작성일자: 2013.6.12

작성자: 뉴델리 무역관 Ms. Jaya Nayar (jaya@ktcdelhi.net)

 

 

1. 수요동향

 

□ 시장규모

 

 ○ India Ratings expects the Indian education sector's market size to increase to Rs 602,410 crore (US$ 111.16 billion) by FY 2015 due to the expected strong demand for quality education. The sector grew at a compounded annual growth rate of 16.5% during FY 2005~2012.

 

 ○ The private education sector is estimated to reach US$ 70 billion by 2013 and US$ 115 billion by 2018, according to consulting firm Technopak. Technopak sees enrollments in Kindergarten-12th grade (K-12) growing to 351 million, requiring an additional 34 million seats by 2018.

 

 ○ Further, according to the report '40 million by 2020: Preparing for a new paradigm in Indian Higher Education' released by Ernst & Young, the higher education sector in India is expected to witness a growth of 18.0% CAGR till 2020. At present, the sector witnesses spends of more than Rs 46,200 crore (US$ 8.52 billion), which is estimated to grow at an average rate of more than 18.0 per cent to over Rs 232,500 crore (US$ 42.89 billion) in 10 years.

 

□ 투자규모

 

 ○ The education sector in India is also considered as one of the major areas for investments as the entire education system is going through a process of overhaul, according to a report 'Emerging Opportunities for Private and Foreign Participants in Higher Education' by PricewaterhouseCoopers(PwC).

 

 ○ The education sector has attracted foreign direct investments(FDI) worth Rs 3,239.76 crore (US$ 597.68 million) during April 2000 to December 2012, according to the data released by the Department of Industrial Policy and Promotion(DIPP).

 

 ○ Public-private partnerships(PPP) can revolutionize education in India and facilitate growth. They can raise the standards of education provision in India and help meet the demand for quality education from a growing middle class with increasing incomes.

 

 ○ According to a report ‘Indian Education Investment Report 2013’ by Franchise India Holding Ltd., the education market in India currently stands at a whopping YoY growth of 15%. However there is a further demand of investments to the tune of US$100 bn for construction and provisioning of education facilities especially in K – 12 and higher education segments. The current spending on Education stands at INR 1035 per month for an urban household and INR 293 for a rural household however consumers are willing to spend even higher spends if given access to quality education and this has brought players to the forefront. Likewise the private sector is rapidly spreading its horizon in the Education market and currently accounts for 48% of its total revenue.

 

 ○ Pre-Schools Education Market largely unregulated is set for a 26% growth over the next few years. This exemplifies the opportunities for education providers to enter Pre-School Education. Some of the new business opportunities existing in the Pre-School segment include Teacher’s training, inclusion of day care centers, provisioning of After-School extra-Curricular activities and edutainment.

 

 ○ The K-12 market though regulated offers a number of opportunities especially in the informal sector such as automated learning platforms, integration of ICT in Classrooms, diversification of Information sector in formal K-12 market and integration of Pre-School education with primary schooling. Higher education market is also flourishing with CAGR of 19 percent expected over the next couple of years.

 

 ○ Investments in the sector are likely to be made in setting up education hubs and incubation centers, expanding existing institutions, developing physical infrastructure, combining vocational education with mainstream education making alternative use of premises and e-learning. In terms of Vocational training the major prospective centers from an investment perspective seems to be Banking and Financial Services, Hospitality, IT / ITES and Beauty and Wellness.

 

 ○ The Early Education, K-12 and vocational education franchise chains are expanding their wings all across the country as well as abroad. Within the education sector, pre-school and child enhancement education services together have taken the lead in franchising with a significant share of 35 per cent. This is followed by professional skill-based education and vocational courses which carry the weight of 30% of the educational franchise industry. There are more than 50,000 franchised education outlets.

 

□ 정부정책

 

 ○ The Central Government plays a vital role in the evolution and monitoring of educational policies and programs.

