Access for foreign campuses as legislation ‘abandoned’

After years of delayed legislation, India is poised to allow foreign universities to set up campuses and offer degrees. The Education Ministry announced this week that it would permit foreign universities to operate branches as non-profit companies.

New rules on "the Operation of Campuses of Foreign Education Institutions" will allow foreign universities to award foreign degrees under the University Grants Commission, and in line with the Companies Act.

Tuesday’s announcement, which is effectively an executive order, does not need parliamentary approval and is seen as a way out of a legislative stalemate.

The foreign education providers’ bill has been awaiting parliamentary approval for the past three years, and also failed to be debated in the just-ended current session of parliament.

The move has been supported by the departments of industrial policy and promotion and of economic affairs, the ministry said in a press release.

Ministry officials said the law ministry was still vetting the administrative details and an official notification would be published soon. Once the notification has been published, the ministry’s order will “render irrelevant” the Foreign Educational Institutions (Regulation of Entry and Operations) Bill 2010.

In effect it is an admission by government that its attempt at legislation has failed, as it could not gain the support of opposition parties.

At present, a foreign university wishing to operate in India must join with a local education provider to offer courses, and the degrees awarded are not considered foreign degrees.

The main difference between the executive order and the likely-to-be-abandoned foreign providers bill, is that under the bill foreign universities in India would have been allowed to award an Indian degree equivalent to those from Indian universities.

Instead, foreign branch campus degrees will be considered foreign degrees. If their graduates wish to pursue further studies at an Indian institution or seek government jobs, they will have to seek ‘equivalence’ or recognition for the degree from the Association of Indian Universities.

Conditions

Under the new rules, which are still being finalised by the government, foreign institutions will be eligible to set up branch campuses in India if they are not-for-profit legal entities that have been in existence for at least 20 years and are registered by an accrediting agency of the country concerned or by an internationally accepted system of accreditation.

An educational institution also needs to be in the top 400 in one of three global rankings: the UK-based Times Higher Education or Quacquarelli Symonds (QS) rankings, or the China-based Shanghai Jiao Tong University Academic Ranking of World Universities.

Foreign providers must offer programmes or courses comparable in quality to those on their main campuses.

However, educational institutions registered under Section 25 of the Indian Companies Act cannot distribute profit or dividends to members, and cannot repatriate money.

But there are also advantages for foreign universities in the administrative rule. “The deposit universities have to maintain with the ministry (and which they will forfeit in case of any violation) has been reduced from Rs500 million (US$7.8 million) (as mentioned in the stalled Bill) to Rs250 million,” an education ministry official said.

Foreign universities will fall under the ambit of the University Grants Commission and will have to follow UGC rules. But experts believe that under this system there could be some flexibility over reservations, or affirmative action quotas for specific caste groups, and faculty recruitment norms including salaries.

This is not the first bill to have been resolved in this manner. While the Universities Accreditation Bill is still pending in parliament, in March this year the UGC produced a new regulation that makes accreditation mandatory – previously, it was voluntary.

Win-win

Shalini Sharma, head of higher education at the Confederation of Indian Industry, said there was huge interest in the Indian higher education sector.

“The non-profit issue will not act as a deterrent for genuine foreign institutions who want to set up campus in India and get the best students and faculty. They will need to invest in the campus, in faculty development and grow over the years. It’s a win-win situation for everyone.”

Sharma added that unlike the issue of opening India up to foreign multi-retail brands, which was opposed by several political parties, many states would welcome foreign institutions.

“Over the years several states have enabled private players to invest in and set up higher educational institutions through state legislation. They will be happy that more investment is coming into an area where they are not putting in the money,” Sharma said.

TV Mohandas Pai, chair of Manipal Global Education and former Infosys director, welcomed the announcement and said it would allow international universities of high repute to freely enter India.

“Our students will get exposure to world-class global education and won't have to leave the country for that. It will offer competition to local universities and offer greater choice to students,” Pai said.

However some experts said the rules could be a deterrent to some overseas for-profit business schools.

Student reaction

Students and academics were cautiously optimistic. To Indians hit with a depreciating rupee, increasing difficulty in securing education loans and tightening visa and post-study work rules in many countries, it is an opportunity to receive quality education at home.

“I am not sure if the Ivy League universities will come. But even if some of the best institutions are willing to set up campus in India, it will make a difference to the higher education sector,” said Zoya Ansari, a masters student at Jamia Millia Islamia in New Delhi.

She said it would make quality education cheaper. “Students who can afford the cost or avail of a bank loan will still go abroad. But thousands of excellent students who are not able to do that will get an opportunity right here,” Ansari said.

Professor Gautam Gupta, of the department of economics at Jadavpur University in Kolkata, said that rather than limiting the universities to those that rate highly in international rankings, the government should look at needs on the ground.

“Let us assess our needs. Do we need more institutions teaching vocational, offering degrees, doing research or a combination of all? Accordingly we [should] allow institutions to set up base,” Gupta said.

Huge market

For foreign universities, India is a huge education market with a youthful population, lower recruitment and research costs, and the opportunity to offer executive education programmes and consulting services to Indian companies.

And to India, it could mean significant foreign direct investment.

A Human Resource Development Ministry official said that at least 20 foreign universities – mostly from the US, followed by Australia and Canada – had expressed a desire to enter the market, including Duke University, California Institute of Technology and VirginiaTech.

However, it was still too early to say how foreign institutions would react to conditions for entry and to what extent the Indian bureaucracy would cooperate in enabling smooth entry for foreign players.