Not-for-profit status of educational institutions have been a dampener for foreign investors ever since the sector was opened up for FDI a decade ago, but that seems to change.
Despite its rather small size (R12 crore), the deal is expected to set a precedent and help the higher education sector, starved of FDI, to attract foreign funds by carving out entities for specific business purposes. The investment will be used in low carbon and renewable energy generation, energy efficiency and conservation and energy distribution, among others.
13E Trust was incorporated as a Sebi-registered venture capital fund set up by the Centre for Innovation Incubation and Entrepreneurship (CIIE). BP Global provides advisory and manpower resource support services to BP.
With Indias rules mandating that core education cannot be a commercial enterprise, FDI has flown only into companies involved in businesses related to education. But this is first time an institution of the repute of IIM-A has got FDI.
Though FDI is allowed in higher education, there are road blocks like the absence of enabling legislation. Parliament is yet to clear the Foreign Educational Institutions Bill, which would allow overseas universities to set up campuses here. Almost two years after the ministry of human resource development drafted the Bill, Parliaments standing committee has not given its nod.
A ministry official said: Foreign investment peaked in 2008-09 and has been falling since. The main reason is the sectors not-for-profit status. There is no enabling legislation either. How can a foreign university wishing to set up a campus here get approvals without the legislation in place
Ficcis education committee director Shobha Mishra Ghosh said, The regulatory environment is uncertain. Most of the investment will come only into a campus set-up. So far, the investment has been in training and technology, but both have not been explored completely. Besides, investments are minimal due to lack of clarity.