 

 ○ Some of the initiatives taken by the government for the infrastructural development of education sector are:

  - Rs 160 crore (US$ 29.51 million) is allocated in the Union Budget 2013~2014 to the corpus of Maulana Azad Education Foundation to raise its corpus to Rs 1,500 crore (US$ 276.64 million) during 12th Plan period.

  - Rs 4,727 crore (US$ 871.68 million) is allocated in the Budget 2013~2014 for medical education, training and research.

 

 ○ Government of India is committed to the creation of Nalanda University as a center of educational excellence.

 

 ○ Hewlett-Packard(HP) India has won a contract from the Government of Uttar Pradesh(UP) to supply 1.5 million laptops worth Rs 2,858.70 crore (US$ 527.14 million)

 

 ○ The Nasscom Sector Skills Council(SSC) has signed a memorandum of understanding(MoU) with NIIT for three years, to offer enhanced training programs to students, through its training campuses across India.

 

 ○ India and Republic of Korea have signed a memorandum of understanding(MoU) for cooperation in the field of education.

 

 ○ The Ministry of Human Resource Development(MHRD) plans to set up ten community colleges in collaboration with the Government of Canada in 2012. The Government of India has decided to set up hundred community colleges this year.

 

 

2. 해외기업의 성공하기 위한 요인

 

□ Entry Mode

 

 ○ The international brand may look for a joint venture or prefer franchise model to enter India. Singapore-based EtonHouse, which has 52 international schools and preschools in countries like Singapore, China, Indonesia, Japan, Korea, Malaysia, Vietnam, and India, has set up Serra International, a preschool chain, by joint venturing with Pune- headquartered Edvance Preschools Pvt. Ltd. Serra has opted for the franchise growth model to scale up across the country. Whereas Maple Bear, a preschool brand and supplementary education concepts namely Kinderdance, FasTracKids, KidzArt, Kidville and apple seeds, have entered India through franchising. However, the growth and success of these brands are influenced by key factors such as their uniqueness, adaptability and lucrative proposition.

 

□ Customize for wider consumer-base

 

 ○ To establish itself in the new market and reach a wider consumer-base, the brand’s curriculum or services should be flexible enough to adapt to the local market conditions, if required. Otherwise, the brand may fail to connect with the targeted consumers resulting in a loss of market share. US-based Art franchise ‘KidzArt’ has signed a developer agreement for the state of Maharashtra. Franchising since 2002, the brand’s concept incorporates different styles of Indian folk paintings and it is considering artworks for famous Indian festivals. Now the brand better understands the expectations of the Indian parents.

 

 ○ Canadian education brand Maple Bear, operating since 2004, has found much success in India. The preschool today has a total of 28 locations across India. All of them are franchised. The brand’s curriculum very much aligns to the national curriculum framework of NCERT. Since the same curriculum is offered across its global franchise system, Maple Bear has kept it very prescriptive. Thus, very little tweaking is required locally and there are no costs for customization. Addressing its franchisees for local needs, the brand endeavors to constantly update its curriculum in line with the latest trends in early childhood education worldwide.

 

 

3. 시장 내 주요 경쟁업체

 

 ○ There are many big and small players in the field of mental development/ brain development programs in India.

 

 ○ In this field the most popular field is Abacus Mental Arithmetic with many players in the field. There are many companies both Indian and International in this field offering popular courses on Abacus, Vedic Math, Smart English etc.

 

 ○ All companies are operating through offline centers mostly by franchise way. Revenue turnover of companies could not be found as per published information; also the companies did not disclose the information.

