India’s Education Sector – Back to School

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.

Opportunity beckons

The Indian government allocated about US$8.6 billion to education for the current financial year. But considering the significant divide between the minority of students who graduate with a good education and the vast majority who struggle to receive basic elementary schooling, or are deprived of it altogether, private participation is seen as the only way of narrowing the gap. Indeed, it is estimated that the scope for private participation is almost five times the amount spent on education by the government.

CLSA estimates that the total size of India’s private education market could reach US$70 billion by 2012, with an 11% increase in the volume and penetration of education and training being offered.
The K-12 segment is the most attractive for private investors. Delhi Public School operates approximately 107 schools, DAV has around 667, Amity University runs several more and Educomp Solutions plans to open 150 K-12 institutions over the next four years. Coaching and tutoring K-12 students outside school is also big business with around 40% of urban children in grades 9-12 using external tuition facilities.

Opening the doors

Private initiatives in the education sector started in the mid-90s with public-private partnerships set up to provide information and communications technology (ICT) in schools. Under this scheme, various state governments outsourced the supply, installation and maintenance of IT hardware and software, as well as teacher training and IT education, in government or government-aided schools. The central government has been funding this initiative, which follows the build-own-operate-transfer (BOOT) model, under the Sarva Shiksha Abhiyaan and ICT Schools programmes. Private companies such as Educomp Solutions, Everonn Systems, and NIIT were among the first to enter the ICT market, which is expected to be worth around US$1 billion by 2012.

Recently, the central government invited private participation in over 1,000 of its industrial training institutes and offered academic and financial autonomy to private players. Companies such as Tata, Larsen & Toubro, Educomp and Wipro have shown keen interest in participating in this initiative.

Regulatory roadblocks

Education in India is regulated at both central and state government levels. As a result, regulations often differ from state to state. K-12 education is governed by the respective State School Education Act and the Central Board of Secondary Education (CBSE) Rules and Regulations concerning affiliation and/or the rules of any other affiliating body. Under current regulations, only not-for-profit trusts and societies registered under Societies Registration Act, 1860, and companies registered under section 25 of the Companies Act, 1956, qualify to be affiliated with the CBSE and to operate private schools.

While the K-12 segment accounts for the lion’s share of India’s educational market, weaving through the complex regulatory roadmap to qualify for affiliation poses serious difficulties for investors. The CBSE requires privately-funded schools to be non-proprietary entities without any vested control held by an individual or members of a family. In addition, a school seeking affiliation is expected to have a managing committee controlled by a trust, which should approve budgets, tuition fees and annual charges. Any income accrued cannot be transferred to the trust or school management committee and voluntary donations for gaining school admission are not permitted.
Schools and higher education institutions set up by the trust are entitled to exemptions from income tax, subject to compliance with section 11 of the Income Tax Act, 1961. In order to qualify for tax exemptions, the trust needs to ensure that its predominant activity is to serve the charitable purpose of promoting education as opposed to the pursuit of profit.

Alternative paths

Alternative routes do exist for investors seeking to avoid the web of regulatory barriers that constrain their involvement. Sectors such as pre-schools, private coaching and tutoring, teacher training, the development and provision of multimedia content, educational software development, skill enhancement, IT training and e-learning are prime sectors in which investors can allocate their funds. These areas are attractive because while they relate closely to the profitable K-12 segment, they are largely unregulated. As such, they make attractive propositions for private investors interested in taking advantage of the burgeoning demand for quality education. Companies such as Educomp Solutions, Career Launcher, NIIT, Aptech, and Magic Software, are market leaders in these fields. Educomp recently acquired a large number of educational institutes and service providers across India. It has also formed joint ventures with leading higher education groups, including Raffles Education Singapore, for the establishment of higher education institutions and universities in India and China. Furthermore, it has entered into a multi-million dollar collaboration with Ansal Properties and Infrastructure to set up educational institutions and schools across the country and closed an US$8.5 million deal to acquire Eurokids International, a private provider of pre-school educational services in India. Gaja Capital India, an education-centric fund, has completed the funding of three education services companies in India. NIIT and Aptech, meanwhile, are engaged in the IT training business.

Core Projects and Technology is also focusing heavily on India and is likely to bid to takeover, upgrade and run public schools for specified periods on a public-private partnership basis.

