The Indian education system, one of the largest in the world, is divided into two major segments core

and non-core businesses. While, the core group has schools and higher education, the non-core business consists of pre-schools, vocational training and coaching classes.

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 country 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 five institutions established under various state legislations, according to the Ministry of Human Resource Development (HRD) Annual Report 2010-11 The country has around 79 centrally funded institutions, which includes 15 Indian Institutes of Technology (IITs), 11 Indian Institutes of Management (IIMs) and 30 National Institutes of Technology (NITs).
India is a country with the second largest population base in the world. Of this, 572 m people, fall in the age group of 0-24 years. And this population is the target for one of the fastest growing sectors of the country. We are talking about the Indian education sector, which has a student strength of around 230 m currently

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.

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.
Government Initiatives
The Right to Education (RTE) Act is being implemented with effect from April 1, 2010 through the Sarva Shiksha Abhiyan (SSA). For 2012-13, I have provided Rs 25,555 crore for RTE-SSA. This is an increase of 21.7 per cent over 2011-12. In the Twelfth Plan, 6,000 schools have been proposed to be set-up at block level as model schools to benchmark excellence. Of these, 2,500 will be set up under Public Private Partnership. The Rashtriya Madhyamik Shiksha Abhiyan (RMSA) was launched in March, 2009 to enhance access to quality secondary education. In 2012-13 allocated Rs 3,124 crore for RMSA which is nearly 29 per cent higher than the allocation in 2011-12

The education sector received a hike of about 18 per cent in the budgetary allocation for 2012-13 with a plan outlay of Rs 61,427 crore (US$ 10.92 billion) in which 22 per cent increase has been

announced for the Sarva Siksha Abhiyan. Rs 15,458 crore (US$ 2.74 billion) has been earmarked for higher education while school education has received Rs 45,969 crore (US$ 8.17 billion).

Fund of Rs 1000 crore has also been allocated to National Skill development Fund as an initiative. The Budget provisions earmarked for education of girl children should be enhanced from Rs 1,265 to Rs 3,000 in 2012-13 The private education sector is estimated to reach US$ 70 billion by 2013 and US$ 115 billion by 2018

SECTOR FACTS

FDI inflows in the education sector during the period April 2000 to March 2012 stood at US$ 515.15 million, according to the Department of Industrial Policy and Promotion (DIPP) According to the 2011 census, the total literacy rate in India is 74.04 per cent. The female literacy rate is 65.46 per cent and male literacy rate is 82.14 per cent

The government allows 100 per cent FDI in the education sector.

In recent months, The education segment has also seen the rising interest of private equity players. India-focused PE firm Gaja Capital Partners invested 8.25 million dollars in Career Launcher. Similarly, SAIF Partners invested 10 million dollars in the English training academy Veta and ICA Infotech. Some of the other listed companies in the education segment are Educomp Solutions, which posted a return of 374 per cent. Everonn Systems, which got listed in August 2007, gave a return of 130 per cent in just five months. Not far behind are the older horses such as Aptech and NIIT, which fetched returns of 162 per cent and 124 per cent last year. He also added, In the next five years, I dont see any reason why we shouldnt be looking at a thousand crore market.
. And the Indian government is doing all it can to support and boost this number. The budget allocation for education was increased by six times in 11th 5-year plan as compared to 10th 5-year plan. On the whole, the Indian Education Sector is valued at US $ 80 bn currently.

PORTERS FIVE FORCES OF MODEL ON EDUCATION INDUSTRY 1.Threat of new entrants o o o o High capital requirement Weaker earnings Enrolment drops Requirement and restrictions imposed by accrediting association

2.The intensity of competitive rivalry o approximately 4000 degree granting colleges and universities

3.The bargaining power of customers (buyers)

o In todays information age, the contents of an undergraduate record of course descriptions is only a mouse click away. School search and evaluation data is a frictionless, symmetrical and essentially free process o This buyer characteristic limits the effective power any one specific student may have in terms of negotiating tuition rates, admission requirements and other amenities

4.The bargaining power of suppliers

o few suppliers to an industry and these suppliers sell an essential component or service to the industry, then supplier power will be high relative to other industries

5.Threat of Product or Service Substitution

o the variety of educational products is extensive and continues to increase as influenced by the exponential advances in information technology o the process of transferring between universities or colleges is relatively fluid within the India o
o India has the third largest education system globally, after China and the US, with one million schools and 20,000 institutes for higher education and 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 five institutions established under various state legislations. On the whole, the Indian Education Sector is valued at US $ 80 bn currently India is a country with the second largest population base in the world. Of this, 572 m people, fall in the age group of 0-24 years which has a student strength of around 230 m currently There is a huge demand-supply gap in the Indian education. 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 and quality education. The education sector received a hike of about 18 per cent in the budgetary allocation for 2012-13 with a plan outlay of Rs 61,427 crore (US$ 10.92 billion) in which 22 per cent increase has been announced for the Sarva Siksha Abhiyan. Rs 15,458 crore (US$ 2.74 billion) has been earmarked for higher education while school education has received Rs 45,969 crore (US$ 8.17 billion). The education sector received a hike of about 18 per cent in the budgetary allocation for 2012-13 with a plan outlay of Rs 61,427 crore (US$ 10.92 billion) in which 22 per cent increase has been announced for the Sarva Siksha Abhiyan. Rs 15,458 crore (US$ 2.74 billion) has been earmarked for higher education while school education has received Rs 45,969 crore (US$ 8.17 billion). The Rashtriya Madhyamik Shiksha Abhiyan (RMSA) was launched in March, 2009 to enhance access to quality secondary education. In 2012-13 allocated Rs 3,124 crore for RMSA which is nearly 29 per cent higher than the allocation in 2011-12 In the Twelfth Plan, 6,000 schools have been proposed to be set-up at block level as model schools to benchmark excellence. Of these, 2,500 will be set up under Public Private Partnership. The government allows 100 per cent FDI in the education sector and FDI inflows in the education sector during the period April 2000 to March 2012 stood at US$ 515.15 million. The education segment has also seen the rising interest of private equity players. Indiafocused PE firm Gaja Capital Partners invested 8.25 million dollars in Career Launcher. Similarly, SAIF Partners invested 10 million dollars in the English training academy Veta and ICA Infotech. Indias private banking giant HDFC 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.

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