 

Institutes/ Company	Profile	Programmes Offered	Website
Brainobrain Kids Academy Private Limited	Brainobrain is one of the world’s leading Children Institutes for Self Empowerment. Having its Corporate Office in Chennai, India. Brainobrain Kids Academy Private Limited is an ISO 9001 : 2000 certified institution established in the year 2003 having presence in 22 countries.	Abacus Skill Development Course (10 Levels) • For Children of age 4~14 Years • Each Level: 3 Months Total: 10 Levels • Total Duration: 30 Months • Weekly 2 Hours only • Daily practice of 15 Min. essential at home.   NLP Leadership Development Course (5 Days) • For Children of age 8~14 Years • Total Duration - 5 days	www.brainobrain. com
Kumon India	The Kumon Method that began from a father’s love for his child is now available in 47 countries and regions with 4.37 million subject enrolments (as of June 2012). The Kumon Method has remained consistent for over 50 years and has been accepted in many countries despite differences in lifestyle, educational system, and culture.	Maths Programme English Programme Pencil Skills Programme	http://in.kumonglobal.com/
Aloha India	Aloha India, which was established in august, 2002 at Chennai, is the Indian subsidiary of Aloha International, Malaysia, a global leader in advanced abacus and Mental Arithmetic programs specially designed for children in the 4~13 year age span.	Mental Arithmetic Tiny Tots Speed Maths English Smart Kids Art 9 Smart Power Plus Aloha Kinderstart Handwriting Skills	www.alohaindia.com
UCMAS (India) Pvt. Ltd.	Was established in the year 1999 with its corporate office at Chennai. U C MAS took its roots in Malaysia and with the collaboration of Zhusuan Association, China, constantly rose with increased representation in different countries. Bringing the Concept to India as a National Franchiser, U C MAS-INDIA took the responsibility of popularizing the concept in the entire country to benefit the children across all parts of it. There had been more than 3.5 lac student enrolments in India, which speaks about the strong foundation that U C MAS India, was able to establish in India.	Abacus Course UC MAS Memory Technique	www.ucmasindia.com
Ascent Abacus & Brain Gym	USA based company, Specializes in two hand abacus mental arithmetic.	Advance Abacus Brain Gym Kinder Kids Speed Maths Vedic Maths Handwriting Skills Ascent Pre-Abacus Drawing Programme Ascent English	www.ascentabacus.com
SIP Academy India Pvt. Ltd.	SIP Academy India Pvt. Ltd., is a children skill development organization headquartered in Chennai, India. SIP Abacus and Brain Gym program is currently available in 12 countries. More than 500,000 children have benefited from this program from 1000 learning centres spread across these countries. In India, this program was initiated in January 2002. The efficacy of this program has seen more than 2,25,000 children trained & developed in 18 states (Andhra Pradesh, Assam, Bihar, Delhi (NCR), Haryana, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Pondicherry, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttaranchal, and West Bengal) by March 2012. The company is now going into smaller towns to help children improve life skills. We train children aged 7~12 years. The knowledge of numbers from 0~9 is all that is required at the beginning.	SIP Abacus and Brain Gym programme is for  7 to 12 year old children to improve their concentration, listening skills, and numerical ability.   Global Art is a drawing and painting programme for 4 to 15 year old children. A unique programme enhancing creativity, drawing and colouring skills.   SIP AMAL – This accelerated mental learning programme for 4 ½ to 6 year old children is focused on teaching children ‘how to learn’ by improving their logical thinking.   MI Kids programme for 4 to 8 year old children. Helps to speak English fluently with proper pronunciation and intonation.	www.sipacademyindia.com
MaxMind EduTech P. Ltd.	MaxMind is Hyderabad based Internationally renowned brand in Mind Development programs for kids operating since 2006 Imparting Education in Abacus, Vedic Math, and Aero Modeling & Science Labs for kids.	Abacus Vedic Maths Handwriting Science Labs Calligraphy English Speaking	www.maxmindindia.com

 

 

4. 해외 교육 서비스 업체에 관한 현지 법률 및 규제

 

□ The Indian education sector can broadly be classified as such:

 

 ○ K-12 and HEI: The term K-12 stands for kindergarten plus 12 years of schooling. Children enter kindergarten at age 3 and after spending two years in kindergarten, continue on to 12 years of schooling before he/she is ready for higher education. The higher education institutes(HEIs) then take over providing undergraduate, graduate and vocational level university education.

