Indian ed tech companies can benefit from China’s crackdown on sector

  Aug 23, 2021

China’s crackdown on education companies from making profits, raising capital or going public has wide ramifications. The policy also puts limitations on foreign ownership of these businesses, including merger and acquisitions (M&A), running franchises, etc. The companies aren’t allowed to hold tutoring sessions on holidays or weekends either.

However, there is a silver lining for India’s ed tech sector in this situation, said Abhay Chebbi, Pro-Chancellor, Alliance University. He said, China’s loss in the ed tech sector can be India’s gain if the latter can address four critical issues: last-mile connectivity (about two-thirds of India lives in villages), storage (to overcome frequent power failures), 24×7 availability, and pricing within the reach of all. “Without these initiatives, the sector will open the already deep societal fissures even more” he said.

Recent regulatory decisions for ed tech companies as a part of larger crackdown on large corporates in China can be highly debatable as it may stifle innovation and put constraints on enriched learning and development. Abhishek Kumar Rohit, Associate Professor & Co-Chair – Banking and Financial Services, T A PAI Management Institute, Manipal, said, Indian ed tech companies are well-positioned to benefit from this move as they can be the first choice of available global investments ready to ride on this booming sector. “This would help create better infrastructure in India which may promote deeper penetration of better education and much needed skill development. The EdTech firms should use this as an opportunity and assist in narrowing the inequality gap of learning opportunities in India at all levels.”

Given the fact that India is at a nascent stage in the journey of ed tech and online education across the board, be it primary, K12 or higher education, there is a lot of advantage. Ambrish Sinha, Chief Executive Officer, UNext, said, “The ed tech start-ups in India are regulatory-compliant and have benefitted from the government’s progressive policy in the higher education and skilling space. The low gross enrolment ratios and lack of infrastructure provides a very enabling environment for growth of ed techs in India to benefit and skill our human capital and help in increasing employability. With the aggressive regulatory clamp in China, there will be a migration of capital to India. This also provides an opportunity to Indian ed tech start-ups to build for the world.”

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