FACILITATING FOREIGN DIRECT INVESTMENTS IN INDIAN BUSINESS AND INDUSTRY
FACILITATING FOREIGN DIRECT INVESTMENTS IN INDIAN BUSINESS AND INDUSTRY
The Indian education sector is at a crucial stage in its growth phase. The country’s demographic advantage of a large young population coupled with low gross enrollment ratios (GERs) presents a huge opportunity to players in the education sector.
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 man's 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.
The education sector 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 training.
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. India has the world’s largest population of about 500 million in the age bracket of 5-24 years and this provides a great opportunity for the education sector. The education sector in India is estimated at US$ 91.7 billion in FY18 and is expected to reach US$ 101.1 billion in FY19.
Number of colleges and universities in India reached 39,050 and 903, respectively in 2017-18. India had 36.64 million students enrolled in higher education in 2017-18. Gross Enrolment Ratio in higher education reached 25.8 per cent in 2017-18.
The country has become the second largest market for e-learning after the US. The sector is expected to reach US$ 1.96 billion by 2021 with around 9.5 million users
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.
The total amount of Foreign Direct Investment (FDI) inflow into the education sector in India stood at US$ 2.47 billion from April 2000 to March 2019, according to data released by Department for Promotion of Industry and Internal Trade (DPIIT).
The education and training sector in India has witnessed some major investments and developments in the recent past. Some of them are:
Various government initiatives are being adopted to boost the growth of distance education market, besides focusing on new education techniques, such as E-learning and M-learning.
Education sector has seen a host of reforms and improved financial outlays in recent years that could possibly transform the country into a knowledge haven. With human resource increasingly gaining significance in the overall development of the country, development of education infrastructure is expected to remain the key focus in the current decade. In this scenario, infrastructure investment in the education sector is likely to see a considerable increase in the current decade
Moreover, availability of English speaking tech-educated talent, democratic governance and a strong legal and intellectual property protection framework are enablers for world class product development.
The Government of India has taken several steps including opening of IIT’s and IIM’s in new locations as well as allocating educational grants for research scholars in most government institutions. Furthermore, with online modes of education being used by several educational organisations, the higher education sector in India is set for some major changes and developments in the years to come.
With an increase in the average Indian household, more money is being kept aside for education purposes. Also, because of the initiatives of the government, more students are enrolling themselves for higher education. This means that more colleges are needed to cater to these students. Also, the demand for education is inflexible; that is, no matter what, the education sector is not going to collapse.
Primary education is expanding. Many foreign schools are making their presence felt in India. Parents are enrolling their kids into international schools for better education directly from the primary level.
Technology-oriented courses are gaining in popularity due to the rising demand in these industries. The medical industry is also revamping itself. There is a need for more doctors and skilled professionals in this area. Thus, engineering and medical colleges are going to be in demand. The demand for management education is also rising. Many international management institutes are creating ties with Indian colleges or setting up their own centers in India.
Specialized courses, such as aeronautics and biotechnology, are also popular. There is immense scope in India for universities offering specialized courses and research potential. The R&D sector requires more expertise and quality professionals to cater to its design and needs.
Many foreign universities operate via the twinning mode as of now. This essentially means the collaborating institution can offer the curriculum of the other university in its first half. These students thus gain credits, which are transferable to the foreign university. This helps the students choose from an array of subjects and also complete a year in India itself. Thus, these programs are successful and present a good opportunity for investment.
E-learning and Distance learning programs are also gaining popularity. Many students and working professionals are taking these courses to get a quality education. The drawing factors for these programs are the world-class curriculum, comfort, and low costs.
As many Indians go to foreign shores for quality education, the market for foreign universities is very present in India. The government is also encouraging FDI in this sector to improve the quality of education in the country. 100% FDI is allowed in this sector as long as the rules and regulations are met.
Thus, this sector offers multiple benefits and is becoming a favorable area for investment.
In 2030, it is estimated that India’s higher education will:
Some of the other major initiatives taken by the Government of India are:
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