 

 ○ Public education and private education: The Government of India allocates a percentage of its annual budget to the education sector and operates educational institutes. More than 90% of the government’s spend on public education flows into K-12 level education. In addition to government-run public schools, private investment in the education sector is seen traditionally in the form of not-for-profit trusts that operate private educational institutes.

 

 ○ Formal and non-formal education: The formal education system in India broadly comprises the K-12 and HEI level education, which falls under the purview of the Ministry of Human Resource Development(HRD). The non-formal education segment includes pre-schools (1.5~3 years), coaching classes, multimedia/IT to schools and colleges, vocational training and the books market.

 

□ Steps to open a school in India:

 

 ○ In India a school is considered a not-for-profit initiative but the business opportunities available in this case are substantially. Several NGOs working in the domain of education have stated that in Delhi at least 14 lakh kids get admitted to schools in different classes every year.

 

 ○ As per laws, private organizations cannot open schools in India. The schools have to be operated by a society that has been created in accordance with the Societies Act of 1860 or by a trust that has been organized as per the Public Trust Act of individual states.

 

 ○ A private entity willing to set up a school in India can also set up a company as prescribed by Section 25 of the Companies Act 1956. All these legislations ensure that a school is set up as a non-profit making body.

 

□ Under Indian law, 3 legal forms exist for Non-Profit organizations:

 

 ○ Trusts

 

 ○ Societies

 

 ○ Section 25 companies

 

□ Due to better laws, Section 25 companies have the most reliable strongest organizational structure. Section 25 companies are those companies which are formed for the sole purpose of promoting commerce, art, science, religion, charity or any other useful object and have been granted a license by the central government recognizing them as such. Thus, there are three criteria for determining whether a particular company is section 25 company or not:

 

 ○ Its objects should be only to promote commerce, art, science, religion, charity or any other useful object.
 

 ○ It should intend to apply its profits or other incomes only in promoting its objects; and

 

 ○ Central government should have granted a license to such a company recognizing them as such, these types of companies can be either public company or private company having a limited liability.

 

□ Formation Procedure of Section 25 Companies

 

 ○ Step – 1 Form 1A: Name approval: An application in E-Form 1A has to be made for availability of name to the registrar of companies, with a fee of Rs. 500/-. It can be filed electronically. Six name in preferential order need to be proposed.

 

 ○ Step-2 Application to Regional Director: After the availability of name is confirmed, an application should be made in writing to the regional director of the company law board for granting license under this section. The application must include copies of the memorandum and articles of association of the proposed company, as well as a number of other documents, including a statement of assets and a brief description of the work proposed to be done upon registration.

 

 ○ Step – 3 Filing of Application copy to the RoC: The applicants must also furnish to the registrar of companies (of the state in which the registered office of the proposed company is to be, or is situate) a copy of the application and each of the other documents that had been filed before the regional director of the company law board.

 

 ○ Step – 4 Publication of Notice: Within a week from the date of making the application to the regional director of the company law board, the applicants are required to publish a notice in the prescribed manner at least once in at least two newspapers. One notice should be in an English newspaper circulating in that district and in a language of the district in which the registered office of the proposed company is to be situated or is situated and circulating in that district.

 

 ○ Step – 5 Grant of Approval: If the registrar satisfies that the application is complete in all respects and in the best interest of the country, regional director can grant the license under this section with or without conditions and may also direct the company to insert in its memorandum, or in its articles, or in both, such conditions of the license as may be specified by him in this behalf.

 

 ○ Step – 6 Other Incorporation formalities: After obtaining license under section 25 the company shall be formed as a normal company and the other formalities of incorporation shall be complied with.

 

 ○ Step – 7 Registration under Section 80G: If a section 25 company gets itself registered under section 80G then the person or the organization making a donation to the NGO will get a deduction of 50% from his/its taxable income. The company has to apply in Form No. 10G to the Commissioner of Income Tax for such registration. Normally this approval is granted for 2-3 years but can be granted earlier depending upon the situations.

