The EdTech sector is seeing significant investments and expenditure by governments, schools, universities, students and professionals globally. By 2030, it is expected that global EdTech expenditure will grow to USD 10 trillion. The growing popularity of online learning, further necessitated due to the nationwide lockdown, has provided a major push to the sector in India, which is expected to grow at a CAGR of 52% to become a USD 2 billion industry by 2021. The key growth drivers propelling EdTech in India are the ability to serve a large audience at significantly lower costs compared to traditional in-classroom learning, significant growth in internet and smartphone penetration across India, steady rise in disposable income of the Indian households, and a large consumer base with over 37% of India’s around 1.35 billion population falling in the 5-24 age bracket.
Formal education in India can be broadly classified into school education (elementary, secondary and higher secondary), higher education and vocational education. The Ministry of Human Resource Development (MHRD) is the nodal ministry responsible for development of school education and literacy in the country, for bringing world class opportunities of higher education and research to the country and for formulating and implementing associated policy framework.
Following the constitutional amendment by Article 21-A in the Constitution of India to provide free and compulsory education of all children in the age group of 6 to 14 years as a Fundamental Right, the Right of Children to Free and Compulsory Education Act, 2009 (RTE Act) was enacted to ensure that every child has a right to full time elementary education of satisfactory and equitable quality and prescribes certain essential norms and standards to be followed by schools. Additionally, several boards including Central Board of Secondary Education (CBSE), the Indian Certificate of Secondary Education (ICSE), International Board, respective State boards and associated affiliation guidelines, bye-laws, State acts and rules and regulations generally prescribe the conditions and requirements to be fulfilled for setting up schools, for being affiliated with the relevant board, prescribe curriculum and, in certain States, the State regulations also govern the fees that can be charged by schools.
Higher education in India can be classified into central universities, state universities, deemed universities and private universities, depending on the manner in which they are set up. Higher education is largely regulated by the University Grants Commission Act, 1956 and the rules and regulations framed thereunder (UGC), which inter alia determines and maintains standards of teaching, examination and research in universities and lays down the minimum standards of instruction for the grant of degree. Additionally, the National Board of Accreditation (NBA), initially established by the All India Council for Technical Education (AICTE) and now an independent autonomous body, provides accreditation of technical programs and courses and the National Assessment and Accreditation Council (NAAC) provides accreditation to colleges and universities.
Vocational and professional education
The Government of India (GOI) established the National Vocational Education Qualification Framework (NVEQF) that would consist of nationally recognised qualification systems including schools, vocational education institutes and institutes of higher education reaching upto the doctorate level. It provides for a model curriculum and framework for separate sectors such as agriculture, information technology, tourism, communications, economics and finance, etc. Further, each professional course is regulated by a separate body, such as the Medical Council of India for medical studies, AICTE for technical courses, and the Bar Council India for legal studies.
As the EdTech sector grows and more innovation is brought in different spheres of education and online learning, it also poses certain challenges for businesses operating in the sector. A major challenge that the sector is facing is the web of regulators without a single body responsible for governance of the EdTech sector. Whilst schools are trying to collaborate with different regulators in the sector for a better online learning experience, there is no separate legislation that governs online education in India. The RTE Act provides State Governments the liberty, albeit in harmony with the Act, to form rules and guidelines that are State specific. The States also have the ability to formulate rules and regulations to govern online learning and education. However, States have not taken any major step in this regard. MHRD has announced that they are formulating a separate set of regulations for governing online education at the school level. However, this concept is still in pipeline and there are only government schemes to rely on for imparting online learning at this stage. The nationwide lockdown due to Covid-19 gives a ray of hope for the rise of online education as classroom learning is expected to continue to remain shut for a while and it might prove to be a blessing in disguise for the government to focus on uniform regulations governing this sector for the growth and benefit of the EdTech industry.
Investors investing in the EdTech space also need to take into consideration certain other legal aspects, such as protection of intellectual property rights, compliance with data privacy laws and issues arising from it, foreign direct investment regulations when a foreign party is making investment in the sector in India, protection of proprietary software/technology, accreditation of certificates proposed to be issued by the EdTech service providers and tax considerations.
