1) How would you define the current state of Indian Higher Education Market ?
The Higher education sector is in a churn. On the one hand there is a low GER(Gross Enrollment Ratio) while on the other, we have seen the closure of a number of private technical and management institutions. Clearly while the demand supply gap is large, the point to understand is that the huge demand is for quality education. Government colleges that make up the back bone of the system are woefully lacking in quality. While the Rashtriya Uchhatar Shiksha Abhiyan can potentially address this issue, the challenge will be for State Governments to provide the match resources.
There has been tremendous growth in education service and skills and vocational education training providers who fall outside the restrictive not-for-profit regulatory regime but this is a very a fragmented market.Online education is a fast growing trend as a large number of foreign institutions provide on-line courses.
2)What is your take on the GER(Gross Enrollment Ratio) target of 30 that our Government is planning to achieve by 2020 and what according to you are the most important steps that has to be taken by the Government to achieve this GER target?
The current GER is about 18% which is still lower than the average enrollments in most developed countries. India currently has ~33000 colleges and ~700 universities. Increasing GER to 30% by 2020 will require creation of additional enrollment capacity at an unprecedented scale. Accordingly, 12th five year plan envisages creating additional enrollment capacity of 10 million which is expected to raise GER to ~22-25% in 2017-18. This will be the real challenge and the key issue is whether the Government alone can create this huge capacity. There is therefore the need for a continued and growing role of the private sector in education. However, the regulatory regime that disallows any profit making entity from setting up an institution and makes entry of foreign educational institutions very difficult needs to be reviewed. CSR alone will not be able to generate the level of resources needed to set up quality institutions. Another area to promote is distant and online education, which has been growing quite rapidly with a number of innovative product offerings designed to keep fees low and ensure greater flexibility.Equally, issues of quality, relevance and accreditation need to be addressed.
3) Which section presents the best opportunity for Private Investments -Higher Education, Vocational Training or Education Services ?
Vocational training and education services face lesser regulatory restrictions and can be set up as for profit ventures as against Higher education where regulations permit only certain type of not-for-profit entity structures (sec.25, Trust and society). And we have seen this is the large number of private initiatives in this space. Hence, Vocational Training or Education Services present better opportunities for Private Investments than the formal higher education space.
Having said that, it must also be borne in mind that this space is predominantly occupied by small and local firms that can operate on very low margins making scaling up a great challenge.
4) Out of the various possible formats of PPP (Public Private Partnerships) in Education, which according to you is the most feasible one for Foreign entrants keeping in mind the complex Indian Higher Education system?
It is essential for a foreign educational institution to find a good Indian institution to partner with. This is important not only for regulatory compliance but also because of understanding of the domestic context and requirements. The partnership need not be a JV, which has enormous regulatory challenges but can be academic and there are a number of models – from twinning to academic collaboration.
5)The Two most important issues for Foreign Entrants?
Two important issues for foreign entrants:
– Collaborating by having the correct tax and regulatory compliant structure that safeguards the interest of all stake holders including the Indian and foreign institutes,
– Collaborating with the right Indian partner who meets all eligibility criteria including proven track record and reputation in the home.
Mr Dhiraj Mathur is an Executive Director with PwC, India Firm, since September 2007. He leads the Education practice at PwC. He has been the lead advisor to many foreign and Indian corporations, universities and educational institutions on their India entry plans and joint ventures. As Chief of Staff to the Minister of Human Resources Development, he was associated with formulating federal policy in Education – key scheme launched was “Education for All”. He has international experience in advisory operations in foreign direct investment