 

□ The Advantages of section 25 companies over other companies registered under

 companies act are discussed below:

 

 ○ All companies having limited liability are required to use the term ‘limited’ or ‘private limited’ as the case may be in their names as required by section 13. But section 25 companies are allowed to dispense with the use of term ‘limited’ or ‘private limited’ from their names [sub-sec. (6)]. This helps the company to enjoy limited liability without disclosing to the public the nature of liability of its members.

 

 ○ A partnership firm is allowed to be a member of the section 25 company [sub-sec (4)] in spite of the fact that the law does not recognizes them as a legal person. The only limitation in this regard is that on dissolution of such a firm its membership of the company ceases.

 

 ○ Minimum Share Capital: As per the provision of section 3 of the companies act a private company is required to have a minimum share capital of rupees one hundred thousand and public company is required to have minimum share capital of five hundred thousand rupees. However Section 25 Companies have been exempted from this requirement regarding minimum share capital by insertion of sub-section (6) through Amendment Act of 2000. As such they can be registered even if they have share capital less than the statutory minimum.

 

 ○ Publication of Name: A section 25 company has been exempted from the provisions of section 147 and as such is not required to mention its name and address as required in case of all other companies.

 

 ○ Annual Returns of a Company not having Share Capital: Section 25 Company without a share capital is also required to file returns with the Registrar as required by section 160 but it has been exempted from mentioning the particulars of the members who are presently with the company or have ceased to be members since holding of its last AGM.

 

 ○ Time and Place of AGM: Section 25 Company has been exempted from provisions provided under section 166(2), As such they are free to determine the date, place and time of its AGM according to their convenience and feasibility the only condition being that time, place and date of such meeting should have been pre-determined by the Board of Directors in accordance with directions of the company if any.

 

 ○ Notice of AGM: By virtue of section 171(1) a company is required to call AGM by giving not less than 21 days notice in writing to its members. But Section 25 Company has been given some relief in this regard by allowing them to hold an AGM after giving a notice of 14 days length instead of 21 days as required by section 171(1).

 

 ○ Maintaining of Books of Accounts: Every company is required by section 209(4-A) to maintain books of accounts relating to a period of eight years immediately preceding current year along with its vouchers. However a Section 25 Company is required to maintain books of account relating to a period of only four years instead of eight years immediately preceding the current year.

 

 ○ Increase in Number of Directors: Under section 259 a public company is not allowed to increase the number of it directors beyond the permissible limits under its articles without the approval of Central Government provided such increase results in total number of directors to go beyond twelve. But Section 25 Companies are exempted from this section and are thus free to increase the number of its directors without seeking approval of central government[vide Notification No. 2767, dated 5-8-1964].

 

 ○ Board Meetings: Under section 285 the meeting of Board of Directors should be held at least once in every three months and four meetings should be held in a year. However section 25 companies are required to hold meetings of Board of Directors/ Executive Committee/ Governing Committee only once in every six months [vide Notification No. SO 1578 dated 1-7-1968]. The rest of the section 285 will apply to section 25 companies as it is, therefore section 25 companies are allowed to hold Board meetings only once in six months but should have held four meetings in a year.

 

 ○ Quorum for Meetings: The required quorum for a board meeting of any company under section 287 is 1/3 of its total strength which is arrived at after deducting the number of interested directors from the total number of directors on the Board or at least two whichever is higher. But the section 25 company is exempt from this section to the extent that the required quorum for any board meeting is eight members or one/fourth of its total strength, whichever is less, provided it should not be less than two members in any case.

 

 ○ Exercise of certain Powers: Section 25 companies are allowed to decide following three matters by passing a resolution by circulation instead of at meetings: the power to borrow moneys other than on debentures, · the power to invest funds of the company, and · the power to make loans. The remaining powers specified in section 292 viz., power to make calls on shareholders in respect of money unpaid on their shares; power to authorize by back of shares in accordance with section 77A; and power to issue debentures, can be exercised only by passing of resolutions at duly conducted meeting of Board of Directors of section 25 company [vide Notification No. 2767, dated 5-8-1964].

