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Hurdles remain for foreign univs to set up India campuses

Criteria like world ranking and not-for-profit tag might act as deterrents

Kalpana Pathak  |  Mumbai 

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US-based Stevens Institute of Technology on Wednesday tied up with the Mukesh Patel School of Technology & Engineering, of NMIMS University, for student exchange, faculty exchange and research programmes. But if Stevens Institute, ranked 75 among all US universities, were to consider opening a campus in India, it might not qualify. For, it does not rank within the top 400 universities of the world published by Times Higher Education, Quacquarelli Symonds or the Academic Ranking of World Universities by Shanghai Jiao Tong University.

This, and a few more conditions put forth by the ministry of human resource development on Tuesday for allowing foreign universities to open campuses in India have irked the academic community and industry players. “To say that institutions would have to rank within the top 400 universities of the world is not correct. Different agencies use different criteria to rank universities and the order changes every year. How do you decide on it then?” said Rajan Saxena, vice-chancellor of NMIMS University. Overall, Saxena thinks, it is a positive move.

But concerns remain.“The Ivy leagues are certainly not interested in setting up a campus here, but there are others which are. Though foreign universities might not warm up to India immediately, they would in the long term,” said Shalini Sharma, head, higher education, Confederation of Indian Industry.

While foreign institutions would be required to maintain a corpus of not less than Rs 25 crore (brought down from Rs 50 crore suggested earlier), it would have to be a not-for-profit entity that has been in existence for at least 20 years and accredited by an agency of the country of origin or by an internationally accepted system of accreditation. Foreign varsities will have to operate as a not-for-profit entity under Section 25 of the Companies Act 1956. A not-for-profit entity is one that does not distribute its surplus funds to owners or shareholders. It, instead, reinvests these in the institute. Many private universities have been set up under Section 25 of the Companies Act. However, deemed universities are not covered by the Act.

Some higher education institutions have taken this route in the technical education space to escape policing by the All India Council for Technical Education. For instance, many schools have gone the Indian School of Business way, opting for a one-year programme (against the conventional two-year courses), and have registered themselves under Section 25 of the Act.

Foreign universities interested in engaging with India have three different needs and objectives — prestige-enhancing, prestige-seeking and revenue-profit maximising.

“Indian policymakers were interested in attracting universities from the first group without understanding that unless they are funded or financially supported by the host country – for instance, New York University in Abu Dhabi – there is a lack of interest among this group in building branch campuses,” says Rahul Choudaha, director, research and strategic development at World Education Services in New York.

Choudaha says the foreign universities Bill proposed barriers like the requirement of a corpus fund of Rs 25 crore, due to the depreciation of the rupee. Besides, given that the Indian government does not promote ‘for-profit’ institutions, it has included a clause regarding non-repatriation of surpluses by foreign universities.

Choudaha says big names like Duke Fuqua, Virginia Tech and Georgia Tech have abandoned their ambitions for full-fledged degree campuses. “The clause regarding non-repatriation of surpluses effectively eliminated all leading universities, especially the publicly funded ones, which cannot justify to their stakeholders putting up financial capital when there is limited potential for a return on their investment,” he said.

A professor and India representative of an international university in India told Business Standard that non-repatriation of funds would act as a deterrent to international universities. “The Indian government should first look at its own institutions which have, under the garb of being charitable ones, mastered the art of profit making,” he said. Choudaha explains that in terms of philanthropy, Indian higher education is still far behind. “There are hardly any cases of wealthy Indians donating money to higher education institutions and potentially funding foreign branch campuses, though there are a couple of examples like Shiv Nadar University and Azim Premji University – both private universities funded by technology billionaires.”

Also, there is a lack of clarity on how does one qualify foreign institutions which are already operating in India in partnership with Indian institutions — like Lancaster University and GD Goenka, Leeds Metropolitan University (MET) and Jagaran Social Welfare Society (a non-profit organisation owned by the Dainik Jagarn media group), and Strathclyde University and SKIL India. Last year, several students filed petitions in an Indian high court accusing Leeds MET India of misrepresentation, as the degrees they confer lack recognition from accrediting bodies in India.

  • To qualify for setting up campuses in India, foreign varsities should figure in top 400 global universities rankings by various agencies
  • Foreign institutes are required to maintain a minimum corpus of Rs 25 crore
  • Under the non-repatriation clause, foreign varsities cannot remit surpluses from Indian operation to parent country
  • Currently, student traffic from India to other countries for higher education stands at anywhere between 150,000 and 200,000 per annum
  • Foreign varsities can help stem this outflow
  • Currently, US, UK, Australia, New Zealand and Canada attract most number of students from India in higher education

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First Published: Thu, September 12 2013. 00:18 IST