In India, education is the key to the task of nation-building.

It is also a well-accepted fact that

providing the right knowledge and skills to the youth can ensure the overall national progress
and economic growth. The Indian education system recognises the role of education in instilling
the values of secularism, egalitarianism, respect for democratic traditions and civil liberties and
quest for justice.
The ongoing demand to strengthen the Indian education sector has opened up many avenues for
people of India as well as non-residents of India (NRI) to invest in education sector.
Market Size
The education sector in India is evolving, led by the emergence of new niche sectors like
vocational training, finishing schools, child-skill enhancement and e-learning.
According to a report Education in India: Securing the demographic dividend, published by
Grant Thorton, the primary and secondary education, or K-12 sector is expected to reach US$ 50
billion in 2015 from US$ 24.5 billion in 2008, growing at an estimated compound annual growth
rate (CAGR) of 14 per cent.
Market size of education sector in India
With a growth rate of 10 to 15 per cent expected over the next decade, education in India has
witnessed a series of developments and changes in the last few years, which has resulted in a
significant increase in the market size and investment opportunities as compared to previous
years.
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.

Government Initiatives to boost Investments
The education sector in India is also considered as one of the major areas for investments as the
entire education system is going through a process of overhaul, according to a report Emerging
Opportunities for Private and Foreign Participants in Higher Education by
PricewaterhouseCoopers (PwC).
Ever since, the Government of India has allowed foreign direct Investment (FDI) up to 100 per
cent through the automatic route, many people find it convenient and profitable to invest in
education sector.
Some of the initiatives taken by the Government for the infrastructural development of the
sector and to increase the business opportunity in education are:
For the year 2012-13, Rs 25,555 crore (US$ 4.63 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$ 566.69 million) have been provided for the RMSA (Rashtriya
Madhyamik Shiksha Abhiyan), which is an increase of 29 per cent over 2011-12
India and Republic of Korea have signed a memorandum of understanding (MoU)
for cooperation in the field of education
Prime Ministers fellowship scheme for doctoral research has been launched in New
Delhi by Mr S Jaipal Reddy, Union Minister for Science and Technology, according to
Confederation of Indian Industry (CII)
The Ministry of Human Resource Development (MHRD) plans to set up ten
community colleges in collaboration with the Government of Canada in 2012. The
Government of India has decided to set up hundred community colleges this year
The Government of India plans to set up an Indian Institute of Agricultural
Biotechnology at Ranchi with an investment of Rs 287.50 crore (US$ 52.15 million).
The Institute will be a deemed university and will have different schools to import
knowledge in genomics, bioinformatics, genetic engineering, nano biotechnology,
diagnostics and prophylactics and basic and social sciences and commercialization.
Government Initiatives
Initiatives taken by the government for the infrastructural development of education sector are:
Rise in budget allocation for education sector by 17% i.e. Rs 150 crore for establishing
new IITs and IIMs in India.
A proposal was proposed for setting up 6000 schools at block level as model schools in
the 12th Five Year Plan.
Fund of Rs 1000 crore has also been allocated to National Skill development Fund as an
initiative.
Provide incentives to private sector for creation of infrastructure for higher education
The government initiated measures to establish four regional centers of Indian Institute
of Mass Communication (IIMC) to promote excellence in journalism.
The Budget provisions earmarked for education of girl children should be enhanced from
Rs 1,265 to Rs 3,000 in 2012-13.
The allocation of Rs.636215 crore to UGC (University Grants Commission) which involves
the finances for deemed and central universities across India.
Survey by apex industry body, ASSOCHAM, predicts an investment of Rs. 4,500 crore
over next three years
To increase the IT spending from an estimated $356 million in 2008 to $704 million by
2012, reflecting in a Compounded Annual Growth Rate (CAGR) of 19 percent during
2007-2012


REASONS:
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, Indias 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.
Future of Indian education sector
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 Indias Education Sector.
There are clear investment opportunities for private players to enter the Indian education
space. The opportunity exists in all three segments schooling, higher education and vocational
training. Some success stories are Manipal University, Amity University and the Indian School of
Business. Public-private partnerships (PPP) arrangements, tax concessions for education and
encouraging foreign capital to build infrastructure in India would encourage the creation of new
capacities by the private sector.
Indias education sector is expected to witness huge investments from PE funds over the next
couple of years on the back of increased Government spending and expansion plans of private
players.

With increasing population in India, the demand for educational institutes has also augmented.
Today, the Indian education sector is one of the biggest education systems in the world. The
sector is one of the leading areas for investment opportunities.
The education sector in 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.
Invest in Indian Education Sector
India needs 1.2 million more teachers under the Right to Education Campaign, according to Shri
Kapil Sibal, Union Minister for Human Resource and Development. He also added that with 546
million people under 25 years of age, there is huge potential in India in the education sector that
needs to be tapped.
The country has been attracting foreign direct investments (FDIs) in education sector as well.
According to data released by the Department of Industrial Policy and Promotion (DIPP), FDI in
education sector stood at Rs 1170.09 crore (US$ 221.71 million) in the month of May 2012. The
Government of India allowes 100 per cent FDI in education sector through the automatic
route.
The countrys fast-growing education sector holds a potential to attract a US$ 100 billion
investment over the next five years, driven by demand for skilled professionals and need for
infrastructure development, according to research firms such as KPMG.
The education sector in India is expected to witness huge investments from PE funds over the
next couple of years on the back of increased Government spending and expansion plans of
private players.