 

 ○ Maintenance of Registers of Contracts: Under section 301 a company is required to maintain register of all the contracts to which section 297 or 299 applies. But a section 25 company is exempt to the extent that it allowed to maintain register of only those contracts to which sub-sections (1) and (3) of section 297 apply. Thus they are exempted from maintaining registers of those contracts which are made in pursuance of sub-section (2) of section 297 or are covered by section 299.

 

 ○ Maintenance of Register of Directors: Section 25 Company has been exempted from operation of sub-section (2) of section 303 and as such they are not required to notify changes among its directors, etc. to the Registrar. They are only required to maintain Registers of their Directors, Managing Directors, Managers and Secretary in prescribed format containing specified particulars and updating the register by making changes in it as when there is some change among the Directors, Managing Directors, Managers and Secretary of the company.

 

 ○ Qualification for Secretary-ship: A Section 25 Company is exempt from the provision of section2 (45) to the extent that the rules regarding the qualification of a Secretary do not apply to them [vide Notification NO. F.2/3/76-CLV dated 09-01-1976]. As section 2(45) do not apply to them they are free to appoint any person as its Secretary whom it feels fit and proper for the same.

 

 ○ Applicability of CARO: Section 25 Companies are exempted from applicability of Companies Auditor’s Report Order 2003(CARO). CARO has been made applicable to all companies from 1st January 2004. But CARO expressly exempts section 25 companies from its applicability vide Clause 2(iii) of Para I of the Order.

 

 ○ Payment of Registration Fees: The fees payable by a Section 25 Company at the time of registration and further increase of its share capital has been kept very low in comparison to other companies and is at present fixed at mere Rs. 50/- irrespective of the authorized amount of share capital (Circular No. 6 dated 24-06-1996 and Notification No. SO 3879 dated 22-12-1962)

 

 ○ Stamping of Memorandum and Articles: The Articles and Memorandum of a Section 25 Company are not required to be stamped in accordance with the Indian Stamp Act, 1899.

 

 ○ Raising Money: A Company can sell shares of the Company to the public or can accept deposits from public and can therefore raise money easier than other business structure types. The modes of financing business carried on by company are numerous.

 

 ○ Easy Transferable Ownership: The shares and other interest of any member in the Company shall be a movable property and can be transferable in the manner provided by the Articles, which is otherwise not easily possible in other business forms. Therefore, it is easier to become or leave the membership of the Company or otherwise it is easier to transfer the ownership.

 

□ Drawbacks or Obligations of section 25 companies:

 

 ○ Though a Section 25 Company has many advantages and enjoys many privileges yet there are some statutory obligations which are required to be complied with and taken care of by such companies.

 

 ○ A Section 25 Company has to ensure that its profits and all other incomes are utilized only for the purpose of promoting its objects and not for any other purpose.

 

 ○ It should also ensure that its profits are not distributed as dividend among its members.

 

 ○ Section 25 Company cannot alter its objects clause in its Memorandum without seeking the written approval of central government [sub section (8)].

 

 ○ If the Central Government has imposed some conditions and regulations upon the company for granting a license under section 25 then such a company is bound by such conditions and has to ensure adequate compliance with them. Where such conditions and regulations have been imposed then such conditions and regulations are required to be included in the Articles or/and memorandum of the company as may be directed by the government.

 

 ○ Section 25 Company is regarded as a ‘company’ within the meaning of the Income Tax Act, 1961 and as such its income is taxable according to the applicable rates similar to those applying to other companies.

 

 ○ If an existing company obtains a license under section 25 it has to ensure that its objects are confined to those mentioned in section 25 itself and if not make proper alteration to its memorandum and articles.

 

 ○ Long Closing Proceedings: It is generally not easy to close the company as compared to other forms of business, the procedure to close is long and involves compliance of various formalities, at times it takes 1~2 years to completely wind-up the company. Moreover in certain cases, it is necessary to take the permission of the High Court to close the Company.

