Start a Business in Education Sector in India

“India, first of all, came to the game with some just natural advantages: one, English-speaking population; two, real emphasis on education. You also had a country that is very instinctively able to globalize, take the best of the global world and meld it with their own culture.”

                                                                                    Tom Friedman, Columnist, the New York Times 

Mr. Manoj Kumar
Vice President
+919910688433
manoj@indiacp.com

When you hear of India being called a great country; the first thought that usually comes to the mind is of India being one of the most populated countries, or India having one of the largest geographical areas in the World. But there are other things too which contribute to making India one of the most talked about countries. One such fact is the Indian education system which is one of the largest in the World.

According to a report “Emerging Opportunities for Private and Foreign Participants in higher Education” by PWC; the Indian education Industry is one of the major areas for investment because it is going through a metamorphosis, a renovation process. The Annual Report 2010-11 of MHRD states that India has 544 university level institutions, which includes 261 state universities, 73 state private universities, 42 central universities, 130 deemed universities, 33 institutions of national importance and 5 institutions established under various state legislations. India also has 79 centrally funded institutions, which includes 15 Indian Institutes of Technology, 11 Indian Institutes of Management and 30 National Institutes of Technology. 

THE MARKET: AT A GLANCE

Education is one among the largest services market in India. Let’s have a look at some of the facts of online education and similar trend in India particularly non-core segment of Education Sector. 

• Coaching Institutes: This segment will witness a 17% increase by the end of 11th 5-year plan as compared to the figure of 2008. 

• Vocational Training: Owing to the significant improvement this sector is witnessing in respect of methodology and technology; it is gathering huge investments from the corporate and private equity firms. All this has been possible due to the enhanced demand and supply of online and correspondence courses, facilitation by government and quality improvement. 

• Education through Television: Media, Telecommunication and Education players are now providing education through TV by taking digital education Business-to-Customer (B2C) and helping children study while watching TV. 

• Competitive Exam Service: “iExam” is one such step by Bharti Airtel’s DTH service. 

• Game based Learning: Games on the lines of NCERT and International Baccalaureate curricula covering subjects such as Mathematics, English, Science, General Knowledge and; Environmental studies are soon picking up. NCR based company “Digiwise Knowledge” pioneered the concept. 

• Interactive Learning platform for K12 students: A Hyderabad based Education Service Company “Edutor technologies” is developing a proprietary touch-screen device which comes pre-loaded with educational content which can be updated with the student’s promotion to a higher class. The product which is being marketed only in Hyderabad will soon spread over other parts. 

• Online Education: E-learning market in India was valued at Rs. 1841 crores in 2010-11 and is expected to increase at a rate of 20%. Increasing Internet availability and rising demand are going to take this segment to its heights. Large investments have already poured in which makes it clear that there are going to be huge business opportunities in e-learning segment in the near future. 

REGULATIONS IN THE INDIAN EDUCATION SECTOR 

Education Sector of India operates in a highly regulated framework. The regulation starts at the Central level gets decentralized at State level. Hence, the regulations differ from one state to another. 

• K 12 Sector: This fragment is governed by the “School Education Act” of the respective states and CBSE Rules and regulations concerning affiliation and rules of any affiliating body. 

Who qualifies to be affiliated with CBSE? 

• Non Profit Trusts & Societies registered under Societies Registration Act 1860 

• Companies registered under Section 25 of the Companies Act, 1956 

Income Tax Exemptions are available to Schools and Institutions for higher education set up trust provided they comply with Section 11 of Income Tax Act, 1961. Trust has to ensure that its main activity is the noble purpose of promoting education and not earning profits. 

Professional Institutions: Professional councils like the All India Council for Technical Education (AICTE) regulate the professional and technical educations in India. Setting up of educational institutions requires huge funds after all and your investment might not be sufficient. University Grants Commission (UGC) or other schemes of Government may seem like the light at the end of a tunnel. 

PROSPECTS OF FOREIGN INVESTMENT

The central government is ever enthusiastic to welcome overseas investment. It is because, not only the government’s expenditure will reduce but the development of education sector will take a better shape. As the foreign participation increases, one can hope for the regulations to mellow down a bit. The entry of foreign participants is proposed to be covered by the new “Foreign Education Providers (Regulation for Entry and Operation) bill which is aimed at: 

1. Regulating the entry and operation of foreign education Providers. 

2. Awarding them the status of “deemed universities”. 

3. Limiting the commercialization of higher studies. 

Many foreign educational institutions are operating in the country offering different types of courses and programs and there is no regulation presently in place to control and curb the operation of such institutions with academic credentials which may not even be satisfying in their own country. 

GOVERNMENT: THE FACILITATOR

The role of Central Government is of paramount importance in the evolution and monitoring of the education policies and programmes. The following initiatives have been taken by the Government:- 

• Right to Education- Sarva Siksha Abhiyan: Rs. 25,555 Crore have been allotted for the year 2012-13 which is a 21.7 increase from the previous allotment. 
• Model Schools: 6,000 schools have been proposed to be set up at b lock level in the 12th five year plan. 
• Rashtriya Madhyamik Siksha Abhiyan: Rs. 3,124 crore have been provided which is a 29% increase over the previous budget allotted 
• IITs and IIMs: budget allocation for the education sector has been increased by almost 17% i.e. Rs. 150 Crore for establishing new Indian Institutes of Technology and Indian Institutes of Management. 
• Excellence in Journalism: Measures have been taken to establish 4 regional centers of Indian Institute of Mass communication. 
• Financing of Deemed and Central Universities: Rs. 6,36,215 Crores have been allocated to University Grants Commission (UGC). 
• Collaboration with European Union: India and EU have joined hands to launch a skill development project in India where EU will invest 6 million euros over a span of four and a half years. 
• Strategic Partnership with US: India will set up a higher education platform to enhance collaboration in research, skill development and student and faculty exchange. 

THE BIG PICTURE: WHAT LIES AHEAD

India is going to focus on vocational education and training to increase its formally skilled workforce by about 70 million people in the next five years. Huge changes are expected to occur in the higher education segment in the coming years. Foreign partnerships will enter the country to bring new ideas while Indian entities will work on improvising the existing methodologies of teaching to make India an even better place for education. 

Education is one phenomenon which is ever evolving and Indian education sector is not behind. It offers huge business opportunities for those eager to invest. Availability of funds and a noble mindset to promote quality education can take the investor to places.