Foreign
universities can now set up campuses and offer degrees in India without having
a local partner
New Delhi: The
government has decided to allow foreign universities to operate independently
in India, set up campuses and offer degrees without having a local partner—a
move that finally opens the gates for foreign educational institutions seeking
to establish a presence in the country.
To foreign
universities, the move presents an opportunity to tap a country with a
population of 1.2 billion. To Indians (at least those who can afford it), it is
an opportunity to receive quality education without leaving India (and without
paying in dollars). And to India, it could mean significant foreign direct
investment.
The department of
industrial policy and promotion (DIPP) and the department of economic affairs
(DEA) have agreed to allow overseas universities to operate as so-called
Section 25 or non-profit companies under the newly passed Companies Act, the
human resource development (HRD) ministry said on Tuesday.
Companies
registered under Section 25 of India’s Companies Act cannot distribute profit
or dividends to members, which means that the foreign universities cannot
repatriate money—a constraint that was criticised by at least one expert.
Several foreign
universities have been keen to enter India to tap a higher educational market
that is worth Rs.46,200 crore and expanding by 18%
every year, according to 40 million by 2020, a report from audit and
consulting firm EY. They have been constrained by the need to do so through
partnerships.
The Foreign
Education Providers’ Bill is still awaiting parliamentary approval. Tuesday’s
announcement, which is effectively an executive order, doesn’t need to be
approved by Parliament and could see a rush of foreign universities to enter
India.
“The ministry had
sought comments and observations of the department of industrial policy and
promotion and the department of economic affairs on the rules. Both DIPP and
DEA have supported the proposal,” the HRD ministry said in a statement on
Tuesday.
Ministry
officials said that the details are being vetted by the law ministry and an
official notification will be published soon.
With the powers
vested in it through the University Grants Commission (UGC) Act, the ministry
will allow foreign universities to set up campuses in India and award foreign
degrees. Currently, a foreign university needs to join hands with a local
education provider to offer courses and the degrees are not considered foreign
degrees.
Under the
proposed rules, foreign universities can set up campuses in India once they
have been notified as ‘foreign education provider’ by UGC. An educational
institution wishing to operate in India needs to be in the top 400 in one of
three global rankings: the UK-based Times Higher Education Ranking;
Quacquarelli Symonds ranking published in UK again; and the China-based
Shanghai Jiao Tong University rankings.
An HRD ministry
official said that at least 20 foreign universities—mostly from US, followed by
Australia and Canada—have expressed their desire to enter the market.
“Universities
such as Duke University, California Institute of Technology (Caltech) and
VirginiaTech are some of the names that have shown interest,” said the
official, who asked not to be identified.
Mint
could not independently verify this. In September 2012, the University of
Chicago Booth School of Business’ deputy dean Robert H. Gertner told
Mint that the school was exploring opportunities to open an executive
education centre in India.
The degrees
awarded by foreign universities in India will be considered foreign degrees and
students holding these degrees need to get an equivalence certificate from the
Association of Indian Universities (AIU), the HRD ministry said in its
statement. These universities will also function under the UGC rules.
The profit motive
A foreign
university cannot repatriate money that it makes in India. And any university
seeking entry to India must be accredited by bodies in its home country.
“Quality control is key and we will build the safeguard mechanism with each of
the universities,” a second official in the HRD ministry said.
An expert was critical
of these provisions. “On the one hand you are saying, we want top 400
institutes to come and on the other, you are not allowing them to repatriate
surplus to the home campus. It’s a fundamental problem. I think there is still
an inherent trust deficit between the government and the (foreign) educational
institutes,” said Pramath Sinha,
founding dean of the Indian School of Business, Hyderabad.
“They have to
stop questioning everybody, at least the best of the institutes. This problem
was there in the Bill and if they are retaining it in the executive order, it
will be a huge drag,” added Sinha, who is setting up a liberal arts university,
India’s first, in Haryana.
The two HRD
ministry officials said enough changes have been made to make it attractive for
foreign universities to enter India. The India campus will function as a branch
campus of the parent, rather than as an independent campus. The universities
will offer the same degree they are offering in their parent campus. And the
ministry has reduced the deposit universities have to maintain with the
ministry (and which they will forfeit in case of any violation) from Rs.50 crore to Rs.25 crore.
To be sure, it
will not be easy for foreign universities to acquire land, especially in the
context of India’s new land acquisition law. “We will not facilitate the
university in getting land at a concession. Anyway, procuring land and other
infrastructural facilities in India will be way cheaper than in developed
countries,” said the first ministry official.
He added that
there were still three things that would attract foreign universities to India:
a huge education market and the young demography to grow that further; lower
recruitment and research costs; and the opportunity to offer executive
education programmes and consulting services to Indian companies.
The second
official grandiosely described the ministry’s move as “liberalizing the higher
education space the way India economy was liberalized between 1991 and 1993”.
Manish Sabharwal, the
chief executive of staffing and training company TeamLease Services Pvt. Ltd,
said that India remains an attractive destination for education. In many
countries there are two problems, he added—demography and cost—but in India
both the issues are in the right place. The problem, he said, is in the
details.
Anton Muscatelli,
vice-chancellor of the UK-based University of Glasgow, too stressed the
importance of details. The Indian government’s willingness to allow
universities to come into India should certainly boost the entry of foreign
universities, but the details will be important, he said. His own university,
he added, has several partnerships in India and will continue to work with
strong Indian partners.
Once it is
notified, the ministry’s order will render irrelevant the Foreign Educational
Institutions (Regulation of Entry and Operations) Bill 2010, a brainchild of
former HRD minister Kapil Sibal, who is
currently in charge of the telecom and law ministries.
Source | Mint – The Wall Street Journal | 11 September 2013
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