Editorial: Time to regulate coaching factories

It is baffling that India’s edtech industry, providing supplementary guidance for students aspiring to crack competitive exams like JEE, NEET, UPSC, is being allowed to operate without any regulation

India’s edtech industry, once a booming sector, is now in the middle of a meltdown. The recent troubles at Byju’s and FIITJEE illustrate a deepening crisis. The troubles are largely due to financial mismanagement, declining student engagement, exorbitant fee structure, high operational costs, unethical and unregulated practices, and other extraneous factors. The enveloping crisis serves as a reminder of the broader challenges facing an unregulated coaching industry in the country. Ultimately, it is students who suffer the most. There is an urgent need for stringent oversight and regulation of fee structures. It is rather baffling that India’s coaching industry, providing supplementary guidance for students aspiring to crack competitive exams like JEE, NEET, UPSC, and many others, is being allowed to operate without any regulation. The absence of oversight has led to inconsistencies in quality, exorbitant fees, and unethical practices. Over the past two decades, coaching institutes have mushroomed across the country, promising students an edge in highly competitive examinations. They are extremely unethical businesses that try to cash in and profit off the fear and insecurities of students. Not long ago, these two leading players in the thriving coaching industry appeared unstoppable, riding high on expanding markets, soaring valuations, growing student admissions, and investment flows. At its peak in 2022, Byju’s boasted over 150 million registered learners globally and operated in 120 countries with a USD 22 billion valuation. Launched in 2015, the edtech firm catered to students from kindergarten to class 12 and achieved the unicorn status, valued at over USD 1 billion by 2019.

The company’s rapid expansion through acquisitions and aggressive marketing campaigns proved unsustainable, particularly after the pandemic-driven boom subsided. It faced criticism for using high-pressure sales tactics and potentially misleading advertising to attract customers. It was also accused of creating a high-pressure work environment and implementing mass layoffs to cut costs. The cash-strapped edtech company has entered insolvency proceedings after American lenders complained last year about the alleged misuse of USD 1 billion borrowed by the company. This has left thousands of employees and students in the lurch. FIITJEE, a prominent player in the competitive exam coaching landscape with over 100 centres across the country, is also grappling with multiple crises, including abrupt closures of several centres, financial difficulties, and legal challenges. At least eight centres across north India have been shut down in recent times after hundreds of its teachers resigned over non-payment of salaries and pay cuts. The test preparation market, valued at Rs 58,000 crore a few years ago, has historically been unregulated, leading to concerns about exorbitant fees, misleading advertisements, and the lack of standardisation in teaching quality and infrastructure. For an industry of this size and scale, it is surprising that there is no regulation in place. There are only broad guidelines issued by the central government in January last year, which are observed more in the breach than in practice.

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