6 Reasons Entrepreneurs Should Invest in the Indian Education Sector

Although education cannot be considered a business, it must be run like one to ensure the efficiency and effectiveness of the program
6 Reasons Entrepreneurs Should Invest in the Indian Education Sector
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Managing Director, Strategum Eduserve
4 min read
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The Indian education space is growing at an astronomical pace with a projected market industry size of USD 5.7 billion by 2020. The segments include preschools, K-12 Schools and, Higher and Vocational Education. If one considers the opportunity to invest in online and distance education, learning materials, edu-tech ventures and ancillary industries the market size is probably one amongst the top 5 industries in India. There are various reasons for entrepreneurs to invest in the education industry; a few of which are listed below:

Government support for Investment in Pre- Schools

The Government spends in Human Resource Development was budgeted at INR 80,000 crore in last year's union budget. An increase of a significant 9.90% can be seen with respect to the previous year. Over 50% of this budget was towards the school education sector. More importantly, the HRD Ministry's Budget does not include the pre-school segment, which falls under a different Ministry at the Centre. The Government initiatives and investments open up huge opportunities for serious and committed companies to transform our country and convert this demographic burden to demographic dividend.

Anticipated Flood of Opportunities

The pre-school and school segment is the most attractive investment domain at present. There are about 1.80 million schools in India, out of which CBSE and ICSE schools are only about 20,000. The sudden inclination towards International Schools is enormous. However, these schools are merely 500 in number at best. With the initiatives of CBSE, awareness of parents and heightened media attention, a large number of State Board Schools could upgrade themselves to CBSE Board. This opens new vistas for edu-preneurs in the sector.

Constant Character of the Indian Education Sector

Over the last century, the education sector in India has not shown much change in character. While the world has transformed, Indian classrooms still reminiscence of the factory system of the industrial age. Education must reflect the transformational changes in our life - the way we communicate, collaborate, think, work, network, and celebrate. Owing to the changing demands of the education sector a teacher in a classroom can no longer resemble a sage on the stage like earlier times. It is a matter of time, when students in primary schools powered by tablets, internet and data will begin questioning the relevance of schools if they do not re-invent themselves. The urgent need to transform the education space creates a vast opportunity for everyone associated with it right from policy-makers to end consumers.

A Noble Cause

Education provides a wonderful opportunity and more importantly the responsibility to educate and nurture our nation's children and youth. In our culture, education has always been considered as a charitable and noble cause. Although education cannot be considered a business, it must be run like one to ensure the efficiency and effectiveness of the program. For instance, the high cost of school education is a result of operational inefficiencies rather than the cost of services.

Delayed Gratification Yet High Returns

It is lucrative to invest in the education sector only if the investor believes and is committed to the cause for a long term. The return on investment is significantly high and is sufficient to make the project viable in a long term. It is important to understand that education projects have a long gestation period and can return an IRR (Internal Rate of Return) of approximately 30% or more over a ten-year period.

Access to Diversified Sectors with High Business Potential

The ancillary products in the education space such as uniforms, textbooks, notebooks, stationery, etcetera, is highly fragmented and unorganized. This is a pain point for many schools and college principals. With the help of technology, e-Commerce and better logistics management this sector has immense potential. There is a reasonably good scope for the provision of affordable and targeted services such as advertising, event management, Public Relations and Digital Marketing for education institutions. For instance, out of 20,000 CBSE Schools, assuming 2000 schools would spend an average INR 5 lakhs for their annual day each year, the business potential for organizing an annual day is INR 100 crores

Learning is a natural and elementary need of human beings and therefore the industry of education will always see growth. The Government policies are sure an impediment to private investment but sooner rather than later, it is anticipated that the sector would be liberalized to a larger extent paving a path for a 'Better India'.

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