Higher hurdles

While state governments are largely responsible for providing K-12 education in India, the central government is accountable for major policy decisions relating to higher education. It provides grants to the University Grants Commission (UGC) and establishes central universities in the country. The UGC coordinates, determines and maintains standards and the release of grants. Upon the UGC’s recommendation, the central government declares the status of an educational institution, which once authorized, is entitled to award degrees.

State governments are responsible for the establishment of state universities and colleges and has the power to approve the establishment of private universities through State Acts. All private universities are expected to conform to the UGC guidelines to ensure that certain minimum standards are maintained.

Amity University in Uttar Pradesh is one of the private universities to open its doors. It was approved by the Uttar Pradesh state legislature on 12 January 2005 under section 2(f) of the University Grants Commission Act.

Not-for-profit and anti-commercialization concepts dominate higher education fee structures. To prevent commercialization and profit-making, institutions are prohibited from claiming returns on investments. This, however, does not pose a hurdle for universities interested in mobilizing resources to replace and upgrade their assets and services. A fixation of fees is required in accordance with the guidelines prescribed by the UGC and other concerned statutory bodies. For this purpose, the UGC may request the relevant information from the private university concerned, as prescribed in the UGC (Returns of Information by Universities) Rules, 1979.

In line with the policy on Fee Fixation in Private Unaided Educational Institutions Imparting Higher and Technical Education, two types of fees are required: tuition fees and development fees. Tuition fees are intended to recover the actual cost of imparting education without becoming a source of profit for the owner of the institution. While earning returns on investment would not be permissible, development fees may provide an element of partial capital cost recovery to the management, serving as a resource for upkeep and replacement.

Legal precedents

In order to be awarded university status by the UGC, institutions must comply with the objectives set forth in the Model Constitution of the Memorandum of Association/Rules, and ensure that no portion of the income accrued is transferred as profit to previous or existing members of the institution. Payments to individuals or service providers in return for any service rendered to the institute are, however, not regulated.

In this context recent court judgments on private universities are relevant. The Supreme Court, in Unnikrishnan JP v State of Andhra Pradesh, introduced a scheme regulating the admission and levy of fees in private unaided educational institutions, particularly those offering professional education. The ruling was later notified in the fee policy.

Subsequently, in the case of Prof Yashpal and Anr v State of Chattisgarh and Ors in 2005, the Supreme Court assailed the Chattisgarh government’s legislation and amendments which had been abused by many private universities. It was contended that the state government, simply by issuing notifications in the Gazette, had been establishing universities in an indiscriminate and mechanical manner without taking into account the availability of any infrastructure, teaching facilities or financial resources. Further, it was found that the legislation (Chhattisgarh Niji Kshetra Vishwavidyalaya (Sthapana Aur Viniyaman) Adhiniyam, 2002) had been enacted in a manner which had completely abolished any kind of UGC control over private universities.

The Supreme Court concluded that parliament was responsible for ensuring the maintenance and uniformity of higher education institutions in order to uphold the UGC’s authority. Following the judgment, only those private universities that satisfied the UGC’s norms were able to continue operating in Chattisgarh.

Professional institutions

Professional and technical education in India is regulated by professional councils such as the All India Council for Technical Education (AICTE). Established under the AICTE Act, 1987, AICTE gives recognition to courses, promotes professional institutions, provides grants to undergraduate programmes, and ensures the coordinated and integrated development of technical education and the maintenance of standards. The AICTE has recently exerted pressure on unrecognized private technical and management institutes to seek its approval or face closure.

A single bench decision of the Delhi High Court in Chartered Financial Analysis Institute and Anr v AICTE illustrates the far-reaching implications this kind of pressure can have on all institutions operating independently of the AICTE. The court found that the Chartered Financial Analyst Institute, a US-based organization, was engaged in imparting technical education and that its charter, though not described as a degree or diploma, was nevertheless descriptive of the candidate attaining an academic standard, entitling him to pursue further courses, and achieve better prospects of employment in the investment banking profession. The AICTE argued that the Chartered Financial Analyst Institute fell within the ambit of its regulation and was therefore obliged to submit to the jurisdiction of the regulatory body. The Delhi High Court upheld the AICTE’s view that the Chartered Financial Analyst Institute did qualify as an institution imparting technical education..

This judgment may have emboldened the AICTE to proceed against a number of other establishments that are on its list of unapproved institutions. It holds particular significance since despite not granting degrees and diplomas, the Chartered Financial Analyst Institute was still deemed by the court to be covered under the description of a “technical institute”.

