By Nick Clark, Editor, World Education News & Reviews
A long-awaited bill that would allow foreign universities to establish campuses and issue degrees in India was passed by the government in mid-March, and while it still remains unclear exactly how the final regulations will be shaped – if passed by parliament – some parts of the picture have gained a certain degree of clarity.
The Foreign Educational Providers (FEP) Bill was originally drafted four years ago and now appears to have significant momentum after approval by the Cabinet and the signature of Prime Minister Manmohan Singh, who has long been beating the drum for reform of the Indian system of higher education. However, it still has to face a parliamentary review committee and then both houses of parliament – Rajaya Sabha (states) and Lok Sabha (people) – before becoming law. The bill is slated for introduction to parliament before the end of May.
As it currently stands, foreign institutions can only offer degrees in conjunction with Indian providers if they want a presence on the sub-continent, and many already do (see this month’s feature article). Under the provisions of the FEP Bill, foreign universities would be allowed to open free-standing campuses and issue degrees independently, as long as they adhere to the rules governing their presence in India.
What do the Provisions in the Bill Say?
While it still remains unclear exactly how the final bill will look, assuming it passes through parliament, it would be fair to say that it is something of a contentious piece of legislation among Indian lawmakers. There is significant disagreement on whether foreign institutions in India should be bound by the same regulations as those governing Indian institutions – including the issues of admission quotas for underrepresented and historically oppressed groups, profit motives, and tuition caps – or if foreign universities should be bound by different rules, as would partly be the case if the FEP Bill is passed by parliament.
According to a policy expert interviewed by The Chronicle of Higher Education in March, the draft bill will not be made public until it is introduced in parliament, although he and others have seen it and state that it leaves unspecified whether foreign institutions would be free to set their own tuitions and salary levels.
However, the bill clearly states that foreign universities will not be allowed to send profits back home, said Pratap Bhanu Mehta, chief executive of the New Delhi-based Centre for Policy Research , a private think tank, while they would be exempt from the quota requirements to which public institutions are subject, provided that they do not accept federal or state government support. Institutions would be allowed to take part in, and reap the profits from, ancillary activities such as consultancy projects.
The bill would also require foreign institutions establishing in India to invest at least 51 percent of the total capital required for any operation there, while also requiring that they deposit at least US$11 million with the Indian regulator as a corpus fund, said Mr. Mehta. In addition, the institution must be accredited in its home country, while also being cleared to operate in India by their countries’ embassies.
It is still somewhat unclear whether foreign institutions will be required to undergo the accreditation process by Indian regulators, although it appears certain, according to multiple news reports that universities would have to be licensed by, and work under, India’s university regulator, which might result in an unwanted lack of autonomy from government interference. While universities would have complete autonomy over matters of curriculum, they would still be required to have courses and programs approved by the current, or planned, university regulator, which would also have the power to rescind its approval of foreign institutions.
A new commission being set up by the Indian government at the recommendation of the minister in charge of education is set to replace a host of intertwined and overlapping higher education regulatory agencies, in hopes of increasing clarity and reducing bureaucracy in the accreditation process. Human Resource and Development (HRD) Minister Kapil Sibal explained that this commission will review applications from foreign institutions wishing to enter India, but said it will not have the authority to approve them, implying that his ministry will have the final say. Official sources have stated that the proposed law allocates an eight-month process for granting approval to foreign educational institutions to set up campuses.
What do Indians Think of the Bill?
Reform-minded HRD Minister Sibal is quite clearly in favor of opening the Indian education system to the outside world, believing that such a move would bring about much needed collaboration with foreign institutions, while improving access to high quality university programs and easing capacity constraints more broadly within the tertiary system.
“This is a milestone which will enhance choices, increase competition and benchmark quality. A revolution larger than the one in the telecom sector awaits the education sector,” Sibal said after the bill was passed by the government in March.
And the issues of access and choice are particularly important when you consider that the proportion of the college-age population (18-24) attending institutions of higher education in India is approximately half the 15 percent average elsewhere in Asia. The main reason for this statistic is a shortage of institutions, and perhaps more importantly, a shortage of high quality providers. Clearly, the entry of reputable foreign providers would help ease these constraints. However, they would represent no more than a drop in the ocean when you consider recommendations from the National Knowledge Commission , an advisory body to the prime minister, that the country establish 1,500 universities to meet current and future demand. These would be in addition to the 480 universities and 22,000 colleges operating in India today.