 

□ Revocation of License: The Central Government after giving reasonable opportunity of hearing can revoke the license by passing a speaking order.

 

□ Winding up of the company It can also be wound up if the objects for which it had been established have been fully achieved. The surplus assets if any may be given to a similar charitable cause.

 

□ Hence, having noticed various benefits and drawbacks of section 25 companies, it’s clear that such companies are a well regulated form of non-profit organizations and the prescribed incorporation and dissolution procedures and other provisions helps the government in keeping a check on the working of such companies.

 

□ Income Tax Provisions

 

 ○ To get the benefits under the Income Tax Act, Section 25 Company has to get registered under two distinct sections:

 

□ Section 12AA

 

 ○ A Section 25 Company can get itself registered u/s 12AA of the Income Tax Act and can get the benefit of accumulation of its income to some extent for utilization in future years. Thus its income shall not be taxable if it gets registered under Section 12AA.

 

□ Section 80G

 

 ○ If a Section 25 Company gets itself registered under Section 80G, any donor donating the amount to such a company shall be entitled to a deduction to the extent of 50% of the sum donated from its income.

 

□ Audit under the income tax act

 

 ○ The Income Tax Act provides for mandatory audit of accounts of such companies provided the total income without giving effect to the provisions of section 11 &12 exceeds the prescribed amount.

 

 ○ The audit report is to be submitted in Form No. 10B and must be duly signed by the Auditor, being a chartered accountant.

 

□ The next step

 

 ○ Once the governing entity, whether a company, trust, or society, comes into existence, it will have to look for land. There are two possibilities—one, if the society or trust has a land of its own, or, second, when the governing entity decides to buy a land for the proposed school. Buying land from the government requires permission in the form of a no-objection certificate from the Department of Education of the concerned state. The no-objection certificate, called Essentiality Certificate(EC), certifies the requirement of a school in a particular area. The logic behind the practice is to make sure no two schools compete with each other and one becomes redundant. The EC comes with a rider that construction must commence within three years, failing which the society will have to reapply for the same.

 

 ○ One can apply to the concerned municipal corporation for land for the school with the EC. Land is supposed to be allotted to the governing entity at subsidized rates is usually allotted through auction.

 

 ○ Even if a member on the board of a governing entity has land that the entity wants to use for setting up a school, a no-objection from the Department of Education stating the requirement of a school in that area is required.

 

 ○ From the time of forming a governing entity to a school actually starting up, one normally requires about a year, though taking more than two years is also not unheard of. Normally the infrastructure required to start up can be constructed within a period of six to seven months. Once the construction is over, school authorities need to apply for recognition. Up to Class 5 recognition from municipality is all that is required. For Classes 6 to 8, recognition comes from the Department of Education. Recognition for anything above this also comes from the Education Department, but after a minimum gap of two years. School authorities are free to seek affiliation to CBSE or CISCE. In that case, the school will have to follow the guidelines of the board it is seeking affiliation to. The school will need to follow the syllabus, books prescribed by the affiliating board, and pay specified salaries to the teachers.

 

 ○ If it is not a government school, affiliation for schools normally comes in stages. Initially, for Classes 1 to 6 a temporary affiliation is given and guidelines are laid down for schools by the concerned education board. Once things are in place according to the guidelines, an inspection is conducted. If things are to the satisfaction of the board authorities, permanent affiliation is bestowed on the school.

 

□ Licenses and documents

 

 ○ Setting up a school involves a lot of legal processes from the very beginning. While forming a society, trust, or company, one has to have a Memorandum of Association, a document needed almost at every stage later. Like for any other business, a detailed project report for the school is also needed. In addition, details of land and building, auditor’s statement, bank statements of the governing entity and their members and auditor’s statements are needed at some point or the other.