Government initiatives to promote online learning
One of the many initiatives taken by the GOI to promote online learning was through the SWAYAM programme. This initiative is designed to achieve the three cardinal principles of the Education Policy – access, equity and quality. The objective of this program is to bridge the digital divide for students who have not been able to join the mainstream knowledge economy. Through SWAYAM, 82 undergraduate and 42 post-graduate non-engineering courses are to be offered in the July 2020 semester.
DIKSHA is another initiative which serves as a National Digital Infrastructure for teachers. DIKSHA leverages existing highly scalable and flexible digital infrastructures, while keeping teachers at the centre to ensure that they are well equipped to impart quality education to the students.
Due to restrictions on classroom learning in view of the Covid-19 pandemic, the GOI has also been encouraging the heads of Higher Educational Institutions to switch to online methods of education and ensure that the academic sessions are not interrupted. The GOI also took an interesting initiative by launching an AI-powered mobile application on May 19, 2020, called the National Test Abhyas App created by the National Testing Agency for students preparing for JEE (Mains) and NEET entrance exams. Further, the GOI has also launched the ‘Aatmnirbhar Abhiyan’ (self-reliant India initiative) on May 17, 2020. As part of this initiative, the GOI announced the E-vidya programme to promote multi-mode access to digital education.
How has the lockdown boosted innovation and investment in the EdTech Sector?
There are about 4,450 EdTech start-ups operational in the country presently catering various segments including K-12, vocational and professional training/skilling and school/college educational operations. While the K-12 and competitive examination segment is dominated by Indian players, the international players are focused on reskilling, vocational training, and certifications. Some successful international players are Coursera, LinkedIn Learning, Udemy, Edx, Khan Academy and Google Classroom.
A lot of innovations have been experimented within the Indian EdTech industry to balance the dynamics of teachers and students from a traditional classroom to a virtual one. While these trends and innovations saw lower adoption in the pre Covid-19 world, many existing off-the-shelf technology and innovation saw wide adoption in educational institutes recently, to ensure that the academic flow is not impeded. Technology is turning teacher-centric education to a more teacher-student setup. Smart classrooms are making teaching more transparent and equal for every student in a close to real classroom like experience.
There are various universities and colleges in the higher education space that have come up with innovative measures to cope with the impact of Covid-19. Certain universities have given students the option of what we can call ‘education on demand’ wherein students across the world can record their online classes (instead of attending it live) and watch at their own time and convenience. Due to the reduced personal touch for students, UGC has requested universities and colleges to follow some important measures to ensure psychological and mental well-being of students in these tough times.
There are several private players providing online coaching classes and training for various higher educational, vocational and professional courses. Such private players could also tap into their resources and collaborate to share learning infrastructure and experience to provide a better online learning opportunity and technology to students.
Boards in India are also doing their bit to ensure continuity of education. CBSE is encouraging schools to continue teaching and learning with the help of digital learning platforms and provide content to students online. They have also launched a podcast called CBSE-Shiksha which would assist schools in disseminating crucial information to their teachers, students and parents. ISCE has partnered with television channel ABP Ananda to begin teaching Mathematics, English and Science for students in class four to twelve by airing the lectures on television.
While the sector is growing and India is currently home to the second highest number of EdTech companies, there is a lot of room to improve India’s market share in the EdTech space globally, which is only around 2.09%. Factors such as tangled regulations governing the education sector, lack of uniform government policies, lack of financial incentives for research and innovation in the EdTech space, patchy internet connectivity especially in rural India and other socio-economic barriers are some of the impediments to the growth trajectory of this sector in India. The lack of central regulator for all aspects governing the sector and the lack of coordination between the centre and the state as well as various boards and institutes also remain major stumbling blocks, which warrants a sharper focus and attention from economic and regulatory perspective. That said, the EdTech sector is growing significantly and, with careful planning and legal assistance, investors can navigate through the web of legal and regulatory challenges in the sector and see significant returns on their investment.