Government revives plan to permit foreign branch campuses

A plan to allow foreign universities to establish campuses in India has been revived, with the Narendra Modi government set to include a provision in its Higher Education Commission of India (HECI) Bill that would allow their entry and operation and specifies norms for joint and dual degrees.

But with restrictions on repatriation of profits a key sticking point for foreign universities, the government’s policy think tank has proposed the idea of ‘Exclusive Education Zones’.

The new bill, expected to be approved by the cabinet soon, intends to set up a single higher education regulator to replace the current University Grants Commission (UGC) and the All India Council for Technical Education (AICTE), which oversees business schools, engineering institutions and other vocational institutes.

The Human Resource Development (HRD) Ministry has also included globalisation as one of its focus areas in its ambitious five-year plan called Education Quality Upgradation and Inclusion Programme or EQUIP, released in August this year. The five-year vision document proposes the government reconsider the Foreign Education Providers Bill.

The HRD Ministry recently circulated the draft law for inter-ministerial discussion, sources said. The bill includes a clause that the new regulatory body will be able to allow “highly reputed foreign universities” to set up branches in India.

This is a reversal of the earlier stance of the ruling Bharatiya Janata Party (BJP) on the Foreign Educational Institutions Bill introduced by the earlier Congress-led United Progressive Alliance-II government (2009-14). That bill did not get the required support in parliament and finally lapsed when the BJP came to power in 2014.

At that time, one of the main arguments against allowing in foreign universities was that the high fees charged by foreign universities would increase the cost of education, making it out of reach of a large section of the Indian population.

Bypassing ban on repatriating profits

Amid heavy lobbying by foreign institutions against non-profit status, during the previous Modi government (2014-19) the Commerce and Industry Ministry – which has continually called for an opening up of the sector to foreign providers – suggested in 2016 that foreign universities should be permitted to establish campuses in Special Economic Zones.

A Special Economic Zone (SEZ) is a land area assigned by the legislature with exceptional rules to encourage businesses and industry to set up there. SEZs include reduced taxes for around five years and adaptable work laws.

Institutions operating in SEZs do not have to follow domestic rules such as a ban on repatriating profits.

But the HRD Ministry did not approve of the idea – in particular preferential treatment for repatriating profits which could be seen as an election liability, and likely to be heavily criticised, particularly at the state level, as discriminating against local private institutions.

The Indian government’s policy think tank NITI Aayog has also suggested ways to permit foreign universities to establish Indian campuses. “Foreign universities under the existing system are required to register as a company, barring the repatriation of profits, which has made setting up campuses in India a non-starter,” said the Aayog.

‘Exclusive Education Zones’

NITI Aayog has more recently favoured the development of Exclusive Education Zones (EEZs) akin to SEZs in a few select cities, in Bengaluru, Hyderabad, Ahmedabad, Pune, Chandigarh and Sikkim.

The think tank’s vice-chairman Rajiv Kumar recently convened a multi-ministerial meeting to discuss measures to boost growth in the inflow of foreign students – NITI Aayog plans to attract 200,000 foreign students to India annually – including ways to permit foreign universities.

But Himanshu Rai, director of the Indian Institute of Management Indore, said SEZs – an idea imported from China which used SEZs to launch its economic boom of the 1980s and ’90s – has not really worked in India. “Coming up with a similar idea for the education sector does not make sense at all. Education, for instance, is not a business,” he said.

One reason why SEZs did not take off in India is because not much thought has gone into setting up those SEZs, including land acquisition and connecting infrastructure, he said. “So initially a couple of companies might come in but then they realise that the infrastructure is not good enough for them to transfer the goods from this place to the other places …[and] things start falling apart.”

But the idea of EEZs is even more complex as it is not about the manufacturing and transfer of goods. SEZs for services are an untried model in India, although they exist in countries like the United Arab Emirates and South Korea.

Level playing field

Allowing foreign institutions under special conditions in special zones “is going to be in many ways discriminatory against educational institutes already operating in India”, Rai said, adding that institutions in India abide by current UGC or AICTE rules and have little room for manoeuvre, while foreign institutions setting up campuses will have many more freedoms.

“The playing field has to be levelled,” he said. Indigenous private universities “have invested a lot of money and many of them have done so without receiving any support in terms of rebates, and so on”.

“We should allow foreign universities to come up in India without creating these EEZs. We need a free market situation… so let them come and compete on certain terms and conditions,” he said.

“When you invite educational institutions, what we get out of it may not be tangible. It’s not going to create many jobs for people in India, but it will bring in best practices in terms of pedagogy, research, people and that is going to be good for the country.”

Foreign universities could put a lot of pressure on second- and third-tier universities, which are finding it difficult to attract students, he added.

Much more needs to be done before inviting in foreign universities. “Because otherwise what is likely to happen is you roll out the red carpet and you bring them in and then try to push in rules and regulations retrospectively,” he said.