Enthusiasm grows for foreign participation

While regulators such as the AICTE continue to exercise influence in the Indian education system, the sector is expected to witness a surge in foreign investment and perhaps a reduction in the number of regulatory roadblocks as a result of the central government’s enthusiasm for overseas investors. Foreign direct investment in higher education could help reduce government expenditure and there is a general consensus that education as a whole should be opened for domestic and foreign private participation.

The entry of foreign educational institutions into India will be covered by the new Foreign Education Providers (Regulation for Entry and Operation) Bill. The bill seeks to regulate the entry and operation of foreign education providers, as well as limit the commercialization of higher education. Foreign education providers would be given the status of “deemed universities” allowing them to grant admissions and award degrees, diplomas or certificates.

Operationally, the bill proposes to bring foreign education providers under the administrative umbrella of the UGC, which would eventually regulate the admissions process and fee structures. Since these foreign institutions will have to be incorporated under central or state laws, they will also be subject to the government’s policies of reservations. The bill is pending approval from the Indian Parliament but it is unclear if it will be taken by the present government for a vote prior to the general elections in 2009.

Innovative structures unlock profitability

The regulatory restraints on running profitable businesses in the K-12 and higher education sectors have driven Indian lawyers to devise innovative structures that enable private investors to earn returns on their investments. These typically involve the establishment of separate companies to provide a range of services (operations, technology, catering, security, transport, etc.) to the educational institution. The service companies enter into long term contracts with the trust operating the institution. Payments made by the trust to the service companies must be comparative and proportionate to the services rendered by such companies. Furthermore, in order to qualify for tax exemptions, the expenses paid by the trust to the service companies must not exceed what may reasonably be paid for such services under arm’s length relationships.
Despite the regulatory constraints, the Indian education sector is on a path of exponential growth. A growing number of private companies are undertaking creatively structured projects in the education business and the level of investor confidence is demonstrated by the recent spate of M&A activity that has taken place.

With more domestic players emerging, the education sector is likely to witness consolidation, but at the same time, increasing foreign participation will drive competition and raise standards. Liberalization will continue to intensify as the government struggles to remedy its poor public education system and provide quality institutions to educate India’s masses.

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Fit Tip #1 – Watch Your Language

Now I know you’re asking yourself… how is watching my language going to help me succeed at living a more fit and healthy lifestyle? Let me explain.

You may be sabotaging your fitness goals and not even realize it. You may be setting yourself back due to your own self talk, or the way you are expressing your fitness goals to others!

Do you say… “I’ll Try” to work out this week, or “I’ll Try” to eat healthy this week? Right off the bat you are allowing yourself a way out of your commitment, simply by the words you are choosing to identify your fitness goal. When you say, “I’ll Try” instead of “I will” then if you don’t follow through you can tell yourself… “Well, I tried.” Saying you will “try” is not making a firm commitment to a goal. It’s an easy way to avoid taking personal responsibility for your actions! Instead use powerful words! Say, “I will” work out three times this week for 30 minutes! “I will” lose two pounds this week by increasing my exercise and eating healthy foods that are good for me and will help me reach my fitness goals!

Do you say… “I can’t eat healthy because I’ve got kids (or a spouse who doesn’t eat healthy, or co-workers who want to go out to eat all the time)”. Once again, listen to the language you are using. If this sounds familiar to you, you may be playing the blame game. You may be allowing yourself to continue to make excuses and procrastinate when it comes to making the necessary changes in your lifestyle. Remember that the choices you make are YOUR choices. Making the healthy choice, and creating the healthy habit in your life will aid you in being not just a healthier person, but a more active mother or father, a more energetic and healthy wife or husband, girlfriend or boyfriend, a less stressed and more productive friend or employee/employer. Take charge of your actions! Tell yourself that you and only you can make these changes! Tell yourself “I can eat well and create healthy lifestyle habits!” Once you’ve made that decision and tell yourself this, you can find strategies to overcome the obstacles that life throws in your way!

You have choices in life. Living fit and healthy is a choice. It is something that you can do… yes even you! Life may be throwing obstacles in your way, but if you understand that your health is one of the most important things for you to manage, if you understand that being fit and healthy is going to help you succeed in all your other roles of life as well, you will be successful in setting fitness goals for yourself and accomplishing them. Don’t procrastinate any longer. Start saying “I will” today!

Listen to the language that you use when expressing your fitness goals. Are you making excuses or giving yourself an out? It may be time for you to reevaluate and really commit to your goals! You have the power within you to make the necessary changes that will benefit the quantity and quality of your life.

