India?s march to inclusive growth is crucially dependent upon a steady flow of skilled labour. The country?s development strategy has revealed a preference for skill-intensive activities as India?s comparative advantage. But it?s not good news that India may face an acute skill shortage with business as usual in the education sector. According to a CII estimate, India would need over 25 million new workers with higher education by 2016. About 2.2 million would be required by the IT & ITeS sectors alone. Quantity is not the only factor here. According to a report by McKinsey, only about 25% of India?s graduates are considered fit to work at MNCs.
The publicly funded education system in India is not capable of meeting the quality challenge alone. India already has the world?s second largest publicly funded (or aided) education system after China, with total enrollment of around 10.5 million. It is the sheer size of the system that inhibits quality improvement. Public funds are stretched just to meet administrative costs. While administrative reform and better targeting of education subsidies can be a long-term policy goal, the immediate need is to create additional capacity, especially in professional and technical courses that meet global standards.
Here, SEZs devoted to education may be a solution. They can use a public-private partnership model funded by FDI and the Indian private sector. Since these SEZs will be in urban areas or in the suburbs of big metros, it will be easier for investors to acquire land and create world class education infrastructure. It will also allow flexibility in terms of regulations on fee structure, syllabus and labour laws, making such an investment an attractive proposition for those in industry and for foreign universities. Syllabus flexibility will allow courses to be designed that meet the professional and research requirements of industry, not just in India, but globally. Fee flexibility will allow innovative fee structures.
We need to have just a few such large SEZs. In time, these will have an agglomeration effect, creating clusters of education excellence with several world-class institutes. But for that to happen, such SEZs will have to make big investments in infrastructure that focus on both the soft aspects related to academic excellence as well as the hard aspects related to the physical quality of life on such campuses.
High-quality infrastructure, flexible and innovative syllabii and competitive salaries would attract faculty from around the world, including members of the Indian diaspora teaching at foreign universities.
These SEZs make immense sense in trade policy terms. In 2007, India spent $300 million importing intellectual property from the US, and spent $3 billion, 10 times that amount,?importing education, most of it Mode 2 (Indian students going to the US). We spend far less on importing technology than importing skills and training. With world-class education SEZs in India, the import substitution and addition to GDP will be a big gain in itself. These SEZs will also attract students from other Asian countries and boost India?s services export earnings. The infrastructure would have to be world class.
The process of designing and implementing these SEZs can be accelerated through joint efforts of the Centre, state governments and the private sector. The role of the government must be collaborative, not authoritative. There should be flexibility in adopting international over national standards in certification, recognition of degrees in India and abroad, fees structure, salaries to faculty, standards enforcement and regulation, labour laws and affirmative action. The idea is to create a first world environment in an emerging economy.
If it succeeds, very soon, top US and UK universities will face stiff competition from these SEZs. So will our education institutes in the domestic tariff areas. In time, the demonstration effect on them would be a national gain.
Jayanta Roy is principal adviser, CII. These are his personal views