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MUMBAI, INDIA – OCTOBER 22: Chairman of South Korean automaker Hyundai Motor Group Euisun … (+)
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India has overtaken China for the first time as the top market for initial public offerings (IPOs) in Asia. Yet behind the festive headlines that one in the Financial times– lies a deeper story about ambition, grow and an urgent question: can the country do that? higher education system maintain this momentum?
From a strategic perspective, this question is not just about volume, but also about the system’s ability to align educational outcomes with national economic imperatives.
Challenges for India Higher education and economic growth
As billions of dollars flowed into Indian stocks, buoyed by the optimism of investors betting on everything from tech unicorns to manufacturing hubs, another pressing question loomed: who will drive this growth over the next two decades? Will India’s universities, colleges and research institutions be ready to meet the demand for skilled talent, innovation and intellectual leadership?
Understanding this willingness requires a closer look at the state of India’s higher education system – its size, structural challenges and potential for reform.
On paper, the national higher education system looks formidable. With more than 56,000 institutions serving nearly 40 million students and supported by 1.5 million educators, it is one of the largest education ecosystems in the world. Over the past decade, the sector has witnessed a massive increase in the number of institutions: from 600 universities in 2012 to almost 1,150 today. Privately managed institutions, which now make up 40% of the total, dominate the landscape. At the same time, the number of students grew by almost 16% in just five years.
But size only tells part of the story. Beneath the surface lies a paradox. Although the sector has grown in size, quality remains uneven and research output lags behind global standards– an issue highlighted in analyzes of E.Y And The MIT Press.
Bridging talent gaps for higher education and economic growth in India
Even India’s premier institutions – the IITs and IIMs – are struggling with faculty shortages, infrastructure shortages and bureaucratic inertia. The number of faculty vacancies stands at 40% at IITs and 31% at IIMs, indicating a chronic gap in attracting And retaining top academic talent. These are not numbers you should overlook; they are the seams that hold together an educational fabric that threatens to unravel under pressure.
The stakes are high. India’s demographic dividend – a young, growing workforce – could become a demographic burden if the education system fails to deliver. With forecasts estimating that India needs to add 26 million higher education enrollments by 2035 to meet the National Education Policy (NEP 2020) target of 50% Gross Enrollment Ratio (GER), the clock is ticking.
“Higher education in India is at a crucial stage,” Vijay Pereira said in an interview with me. The newly appointed senior professor, associate dean and director of KEDGE India at KEDGE Business School, Paris, explained that on one hand there is an undeniable growth story, but on the other hand there are structural gaps in quality, equity and research focus. that need immediate attention. Consequently, India’s education landscape requires significant alignment with global trends, especially in fostering partnerships that bridge academic theory and industrial practice.
These gaps in talent supply and institutional capacity become even more apparent when compared to India’s recent economic performance.
Research and innovation in India Higher education and economic growth
India’s dominance in IPO fundraising in 2024 was no coincidence. It is the result of years of economic recalibration, maturation of the technology sector and a vibrant entrepreneurial ecosystem. Companies like Swiggy, Zomato and Ola Cabs have become household names in India and globally. Hyundai Motor’s substantial listing in India further underlined the country’s growing importance in global equity markets.
But behind these stunning financial victories lies a less discussed concern: talent. As industries grow, they need leaders, engineers, researchers and strategists. The Indian economy, now the fifth largest in the world, cannot rely on a handful of elite institutions like the IITs and IIMs to produce the workforce of the future. It requires systemic reforms – an overhaul of educational practices, research funding and industry alignment across thousands of smaller institutions. This imbalance between institutional capacity and business demands underlines the urgent need for scalable, inclusive solutions in higher education.
Take the digital transformation wave. While urban universities have integrated hybrid learning models and AI tools into their curricula, smaller and rural institutions remain limited by outdated teaching methods, poor infrastructure and limited digital access. Less than 1% of Indian colleges are registered with the Academic Bank of Credits (ABC) system, which is designed to allow students to transfer credits between institutions. This lack of adoption limits student mobility and flexibility, reinforces systemic inequality, and limits access to modern academic opportunities.
Digital Transformation in India Higher Education and Economic Growth
India allocates just 0.69% of its GDP to research and innovation – a stark contrast to countries like South Korea (4.2%) and Israel (4.3%). This limited investment translates into a glaring disparity in research capacity. According to 2023 factsSouth Korea leads the way with 7,498 researchers per million inhabitants, followed by Japan (5,304), the United Kingdom (4,341) and the United States (4,245). By comparison, India has just 255 researchers per million inhabitants – a figure that underlines the scale of the challenge.
Pereira, the president-elect of the Indian Academy of Management, explained to me that without significant investments in research infrastructure, faculty development and policy frameworks to support long-term research goals, India risks falling behind in both global competitiveness and leadership in the field of innovation.
International collaborations are often presented as a solution to bridge this gap, providing opportunities for Indian institutions to enhance their research capabilities and adapt to global standards. However, such partnerships remain limited. Less than 10% of India’s 1,043 universities and only 1% of 42,343 colleges are actively involved in internationalization efforts. Among them, approximately 230 universities meet the criteria to offer twinning, dual or joint degree programs. Despite government initiatives, inconsistent policies, structural barriers and limited institutional capacity continue to hinder widespread adoption.
However, there are promising exceptions. Partnerships such as Cranfield University with Manipal Academy of Higher Education (MAHE), the University of Liverpool with IIT Palakkad, and Vijaybhoomi University with KEDGE Business School demonstrate the potential of international collaborations to drive academic excellence, research innovation and cross-cultural expertise. Yet these remain isolated examples, largely limited to elite institutions.
For internationalization to become an industry-wide catalyst rather than an exclusive privilege, India must address systemic barriers. Streamlined regulations, financial incentives and capacity-building initiatives will be critical to enabling smaller institutions to meaningfully participate in global networks.
The Future of India Higher Education and Economic Growth
The Indian higher education sector is at a strategic inflection point. Although the growth in size and ambition is undeniable, systemic weaknesses in research, talent development and institutional alignment remain important obstacles.
Addressing these challenges requires a strategy based on established theories. Porter’s Competitive Advantage emphasizes the need for institutions to build on unique strengths. The resource-based view (RBV) underlines the importance of developing inimitable assets: faculty expertise, advanced research infrastructure, and robust governance. The theory of dynamic capabilities emphasizes agility and adaptability, allowing institutions to quickly respond to trends such as digital education, AI adoption and sustainability commitments.
In essence, India’s education strategy must evolve in line with its economic ambitions to ensure sustainable growth and global competitiveness. After all, the country’s success depends not only on policy intent, but also on implementation that aligns vision, resources and institutional culture with innovation, agility and long-term strategic clarity.