Tightening Visa Norms: A Boon for India's Higher Education Sector?

The tightening of student visa norms in countries such as the USA, the UK, and Canada may unexpectedly foster growth in Indian higher education institutions, a study by ICRA suggests. These changes are likely to boost the credit profiles of Indian educational institutions, especially those focusing on medical studies.

ICRA forecasts a 9-11% revenue increase for higher education institutions by FY2026, with a comparable projection for FY2025 based on expanding seat capacities, enrollment growth, and new courses. With about 15-20% of India's population aged between 15-24 and literacy rates improving, the demand for higher education is set to rise.

Although the cost of higher education has been a deterrent, easier access to student loans and a doubling of government expenditure in the last decade have supported revenue growth. With the number of universities almost doubling from 642 in AY2011 to around 1,189 in AY2025, higher education sees robust revenue growth.

According to Suprio Banerjee, Vice President & Co-Group Head, Corporate Ratings at ICRA, apart from government encouragement, restrictive visa norms will drive Indian students to consider domestic options, which boosts the sector's outlook. The push from the National Education Policy 2020 and private sector involvement underscores a promising future.

The operating surplus for studied entities remained at a healthy 30-35% from FY2020-2024, and this trend is expected to continue. The capacity to fund expansion through on-book liquidity ensures robust debt coverage, supporting growth without heavy borrowing. The gross enrollment ratio (GER) has climbed to approximately 28% in AY2022 and aims for 50% by 2035 under NEP 2020, highlighting the sector's untapped growth.

(With inputs from agencies.)