Design services

India is emerging as a global design hub as multinational companies (MNCs) are increasingly outsourcing industrial and engineering design tasks to diverse industrial sectors like semi-conductors, aerospace, automotive, farming equipment, power generation and consumer electronics among others. Emphasising the role of design, Mr Anand Sharma, Minister for Commerce and Industry said, “Design is integral for growth of Indian industry and India as a country."

Offshoring of jobs has today spread to include high-end product design work and even packaging and graphic designs. As manufacturers look at reducing costs and product development cycles, India is fast emerging as the new-age design board for MNCs.

The result: MNCs like Whirlpool, GE, LG, Philips, Bosch, Dell Computer, Ford Motor, Toyota Corp., Ferrari, Honda Motor, Rambus Inc. and Wind River Systems Inc are setting up India centres, others like Reckitt, Boeing and Airbus are offshoring design work to Indian design houses.

Automobile Design

Indian automobile companies have come of age and can today boast of several indigenously designed cars. Tata Motors has designed and developed its small cars, Nano and Indica, in India. Maruti Udyog engineers after working on designing Swift, SX4, Zen Estilo and Concept A-Star, are likely to design Splash and Kizashi. Mahindra & Mahindra have successfully designed and built its car, Scorpio as also multi-utility farm vehicle, 'Shaan', which has captured 6 per cent share in US market.

India has now established itself as a 'brand in engineering' with global original equipment manufacturers (OEMs), looking at India as a good outsourcing hub.

General Motors, Hyundai, Toyota, Ford Motor, Ferrari, and Honda Motor are all boosting Indian outsourcing, as are key component makers such as Robert Bosch, TRW Automotive, Visteon and Collins & Aikman. Vijay Mallya-owned Force India has inked a multi-million dollar three-year deal with Computational Research Laboratories (CRL) to design the team's next generation cars and to improve the aerodynamic efficiency of its current racing models. This is the first time a Formula One team is leveraging an Indian High Performance Computing (HPC) organisation for their design activities.

By 2010, the Indian automotive design and engineering services industry is likely to cross US$ 1 billion (from US$ 270 million–US$ 300 million in 2005) and the employee strength of India-based automotive design vendors will reach 40,000 (from about 12,000 in 2005).

Aviation Design

With a blend of its state-of-art information and aerospace technologies, India has tremendous potential in the area of design in aerospace.

Engineering and design services being outsourced to India include control system design, embedded development, high level aeronautical system design, simulation, testing devices, cockpit equipment support software, air traffic management systems, and composite structuring.

Aerospace majors like Lockheed Martin, Boeing, Thales, Pratt & Whitney, Bombardier, Rolls Royce among others have all shown a keen interest to participate in this segment.

• European passenger plane maker Airbus SAS will move 20 per cent of its engineering and design activities to low-cost countries, a majority of it to India, by 2012 to bring down the cost of making planes. Airbus has a 120-people engineering centre in Bangalore, which will grow to 450 employees next year.
• HCL Technologies is working on various systems like flight management and landing gear for Boeing 787. It has also worked on the Airbus A 380, with their tier-1 supplier.
• Tata Consultancy Services (TCS) will design and develop the next-generation fighter jet, Gripen, for the Swedish aerospace major Saab.
• American aviation giant, Boeing has set up its research and technology centre at Bangalore, which will work in the areas such as aero structures and aerodynamics to sustain the company's competitive technological edge.
• Bangalore-based aviation design supplier CADES with global clients such as EADS, Airbus, Boeing, Fokker, and Embraer has been awarded the 2009 Frost & Sullivan Award for Emerging Company of the Year.

A market research report by RNCOS, 'Global Aerospace Market Forecast (2006–2009)' predicted that the Indian aerospace technology outsourcing market, which was US$ 155 million in 2007, will reach US$ 1 billion by 2009.

India has developed the design expertise to produce world-class warships at a lower cost. The indigenously-designed, 44,000-tonne Indigenous Aircraft Carrier (IAC) under construction at Cochin Shipyard Limited (CSL), costs a third of Queen Elizabeth, the new-generation aircraft carrier constructed by United Kingdom’s Royal Navy.

Semiconductor design

The Indian semiconductor design industry comprises of Very Large Scale Integration (VLSI) design, board design and embedded software companies. India has almost 130 chip design companies, with almost all global design semiconductor companies setting up design operations in India. Embedded software, VLSI and board and hardware design account for a significant part of the revenues generated by the Indian semiconductor ecosystem.

