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Snapshot: Education Sector in India

Introduction
Education is the harbinger of socio-economic transformation and plays a key role in India’s emerging
knowledge-based economy. The country has come a long way since western education systems were
introduced and the current literacy rate stands close to 75%. The gross enrolment ratio in higher
educational institutions is also gradually gaining and is presently estimated around 12%.

India is now a recognised source of skilled professionals and is considered as an important contributor to
the global knowledge pool, primarily owing to the affordable and the high quality of education. In India,
education is now considered a requisite investment rather than an unavoidable expense.

The domestic primary education segment is characterised by a strong presence of the public sector by
way of proactive measures to encourage enrolment. These include launching EDUSAT, a satellite
exclusively for education, and initiating schemes like “Sarva Shiksha Abhiyan” and the “National Literacy
Mission”. With such measures in place, about 99% of the rural population has access to primary schools
within a 1-km radius and the school dropout rates have reduced to 13% from 25.55% in 2007-08.

On the other hand, higher education in India is presently the turf of private players and accounts for over
75% of the total number of higher education institutes. Low public spending and centralised governance
are seen as the key factors that have paved the way for private players to tap the huge potential in this
segment.

Increased public-private participation is seen as a way forward to bridge the supply-demand gap
especially in the higher education sector. Government has also relaxed norms to help foreign direct
investments in the sector.

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Education Sector – Structure
The Indian education system is organised and is classified as follows:

Education System

Formal Education System Informal Education System

Pre-Schools

K12 Schools Higher Education E-learning

Vocational Training
Elementary Secondary
(grade 9 to 12)
Coaching Classes

Primary Upper primary

(KG to grade 5) (grade 6 to 8)

Source: eRPI

• Formal education system is a state subject and has the presence of both public and private
players
• While K12 schools have to be affiliated to Government recognised boards, higher education is
governed through universities and councils
• K12 schools cater children in age group 3 -17 years; some of the K12 boards recognized by state
or central Government include:
o The Central Board of Secondary Education
o The Indian School Certificate Examinations Board
o The State Government Boards such as SSLC (Secondary School Leaving Certificate) or
Matriculate
o National Open Schools
o International Schools

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 • Higher education includes graduates and post graduate courses
o The union government has mandated University Grants Commission (UGC) as the national
level body established to maintain quality standards across universities and general colleges
in India
o The All India Council for Technical Education (AICTE) is the statutory body for technical and
management education in India
o Some of the other education councils include Distance Education Council, National Council
for Teacher Education and Medical Council of India
• Informal education system which includes pre-school, e-learning, vocational training and
coaching classes is not governed by any regulatory body

Education Sector - overview

• The Indian education industry was valued at around INR 3,545 billion in 2009-10 and is expected
to grow at a CAGR of close to 11% in the coming years
• Public spending on education hovers around 3.5% of India’s GDP and is estimated around INR
1,865 billion; K12 segment accounts for over 70% of the overall public spending in the education
sector
Indian Education Market: Break-up by segments, 2009-10

India education market : INR 3,545 billion

Informal
16.1%

Private
Government 59.7% K12
40.3% 30.5%

Higher education
13.1%

Note: Excluded overseas higher education market

Source: eRPI

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• Formal education segment comprising of K12 schools and higher education accounts for over
70% of the private education market
• The K12 education sector was valued at over INR 1,000 billion in 2009-10 and expected to grow
at a CAGR of close to 15% per annum during 2009 and 2012

K12 education: Number of recognised institutions in India, 2006-08 (000 nos.)

Category 2006-07 2007-08

Primary/ Junior basic schools 756.9 785.9

Middle/Senior basic schools 300.0 320.3

High schools/Higher secondary/ Intermediate/
165.0 171.9
Pre-Degree/ Junior Colleges
Total 1,221.9 1,278.1
Source: Ministry of HRD

• Private schools account for just around 7% of the total number of K12 institutions in the country,
however, due to issues of quality of education and service, private schools are relatively more
popular than public schools especially in urban areas
• The total number of students enrolled in K12 schools is estimated around 220 million, of which
40% of enrolments is accounted for by private institutions
• Higher education in India comprises of post-secondary education in different subjects and is
governed by around 504 universities and university-led institutions across the country
• Higher education market comprises of around 26,000 colleges for general and professional
education with a significant presence of private players especially in professional courses such as
engineering, medicine and management
• Private institutes account for over 75% of the total number of higher education institutes in the
country
• The domestic higher education market (private) was valued at around INR 465 billion in 2009-10
and is expected to grow at a rate of 13% per annum during 2009 and 2012
• About 50% of the total medical seats and 80% of the total engineering seats come under private
sector

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 Private higher education market: Break-up by education streams, 2009-10

Total INR 465 billion

Management Others*
10% 1%

Medicine
5%

Engineering
84%

Source: eRPI
Note: *Others include arts & science

• The informal sector focuses on imparting cognitive and vocational skills and is largely fragmented
• The private informal education market is valued at around INR 570 billion (2009-2010) and is
expected to grow at a CAGR of 11% during 2009 to 2012

Private informal education: Break-up by segments, 2009-10

Total INR 570 billion

Others* Preschools
E-learning 7%
15%
2%

Vocational
training
14%

Coaching
classes
62%
Source: eRPI
Note: *Others include test preparation

• The coaching sector which prepares students for competitive examinations is a regional and
highly fragmented sector
o The sector was valued at over INR 350 billion in 2009-10 and growing at a rate of 13%
annually

