Computer education sector seeks tax breaks

The India Computer Education Industry is going through a wave of change with the government's opening up the sector for private sector participation. The Governments at the Central and State levels are coming out with tenders for computerization of the public schools and are pressing for computer education at the school level so as make the new generation upbeat to the current global scenario. The quarter gone by has seen continued good performance by the private sector players.

In the 11th plan, the government has budgeted Rs 411 billion to set up ICT labs for computer-aided learning and Edu-sat centers for distance learning programs. The government has also proposed Rs 310 billion for the National Skill Development Program in the plan period, for training through virtual centers.

The India education space could be one of the largest markets in Asia with a population of over 1.13 billion. With the government planning to spend around 5% of GDP in the next 5 years on education, the market could be any where worth US$ 50-55 billion.

Industry expectation

In the budget 2008, the Government had increased the allocation by 20% at Rs 34400 crore. The industry is expecting such increase in the current budget.

The industry is demanding tax breaks to Companies investing in Education infrastructure so as to encourage fast paced growth in education infrastructure.

Analyst expectation

We expect a similar increase in the current budget as well.

Stocks to watch

Educomp Solutions, Everonn Systems, NIIT

Outlook

The Indian IT Education & Training and ICT sector has huge untapped potentials. The Government is focused on improving literacy and quality of Education. Any further thrust in the budget would boost the sector further. The spending on education is expected to rise 12-fold per household between FY1995-2025E due to rise in income levels of the Indian middle class.

However, the sector is unorganized with regional content and a large number of regional players with large dependence on government spending and lack of quality education in rural areas. Any delay in the government programme and red-tapism can delay the growth.