Fortune At The Bottom On India's Population Pyramid

This is India's population pyramid in the year 2050. India will still be a young nation, age-wise, adding a new citizen every second. That's a lot. Today, the average Indian is 27 years of age. But as many marketers know, marketing is not about averages.

It is about clusters, also called customer segments.

Source: US Census International Database

There is a market at the bottom of this pyramid that serves 320 million consumers, which doubles every 3 years, and makes or breaks this nation’s future. 

So how does it manage to stay under the radar?

Government conspiracy, a well-kept secret, or unrecognized potential? The market that we are talking about is Early Childhood Care and Education or ECCE for short.

What is ECCE? As per UNESCO, "Early childhood is defined as the period from birth to eight years old. A time of remarkable brain growth, these years lay the basis for subsequent development.

So what does this have to do with business, or with startups for that matter?

Early childhood care and education (ECCE) is more than a preparatory stage assisting the child’s transition to formal schooling. It places emphasis on developing the whole child - attending to his or her social, emotional, cognitive and physical needs - to establish a solid and broad foundation for lifelong learning and wellbeing."

At its core, ECCE is about laying a solid foundation for a child to be the best version of themselves.

For the purpose of this estimate, we will focus on the zero to six years of age as the target segment.

Lay out the basic numbers for the building blocks to find the answers of where or what industry you may wish to build a market in India.

  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. daycare + market size of in-home care i.e. doulas/nurses, nannies
If you take the numbers above and formulate the potential growth of a product or service you are considering bringing into the Indian market, you will find an immense opportunity in this land, both now and especially moving into the future.

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 December 2016. The snapshot of the results is laid out below for your reference.

Source: CensusNSSOMWCD, primary research, internal estimates

The key insights and analysis for new business potential in India. Consider these stats:

  1. 1.6%: Share of ECCE spending in India’s Gross Domestic Product (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. USD 17 (INR 1,100) per month: Amount spent per child (0–6 years) on ECCE in India
  6. 20X: Difference between the amount spent per urban child (USD 45 or INR 3,000 per month) vs. amount spent per rural child (USD 2 or INR 150 per month). The government of India (GoI) is responsible for 30% of the expenditure (<USD 1 or INR 50 per month) under the ambitious Integrated Child Development Services scheme where rural pregnant mothers and children are provided subsidized healthcare and education.

Business Opportunities

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

  1. Adoption of new techniques introduced and accepted by the urban population of 0–3-year-old education and care products (80% of the market is not penetrated).
  2. A similar increase in presenting adoptable information to the rural population of 3–6-year-old, in the form of preschool education, both private and government-sponsored (80% of the market is not penetrated).
  3. Gaining trust within the urban population of parallel education (i.e. hobby classes, coaching classes, and admission preparation), showing the quality of life increase with these products or services. 
  4. Systematically increasing the fees charged by such institutions, based on anecdotal evidence. The fees that have currently been increased are doubling the rate of inflation. This shows potential growth possibilities for investors and innovators.
  5. Informing, introduction and production of progressive and advanced products and services for companies which can compliment and be used by the ECCE educational approaches. These lucrative opportunities for unlimited amounts of products & services, not just to the children, the government, and the school system -- but also presentations of progress to the parents of India. Parents, who, like the parents of all nations, want to lift their children to a better life, will sacrifice greatly to see this advance for their children. There are several lifetimes of possibilities in India for items both imported and home-grown. All products and services will be attractive to this country -- in many commerce areas -- if one will see the potential and grasp it.

By all accounts, ECCE remains a market in its infancy. The majority of the business space, both in product and services is unorganized.

There is no single leading player in this country, and parents are constantly on the lookout for an edge. The parents, schools, children and government all are supportive of raising the level of ability to market in India.

The purpose of this article is to raise awareness about the rising importance of industries and companies to grasp the vision of the vast potential in India and encourage entrepreneurs to take advantage of the structural opportunities available.