According to a joint report by India Semiconductor Association (ISA) and IDC India, the Indian semiconductor design services industry is likely grow at a compounded annual growth rate (CAGR) of about 21.7 per cent between 2007–2010. The overall design market in India for 2007 was estimated at US$ 6 billion, with 81 per cent of the revenue coming from embedded software. The market is expected to cross the US$ 7.37 billion-mark in 2008, and further grow to US$ 10.96 billion in 2010.

Until recently, semiconductor design activities in India were clustered mostly in Bangalore, Hyderabad, Delhi/NCR and Chennai. Design companies are now also setting up operations in Pune and Ahmedabad. Bangalore leads with around 85 design firms with over 30 captive offshore design centres, making it one of the top global clusters in chip design, comparable to Silicon Valley, Cambridge (in the UK) and Taiwan.

A benchmarking study conducted by ISA and Ernst & Young in 2007, called `India in the Global Semiconductor Design Ecosystem', found India to be favourable in terms of availability and scalability of talent compared to its peer countries. In the study, India was benchmarked on certain parameters including talent-related factors, business environment-related factors and infrastructure related factors.

Engineering services

India has a robust and diversified manufacturing base for a varied range of basic and capital goods to meet the requirements of sectors like heavy electrical, process equipment, automobiles, power generation and transmission, shipping, aviation, mining, chemicals, petroleum, etc.

The engineering sector in India is an integral part of the manufacturing activity and was estimated at US$ 27.51 billion in 2004–05 and has been growing at 11 percent. Further, according to a Booz Allen Hamilton analysis, by 2020, India's offshore engineering services market can go up to US$ 3 billion.

India's well-developed and strong 'light engineering' sector is a major contributor to the Indian economy and is the foundation of almost all productive and business activities in the country. It accounts for around 20 per cent of the entire engineering industrial sector estimated at around US$ 410 million–US$ 512 million.

Engineering Services Outsourcing (ESO)

The Engineering Services Outsourcing (ESO) sector is another sector with great potential. ESO includes product design, research and development and other technical services across sectors like automotive, aerospace, hi-tech/telecom, utilities and construction/industrial machinery.

According to a study by NASSCOM and Booz Allen Hamilton (a strategy and technology consulting firm), the global engineering services market in by 2020 is estimated to touch US$ 1,100 billion, of which the outsourced component is estimated to reach around US$ 200 billion in the same span of time. Presently, the ESO market is worth around US$ 15 billion with India cornering a 12 per cent share.

Government Initiatives

The Designs Act 2000 has put in place a framework for documentation, classification, representation, registration, acceptance, inspection, cancellation, certification and legal redressal. The Union Cabinet has also approved the National Design Policy in 2007 with the aim to globally position and brand Indian designs and making 'designed in India' a by-word for quality and utility. The policy also envisages:

• Mr Anand Sharma, Minister for Commerce and Industry proposed that the Government, National Institute of Design (NID), Confederation of Indian Industry and India Design Council work together to institutionalise the India Design Council by end of the first Quarter of 2010 for the promotion of Design in India
• Setting up of specialised Design Centres of 'Innovation Hubs'
• Enhancing the status of the National Institute of Design (NID) as a global centre of excellence and setting up two-three undergraduate design centres
• Launching the Good Design Mark to promote domestic designs
• Setting up of new institutes and sector-specific design education centres
• Setting up an India Design Council (IDC)

Indian science is being regarded as one of the most powerful instruments of growth and development, especially in the emerging scenario and competitive economy. India is one of the top-ranking countries in the field of basic research.

India’s current rise in science is as impressive as its economic surge of recent years and the country clearly has the potential to become the home for world class research, says a study by Thomson Reuters titled ‘Global Research Report: India’. The study further points out that while India’s research portfolio is well balanced between the life sciences and physical sciences, its annual growth rate has vaulted in recent years vis-a-vis well-established countries such as Japan, France, Germany and the United Kingdom.

The report further mentions that annual output of scientific research publications released by Indian scientists has grown by around 80 per cent in the past decade. The annual output of publications, which has risen to nearly 30,000 in 2007 from 16,500 in 1998, will be at par with that of most G8 nations within seven-eight years and will overtake them between 2015 and 2020, according to the study.