While the bill certainly has its supporters, objections to the proposed reforms remain strong. Opponents point to the high tuition rates institutions abroad charge and say they do not want to see the same happen in India as it would benefit only students from wealthier families, despite the fact that private institutions in the country are already charging significantly more than the tuition fees charged by public institutions.
Others are concerned that the legislation, if passed, could led to increased faculty shortages at public universities, with top professors being lured by the higher salaries being offered by foreign institutions. Yet others are worried that the opening up of the higher education sector could result in an influx of unscrupulous and poor quality institutions looking to exploit poorly informed students who do not have the scores to enter a good public university or the finances to study abroad.
Columnist for the Hindu newspaper, C.P. Chandrasekhar, dismisses this viewpoint, pointing out that the proposed legislation would actually close loopholes in current laws governing the entry of foreign providers, making it much harder for profit-seeking, fly-by-night operators to set up shop in India and ‘repatriate’ profits.
“What the Foreign Educational Institutions Bill does is that it seeks to bring … foreign institutions within a separate, clearly defined regulatory framework, requiring institutions providing diplomas and degrees to register under a designated authority, making them subject to regulation and seeking under such regulation to ensure that the promoting institution has a proper pedigree, brings in adequate resources, employs quality faculty, offers adequate facilities, and reinvests all surpluses in the institution, which cannot function for profit. However, even though these are not considered for-profit institutions, the government is not seeking to regulate the fees they charge and the students they take in,” Chandrasekhar points out .
As a follow up to the concerns noted above, Chandrasekhar asks in his March column if top-tier foreign providers are likely to be deterred from coming to India if stringent regulations are imposed on them. Answering his own question, Chandrasekhar postulates that the “not-for-profit” condition, which prevents them from extracting surpluses and transferring them abroad, may indeed be a deterrent for some providers interested in establishing India operations. He also points out, however, that the legislation “exempts institutions conducting any ‘certificate course’ and awarding any qualification other than a degree or diploma … from most of the provisions of the Act, making them subject only to certain reporting requirements.”
He concludes: “This amounts to saying that if a foreign provider enters the country, reports its presence, and advertises and runs only such ‘certificate courses,’ it would have all the rights that many of the so-called “fly-by-night” operators exploit today. Once that possibility is recognized the only conclusion that can be drawn, based on the experience hitherto, is that this Act in itself is unlikely to either bring high quality education into the country, or keep poor quality education out. What motivates it is, therefore, unclear.”
However, if an educational service provider chooses to establish an institution that is termed a university and is recognized as such by the University Grants Commission , or if it awards a degree or diploma that is recognized by the All India Council for Technical Education  or the Medical Council of India  or other such institutions, then it would be subject to regulation just as any other Indian institution would.
Not Harvard , if a recent article  from Forbes India is to be believed. Nor Stanford , whose president, John Hennessey, states : “Our world-class research programs and our culture of multidisciplinary collaboration, which relies on having a critical mass of expertise in a variety of disciplines, cannot be easily replicated and transplanted elsewhere. We are loath to consider creating a satellite campus that would offer a degree program that did not live up to the quality that we can offer on our home campus.”
The article, Why They Won’t Come to teach You from India, says that since the bill was approved by the cabinet, ‘all of six universities have shown an inclination to enter India’: Virginia Tech , Georgia Tech , Schulich School of Busines s (part of York University in Toronto), and Boston , Duke  and Middlesex  (UK) universities.
This after reports last year that as many as 50 foreign universities  were knocking on the door awaiting the passage of the FEP Bill. Most of the reports citing this demand were in fact talking about much lower expectations, that is to say the establishment or expansion of partnerships with Indian institutions, and not the creation of full-fledged branch campuses. As an example, Yale has just clarified that they do not see starting a campus in India ; instead they are interested in expanding partnerships. Brown University  appears to be following a similar line of logic . The Daily News and Analyses, an online Indian newspaper, reports that Harvard isn’t coming, and nor is George Washington University , despite earlier claims to the contrary by HRD Minister Sibal.
