Government clears bill to allow foreign universities

If all goes well, the world’s best universities will soon be able to set up shop in India. You could have a choice of not only the IITs and IIMs, but also the Harvards, Yales and Oxfords of the world.

On Monday, the Union cabinet cleared the tabling of the much-awaited Foreign Educational Institutions (Regulation of Entry and Operation, Maintenance of Quality and Prevention of Commercialisation) Bill, 2010. If the bill becomes law, foreign universities will be able to set up their campuses in India and offer degrees independently.

“This is a milestone which will enhance choices and increase competition and benchmark quality,” said human resources minister Kapil Sibal.

But will foreign universities take the bait? According to sources, the new bill is silent on ticklish issues like reservation of seats for SC/ST candidates and OBCs. But other stringent norms — like regulation of fees, a minimum corpus of Rs50 crore and a no-objection certificate from the home country’s embassy in India — will remain.

Vivek Wadhwa, senior research associate with the Labour and Worklife Program at Harvard Law School and an executive in residence/adjunct professor at the Pratt School of Engineering at Duke University, says there will be no great rush immediately. “Universities move very slowly, so there will be no major upheaval and change as you saw with the opening of the economy. The change will be gradual. I expect foreign universities to tip-toe into the country — by first setting up small, collaborative programmes, and then opening up campuses.”

Allan Goodman, president and CEO of the Institute of International
Education (IIE), New York, however, welcomed the proposed opening up. “Any step that opens up education for more people and more providers is a positive step. It’s very significant when a country as big and as important as India takes that step; so I applaud this step.”

IIE is the leading not-for-profit organisation in the field of international educational exchange and development training. Over 800 US colleges are affiliated to the IIE.   

Under the rules proposed for foreign universities, they will not be allowed to set up franchisees. They will be granted a deemed university status under Section 3 of the University Grants Commission Act and they will have to ensure that the quality of programmes is comparable to the ones offered back home.

Even though 100% foreign direct investment through the automatic route has been permitted in the education sector since 2000, none of the foreign institutes has so far been allowed to enter the Indian market directly. They have had to operate in collaboration with Indian institutes.

Some of the institutes that were allowed entry into India by the All India Council for Technical Education (AICTE) are: University of Hudderfield (United Kingdom), in collaboration with the Institute of Hotel Management, Aurangabad (Maharashtra); Staffordshire University (United Kingdom), in collaboration with Asia Pacific Institute of Information Technology, Panipat (Haryana); Vaughn College of Aeronautics & Technology, New York (US), in collaboration with Streenidhi Institute of Science and Technology, Rangareddy (Andhra Pradesh), and Regency Institute of TAFE, Adelaide (Australia), in collaboration with IIMT Hotel Management College, Meerut, (Uttar Pradesh).

However, with the new law the government will be opening up the Indian education market for aggressive competition. The government believes that this will not only curb the flow of Indian students going abroad for higher education but also set up a competitive market for Indian institutes besides providing a substantial increase in seats for higher education.

“The foreign universities are certainly going to give us tough competition. The top Indian institutes will have to work hard to prevent their faculty from leaving them and joining these institutions. In any case, it will be an interesting competition,” said a senior professor at IIT, Delhi.

Officials in the HRD ministry said that the law would prevent fly-by-night operators since only accredited universities would be allowed to set up a campus in India. “The proposed bill aims to protect students from fake universities and certificates. Only those universities established under valid foreign law and accredited in the home country will be allowed to operate after getting clearance from the home embassy,” said an official from the ministry.

While laying down terms and conditions, the government is being strategically silent over the issue of reservations for SC, ST and OBC candidates in these institutes. Even though former HRD minister Arjun Singh had, during his tenure, very aggressively campaigned for reservations in foreign universities, the same is missing in his successor. Sibal isn’t very keen on laying down any such condition that can be a put-off for foreign institutions.

In fact, many of the foreign varsities were learnt to have developed cold feet due to the stringent norms proposed in the earlier bill. “Certain provisions in the bill on reservation, hiring, fee structure and ban on remittances are big sticking points for foreign universities,” said an expert who tracks the Indo-US education scene.

While the universities will have the freedom to choose courses, government will keep a close watch on the content. The UGC will be empowered to withdraw their deemed university status if they violate any of the norms - especially those relating to the sovereignty and integrity of India.

These institutes will also have to hire a major part of their staff from among Indians and none can remit the profits earned on Indian soil. However, they can participate in consultancy projects and other activities and the profits generated from such projects can be remitted abroad. The foreign institutes will also have to invest at least 51% of the total capital required for establishing an institution in India.

India has a severe shortage of higher education institutions for its booming population, with more than 30% of its 1.1 billion people being under 14 years old. Only 12% of all school-leavers go to college, and the government hopes to raise the figure to 30% by 2020.

The foreign universities bill has been hanging fire for over four years due to stiff opposition from the Left parties. It is now expected to be tabled by Sibal after the parliamentary recess.