India has a rich talent pool of nearly 13.5 million science graduates growing at the rate of 36 per cent annually. It also produces about 400,000 engineering graduates and about 300,000 computer science graduates every year. India’s spend on research and development (R&D) in 2007-08 was about US$ 24 billion.

Its technical workforce has also increased rapidly–moving from one million to two million in just three years. Instrumental here are India's world-class institutions: 162 universities award 4,000 doctorates and 35,000 postgraduate degrees; coupled with 40 research laboratories run by the Council of Scientific and Industrial Research.

Recognising the significance of science and technology in the growth of the economy, the Union Government is set to launch a US$ 411.46 million initiative in three years to give a big boost to education and research in science.

Infosys Technologies has set up Infosys Science Foundation, a non-profit trust to promote research in sciences and honour outstanding contributions and achievements by Indians.

Space Technology

India is one of the few countries with expertise to conceptualise, design and manufacture satellites and the capability to launch them into space. In fact, it has the largest constellation of remote sensing satellites in the world. Also, the Indian Space Research Organisation (ISRO) is the world's third non-US supplier of one-metre imageries and holds nearly 25 per cent of the US$ 120-million global free-play imageries market.

In October 2008, with the launch of Chandrayaan I—India's first un-manned lunar mission—at a cost of US$ 79.09 million, ISRO added one more feather to its cap. The main objective of Chandrayaan-I is to investigate the distribution of various minerals and chemical elements and to map the entire lunar surface.

Data from India’s Chandrayaan-1 lunar mission team has helped international scientists prove the present of water on the moon.

Buoyed by the success of Chandrayaan-1, ISRO is now planning a more ambitious lunar venture around 2020 after the Chandrayaan-2 in 2012: a manned mission.

On April 20, 2009, ISRO successfully launched its 14th rocket Polar Satellite Launch Vehicle (PSLV), an earth observation surveillance satellite, and the micro education satellite ANUSAT. The speciality of the rocket was that microwave imaging configuration had been installed for the first time, which would help in seeing through clouds, ground, water, vegetation and forest in day and night times. With the launch of this satellite, India has joined countries like Japan, Canada and Germany, which have similar radars.

Indian scientists have discovered three new species of bacteria not found on Earth and which are highly resistant to ultra-violet radiation. The bacteria were found in the upper stratosphere as part of a multi-institutional effort, according to ISRO, which is one of the participating agencies.

Nuclear science

With the opening up of India’s nuclear energy sector, nuclear science and its study has become the new thrust area.

• The Rajasthan Atomic Power Station (RAPS)'s fifth nuclear power reactor, with a capacity of 220 MWe, has been commissioned. It is India's 18th nuclear reactor and brings the overall nuclear power generation capacity to 4,340 MWe.
• India and Canada have reached an agreement on civil nuclear cooperation, making Canada the eighth country with which India has a civil nuclear agreement. The other countries are the United States, France, Russia, Mongolia, Kazakhstan, Argentina and Namibia.
• India and Russia have signed a long-term civil nuclear cooperation agreement in Moscow under which Russia will construct four new nuclear reactors in India and provide uninterrupted supply of nuclear fuel.

Nano Mission

India mounted a national nano mission in 2007 with an objective of promoting basic and applied research in nano science with an outlay of US$ 205.77 million over 5 years. Under this mission, a new institute of nano science and technology at Mohali and centers at Banglore and Kolkata are being established. Projects and centers of excellence in basic and applied research have been supported with an outlay of over US$ 30.86 million during 2007-08. More than 500 students are currently carrying out doctoral research in nano science in the country.

Renewable Energy

Here are some facts regarding the renewable energy sector in India

• India has the largest number of biomass gasifier systems in the world producing 656 mega watts (MW) of power.
• India is the third largest producer of solar photovoltaic cells in the world producing 2.12 MW of power.
• India is the world's fourth largest wind power user.
• India is the ninth largest solar thermal power generating country in terms of million units per sq. m.
• India was the first country to be accorded the status of a Pioneer Investor in 1987 and was allocated an exclusive area in the central Indian Ocean by the UN for exploration and utilisation of resources.
• India has already sent 25 scientific research expeditions to Antarctica and has two permanent stations in Antarctica.
• In May 2007, India received approval from the Antarctic Treaty Consultative Committee (ATCM) to construct its third station at Larsemann Hills in Antarctica.

