Government lifts major roadblock to foreign branch campuses

Foreign universities setting up their international campuses in the Gujarat International Finance Tec-City (GIFT City) can do so without having to follow domestic regulations and can repatriate profits without any restrictions – a concession that removes a major roadblock to foreign universities’ entry into India.

Foreign universities can only enjoy this freedom at GIFT City, a special economic zone in the western state of Gujarat where regulations and controls of the national higher education regulator, the University Grants Commission (UGC), regarding fees, admissions, faculty appointments and an existing bar on profit repatriation, will not be applicable.

However, experts say the developments in Gujarat are an indication that India is keen to attract foreign universities and if the move leads to the successful establishment of good universities from overseas, concessions could be extended to other states in future.

“Gujarat, being Prime Minister [Narendra] Modi’s home state, is a very good testbed. If it works, I can see this very quickly being replicated,” said Adrian Mutton, founder and CEO of Sannam S4 Group, an international business consultancy representing many foreign universities interested in tie-ups between companies and universities in India and elsewhere.

“This is a first for India, so I think it’s absolutely right that India is focusing it on a state where they’ve got utmost political stability, utmost political control, and there is the open-mindedness to try this,” Mutton told University World News.

To set up in GIFT City, a planned business district located on the banks of the Sabarmati River which connects Gujarat state’s business capital Ahmedabad with the political capital Gandhinagar, foreign institutions must offer courses, including research programmes, in financial management, fintech, science, technology, engineering and mathematics.

A new GIFT regulator

The Indian government’s not-for-profit approach to higher education has so far proved to be a major deterrent to foreign universities wishing to set up campuses in the country. Under current laws, foreign institutes are required to invest profits back into their Indian campus and are not permitted to repatriate profits to the parent campus.

They will be free of this mandate in GIFT City where the guidelines of the International Financial Services Centres Authority (IFSCA) – GIFT City’s regulatory body – will apply to foreign higher education institutions setting up campuses.

UGC rules will continue to govern foreign institutions intending to set up centres in other areas of the country.

India’s Finance Minister Nirmala Sitharaman made the announcement that top-notch foreign universities and institutions would be permitted to operate in GIFT City free of domestic regulations in the 2022 Union Budget in February.

Dipesh Shah, executive director (development) at IFSCA, told University World News: “In the union budget it has already been announced that foreign universities can set up their campuses in GIFT City and … will be free from domestic law. Only the regulations of the IFSCA authority will be applicable. The government, through a Gazette [notice] in July, notified that the courses will be offered by the foreign universities as a financial service.

“Then as an authority, we issued the draft regulation for public comment and now we have issued our final regulations for setting up foreign universities,” he said. “Now we have regulations of [the] University Grant Commission and AICTE for disapplication in the parliament,” he said, explaining that the rules and regulations of the UGC and the All India Council for Technical Education (AICTE) for technical institutes will not be applicable in GIFT City.

“The parliamentary approvals for disapplying domestic laws in GIFT City are expected in the next parliamentary session,” he added. The winter parliamentary session begins next month.

“There has been a lot of interaction with foreign universities including British, US and Australian universities, and they are keen to open their branches in GIFT City,” Shah noted.

The first centre could begin operating by September 2023 for the first enrolments and will cater to both Indian and foreign students in the specified disciplines, he said.

World-class universities only

Only world-class higher education institutions can set up their overseas centres in Gift City, according to the authority.

Thus, a foreign university that has secured a position within the top 500 in the overall category and-or in the subject category in the latest QS World University Rankings, or a reputed educational institution in its home jurisdiction, will be eligible, according to the IFSCA regulations officially published on 11 October to allow an international branch campus (IBC) or an offshore educational centre (OEC) to be set up in GIFT City.

A degree, diploma or certificate issued for courses or programmes will enjoy the same recognition and status it would enjoy had it been issued by the foreign higher education institution in its home jurisdiction, the regulations state.

“[An] identical degree, diploma or certificate will be conferred upon the students of the IBC or OEC by the parent institution in the same manner as it confers to its students for the same course or programme in its home jurisdiction,” the regulations state.

The degrees will be treated as equivalent to the corresponding degrees awarded or issued by the foreign entity back home. Faculty recruitment and student selection mechanisms and student grievance redressal processes as well as the name of the Indian campus should also be identical or similar to the parent entity.

The rules include safeguards for students, with closure of courses only possible with the permission of the authority. “In the eventuality of disruption or discontinuation of a course or programme for any reason, it shall be the responsibility of the parent entity to provide an alternative to the affected students, including reallocation to the course or programme conducted by it,” the regulations state.

Branch campuses will be subject to quality assurance audits and inspections by IFSCA and restrictions will also apply to marketing and advertisements which must be “factual with accurate mentions of the roles and purpose of accreditations and shall not be misleading or exaggerated”, according to the regulations.

Regulatory challenges

There are questions about whether IFSCA has the requisite expertise and experience to assess foreign universities from different countries.

“One of the challenges will be, if you allow foreign institutions to self-govern, which is essentially what it looks like, they will be tasked with doing it under their own rules and regulations and delivering their own course content. That’s great for foreign universities, but it becomes very complex for the Indian regulators,” said Mutton.

“If you have a university from Canada, a university from the UK and a university from Australia setting up, they all have different regulatory environments, different expectations, different standards. One of the worries is that the universities are allowed to do pretty much what they want. Then at some point, the government doesn’t like it and the pendulum swings back the other way.

“The UGC has an enormous amount of history behind it,” noted Mutton. “And it’s not easy to simply replace one major governing body with another. So, I don’t think that will come without a lot of learning along the way.”

Mutton said for foreign universities it was an opportunity “to get closer to India to learn and to be in an environment where the regulations are being designed to make it as straightforward as possible for you to enter and operate in the country”.

He said the Indian government wants these initiatives to be a success “and they want them to be scalable, because just doing it in Gujarat does not address India’s higher education challenge … So I think this will be the first of many such examples, and there will probably be a few lessons learned in Gujarat that others can benefit from.”

But he cautioned that each state is very different. Mutton, currently in New Delhi, held meetings with Chief Minister of Uttar Pradesh Yogi Adityanath and with Chief Minister of Assam Himanta Biswa Sarma this week.

He said both Adityanath and Sarma were “receptive” to international cooperation. “Both are very open to developing frameworks to attract the world’s best talent, the best educators and building world-class partnerships.”