Is the move to allow 100% FDI in the education sector a wise one?

POLICY-Lessons in FDI

The commerce ministry and most educationists are upbeat about 100 per cent foreign direct investment (FDI) in the education sector. The ministry has even thrown open a paper titled, 'Higher education in India and GATS: An opportunity', for comments.

The move is aimed at increasing the number of foreign students pursuing higher studies in India (which stood at 7,000 in 2001), and will also facilitate retaining of 48,000 Indian students going abroad each year "� a loss of $4 bn to the Indian foreign exchange.

But the commerce ministry is in for a long haul, as the HRD ministry has been opposing iton grounds that the move would go against national interest. It is not a lone voice.

Some players in the field argue that a lot of foreign universities in India which have tie-ups with institutes here, are not recognised on their soil and award an MBA degree of lower value than that awarded by an Indian institute.

Says Professor Vinayshil Gautam, founder-director IIM Calcutta and leader consulting team IIM-Shillong says, "FDI in education sector is a channel of international benchmarking and should be welcome. But it should be monitored and regulated well, keeping in mind the national interest."

These concerns apart, FDI in colleges by top global universities will ease the pressure on students going abroad to pursue studies. Pillai reasoned that India had an outgo of $4 billion on education every year which could be saved by allowing foreign institutes to set up shop in the country.

Concurs professor A D Sawant, vice-chancellor, Mumbai University: "FDI in education is a very welcome idea. It will not only support funding of institutes but will also encourage institutes to be accountable and do the audits which is not a regular phenomenon now."

Opening up the doors to the foreign varsities would imply that foreign educational institutions would be allowed to establish wholly owned subsidiaries in India, leading to a foreign education and certification for students. While this would make foreign education/certification more accessible to Indian students at a substantial cost, the experts are optimistic that it will improve quality, efficiency and accountability in the educational institutions.

The government may also propose a flexible policy for foreign institutes to fix the fees for students and salaries of their staff. And this is an important point too. Says R N Bhaskar, chairman, e-convergence technologies,"FDI should be allowed in the education sector as it will not just facilitate the building of structures but also help in paying internationally-competitive salaries and packages to teachers."

And as one awaits reactions to the discussion paper, the fact remains that FDI is the need of the hour but should be allowed with certain firm measures in place.