Every conversation about institutional capital in Indian education runs into the same wall. Schools cannot be operated for profit, and surplus cannot be distributed to investors. The TMA Pai and Inamdar line of authority is settled, and attempts to work around it tend to end badly for everyone involved.
Most people treat this as the reason the sector is uninvestable. I think it is the reason the sector needs better structuring, which is a different conclusion entirely.
Separate the building from the school
The constraint applies to the educational activity, not to the physical asset it happens inside. A campus is real estate. It can be owned, financed, leased and valued like real estate, provided the ownership is genuinely separate from the operation and the terms between them are genuinely arm's-length.
So the company builds and holds the campus. The trust or society operates the school. Between them sits a lease and a services agreement priced the way any commercial landlord would price them, and tested against comparable rents rather than against what the school can afford.
Where the return comes from
Rent, licence fees and service fees on the asset. Nothing else. No share of fee income, no participation in surplus, no economic interest in the educational activity. This has to be true structurally, not just on paper, because that is the point a regulator or a court would examine.
The discipline this imposes is useful. It forces the underwriting onto the building — location, condition, replacement cost, the strength of the operator as a tenant — which is exactly where an infrastructure investor is competent anyway.
What it looks like in practice
Two projects are live under this structure, in Punjab and Delhi NCR, alongside an advisory mandate. Roughly twenty million dollars of asset base between them. Small by institutional standards, which is the whole problem the sector has, and the reason the next step is aggregating assets of this shape rather than chasing larger single tickets.