The ministries of Commerce and Industry and New and Renewable Energy are working on a regulation that makes the use of renewable energy mandatory for special economic zones (SEZs) to save on traditional fuel like coal and diesel.

Sustainable energy investment in India went up to US$ 3.7 billion in 2008, up 12 per cent since 2007, according a report titled 'Global Trends in Sustainable Energy Investment 2009'. It included asset finance of US$ 3.2 billion, up by 36 per cent. Venture capital and private equity saw an increase of 270 per cent to US$ 493 million. Mergers and acquisition activities totaled US$ 585 million. Most acquisition activity was centred on biomass, small hydro and wind projects. The Semiconductor Policy announced in 2007 led to US$ 347 million of investment in the solar sector in 2008, nearly all of which is directed towards manufacturing facilities.

India has a market value of US$ 270.98 billion in low-carbon and environmental goods and services (LCEGS). With a 6 per cent share of the US$ 4.32 trillion global market, the country is tied with Japan at the third position in a report released by the British government.

The government of India has taken several initiatives to further promote renewable energy in the country.

• US President Barack Obama and India's Prime Minister, Dr Manmohan Singh, have signed a comprehensive Memorandum of Understanding (MoU) to develop clean energy technology in the field of wind and solar energy, second-generation biofuels, and clean coal technologies.
• The government has initiated a research programme on solar energy synergising strengths of all the four Indian Institutes of Technology (IITs) and other leading Indian technological institutes to develop novel materials, devices and systems applicable to solar energy.

Intellectual Property

Intellectual Property is a product of the mind or the intellect, and can be in the form of patents, trademarks, geographical indications, industrial designs and layout designs of integrated circuits, plant variety protection and copyright.

India has updated its Intellectual Property-related legislation so as to meet its international obligations. The Indian Patent Act, amended in 2005, introduced a product patent regime for food, drugs and chemicals.

India is also a member of several international organisations and treaties:

• India is a member of the World Intellectual Property Organization (WIPO), the United Nations (UN) agency that administers treaties in the field of intellectual property
• India is also a signatory to two major treaties, namely, the Paris Convention for the Protection of Industrial Property of 1883 and the Berne Convention for the Protection of Literary and Artistic Works (relating to copyright) of 1886
• India is a member of the Patent Cooperation Treaty (PCT) which facilitates the procedure for obtaining patents in several countries, through the filing of a single application.
• India is a member of the World Trade Organization (WTO). The WTO agreement also contains an agreement on intellectual property, namely, the Agreement on Trade Related Aspects of Intellectual Property (TRIPS). India has complied with the obligations contained in the TRIPS Agreement and amended/enacted IP laws.

The government has also started a US$ 35 million modernisation programme for infrastructure creation and upgradation of existing facilities in intellectual property offices.

As a result of modernisation and restructuring of existing systems and processes, there has been an increase in efficiency as well as awareness.

Patents

• The filing of patent applications has increased from 4824 in the year 1999-2000 to 36,877 in the year 2008-2009.
• The number of applications examined has gone up from 2824 in the year 1999-2000 to 10,296 in 2008-09.
• The grant of patents has increased from 1,591 in 2001-02 to 18,161 in 2008-09.

Trademarks

• The backlog of unexamined applications of approximately 5,00,000 cases has been brought down to zero.
• The filing of applications has increased from 90,236 in 2001-02 to 1,30,172 in 2008-09.
• As against 8,010 registrations in 1999-2000, 1,02,257 trademarks were registered in 2008-09.

The Government has set up a National Institute of Intellectual Property Management (NIIPM) at Nagpur and it is expected to be fully functional by this year. NIIPM, which was envisaged as a world class institution, will undertake wide-ranging activities such as training, education, research and will also function as an IP think tank.

In the last few decades, India has become a hub for global research and development (R&D) by providing cutting-edge facilities. India is likely to emerge as the next global hub for innovation and to join the club of developed nations, with the country aiming to increase its R&D expenditure in the coming years, according to a study by Evalueserve, a global research and analytics firm.

A forecast by Battelle, the world's largest independent research and development organisation, estimates that R&D spending in India may reach up to US$ 24.1 billion in 2009. India is quickly establishing itself in the global R&D arena especially in the fields of biopharma, automotive, IT/software, and IT enabled services. With growth pegged at 27.3 per cent, India’s R&D sector is ranked the second fastest-growing in the world.