 

 ○ Once the school building is ready for initial use, a certificate of recognition has to come from the state government, issued by the municipality for the junior classes, and by the Department of Education for middle school. If high school is to be added subsequently, certificate of up gradation is required which is again issued by the Education Department. Affiliation from either the CBSE or CISCE is also done through a set process. Schools also need certificates for hygiene, water, and completion of the building from the municipality.

 

□ Policy and Promotion

 

 ○ The government allows 100% FDI in the education sector.

 

 ○ Many other measures have been taken by the government to promote growth of the education sector in India. For instance, the Central Universities Act was promulgated in January 2009 for conversion of three state universities into Central universities.

 

 ○ Further, the Government of India has set up a unique public-private partnership through setting up of the National Skill Development Corporation(NSDC) in 2008. Its objective is to contribute about 30% to the overall target of skilling and upskilling of 500 million persons in India by 2022, mainly by fostering private sector initiatives in skill development programs and providing viability gap funding. Another noticeable move was the inception of the National Knowledge Commission (NKC) in 2005. It was set up as an advisory body to the Prime Minister of India, with the objective of transforming India into a knowledge society. NKC has submitted around 300 recommendations on 27 focus areas and the implementation of its recommendations is currently underway at the Central and state levels. These recommendations encompass reforming the education sector, upgrading research labs and formulating intellectual property legislation.

 

 ○ To promote e-learning, the ministry has announced a scheme that will introduce Information, Communication and Technology (ICT) sector at the elementary school level. The scheme, which is likely to be on the lines of the ICT scheme for higher education, would focus on the development of e-content that can be used by students in primary and upper-primary classes.

 

 ○ Further, a bill in the Parliament has also been introduced in 2010 to open up the Indian education sector to foreign universities. Some of the other education-related bills introduced in the Parliament by the government are:

 

 ○ The National Accreditation Regulatory Authority for Higher Educational Institutions Bill 2010 postulates that every higher educational institution and every program conducted by it should require accreditation in the manner provided in the proposed legislation.

 

 ○ The Educational Tribunals Bill 2010 provides for the establishment of the State Educational Tribunals and the National Education Tribunal. The National Education Tribunal would exercise power and authority over any dispute between a higher educational institution and statutory regulatory bodies.

 

□ Franchising laws in India:

 

 ○ In India, there is no specific franchising regulation, and the relationship is regulated only under the underlying laws of general application to all business operations. The franchisor/ franchisee relationship is established by an agreement, and it is the contract, which is the ultimate point of reference for determining the parties’ rights and obligations, which are allocated in accordance with its terms. The contract is an exclusive statement of the parties’ legal relationship and it is the contract law, in India the Indian Contract Act 1872, which governs the relationship. In the regulated sectors, the contract is of course also the basis of the relationship but freedom of contract will be to some extent constrained by franchise specific laws enacted to address the information imbalance and the power imbalance, which typically characterizes franchise business relationships.

 

 ○ Although there is no one specific franchising law in the India, (unlike in other jurisdictions), a range of civil and commercial laws apply depending on the terms of the contract. There are multiple laws which can apply to franchising relationships and these include law relating to agency, distribution, leasing, assignment, securities, financial investments, intellectual and industrial property, competition, companies, immovable and movable properties, labor, foreign investment, insurance, banking, import-export, technology transfer, and other legislations as may be applicable in to different franchising arrangements.

 

□ In Brief:

 

 ○ There is no one specific franchise law in the India. The concept of franchising falls within the ambit of commercial and agency laws which do not specifically differentiate between franchise, agency or distribution agreements.

  - The Agency Law tends to favor agents/ franchisees rather than franchisors.

  - In cases of international franchise arrangements, the FEMA and RBI regulate the terms of payment under Franchise Agreements (such as royalty fees, franchise fees, management fees, development fees, administrative fees, and technical fees) where one party is a non-Indian entity including the amount to be paid and procedure for remittance of these payments outside India.

  - In cases of international franchise arrangements also if the franchise agreement stipulates payment of royalties or lump sum fees beyond the specified limits, the approval of the Foreign Investment Promotion Board(FIPB) may be required.