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Understanding the gaps in the STUDY ABROAD MARKET? Business Case Study
In 2023 there were 6.4 million students studying abroad all across the world. But Out of these 6.4 million students, 1.3 million students were just Indians! And if you look at the money they are spending on this study abroad journey, it will blow your mind!! In just 1 year of 2019, Indian students spent 37 billion dollars in studying abroad!!! And this number increased to 47 billion dollars in 2022, and is expected to reach 70 billion in 2025!! You know how much 70 billion dollars is, It is more than 5 times Reliance Jio’s annual revenue of 12 billion dollars and 1.6 times Tata Motors annual revenue of 42 billion dollars!!! And if you consider 1.5 million students in 2025 with a 70 billion dollar spend, each student who is studying abroad will spend, 46,666 dollars, or 38.8 lakhs per year on an average!! Now I don’t know if you sense this but, any place where a rich consumer spends with a consistent pattern is a huge market opportunity!! And in India, this is a very rare sight!! Why?? Look at this chart, If you remember our Indus Valley report episode, we learned that the gold mine in India is not 1.4 billion people it is only 22 million people!! Why?? only 22 million people in India pay income tax, 74 million file for taxes, and only 4.5 million as in 0.3% of Indians contribute to 80% of the total income tax paid in India but the rest 1.4 billion people do not pay income tax at all!!!! So if you want to build a fast-growing, high ticket, high margin product to sell in India, this 22 million population is where you can make money!! Everywhere else, you can only make money with low-margin and low-cost products!! So to understand this consumption class better, Blume Ventures put out this report, which said that India can be categorized as India 1 which is 30 million households with an average income of 15,000 dollars, and India 2 which has 300 million people with an average income of 3000 dollars per person and India 3 which has 1 billion people with an average income of 1000 dollars per person!! and you can see them as 3 different countries, which are Mexico, Indonesia, and Sub-Saharan Africa based on their consumption levels!! And the consumption of India 1 is so disproportionately high that if you look at this chart, they alone consume 89% of the beauty products, 70% in Dining, and 79% of the entire food and beverage consumption in India!! So 120 million people as in less than 10% of the population is consuming 3 times more than the rest 1.3 Billion people combined!! And these 13 lakh students who study abroad belong to this golden category of India 1 because they are spending 46 lakh rs a year!!! So if this small subset of students has a lot of money, a lot of problems, and most importantly, if they all have a common behavior, this means it is a gold mine opportunity for you to build products and services for this one category!!! This is the reason it is important to study this market both as investors and entrepreneurs!! So the question is, What does the higher education market in India look like? What are the problems students face in their education journey? What are the gaps that Indian startups are finding to build a business in this space? And where can you find an opportunity in this space?