An Estimate of India’s Early Childhood Care and Education Market Size

Source: Jenn Richardson

How is it that a market that caters to potential 9th most populated nation, doubling every 3 years, and extremely important to a nation’s future manage to stay under the radar? Government conspiracy, well-kept secret, or just hiding in plain sight? We hope to lift the veil off this market in a series of articles on the state of ECCE in India. Part I of this series will attempt to size the market in India based on available data, primary research, and some old-fashioned logic.

Let us begin by listing down the oft-quoted numbers about the space:

1. 90% of brain’s capacity development happens before the age of 5
2. 16.5 crore children in the 0–6 years age group in India as of 2011 – 11.5 crore rural and 5 crore urban children
3. 33,000 preschools in India as of 2015

These numbers are also the only ones available from a credible source on the Indian ECCE market. Next, we need to lay down the basic building blocks of the answer.

1. ECCE’s market size = market size of early childhood education + market size of early childhood care
2. Market size of early childhood education = market size of 0–3 year education + market size of 3–6 year education + market size of parallel education
3. Market size of 0–3 year education = market size of mother toddlers’ + market size of playgroup + market size of pre-nursery
4. Market size of 3–6 year education = market size of nursery + market size of kindergarten (Jr. KG + Sr. KG)
5. Market size of parallel education = market size of hobby classes + market size of coaching classes + market size of admission prep classes
6. Market size of early childhood care = market size of out of home care i.e. day care + market size of in-home care i.e. doulas/nurses, nannies

Expanded market size formula: market size of mother toddlers’ + market size of playgroup + market size of pre-nursery + market size of nursery + market size of kindergarten (Jr. KG + Sr. KG) + market size of hobby classes + market size of coaching classes + market size of admission prep classes + market size of out of home care i.e. day care + market size of in-home care i.e. doulas/nurses, nannies

In order to fill in the information gaps, we relied on personal interviews of over 300 parents and 700 preschools conducted between November 2015 and October 2016. The snapshot of the results are laid out below for your reference.

Source: Census, NSSO, MWCD, primary research, internal estimates

Now the really interesting part begins - Analysis of the answers that we have arrived at. So what are the key insights?

1. 1.6%: Share of ECCE spending in India’s GDP (US$ 32 bn.)
2. 86%: Market size attributable to urban India (US$ 28 bn.), primarily because of the ECCE options available
3. 75%: Market size attributable to early childhood education (US$ 24 bn.) as compared to early childhood care market (US$ 8 bn.)
4. 56%: Size of the largest category in ECCE i.e. 3–6 year education (US$ 19 bn.)
5. INR 1,100 per month: Amount spent per child (0–6 years) on ECCE in India
6. 20X: Difference between amount spent per urban child (INR 3,000 per month) vs. amount spent per rural child (INR 150 per month). Government of India (GoI) is responsible for 30% of the expenditure (INR 50 per month) on a rural child under the ambitious ICDS scheme.

Key Takeaways:

The next 10 years of market growth will be primarily driven by 5 themes:

1. Increase in adoption by urban population of 0–3 year old education and care products (80% not penetrated)
2. Increase in adoption by rural population of 3–6 year old preschool education, both private and government sponsored (80% not penetrated)
3. Increase in adoption by urban population of parallel education i.e. hobby classes, coaching classes, and admission prep
4. Increase in fees charged by such institutions. Based on anecdotal evidence, the fees have increased at double the rate of inflation
5. Introduction of innovative ECCE approaches/products & services to parents, both imported and home-grown

By all accounts, ECCE remains a market in its infancy. Majority of the space is unorganized, there is no single leading player, and parents are constantly on the lookout for an ‘edge’ . The purpose of this article is to raise awareness about the behemoth that this industry has become, mostly in the past 2 decades, and encourage entrepreneurs to bring more structure to the space. In return, we will be ensuring a brighter future for our youngest citizens.

Request: If you appreciated the article, please like and share.

You can also join the movement by raising your voice and sharing your opinions/experiences on social media platforms and blogs such as Medium.