With over 380 universities, 11,200 colleges and 1,500 research institutions, India has the second largest pool of scientists and engineers in the world. Over 2.5 million graduates are added to the workforce every year, including 300,000 engineers, and 150,000 IT professionals.

The country's impressive performance in areas such as space technology, computers, nuclear science, automobiles, pharmacy, manufacturing, biotechnology, energy, nanotechnology, aviation, theoretical physics and statistics, among others, shows that invention and innovation in India are now an important part of the economic activity.

India is fast becoming an attractive destination for global R&D investments due to the large pool of qualified scientists and engineers and the excellent educational and R&D infrastructure, coupled with a regulated patent regime. It is estimated that 225 Fortune 500 companies have R&D centres in India, besides a host of government and privately funded R&D organizations.

The offshoring of R&D services to emerging countries such as India, China and Eastern Europe is expected to pick up in 2010, tracking the global economic recovery despite relatively flat R&D budgets.

Advisory firm Zinnov Management Consulting expects R&D offshoring to grow at an average of 10 per cent in 2010, up from expected growth of 6-7 per cent in 2009.

The total offshore R&D services market in 2009 is expected to be in the range of US$ 19.7 billion-US$ 20.3 billion, up from US$ 18.7 billion in 2008.

In an indication of India’s growing importance as a clinical trial destination, multinational pharmaceutical firms are queuing up for approvals to test their new drugs here. At least a dozen global firms, including Roche, Pfizer and Astra Zeneca, got a nod from the Drugs Controller General of India (DCGI) to conduct over 50 clinical trials on Indian volunteers, official data reveals. The global clinical research outsourcing market is projected to touch US$ 23 billion by 2011, with consultancy firm KPMG estimating that India will corner 15 per cent of this in two years.

After conducting clinical trials for spinal cord injuries in the US and China, US-based stemcell transplantation and therapeutics company, StemCyte Inc is planning to conduct the same in India next year.

The company has set up a first-of-its-kind umbilical cord blood (UCB) public bank for India in a joint venture with Chennai-based Apollo Hospitals and Ahmedabad-based Cadila Pharmaceuticals.

Global R&D Hub

• NTT DoCoMo, Japan’s leading telecom provider, is to set up a new global research and development centre in India in association with Tata Teleservices Ltd (TTSL), its GSM partner in the country.
• Microsoft has built its largest development centre outside the US in India.
• General Electric's (GE) centre in Bangalore is the company's largest research outfit outside the US. GE Healthcare has almost trebled its R&D facility space at its Bangalore centre, including a US$ 25 million ‘simulated hospital’ that will try out new medical innovations for the local and global markets.
• Dell has established its biggest research and development centre outside the US in Bangalore.
• The Daimler-Chrysler Research Centre in India is one of three centres the company has outside Germany.
• SAP Labs India is the largest R&D hub and support presence for SAP outside Germany.
• Royal Shell Group has its second largest R&D centre—Shell Technology Centre—in Bangalore.
• India is the largest R&D centre for Cambridge Silicon Radio (CSR)—a provider of personal wireless technology—outside the United Kingdom (UK).
• Intel's largest R&D centre outside the US is located in Bangalore.
• The Philips Innovation Campus (PIC) at Bangalore is the largest R&D centre for Philips outside Holland.
• Oracle's India Development Centre (IDC), which is spread across twin locations in Hyderabad and Bangalore, is the largest development centre for Oracle outside the US.
• DuPont, the US$ 29.4-billion Global Science Company, is conducting a new experiment—Research and IPR (Intellectual Property Rights), under one roof at its US$ 26.2 million, DuPont Knowledge Centre (DKC) in Hyderabad, its sixth research and development facility.
• 3M India, the subsidiary of US$ 25.3 billion diversified technology focussed 3M Corporation, is expanding the company’s R&D capabilities in India with an aim of meeting the growing local needs. The company is spending US$ 12.3 million to US$ 14.32 million to set up one more R&D centre in Bangalore.
• PerkinElmer, Inc, a global company focused on improving the health and safety of people and the environment, has announced plans to establish a state-of-the-art Bio-pharma Center of Excellence in Hyderabad, India.

