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July 23, 2022Evolving Landscape of Regulatory Overlaps in Ed-tech
by Kalyani Balagopal and Nissy Solomon
The last two years have shown us that education can transcend from its traditionally slow-moving structure to a dynamic hybrid system. If there’s anything the pandemic has been able to teach us, it’s that the world will adapt.
We have had a front-row seat to the growth of the ed-tech industry in India during the pandemic, and an estimated 150 million students have started to depend on these resources. With the use of features like gamification and immersive technology, ed-tech has been successful in not just capturing a lot of attention but surprisingly retaining it. Technology in education which started with smart classrooms in the country has evolved to companies having the capacity to offer stand-alone services. Additionally, the growth of the industry is not just limited to the K-12 and competitive examination market, which has a firm stronghold but also due to the interest of youth from tier-2 and tier-3 cities in skill up-gradation aiming for better employability.
Ed-Tech Companies have created carefully curated content and are striving to emulate real classroom situations in online learning spaces. Companies like Byju’s and Unacademy have remained the pioneers of the steadily growing Indian ed-tech unicorn club. The fact that until September of 2020, only these two companies had a valuation of over one billion US Dollars and post-pandemic, four new ed-tech startups namely Eruditus, LEAD, upGrad, and Vedantu have entered the club is proof of the immense growth that the sector has undergone in India.
However, with unprecedented growth, an inevitable set of problems also follows. In the last year alone, numerous complaints have been raised by students and parents alike, with most of them pertaining to the disingenuous advertising used by companies and features such as auto-debit and EMI loan options being used to bait vulnerable families who are not aware of the consequences of the same. A lot of these complaints made it to the court and in turn, captured the attention of the media and government, which released an advisory in December of last year warning both students and parents alike to not fall into debt traps while also hinting that they were coming up with a regulatory framework.
Regulatory Landscape
In recent years, a major thrust has been given to digital and online education by the New Education Policy (NEP, 2020), bringing sweeping changes in the education sector. Ed-Tech integration into the curriculum is likely to take shape to meet the NEP policy goals. The latest reforms by University Grants Commission (UGC) give further impetus to ed-tech companies by allowing them to collaborate with higher education institutions, provided they operate as per the UGC rules. This propulsion also brings ed-tech platforms into a fragmented regulatory structure with significant overlaps across many sectors.
While presently, there are no regulations or laws specifically for the Indian EdTech sector that protect the interests of stakeholders, a regulatory framework has been on the anvil. In this regard, there exists several ambiguities in the treatment of edtech services in India. The E-Commerce Rules (2020) state that any entity that offers services over the internet against a fee may be considered an e-commerce entity. This brings edtech services within the definition of e-commerce. However, since institutions offering education services in India are strictly to be non-profit entities, there is ambiguity on whether UGC will also step in to govern the content and fee structure of the online courses as is done traditionally.
With ed-tech’s multiple intersections with laws such as e-commerce, UGC, Consumer Protection Act, data protection, etc., the sector is mired in complexity with multiple potential regulators imposing regulatory requirements with overlapping obligations or contradictions. This makes regulatory affairs tougher to navigate.
Thus far, the augmented growth of edtech in India has been aided by the absence of government intervention. Any policy that places multiple mandates (such as lowering fees or curating content) may distort the guideposts that are integral to growth and innovation that leads to cost-effectiveness.
While the need for Regulation has been voiced to reduce the risk to consumers, the potential for over-regulation also poses a risk to the consumers. Inefficient regulation raises costs for firms without any corresponding benefits, and these costs are ultimately borne by the consumers. It is important that the regulatory framework be well-balanced, operating in a socially responsible manner that ensures growth and competition while keeping anti-competitive practices at bay. However, since the track record of Indian regulation has been largely restrictive, characterised by an absence of diverse stakeholder consultations, there’s little hope that prompt central planning could pan out well.
Many industries choose self-regulation in response to both the absence of government regulation and the threat of excessive regulation, such as the case of Indian ed-tech firms, which formed a collective, referred to as the ‘Indian Ed-Tech Consortium’ under the aegis of the Industry body – Internet and Mobile Association of India. A flexible regulatory environment through self-regulation may allow firms to internalise ethical behaviour, operate efficiently and minimise compliance costs solely based on social norms and the conduct of peers rather than top-down prescriptive rules (Caster, 2011). It would certainly be intriguing to see how a framework that could adjust to such a volatile field would come to be developed and whether the consortium will be both successful in establishing a stronghold and managing the concerns of the government.
Considering the complexity involved in the sector, the best course is to take a collaborative and accommodative policy stance that recognises ed-tech as a reality by the government while allowing the regulatory system to evolve instead of initiating reactive policies that may stall the growth of ed-tech firms.
Kalyani Balagopal was Research Intern, and Nissy Solomon, Hon. Trustee (Research & Programs) at the Centre for Public Policy Research, Kochi. Views expressed by the authors are personal and need not reflect or represent the views of Centre for Public Policy Research.