Education in India is provided by the public sector as well as the private sector, with control and
funding coming from three levels: central, state, and local. The Nalanda University was the
oldest university-system of education in the world. Western education became ingrained into
Indian society with the establishment of the British Raj.
Education sector in India falls under the control of both the Union Government and the states,
with some responsibilities lying with the Union and the states having autonomy for others. The
various articles of the Indian Constitution provide for education as a fundamental right. Most
universities in India are controlled by the Union or the State Government.
Investments opportunities in Indian education sector
The Indian education sector has been recognised as a Sunrise Sector for investment in the
recent past. This recognition stems from the fact that the sector offers a huge untapped market
in regulated and non-regulated segments due to low literacy rate, high concentration in urban
areas and growing per capita income. The Government has also been proactively playing the role
of facilitator in this sector.
The higher education sector, owing to its huge potential, holds very promising prospects. With an
estimated 150 million people in the age group of 18-23 years, the sector offers one of the most
attractive yet highly complex market for the private/foreign players.
The Indian Education sector is characterized by a unique set of attributes:
Huge market size both in terms of number of students and annual revenues
A potential growth rate of 16% is expected over thenext 5 years
Significant activity in terms of new foreign entrants and participation is expected to
be witnessed in the years ahead
Accreditation is still not mandatory, however, reforms are in the pipeline to address
this issue
Private sector investment options in Indian education
The Government of India has set itself an aggressive target of achieving 30 per cent gross
enrollment ratio (GER) in Higher Education by 2020, which translates into doubling the GER in
the next 8 years.
As per recent estimates by National University of Educational Planning and Administration
(NUEPA), in order to achieve this target an additional investment of Rs 9.5 lakh crore, which
includes capital expenditure and operating expenditure, has to be made in the next 8 years. To
give a perspective, the total allocation to the education in India under the 11thFive Year Plan
(2007-12) was Rs 2.7 lakh crore out of which higher educations share was only about 30 per
cent.
The private sectors role in the higher education sector has been growing at a rapid pace over
the last decade and needs to further expand at an accelerated rate in order to achieve the GER
target.
Despite the huge potential in the higher education sector, not everyone has been able to achieve
success. The challenges/threats, which the private sector players face in India are significant and
therefore, approaching the market with a well thought-out strategy is advisable.
India has the third largest education system globally, after China and the US, with one million
schools and 20,000 institutes for higher education. The common mans dream of making a better
life for himself has made him focus more and more on education. Due to rising income level in
India, middle class is focusing more on providing quality education to their children.
There is a huge demand-supply gap in the Indian education sector. This has attracted many
private players to invest in education and training institutions with the aim of making the
candidate employable by training them in the right courses.
Importance of Private Investment in Education Sector
Education sector in India is finding it increasingly difficult to cope with the rising market demands
and competition from global educational institutions due to low investments. It has become very
imperative to have increased private investment to improve the infrastructure. The sector offers
opportunities to increase capital because education still lacks good-quality infrastructure in the
country and investors have the opportunity to build it. So, it is very beneficial to invest in
Indian education sector for the private players.
Private Equity Investors have already started investing in educational projects due to increasing
demand trend. Indias private banking giant HDFC (Housing Development Finance Corporation
Limited) has confirmed that Private Equity investment have seen a tremendous growth since
year 2005. HDFC has announced strategic plans to enter the education sector in India and
approved an investment of 100 crores.
With the rising population in India, the demand for educational institutes has also risen along
with it. The Indian education sector is one of the biggest education systems in the world today.
According to reports, the education sector in India is one of the leading areas for investment
opportunities. This is because the whole education system is being overhauled. The private
equity investment in the education sector has been to known to have reached US$ 190 million in
the year 2010. The private companies have understood the vast opportunity brought about by
the difference between demand and supply, since education is very important for Indians and
enjoys a great status in India.
Surveys have underlined the fact that India is one of the youngest countries in the world, with
60% of the population below 24 years of age. This is very good news and promises investment
opportunities in the already thriving
. With the growth in economy and improved technology, it has become a necessity to really
develop the Indian education system. Funds are still the chief worry in the market. The Indian
Government has forwarded many proposals for the developing the infrastructure of the education
system, which can be successful with the help of private industries.
In the tuition oriented education system in India, small and medium size institutions have found
a lot of success. However, since the young population is more than capable of paying good
money for higher education, the big and reputed private companies have started taking an
interest in the Indian education sector. The big companies have started coaching classes for
MBA, IAS and other entrance exam, throughout the country. This has helped in producing a lot of
teaching jobs all over the country. Many of the biggest corporate companies like Reliance, Nirma,
Tata and Zee Learn have taken advantage of the investment opportunities in this sector and
made very heavy investments.