India’s US$40b education market is experiencing a surge in investment. Capital, both local and international, and innovative legal structures are changing the face of this once-staid sector

The liberalization of India’s industrial policy in 1991 was the catalyst for a wave of investment in IT and infrastructure projects. Rapid economic growth followed, sparking a surge in demand for skilled and educated workers. This, combined with the failure of the public system to provide high quality education and the growing willingness of the burgeoning middle class to spend money on schooling, has transformed India’s education sector into an attractive and fast-emerging opportunity for foreign investment.

Despite being fraught with regulatory restrictions, private investors are flocking to play a part in the “education revolution”. A recent report by CLSA (Asia-Pacific Markets) estimated that the private education market is worth around US$40 billion. The K-12 segment alone, which includes students from kindergarten to the age of 17, is thought to be worth more than US$20 billion. The market for private colleges (engineering, medical, business, etc.) is valued at US$7 billion while tutoring accounts for a further US$5 billion.

Other areas such as test preparation, pre-schooling and vocational training are worth US$1-2 billion each. Textbooks and stationery, educational CD-ROMs, multimedia content, child skill enhancement, e-learning, teacher training and finishing schools for the IT and the BPO sectors are some of the other significant sectors for foreign investment in education.

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