With digitization becoming the norm in the post-pandemic era, India’s ed-tech sector is expecting to see increased consumer demand and new business models in the upcoming year.
As more emphasis is placed on the importance of upskilling in keeping up with quickly increasing technological innovations across industries, edtech plays an important role in developing a skilled talent pool for national progress. However, the sector continues to confront obstacles such as a lack of infrastructure, access gaps, and tax inconsistencies.
Following a tumultuous year of spectacular highs and lows, the industry is now at a crossroads, and the allocation of financial benefits and reforms is critical to ensuring future growth and sustainability.
The Journey so far
The Budget 2022 announcements certainly cemented the government’s recognition of the ed-tech sector as key for national development. Announcements such as the development the expansion of the PM eVidya one class-one TV Channel program, the launch of the DESH-Stack e-portal for upskilling and reskilling, and the setting up of 75 skilling e-labs for simulated learning environments have delivered a much-needed boost to the sector.
Building a strong and competitive workforce is key for national growth, and upskilling initiatives are vital to bridging the existing skills gap across industries, particularly in emerging digital technologies.
While government policies such as the Skill India mission and Pradhan Mantri Kaushal Vikas Yojana (PMKVY) have greatly contributed to this goal, further investment in the sector is key to building a strong and competitive workforce that can drive economic growth and development.
Structured professional upskilling programs play a key role on this front, as they enable employees to enhance and expand their skill sets while continuing to work in full-time roles.
Government-funded programs and private-public partnerships on this front are necessary to enable the same and incentivize the workforce to take up these programs.
Expectations from Budget 2023
Increased government support and funding for the sector: Moving towards the NEP’s goal of a 6% contribution to GDP from the education sector (from the existing 3.1%) necessitates initiatives like subsidized rates and incentives to encourage innovation and growth in the industry. Higher education costs in India continue to be high, and financial aid can equip the ed-tech sector to become an enabler in bridging this accessibility gap.
Additionally, increased government support and funding for online initiatives will further help in creating an enabling environment for the growth of the sector.
Tax reforms: A lower tax bracket on educational goods and services will greatly encourage ed-tech entrepreneurship and improve the ease of doing business in the sector. There continues to be a discrepancy between online and traditional learning, with schools being exempt from GST while ed-tech enterprises continue to pay GST at 18%.
Shifting educational products and services to a tax band of 5-12%, as suggested by the Indian Edtech Consortium (IEC), will give the sector a significant and much-needed boost. This is key to incentivizing upskilling among the country’s working population – a key requirement at a time when the country is grappling with a skills gap across sectors.
Digital skills training: As technology continues to advance and automation becomes more prevalent, the demand for workers with digital skills is increasing in a wide range of industries. Therefore, the government must invest in programs to train and upskill workers in areas such as data analytics, full-stack software development, and artificial intelligence to help employees stay relevant in the job market and to meet the growing demand for digital skills in the economy.
Infrastructure development: The development of digital infrastructure should be a top priority to improve accessibility in Tier 3 and Tier 4 cities. This is also key to achieving goals laid out in NEP 2020, such as an increased focus on digital learning, teacher preparation, and the construction of research infrastructure. Additionally, the improvement of internet connectivity infrastructure for last-mile access, affordable 5G devices, and most importantly, stringent data protection legislation for EdTech businesses is imperative. Infrastructure development should also focus on strengthening the upskilling and reskilling ecosystem through investments in equipment and technology to support the delivery of training, such as online learning platforms, virtual classrooms, and training centers.
Education should be given at least 8-9 percent of GDP. More funding is required not just for elementary, secondary, and higher education, but also for initiatives that skill our youth outside of the education system and make them suitable for current career prospects.
In the United States, private colleges are collaborating with the government to transition to an ISA (Income Share Agreement) model as an alternative to education loans. When it comes to boosting skills in India, we must also pay attention to this.
The education budget has already been reduced by 15% during the last two years. This is the ideal decade to capitalize on the demographic dividend. The Indian government should establish an enabling structure that prioritizes and expands initiatives that integrate employment and study to create more career mobility opportunities.
Closing the gaps and removing the barriers between completing one’s education and starting a job will be beneficial to the economy and provide significant ROI for learners, companies, and society as a whole.
As the world enters a new era of optimism and opportunity, policymakers, employers, and educators must promote and encourage programs that combine education and work experience, particularly those that allow people to earn and learn while completing their college degree while taking into account new physical and digital modes of engagement.
Closing the gaps and lowering the friction between finishing one’s education and starting a career provides significant rewards for students, companies, and the country as a whole; the finance minister now has a window of opportunity to build the environment for such an education system to grow!
With India quickly becoming a global hub for innovation and entrepreneurship, sunrise sectors like ed-tech can greatly contribute towards cementing the country’s position as a prime investment destination.
Historically, improvement in education has always been linked to increased economic growth, and budget allocations towards improving infrastructure and accessibility to ed-tech platforms will greatly enable the government’s vision of democratizing education access and building a future-ready workforce.
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