Top-tier British universities appear similarly cautious at this point in time. The Press Trust of India stated in March  that: “Spokespersons of the universities of Cambridge , Oxford  and Imperial College, London , told PTI that they did not have immediate plans to set up campuses in India, but would continue to build on their existing collaboration and others links with Indian institutions.”
However, there are foreign universities with a definite interest in more concrete India operations. According to a recent article  in the Financial Times, if the proposed bill becomes law, the Schulich School of Business is “eager to set up a campus.” And according to Ashwin Joshi, who is the director of an existing MBA program that the Canadian business school offers in conjunction with SP Jain Institute of Management and Research , they “are hopeful and ready.”
The Schulich India MBA is currently located at SP Jain’s Mumbai campus. Twenty-five students from India are enrolled, but the school is targeting 35-40 next year and eventually up to 180, if it opens its own campus. Schulich hopes non-Indians will comprise about 40 percent of the India MBA class, in the same way that most students on its Toronto program are from overseas. Dezsö Horváth, dean of Schulich, believes that India’s higher education market represents a more attractive investment than China.
“The shortfall in business education in India is much more significant than in China,” he says, pointing out that English proficiency is less of an issue, and there are no foreseeable demographic issues with 50 percent of the Indian population aged under 25.
Considering the legislation, if passed, will almost certainly retain the provision that foreign universities cannot take profits out of the country, one assumes that foreign universities, especially in the for-profit sector, will have to think long and hard about their motivations for being in India.
According to Mr. Mehta in his interview with The Chronicle last month, “the top end” among foreign universities “wasn’t coming anyway, and the question is, will the middle end come if they can’t repatriate profits?”
If universities come at all, Mr Mehta postulates, they would most likely be drawn from the ranks of the middle-tier universities, and that they would probably continue to set up partnerships with private providers in Indian higher education, rather than set up purpose-built campuses.
India specialist and WES Assistant Director, Rahul Choudaha, points to three broad tranches  of overseas institutions that will be interested in the Indian market, with three separate forms of motivation:
- prestige-enhancing (top-50 research universities)
- prestige-seeking (next-tier of research universities) and
- revenue/profit maximizing (revenue for public institutions and profit for “for-profit” institutions).
All three, according to Choudaha, will face challenges in achieving their goals. He points out that the Union Government is interested in attracting the first and maybe the second segment, although it has erected significant barriers to their entry, while it is very reluctant to attract institutions with a profit/revenue motive.
Regardless of an institution’s motives or desires for operating in India, one also has to take into consideration the current economic climate. In these times of budget cuts and decreasing endowments for universities, it seems somewhat unlikely that there will be too many institutions willing or able to invest in risky, capital-intensive overseas ventures. Aside from the financial constraints, building a high-quality branch campus requires significant time and resources, and recent failures and disappointments in the Persian Gulf, Singapore and elsewhere have many institutions sounding the alarm bells with regards to ambitious overseas ventures, especially when there are no substantial financial incentives being offered by the host country.
Overall, this makes the case for reputed institutions entering India quite weak, and it certainly doesn’t seem like there will be an immediate gold rush into India should the FEP bill be passed by parliament; however, once the nature of the playing field becomes a little clearer, those institutions that have an interest in India will of course weigh the push and pull factors. And some will find the pull to be stronger, while others will come to the opposite conclusion in considering the emerging opportunities in the Indian higher education space.
For the time being, the degree of uncertainty that surrounds the bill and its exact language has left very few, if any foreign institutions, willing to commit to anything. When (if) the bill is passed, interest from overseas will likely grow, but at this stage it appears that the interest will largely be confined to less risky arrangements such as twinning programs and research collaborations.
India has a huge population of talented college-age people that are hungry for educational opportunities, yet they are served by a university system that for the most part falls way short of expectations, both in quality and quantity. The conditions, it would appear, are ripe for new providers, yet the government has to find the right balance between regulating the sector to ensure unscrupulous providers do not dominate, and deregulation so that foreign universities will actually be interested in the opportunities that so many see in India.