Ivy League may not line up for an Indian campus

Bill likely to be made public for debate.

Ivy League and top-rung foreign institutions are not likely to make a beeline to set up campuses in India, although the Cabinet has given its approval to the Foreign Educational Institutions (Regulation of Entry and Operations, Maintenance of Quality and Prevention of Commercialisation) Bill, say analysts.

The Bill is likely to be made public in the next three weeks for debate before being tabled in the Parliament, said a ministry of human resources development (MHRD) official, who did not wish to be named.

MRHD sources say around 50 foreign universities have shown interest in setting up campuses in India. However, education consultants and analysts say there’s no strong reason for top-rung foreign universities to rush to India.

 

Consider these figures: In 2008, around 140 Indian institutions and 156 foreign education providers were engaged in academic collaborations. Of these 156 foreign education providers, 90 have university status and 20 have college status. Other institutions are training institutions or those for further education. The total number of collaborations was 225 and with each collaboration having over one programme delivery, the total number stands at 635.

Moreover, all major universities have India-specific plans on their agenda. Harvard Business School and Oxford Business School, for instance, have set up India Research Centers in India. Yale, too, has entered into more than 50 collaborations in India and is interested in more such partnerships, according to George Joseph, assistant secretary for international affairs of Yale University.

None of these universities, however, has said anything about setting up a campus as yet. “Yale has no immediate plans to set up a campus here,” admits Joseph.

“To set up a good campus in India, universities would require anywhere between $70-80 million (around Rs 320-370 crore at today’s rates). Most international universities, hence, might opt for the partnership route in India than go solo,” reasons a source from Manipal University.

Anwar Ali, director, Institute of Management Technology, also believes that the Bill should not result in just mid-rung foreign universities setting base here. “Existing institutes need to tighten their belts and improve the quality of education to be able to compete with the universities who come here. It is good for students, as they don’t have to go abroad and they can get admission at a lower cost. However, we need a strong filtering mechanism to ensure that only good universities come here,” said Ali.

“I am not aware of the details of the Bill, but would hope that the provisions applicable to foreign universities are also extended to Indian institutions of high calibre, and that we have a level, competitive, growth-oriented playing field,” concurs Ajit Rangnekar, Dean of ISB.

“Universities with heavy brands would not rush in. What is their need to come to India? They are against spreading their campuses anywhere outside their country. Universities or institutes with huge endowments would look at India as a positive market,” reasoned Narayanan Ramaswamy, ED, head of education advisory services, KPMG advisory services.

Ramaswamy said the universities are not called to make money but for their content. “The decision is good for those who plan to launch degree programmes or set up campuses in India,” he said.

Indian universities, too, are not perturbed. B B Bhattacharya, Vice Chancellor, Jawahar Lal Nehru University, Delhi, said: “This move might not bring any big changes in the education sector immediately. However, good universities, in the long run, could give competition to Indian universities with regard to their best practices.”

Meanwhile, some clauses in the Bill are proving to be deterrents to foreign universities.

The Bill, according to sources close to the development, states that foreign universities having “accredited status at home” will be allowed through their respective embassies in India. The universities will have to deposit $10 million (around Rs 46 crore at today’s rates) as corpus fund by the aspiring foreign university; they would have to bring the fund as FDI (100 per cent) and establish themselves as a limited company under provisions of Section 25 of the Companies Act, wherein they cannot take the profit back but will have to spend the amount for further expansion here.

“Given the regulatory conditions, it’s important to know how many branch campuses of the foreign universities will actually come up. Also, whether reputed universities will be interested to invest in India. It is quite likely that universities with profit motive would like to come. However, I still consider the possibility of foreign universities joining hands with Indian universities through the partnership mode would be a better option,” said a professor.

The universities can, however, involve in other activities like consultancy projects and the profit generated from those projects can be taken back home. Foreign universities will also be allowed to invest at least 51 per cent of the total capital expenditure needed to establish the campus in India.

“These institutions will not be allowed to take surplus out of the institution. They will acquire a legal status once they get registered in the country. They will have to follow the laws of the land,” explained the MHRD official.

At present India is losing substantial forex with Indian students spending a fortune on education abroad. It is estimated that around 1,60,000 students from India are studying abroad. If the average expenditure on fees and maintenance is assumed at $25,000 per student per year, Indian students are spending around $4 billion per annum abroad.

CHECKLIST

# Foreign university to deposit $10 mn as corpus fund to set up campus in India

# Has to register as a Limited Company under Section 25 of the Companies Act

# Will be allowed to participate in consultancy projects; profit generated can be repatriated

# Will be allowed to invest at least 51 per cent of the total capital expenditure needed to establish the campus in India

# Will be granted deemed university status under Section 3 of the Universities Grants Commission (UGC) Act, 1956

# Foreign universities having “accredited status at home” will be allowed through their respective embassies