The government has finally given its approval to the Foreign Educational Institutions Regulation of Entry and Operations, (Maintenance of Quality and Prevention of Commercialization) Bill 2010 (“Bill”). The bill seeks to regulate entry, operation and restriction of foreign universities in India. However shortly after the Union Cabinet cleared the long-pending draft bill that allows foreign education providers to set up campuses in India and offer degrees independently, most of the Indian opposition parties objected to the bill, slamming it as “commercially driven” and one that would breed inequity. As long as the opposition concerns over issues such as equivalence/parity of degrees, fee structures and equity in terms of access to all students remains, passage of the bill in the Parliament looks tough.
Though, the present FDI policy allows 100% foreign investment in the education sector including higher education, foreign universities are currently not allowed to directly offer degree courses in India. It is estimated that nearly 150 foreign institutes offer courses with Indian varsities under a twinning arrangement, i.e. a part of the course in India and remaining abroad but most of them do not have all required accreditation from the regulatory bodies. The existing arrangements are regulated by the All India Council for Technical Education Regulations for Entry and Operations of Foreign Universities in India Imparting Technical Education, 2005 (“Foreign Universities Regulations”), which is presently applicable only to technical and management institutes.
Some of the reported provisions forming part of the present bill approved by the Union Cabinet include:
• Different levels of registration process for getting registered with the University Grants Commission (“UGC”) or any like regulatory body. Subject to necessary approvals by the UGC, a foreign university could be registered as a ‘deemed university’ under the relevant provisions of University Grants Commission Act, 1956.
• A corpus fund of INR 50 Crore (US$ 10 Million Appox.) is required to be deposited by intending foreign university;
• Such foreign universities would be established as “not for profit” companies under Section 25 of the Companies Act and thus cannot take the profit back. Similar provisions are applicable to Indian private universities and deemed universities as profit making activities in education sector is frowned upon by the regulators;
• Foreign universities can however provide consultancy services, faculty development and other like activities and the profit generated from those projects can be repatriated back. Similar structures are being adopted by Indian private universities;
• a time bound process for granting approval to foreign educational institutions to set up campuses;
• scrutiny of proposals of aspiring institutions on the basis of their previous experience, faculty strength, reputation etc;
• Quota laws providing reservation for Scheduled Castes, Scheduled Tribes and Other Backward Classes, may not be applicable to foreign universities setting up campuses in India.
It is indicated that various foreign institutes are already keen to set up campuses in India and these institutes are viewing the recent development with great interest. Thus, legislation of the bill would open a huge market for international educational institutions and collaborations with Indian universities.
The bill once finalized and enacted, is expected to bring huge foreign investment in Indian education sector and support the Indian Government in its commitment to increase public private participation in education sector and raise the college going ratio to 30 per cent by 2020 as compared to the present 12 per cent of all school-leavers entering college. It is also being claimed that this will put India as a “preferred destination for attaining education” on the global knowledge map as it will not only bring down the number of Indian students going out for higher education (estimated to be 1.6 lakh Indian students every year with an outflow of about 7.5 billion of foreign exchange per annum) but would also attract foreign students from south eastern countries.
Besides this, it is also expected to create new business opportunities for the Indian educational players and new and better salaried job opportunities for the teachers, administrative and technical staff.
While the bill is likely to benefit Indian students by increasing choices presently available to them and help in overall development of the education system in India especially the higher education system, there are still several questions left unanswered such as the lack of regulatory clarity and level of governmental inference, lack of independent regulator (non-government body), compliance with mandatory campus infrastructure and development requirements, flexibility in fee fixation, taxation, closure of universities, etc.
In the absence of the actual Bill being publicly available (it will be available once it is being presented in the Parliament) the above views are based on the earlier version of the Bill publicly available and recent public discussions on the bill.