Achievements

• India is the only developing country and the sixth in the world, to design, manufacture and launch its own satellites.
• About 165 institutions in the country are engaged in genetic engineering research, comprising 55 in transgenic work, 25 in therapeutics and 85 in basic research.
• India is among the top five governments in the world funding research and development in neglected diseases, with particular focus on diseases like leprosy and dengue fever.
• R&D spending at India's top 25 drug companies soared 17 per cent in 2008-2009, according to a survey conducted by Pharmabiz. Ranbaxy topped the list with R&D investment of US$ 100 million, up 2.4 percent from the previous year.
• According to a Pharmabiz survey, Dr Reddy’s filed 23 Abbreviated New Drug Applications (ANDAs) during 2008-09 and launched 16 new products in the US market. Orchid filed 58 ANDAs, Lupin filed 28, Glenmark 22, Matrix 20, Aurobindo Pharma 19, Cadila Healthcare 19, Alembic 8 and Ranbaxy 6.
• India is one of the few countries that have developed stem cell lines as part of the stem cell network.
• In the pharmaceutical sector, India has the largest number of FDA-approved plants after the US.
• Indian Institute of Technology (IIT), Chennai, has developed the world's first nano-material-based water purifier.
• In the automobile segment, R&D expenses of six auto companies of Indian origin increased 70 per cent to US$ 351.45 million in 2006-07 - from US$ 112.49 million in 2003-04.
• The engineers of Intel’s R&D lab in Bangalore have made significant contribution to the development of the concept version of the 48-core Intel processor—the Single-chip Cloud Computer (SCC).

Tie-ups

• Biocon Ltd has announced an exclusive collaboration with the US-based generic drugs major, Mylan Inc to develop, manufacture, supply and commercialise many high-value generic biologic compounds for the global markets.
• Avesthagen Ltd has signed a memorandum of understanding (MoU) with Finland's VTT Technical Research Centre to take up product-based research projects in therapy-based diagnostics.
• The company has also signed a MoU for long-term collaboration in its ongoing Parsi genomics project, Avestagenome, with the Harvard Medical School’s Department of Genetics.
• Yahoo! India Research & Development has partnered with the Indian Institute of Information Technology (IIIT), Hyderabad, to accelerate research and development in cloud computing. Cloud computing is an Internet-based computing technique wherein resources are provided over the Internet ‘as a service’ to users, in a completely transparent manner.
• Infosys Technologies is partnering with the Indian Institute of Technology-Bombay (IIT-B) and Monash Research Academy for research and development (R&D) in the area of cloud computing and green data centres.

Investments

• Alexandria, the world’s largest lab space provider, will invest around US$ 200 million in Genome Valley, Hyderabad in a phased manner.
• The US$ 63.7 billion Johnson & Johnson is planning to turn India into a global hub for late-phase development of its new drugs. In the late-phase, scientists decide on the form in which medicines can be best produced and packaged and are the most tightly controlled part of drug development.
• Boeing has set up its R&D centre in Bangalore which will work in areas such as aero structures and aerodynamics to sustain the company’s competitive technological edge.
• Sun Pharmaceuticals, India’s biggest drug company by market capitalisation, will spend US$ 70.24 million in R&D of low-cost versions of original drugs to be sold in the domestic and global markets.
• Maruti Suzuki India Ltd is in talks with the Haryana government to set up an R&D centre, including a testing track, in the state. The proposed project, spread over 500 acres, is likely to be at Manesar and would attract an investment of US$ 381 million.

Road Ahead

A study by Evalueserve reveals that India is expected to strengthen its position in the innovation space as it is targetting to increase its R&D spend to 2 per cent of the GDP by 2012 under the 11th Five-Year Plan, from less than one per cent earlier. This is in line with expectations that China and India are set to overtake Europe and the US to become world leaders in research by 2025.

The Indian education system is one of the largest in the world with some of its institutions for higher education ranked among the best globally. According to a 2008 report by CLSA Asia Pacific Markets, the Indian education market is estimated at US$ 40 billion; this figure spans Kindergarten to grade 12 at US$ 20 billion, private professional colleges US$ 7 billion and tutoring US$ 5 billion, vocational training US$ 1.4 billion, test preparation US$ 1.7 billion and pre-schools US$ 1 billion. An IDFC-SSKI report estimates that private spend in education in India is growing at a compound annual growth rate (CAGR) of 14 per cent and will touch US$ 80 billion by 2012.

Experts say that India’s education sector could attract potential investment of US $100 billion over the next five years on the back of the requirement for infrastructure development and the demand for skilled professionals.

