the undergraduates of engineering and management studies.
  • India has become the first country to ratify the Marrakesh Treaty to facilitate access to published works for persons who are blind, visually impaired, or otherwise print disabled. This would go a long way in establishing equal rights and opportunities for education and employment for the blind, visually impaired, or otherwise print disabled people.
  • The Ministry of Micro, Small & Medium Enterprises (MSME) and Samsung announced a partnership to set up technical schools across the country. According to the MoU, initially 10 such schools will be set up in Delhi, Ahmedabad, Aurangabad, Bhubaneswar, Chennai, Hyderabad, Kolkata, Ludhiana, Mumbai and Varanasi.
  • A national multi-skill programme called 'Skill India' is proposed to be launched as announced by the Finance Minister in his Budget Speech 2014-15. The programme would train the youth with an emphasis on employability and entrepreneur skill.

Road Ahead

With the government allocating funds for the setting up of IITs and IIMs in new locations in the recently announced Union Budget 2014-15 and foreign companies investing heavily to establish education and training institutes in the country, the future of this sector in the next few years seems bright. In the search of quality education, the current Five-Year Plan proposes to provide inclusive and qualitative expansion of higher education in India.

Exchange rate used INR 1= 0.0162 as on September 26, 2014

References: Ministry of Finance, Press Information Bureau (PIB), Media Report, Ministry of Education, Department of Industrial Policy & Promotion (DIPP)