Let us help you! Our goal and mission at Destined 2 Be Fit is to educate you on the healthy choices that you need to be making in your life, we are here to help you identify what is motivating you to make these changes. We are here to help you recognize the obstacles, or the language, that is standing between you and fitness success, and we are here to help you find ways to overcome these obstacles. We aim to keep you motivated and to provide you with support!

What language are you using that may be holding you back from achieving your fitness goals? What can you say instead that will assist you in succeeding?

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Affiliate Marketing Tips for True Success

Have you been considering affiliate marketing but not really sure how to go about it and wondering what type of affiliate marketing tips exist? I am glad to let you know that there are some tips that not have only helped me in my business but many more just like you and I; as long as they followed these general affiliate marketing tips.

Know who you are targeting

One of the best ways to use affiliate marketing is to know and understand who your target individuals are. Know why they are looking at this affiliate marketing program and what do you have to offer as a resolution to their opportunity or problem.

On your website or blog, there is a general theme and the ideas and thoughts you write about should all be congruent so when you do offer an affiliate marketing program for people it makes sense. Let’s say for example you are writing about lawn care, what you do not want to do is put up a banner ad or an affiliate marketing program link to an ad for direct sales in diet pills. The readers that have come to your website or blog to read about lawn care could probably care less about diet pills and even selling those, so there will be a huge disconnect.

The more congruent that you can be with your content and the advertising that you do, will not only make the reader more happier, which brings them back time and time again but also there is a higher chance they will convert to sales for you.

Be Honest and Upfront

With the invention of the internet and the endless amount of information at our fingertips, online readers have become very educated. There is no doubt that they know what they are reading or watching and the days of pulling the wool over their eyes is done and gone. If you are promoting or trying to sell them a product and or service that you do not believe in yourself, they are going to see right through you. Another thing to consider is to not bombard them with ads and links to affiliate marketing products as this will show you as a salesman and not truly worried about their well being and success.

See as more people return to your website time and time again, they will start sharing your site information by bookmarking, tweeting, sharing on social media sites or the general email sharing. With all this sharing and conversing about your products and or services, this provides valuable back links to your site. You need to provide not only honest but also original content for the readers, you will stand out a leader and very knowledgeable in your industry which only attracts more and more readers.

If your readers don’t think that you are being completely open and honest with them up front and are only trying to sell to them, you will lose readers. You need to understand one thing; see people like to buy things but they don’t like being sold. So offer a solution in a helpful and gracious way.

Provide a Solution by giving Value

If you are looking for true success use these affiliate marketing tips and this one especially pay very close attention to. Giving very useful, helpful and educational value is the key to any affiliate marketing program, it has been proved time and time again.

The last thing that you want to do is put up a list of all your affiliate opportunities and just hope tons of readers will just clicking away and signing up and you make your bank account grow. If you are wanting to promote a certain or even all your affiliate opportunities, write a article or shoot a video on the opportunity, in much depth explain how, what, where and why. If you write a very educational article it not only sets the expectations of the reader, there is no surprises months down the road, which in turn strengthens your trust with your readers.

Remember the last thing you want to happen is that you spend so much time and energy on driving traffic to your website or blog and within seconds they leave.

Do Your Homework

Do your due diligence and investigate many options for the vast amount of products and services that many of these affiliates offer. As you investigate each affiliate think to yourself “how could this help me, my friends and many other people”, if you find that it could possibly only help you, then it may not be a great choice to promote as an affiliate. I would also take the name of the affiliate and see how many different search results and queries are done monthly to see if the product or service is saturated or even searched.

Once You Have Decided

After the above steps, hopefully you have found an affiliate marketing program that you feel great about; you are excited and ready to make millions….right? Wrong! The last part of my affiliate marketing tips for you is to produce content and a lot of it; this could include videos, articles, press releases, blog posts, forum posting and many others. If you are looking to make a million in thirty days, you are going to be sadly let down, this is not that road, and trust me as I have been doing this for a long time, that road does not exist.

Content producing activities like articles, videos and the others mentioned above is like building a foundation for a house, the more content equals a stronger foundation and a lot more of it. You need to take into consideration the amount of information that is on the internet and how it filters through the internet. One article or one video is not going to get you huge results, honestly you need to publish at least one article a day for 30 days and submit them to free websites that will send out further for you.

You need to focus on providing original excellent content that readers find not only entertaining but also helpful and you will definitely become more prosperous in your affiliate marketing.

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