Indian academics as well as Indian educational institutions are winning accolades abroad. An India-born structural biologist, Dr Venkatraman 'Ramakrishnan, has been jointly awarded the Nobel Prize in Chemistry in 2009 for work on proteins that control life. Indian professor Yash Pal has been awarded the Kalinga Prize, an annual award, given by United Nations Educational, Scientific and Cultural Organization (UNESCO) in recognition of exceptional skill in promoting science among lay people.

IIT-Bombay and IIT-Delhi have been ranked at 163 and 181 positions, respectively by an annual survey published by The Times Higher Education Supplement (THES) and Quacquarelli Symonds (QS), the 'THE - QS World University Rankings 2009'. The list also ranks IIT Kharagpur among the top 400. The Indian School of Business (ISB), Hyderabad, has been ranked 15th in the global B-School rankings released by the Financial Times, London.

Making education available to all is top priority for the government, and the 86th constitutional amendment has also made elementary education, a fundamental right for children between the age group of 6 to 14. The government had established the University Grants Commission (UGC) in 1953 for the development of the higher education system. Since then, the expansion of higher education has been growing rapidly.

Further, the country's higher education system will receive a huge impetus with the setting up of as many as eight new Indian Institutes of Technology (IITs), six Indian Institute of Management (IIMs) and five new Indian Institutes of Science in various states. Moreover, during the 11th Five Year Plan (2007–2012), the government plans to establish 14 Universities with world-class standards and an additional 16 universities in states which do not have a Central University.

The focus of the 11th Five Year Plan is on giving vocational education to school dropouts and those included in the conventional education streams. The Ministry of Education has estimated that the country needs to build around 200,000 new K-12 (kindergarten to senior secondary) schools. Further, the government is also planning to upgrade 15,000 upper primary schools to secondary schools and enhance the capacity in the existing 44,000 secondary schools across the country.

With the government planning to allow private investment into primary education, primary education will receive a major boost. A few public-private partnerships have already taken shape under the rural health mission and the Sarva Shiksha Abhiyan, mostly in the form of management contracts.

The higher education system in India comprises of more than 17,000 colleges, 20 central universities, 217 State Universities, 106 Deemed to be Universities and 13 Institutes of National importance.

Moreover, India will soon set up its first Astronaut Training Centre at Devanhalli in Bangalore. The search for Indian astronauts is likely to commence in 2013.

Technical Education in India

There are a large number of institutes providing diverse technical courses in India. The number of AICTE approved institutes that offer engineering degree courses in India is 439,689, 1244 institutes offer diploma courses in engineering, 415 institutes offer diploma courses in Pharmacy, 63 institutes offer Hotel Management and Catering Technology, 25 AICTE approved institutes offer Architecture, and 1012 AICTE approved institutes offer Master of Computer Application courses and many other streams. In 2008, the AICTE received 886 applications for starting engineering colleges and 1,084 applications for new management institutes.

Foreign Institutes in India

Many overseas business schools have come to India seeking a big revenue boost, and a chance to understand the concerns of a developing economy.

• Fuqua School of Business at Duke University has tied up with IIM Ahmedabad to offer a global leaders programme.
• The Indian arm of Citigroup is working with The Tuck School to train its executives.
• IIM Bangalore offers an advanced master's programme, in collaboration with the City University of Hong Kong, SDA Bocconi-School of Management in Italy and Anderson School of Business Los Angeles, USA.
• Harvard Business School will start an executive education programme in India next year, targetting companies with global ambitions to address what it believes is the typical challenge in the booming economy; managing hyper growth.
• France-based ESCP-EAP European School of Management plans to hold executive education programmes for corporates in India.
• US-based ESI International, (a provider of consulting and training solutions), plans to enter the Indian corporate training market.
• School of Business and Engineering Vaud (Heigh-VD), Switzerland has proposed a tie-up with Delhi Technological University (DTU) to collaborate on short-term students exchange program under the name of 'Summer University'.

Global Footprints

A number of Indian B-schools have established offshore campuses and the Middle Eastern nations and Singapore are clearly emerging as favourite destinations.

