Union Budget 2021
Every year, we bring the rundown of the Union Budget from the lens of the startup ecosystem through a mix of pre and post budget coverage showcasing the expectations and impact on the ecosystem.
The edtech sector in India saw never-before growth in 2020 as physical classrooms had to shut down due to Coronavirus fallout and online classes became the order of the day. Even as the country is gradually reopening, the boom seems to continue as the digital transformation of an essentially brick-and-mortar segment enables remote access to quality learning.
Backed by the government’s National Education Policy (NEP) 2020, the edtech sector benefited the most during the pandemic. According to the Annual Tech Startup Funding Report 2020, published by Inc42 Plus, edtech was one of the top three sectors in terms of deal counts and raised more than $1.4 Bn. Most of this funding flowed to industry behemoths BYJU’s ($922 Mn) and Unacademy ($260 Mn), which raised the capital in multiple rounds.
As most of the K-12 classes, test prep and other professional training courses went online, the country witnessed a mixed outcome. To start with, a large chunk of Indian schools, colleges and universities were caught unprepared and failed to conduct exams and studies online as the country lacks the kind of pan-India infrastructure required for such a quantum jump. And a large part of rural India, especially the underprivileged and financially and socially marginalised sections, suffered most from this digital divide.
Speaking at the Joint Session of Parliament on Jan 29, 2020, President Ram Nath Kovind highlighted how online education would get a much-needed boost under NEP 2020, but a country-wide implementation road map is still awaited besides the rise in education spend as stated in the policy – from 10% of government public expenditure to 20% by 2030.
Incidentally, at the 2018 joint sitting of Parliament, President Kovind had similarly highlighted how the government’s flagship BharatNet Project would play a key role in taking ehealth, e-education, e-governance and ecommerce to every village, and further claimed that in the first phase, more than 100,000 village panchayats got digitally connected. However, later in 2018,, The Wire published a report saying less than 2.5% of India’s 2.5 lakh panchayats had commercial broadband connections. So, it is not surprising that ‘Bharat’ consumers still require adequate digital infrastructure to reap the benefits of edtech.
According to media reports, India was home to 260 Mn students, the second-largest school-going population in the world, when the country went under lockdown. Although a few state governments started setting up low-cost digital platforms to meet the requirements of this huge market, the impact was missing on multiple fronts due to the lack of awareness, equipment and skill development capabilities.
This could be taken care of with a full-fledged implementation of NEP 2020 as the policy lays a special focus on developing digital infrastructure and paves the way for online apps featuring quizzes, competitions, assessments, enrichment material and online communities for shared interests. It further proposes that schools should develop smart classrooms in a phased manner for using digital pedagogy, thereby enriching the teaching-learning process with e-curriculums, e-classrooms, virtual labs, and other online resources and collaborations.
Platforms like Swayam and Diksha will also be promoted so that standardised e-training programmes can be administered to a large number of teachers/educators within a short span.
All these indicate a bright spot and new growth opportunities for the edtech startups in India. However, a shift from traditional education to technology-driven customised and skill-specific learning will have to deal with several regulatory and operational hurdles. Here is a look at what edtech companies are expecting from Union Budget 2021.
Reduce Import Duty, Taxes On E-learning, Online Counselling
Although online classes and courses have become mainstream in the Covid-19 era, a major section of the country’s population cannot afford them due to high price tags. Most of the online courses and counseling sessions currently attract 18% GST, a major hurdle faced by edtech startups as they try to reach the masses.
Also, this does not sync with the NEP 2020 policy that wants the Right to Education to be extended to all students aged between 3 and 18. Therefore, quite a few founders of edtech companies have argued against high GST.
According to Krishna Kumar, founder and CEO of Simplilearn, “With digital modes of learning and teaching gaining traction, and rising demand for a technically skilled workforce defining the days ahead, digital skilling is the need of the hour. It will encourage both learners and edtech platforms if the government reduces the GST applicable for online education services in the upcoming Union Budget.”
Prateek Shukla, the cofounder and CEO of Masai School, concurs. Keeping in mind the larger agenda of skilling and making the Indian workforce job-ready, the government should consider implementing steps which will encourage investor interest to boost the growth of the sector, he says. “We would like to urge the government to reduce the GST on online education services. This will help us provide quality education to more students.”
Sumeet Jain, cofounder of Yocket, explains that taxable supply implies an inventory of products or services which are tax-leviable under GST. But the offerings provided by an educational foundation to aspiring students, teaching staff and other employees should not be burdened with GST. This may hamper people’s career choices and opportunities and may affect the country as a whole. Educational institutions and courses are being taxed at 18%, but this should be reduced to around 5%.
Needed: A Push Towards Technology-Based Learning
Recognising the importance of integrating technology with the country’s educational ecosystem, NEP 2020 proposed the creation of an autonomous body called the National Educational Technology Forum (NETF). It aims to facilitate decision-making on the induction, deployment and use of technology so that leadership teams in educational institutions, the central and state governments, and other stakeholders can leverage the knowledge and research data to develop and share best practices.
Indian edtech startups expect Finance Minister Nirmala Sitharaman to announce a specific road map in this regard.
Rajeev Tiwari, the founder of STEMROBO Technologies, says until now, the government’s focus on education delivery at the K-12 level mostly evolved around quantity (rapid expansion) and improvement. But there seems to be a growing need for Indian students to organise themselves and be on a par with their global counterparts.
“To achieve this, technology-oriented curriculum delivery, in line with the demands of 21st-century skills, should be assimilated in our education delivery for K-12 students and schools. Union Budget 2021 should enable improved accentuation and discretionary designation to resolve these concerns,” he propounds.
Abhishek Gupta, founder and CEO of Hex N Bit, points out that India is way behind when it comes to developing fab labs (small-scale workshops for experimentation, innovation and development of almost anything). This increases the cost of manufacturing electronic products, especially as companies have to pay high import duties. “The only option is to set up fab labs in India or reduce import duty to ensure made-in-India products become the most preferred all over the globe. Setting up fab labs in India is important , but it requires considerable funding.”
Introduce More PPP Projects For Skill Development
Speaking to Inc42, several edtech startups have underlined the lack of adequate skill sets and training across the formal education system that hindered transitioning to the online system.
According to Kumar of Simplilearn, the need and demand for digital skilling are peaking. “We want the government to encourage public-private-partnership (PPP) models with ed-tech companies at national and state levels, with a bigger agenda of making the Indian IT workforce skill- and job-ready.”
Gupta of Hex N Bit agrees, saying there is a considerable demand for skilled and talented people. So, education companies expect the government to elevate the core infrastructure to meet the demand for new-age technologies like AI, cybersecurity, IoT and digital marketing. Considering the latest trends in technology, the government has already launched NEP 2020 and even top universities can plan to set up their entities in other countries.
This will need a series of collaborations with startups at multiple levels, right from schools, colleges and universities to government organisations. The Union Budget 2021 should pave the way for these multifold partnerships with startups, making it easier for them to enter the formal education space as the latter tilts towards edtech.
Startups also hope that the government would help resolve the issues regarding poor digital infrastructure. While Kashmir is struggling with a 2G connection for months, the Jio connectivity is still poor and inconsistent across the country, and several founders have expressed their disappointment over the unreliability of 4G while conducting online live courses.
“We expect the government to help with network penetration at regional levels and allocate funds for upgrading the tech infrastructure and providing equal opportunities to the underserved,” sums up Amit Agarwal, founder and CEO of OckyPocky.