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 • The pre-school segment is also largely fragmented and was valued at close to INR 40 billion
o A number of corporate players are now entering the pre-school segment and are establishing
a network of preschools across the country
• Vocational training institutes develop self-employment skill sets through an array of courses. The
vocational training institute market was valued at around INR 80 billion
o Public spending on vocational training is minimal and is primarily done through public sector
Industrial Training Institutes (ITI’s)
o There are about 2,000 public sector ITIs and around 5,000 private industrial training centres
across the country. Apart from the industrial training, vocational training has spread across
new fields like financial services, retail, media and hospitality
• The e-learning market includes multimedia and online tutoring in private schools, internet and
computer technology in public schools and online courses at graduate and post graduate levels.
The e-learning market was valued at around INR 11 billion in 2009-10

Key Players
The Central Government mandates all formal education institutions in India to be run as “not-for-profit”
centres under a society or a public trust. To cater to the huge gap in demand-supply, many established
institutions in the K12 segment are now establishing schools in newer markets to reach to a larger
population.

The sought-after institutions of higher education across different streams of education in India include:
Stream of
Institutions
Education
Loyola College, Chennai, Lady Shri Ram College for Women, Delhi, St. Stephen’s
Arts
College, Delhi, St. Xavier’s College, Mumbai
Loyola College, Chennai, St. Stephen's College, Delhi, St. Xaviers College, Kolkata, St.
Science
Xaviers College, Mumbai, Presidency College, Kolkata
Shri Ram College Of Commerce, Delhi, St. Xavier's College, Kolkata, Loyola College,
Commerce
Chennai, Christ College, Bangalore, Lady Shri Ram College for Women, Delhi
National Law School of India University, Bangalore, National Academy of Legal Studies
Law and Research University, Hyderabad, Faculty of Law, Delhi University, National Law
Institute University, Bhopal, ILS Law College, Pune
Indian Institute of Technology, Delhi, Indian Institute of Technology, Kharagpur, Indian
Engineering Institute of Technology, Kanpur, Indian Institute of Technology, Chennai, Indian Institute
of Technology, Mumbai
All India Institute of Medical Sciences, Delhi, Christian Medical College, Vellore, Armed
Medicine Forces Medical College, Pune, Jawaharlal Institute of Post Graduate Medical Education
and Research, Puducherry, Maulana Azad Medical College, Delhi
Source: Secondary sources

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A number of corporate players have entered the informal education segment. The noted players in the
segment include Aptech Limited, Educomp Solutions Ltd., Everonn Education, NIIT

Informal education: Financial data (Sales turnover) of key corporate players

2008-11 (INR Billion)

2009-10 2010-11
Aptech 1.6 2.3
Educomp 8.7 n.a
Everonn 2.1 3.0
NIIT 6.4 6.7
Source: Company annual reports

Government Initiatives
Over regulation and outdated curriculum have been serious concerns in the education sector and the
Government has initiated a number of programmes to address the issues. Some the notable initiatives
include:
• The Right of Children to Free and Compulsory Education (RTE) Act, 2009 which provides for
Free and Compulsory education to all children of the age of six to fourteen years
• Formulation of a policy framework for Public Private Partnership in school education
• Proposal for establishment of 10 new National Institutes of Technology (NITs) and 14 Innovation
Universities apart from new IIM’s, IIT’s and central universities
• Providing broadband internet connectivity to around 20,000 colleges/university departments and
2,000 polytechnics
• Approval of 48 model degree colleges to be set up in educationally backward districts in India by
University Grants Commission (UGC) in August 2011
• Sanction of financial assistance to the tune of INR 2.28 billion to 14 engineering colleges in
Karnataka under the Technical Education Quality Improvement Programme

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Upcoming Projects and Investments
Some of the recent developments in the education sector are,
• Gloriole New Vision Academy (GNVA) based in Noida, accredited by the Northwest Accreditation
Commission of US, has proposed to open 100 K-12 American high schools and 300 online learning
centres across India
• Tata Interactive Systems (TIS) is to set up pre-schools across India at an investment of INR 10 billion.

Other developments in the education sector are listed below:

Investment
Company/Year Details
(INR billion)
To open 20-30 Billabong High
Kangaroo Kids Education Ltd (KKEL) / Jun
2010
International Schools and 400 n.a
preschools by 2015
To expand management and creative
Centum Learning of the Bharti Group / Jul
2010
training institute network to cover 8 1.0
more locations by Mar 2013
To increase the number of K-12 schools
DRS Group / Jul 2010
to 75 by 2015
5.0
To set up an additional 100 schools in
Shemford Group / Jan 2011 the next four years in addition to the 15 15.0
schools in operation
Beacon (subsidiary of Educomp) in
To develop e-learning platforms over
association with Great Lakes Institute of 1.5
the next five years
Management, Chennai / May 2011
Source: Secondary sources

Trends and Developments

• The interaction between higher education institutions and the industry has increased manifold
and a number of universities and education councils are designing courses that are career-centric
• State-of-art technologies and contemporary teaching method using 2-D and 3-D animations are
being introduced in a number of K12 schools
• Introduction of satellite-based Very Small Aperture Terminal (VSAT) technology has made it
possible for a teacher and students to interact across various geographic locations
• A number of well-known foreign universities have evinced interest in setting up campuses in India
to cater to the demand for quality education

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