Revenue growth in India’s higher education sector is expected to continue its strong upward trend, with a projected rise of 9 to 11 percent in the financial year 2026, according to a recent report by credit rating agency ICRA. This forecast mirrors the growth seen in FY2025 and is driven by expanding seat capacity, rising enrolments, and the introduction of new academic programs across institutions.
The report also suggests that changes in global education trends—especially the tightening of student visa norms in countries such as the US, UK, and Canada—could encourage more students to pursue their higher studies in India, further accelerating domestic growth in the sector.
Young Population and Expanding Demand
India’s demographic advantage plays a crucial role in this trend. With nearly 15 to 20 percent of its population falling within the 15–24 age group, and literacy levels steadily climbing, the demand for higher education is naturally growing. This surge is being met with an increase in the number of universities and educational institutions, which have nearly doubled over the past decade—from 642 in the academic year 2011 to approximately 1,189 in AY2025.
Colleges and universities are also benefiting financially from this expansion. The ICRA report notes that between FY2020 and FY2024, the sector recorded a robust compound annual growth rate (CAGR) of 15 percent, supported by consistent admission numbers and annual fee hikes of 6 to 8 percent.
Government Investment and Educational Loans
A significant contributor to this revenue growth is government investment. Over the last ten years, public spending on higher education has doubled, supporting the development of better infrastructure, wider access, and improved quality of education.
At the same time, education has become more financially accessible to students through the increased availability of student loans. With financial institutions offering more loan options and student-friendly repayment plans, many students are now able to pursue higher studies despite the rising cost of tuition.
Boost in Credit Profile of Medical Institutions
The report highlights a steady improvement in the credit profile of institutions, particularly those offering medical education. These colleges have not only increased their seat capacity but have also introduced new specializations to meet the growing demand. Engineering colleges are also regaining momentum, with more focus on industry-ready programs and curriculum innovation.
According to Suprio Banerjee, Vice President at ICRA, “The higher education sector in India is poised for growth owing to continued strong demand, increasing disposable family income, easy access to credit, and enhanced government focus and private sector participation, especially in the medical and engineering streams.”
Challenges Facing the Sector
Despite the positive outlook, the higher education sector still faces several challenges. The landscape is fragmented, with many smaller institutions struggling to match the quality and infrastructure of top-tier colleges. Affordability remains a concern for lower-income families, and there is a persistent gap between education and employability, with graduates often lacking industry-relevant skills.
Faculty shortages and heavy regulatory control also add to the list of concerns. Many experts believe that allowing greater autonomy to institutions could lead to more innovation and flexibility in curriculum and administration.
Aiming for a Higher Enrolment Ratio
India’s Gross Enrolment Ratio (GER) in higher education has grown from 21 percent in 2012 to nearly 28 percent by 2022. With the National Education Policy (NEP) 2020 aiming to increase this number to 50 percent by 2035, there is clearly a vast scope for further expansion. This policy push, along with demographic strength and increased private sector involvement, sets the stage for sustained revenue growth and academic development.
Looking Ahead
Revenue growth in India’s higher education sector is not just a financial indicator—it reflects the nation’s shifting priorities, growing middle class, and the increasing importance of knowledge-based industries. As institutions continue to adapt to global and domestic demands, the focus will remain on balancing scale with quality.
With consistent government backing, rising student interest, and evolving global dynamics, FY2026 could be a landmark year for Indian higher education, marking a new phase of transformation and opportunity.
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