Investment in the education sector needs to be studied from the point of view of two iconic models set up by Dubai and Singapore, pioneering them to emerge as world-class education hubs

The figures are mind-boggling, the industry lucrative. Foreign education is the dream and aspiration for most Indian students. It isn?t just a statement but a fact. Indian students spend considerable amount each year on higher education overseas. India has an abundance of extremely talented and bright young minds whose energy could be channelised in the right direction through qualitative guidance. The Foreign Educational Institutions (Regulation and Entry and Operations) Bill, 2010, seeks to do exactly this by incentivising top-notch universities to set up institutions right here in India. The Bill is a reflection on the pattern followed by Singapore and Dubai, which, decades ago, opened their doors to foreign universities and received a myriad of students from different parts of the globe. Such a move not only diversifies the education system but also brings in a new-found exposure for the native students to study and learn in a global environment.

Currently, the entry of foreign universities in India has been limited to those offering technical education. These universities are regulated by the AICTE regulations for entry and operation of foreign universities in India imparting technical education. A revolution in the Indian higher education sector is needed to revitalise and rejuvenate the dampening spirit of this sector. Investment in the sector needs to be studied from the point of view of two iconic models set up by Dubai and Singapore, pioneering them to emerge as world-class education hubs.

The Emirates? educational policy is based on three important goals. First, to provide students with greater access to higher education. Second, to provide a sustainable supply of skilled people in strategically-targeted sectors. And third, to establish the Emirates as an ideal hub for higher education. In the 1960s, the capital of the Emirates, Dubai, was primarily a business port with very few primary and secondary schools. By 2011, Dubai has transformed itself into a mecca for higher education through the launch of free zones specifically promoting and establishing international educational institutions. In one of the free zones, Dubai established the world-famous knowledge village, which now houses famous institutions such as the London Business School, Middlesex University, University of Bradford and Manchester Business School. For the strategic investors the opportunity is great since there has been a record 77% growth in higher education since the establishment of the free zone. It isn?t as if Dubai doesn?t maintain the quality of education. Dubai established the University and Quality International Board (UQAIB) under the Knowledge and Human Development authority (KHDA) to assure quality of international higher education. The UQAIB provides an independent international input on the quality of higher education. Essentially, the UQAIB ensures that the international higher education providers provide equivalent learning outcomes as those higher education providers at home.

The foreign institutions Bill also provides the same regulatory norm. As per the Bill, no foreign educational institution shall admit students without being notified by the central government as a foreign educational provider. Under one of the resolutions passed by the KHDA, academic authorisation is granted after the higher education provider meets all the operating requirements. Similarly, the Bill presents the process by which the central government grants the recognition and notification of foreign institutions as foreign institutional providers. The KHDA provides guidelines for regulating the advertising and marketing of the foreign institution through a prospectus. Stringing along, the Bill also contains provisions for the mandatory publication of the prospectus and provides for penalty for non-registration of a foreign education provider under the Bill?similar to the process contained in KHDA guidelines. Just like the Emirates has become a magnet for foreign educational institutions, India too could serve to garner foreign investment in education based on the similarities in the Indian and Dubai model.

The Bill provides stringer norms for establishing institutions as foreign institutional providers. One of the tougher parameters for a foreign educational institution is its incorporation and continuance in the education industry for a time period of at least 20 years. The reason for including this criterion would be to ensure investment by well-reputed and recognised institutions. Another peculiar requirement for these providers is the maintenance of a corpus fund of R50 crore. Surprisingly, the Bill also demands foreign universities to invest 75% of their income including surplus in development while reserving the remaining 25% in the corpus fund. Such measures might hinder foreign investment given the restriction on their freedom to operate and perhaps even utilise the surplus in the manner they wish.

On the positive side, the time period involved in obtaining the approval under the Bill is not too long and the procedure not too complex. Application has to be made to the registrar who maybe the secretary of the University Grants Commission (UGC). Within six months of such application, the registrar would make a report on the fitness of the educational institution. The report would be considered by the UGC and within a period of 30 days be sent to the central government for the final approval. The government would recognise and notify the institution as a foreign educational provider within 30 days. Thus, overall the time period for approval is seven months. The Bill is silent on the validity of the approval while the academic authorisation granted by the KHDA is valid for one year.

Tracing the history of the Singapore model, it can be said that the Asian crisis which had unsettled Singapore forced its policymakers to ?adapt to and benefit from an evolving knowledge-based economy?. Singapore has two important educational initiatives. The first is the world-class university programme endeavouring to provide collaborations between local universities and leading universities such as MIT and Yale. The second is the Global School House programme. Like Dubai, Singapore identified three key thrusts under the Global School House initiative. The first was for the education sector to be an engine of economic growth, second to build industry relevant manpower capabilities for the economy, and third to help attract and retain talent for the economy. The Global School House initiative attracts leading foreign universities to set up camp in Singapore either through independent campuses or through collaborations with the local tertiary institutions. Institutions such as the French school INSEAD and the Technical University of Munich have revitalised the educational sector of Singapore providing unique east-west pedagogy.

India needs 1,000 more universities and 50,000 more colleges to be built by 2020 to accommodate 50 million college students. The foreign educational institutions Bill, if passed, would allow 100% FDI by foreign universities in India partially meeting the demand of the Indian educational system. Statistics have shown a low investment by foreign educational institutions in India. Though there are restrictions placed on the foreign universities, more than 2.4 lakh students are willing to study in these universities. The sheer number alone has the power to attract foreign institutions in India. However, the institutions would have to adapt and abide by the rules of their host country. The host country too would need to provide a sensitive, safe and investor-friendly environment for the institutions and themselves to prosper.

The author is a partner with J Sagar Associates. He can be reached at Sidharrth@jsalaw.com. Views are personal