• The Indian Institutes of Management (IIMs) are planning to join hands for setting up campuses abroad.
• Xavier Labour Relations Institute (XLRI) in Jamshedpur offers an executive education programme in Dubai and now has a campus in Singapore.
• Institute of Management Technology (IMT) and SP Jain Institute of Management and Research (SPJIMR) also have campuses in Dubai.
• The Management Development Institute (MDI) in Gurgaon is in advanced talks with the government of Qatar to open a branch in the capital city of Doha.
• Entrepreneurship Development Institute of India (EDI), which has already opened shop in Laos, Cambodia and Vietnam, is in the process of establishing more centres in Myanmar and Kazakhstan.
• NIIT Ltd will be opening up a training centre in Dalian in Northeast China, in 2008, starting with 1,000 professionals, and later, scaling it up to 10,000 a year in the next three years.

E-Learning

Although internet penetration in India is a measly 4 per cent presently, the e-learning market size is US$ 27 million and is likely to grow to US$ 280 million by 2012, according to an education sector report by brokerage firm, CLSA Asia-Pacific Markets. In such a scenario, e-learning is a huge opportunity in India, which many universities are availing of.

Training

The training industry in India is a sunrise industry with a lot of potential. According to “Opportunities in corporate training – South Asia”, the Indian corporate training industry is estimated to be US$ 2.3 billion.

The government of India has also taken many initiatives. These include:

• Setting up 1,500 Industrial Training Units (ITIs); 125 new polytechnics through public private partnerships (PPP) and 50,000 new Skill Development Centres
• Upgrading 400 existing Centres of Excellence; it is into Centres of Excellence with World Bank assistance
• Upgrading 100 ITIs with Central funding and 1,396 ITIs through PPP

Infosys Technologies has set up the world’s largest corporate training centre that can handle 14,000 employees at any given time. Located at its 337-acre Mysore campus, Infosys spent over US$ 415.42 million in setting up the centre, of which US$ 353.11 million was spent on education and training related infrastructure.

Investments

Huge government as well as private investment is likely to flow into the Indian educational system. Education infrastructure is an emerging asset class and favoured by many investors and developers. A recent survey showed that 80 per cent of the 90 private equity firms surveyed were interested in investing in the Indian education sector. Milestone Group, predominantly a real estate fund, is planning to set up a US$ 128.7 million private equity fund, in partnership with Religare, with a specialized focus on education and healthcare. Kaizer Education, another fund, is planning to raise US$150-200 million to invest in the Indian education sector.

The education sector in India is expected to step up its information technology (IT) investment largely in the areas of networking, basic infrastructure and implementing IT security solutions, according to a study by Springboard Research.

In its report ‘Inside the campus: IT in India’s education sector’ , Springboard has forecasted that the education sector will step up IT spending from an estimated US$ 356 million in 2008 to US$ 704 million in 2012, reflecting in a CAGR of 19 per cent during 2007-2012 .

Moreover, private equity players are beginning to show a fair amount of interest in the non-regulated education business in India. More than half a dozen companies in the education business have received private equity investments in the past two years. These include FIITJEE, Time, Career Launcher, Hurix System and Wigan & Leigh.

Eleventh Five-Year Plan (2007-2012)

Prime Minister Dr Manmohan Singh has termed the Eleventh Five Year Plan, 'India's educational plan'. It emphasises:

• Investing more in education by ensuring higher financial expenditure for education so as to gradually increase the proportion of financial expenditure for education in GDP to 4 per cent
• Popularisation and consolidation of nine years of compulsory education in rural areas and elimination of tuition and incidental fees for rural students during the compulsory education period
• Reducing the dropout rates for both boys and girls of all social groups under the Sarva Shiksha Abhiyan (SSA)
• Vocational training for both men and women, which is to be given top priority
• Undertaking a major effort to expand and improve the quality of India's higher education system
• Increasing adult literacy to 85 per cent by the end of the plan period

The Road Ahead

• The Ministry of Human Resource Development (MHRD) is keen to introduce the Foreign Educational Institutions (Regulation of Entry and Operations, Maintenance of Quality and Prevention of Commercialisation) Bill during the 2010 budget session of Parliament in February. The bill proposes to allow 100 per cent foreign direct investment (FDI) in higher education.
• The Ministry of Human Resources Development plans to set up around 14 Innovation Universities. Ivy League universities such as Yale, Harvard, Princeton and Massachusetts Institute of Technology (MIT) have expressed interest in collaborating.
• India is to sign to five Memorandums of Understanding (MOUs) with United Kingdom higher education entities during HRD Minister, Kapil Sibal’s London visit scheduled for January 2010.

Exchange rate used:
1 USD = 48.14 INR (as on September 2009)
1 USD = 46.52 INR (as on December 2009)