The Indian government has begun tightening the noose around local edtech players. First in line are edtech companies partnering with higher educational institutes to offer master’s and degree courses online.
The University Grants Commission (UGC) and the All India Council for Technical Education (AICTE)—the two top governing bodies for higher education and technical education, respectively, which fall under the Ministry of Education—have issued public notices that bar local colleges and universities from working with higher education startups.
As per the public notices by UGC and AICTE, higher educational institutions shall not offer open and distance learning (ODL) and online programs through franchise arrangements with edtech firms. These arrangements reportedly include outsourcing course content creation to online education platforms and running degree programs through them.
The notices also said edtech companies offering MBA (master of business administration), MCA (master of computer applications), and other degrees and diploma courses in conventional, ODL, and online modes in association with UGC and AICTE approved universities are not permitted to do so.
“Some edtech companies are advertising in newspapers, social media, and television that they offer degree and diploma courses in ODL, and online modes in association with some universities and institutions recognized by UGC,” the notice by UGC said. “Such a franchisee arrangement is not permissible, and action will be taken against defaulting edtech companies as well as higher educational institutions under applicable regulations.”
Further, the regulators advised students to check the recognition status of the programs on the UGC and AICTE websites before enrolling in any course.
These notices will directly impact higher education startups like upGrad and Great Learning, as these companies partner with colleges and universities in India and overseas to offer courses. For instance, upGrad offers MBA and PGDM (post-graduate diploma in management) programs associated with local universities like NMIMS Global and Jindal Global University. Similarly, Great Learning has arrangements with institutions like SRM Institute of Science and Technology, Shiv Nadar University, and PES University, among others, to offer master’s and bachelor’s courses, including MBA, MCA, M.Tech (master of technology), and BBA (bachelor of business administration).
Both upGrad and Great Learning declined to comment for the story. Instead, upGrad, in a separate press note, said it has appointed Sanjay Kumar, former Indian country director for Lakshmi Mittal and Family South Asia Institute, Harvard University, to spearhead the company’s corporate affairs and public policy for India.
“As part of his new role, Sanjay will work with the government, industry associations, and other relevant stakeholders in the policy space to propel strategic developments, which in turn can support the brand in creating an integrated learning ecosystem within the country,” upGrad said in a statement.
According to Amit Ratanpal, founder and managing director at BLinC Invest, an early-stage VC focusing on edtech and fintech, the recent move by UGC will have a significant impact on the edtech companies in the higher education space.
“Over the last two to three years, there has been an exponential increase in partnerships between edtech firms and higher education institutions, leading to the emergence of a variety of online degrees in the market,” he told KrASIA. “The increasing popularity of online degrees in the country has garnered the attention of government bodies, which will look to monitor and regulate this segment to ensure fair market participation and consumer protection.”
“However, putting a complete stop to online degrees is not the best solution,” he added. “The regulators need to develop a transparent framework to promote healthy collaboration between edtech and higher education institutions as well as to protect the end learner.”
The crackdown comes barely a week after it was reported that over a dozen edtech firms have come together to create and adopt a self-regulatory code of conduct. The move was followed by an advisory issued by the education ministry in December 2021 about edtech firms making outlandish and false promises to students and deploying loan-based payment schemes that trap parents into paying EMIs, even when they want to cancel the course.
The recent public notices do not impact edtech unicorns like Byju’s, Unacademy, and Vedantu—all of which are a part of the edtech lobby developing the self-regulatory code—as they mainly cater to K-12 and test prep segments. However, Byju’s may be indirectly affected, having acquired Great Learning for USD 600 million in July 2021.
Despite the new regulations, the higher education startups are likely to continue to operate and scale as they also offer degree courses from foreign universities as well as technical certificates for upskilling—which are two of the key focus areas for them.
Moreover, BLinC’s Ratanpal said the existing edtech businesses will move towards becoming the back-end service partners for the online learning programs provided by the universities and other higher educational institutions, which will lead to the emergence of online program management solutions in the country.
A report by Bengaluru-based consulting firm RedSeer and investment firm Omidyar projects the market size of the online higher education sector to be USD 1 billion in 2022, up from USD 329 million in 2019, in terms of sales. In the post-K12 segment, higher education makes up for the lion’s share and is expected to constitute 60% of the soon-to-be USD 1.7 billion market.