Half open door

Written by Garima Pant | Updated: Jul 5 2010, 04:47am hrs
It has been a long wait for the Foreign Educational Institutions (Regulation of Entry and Operations) Bill 2010 to see the light of the day. Expected to be a law soon, the bill is being seen as a big reform for the Indian higher education sector. After 15 years of intense debate and stiff opposition from various ends, the Bill is also expected to stall the growing number of students running to foreign shores to pursue their higher education dreams.

Indias higher education segment has been at the receiving end of a growing mismatch between the demand and supply of quality educational institutes. And the reasons are many. According to UNESCOs Global Education Digest 2009, only 12 children out of every 100 make it to college in India and those who do manage to get university education are hampered by poor teaching and crumbling infrastructure. The government wants to raise this level to 30% by 2020. On the other hand, in China about 23% of children progress to higher education. And that is not all.

Needs and wants

India currently has over 400 universities and more than 20,000 colleges with an enrolment of 14 million students, states a 2009 Ernst & Young report on Indias higher education sector. The report highlights that in spite of these numbers, India still faces a lack of adequate infrastructure in higher education. This is in light of the fact that higher education institutions in the country can accommodate only 7-8% of the countrys college-age students, making Indias gross enrollment ratio (GER) of a paltry 11% in higher education. This is way below the GER of about 60% in the US and Canada, and around 21% in the BRIC countries. Kapil Sibal, Union Minister of Human Resource Development, has stated that the country requires 600 more universities and 35,000 extra colleges over the next 12 years to reach its enrollment goal and needs to attract private investment and foreign institutions. And that is why the big push for the Foreign Educational Institutions (Regulation of Entry and Operations) Bill.

The Bill is aimed at regulating the entry and operation of foreign institutions which are imparting, or intend to impart, higher education in India. It will also permit foreign education providers to set up campuses in the country and offer degrees. Industry analysts see the bill as a much awaited and much desired reform. The bill once passed, has the potential to create the same impact on Indias higher education sector as the one experienced by Indias industrial sector after the economic liberalisation & deregulation in the early nineties, says Bharat Parmar, Partner, Eduvisors, an education research & consulting service provider. However, Parmar cautions against the euphoria of the sector expecting leading foreign universities queuing-up to set-up campuses in India. This has not happened in other economies or countries which are open for international universities and it will not happen in Indias case too, adds Parmar. He points out that the at best, the Bill will lead to improved quality of partnerships in terms of tier-1 universities worldwide partnering with reputed players in the field of education in the country.

The Bill is expected to enhance choice and create healthy competition among students. Along with the IITs and IIMs, students would have the option of choosing from the Harvards, Yales, and Oxfords of the world. But is it too early to expect the big universities queuing up to enter the segment A number of universities have shown inclination, says Narayanan Ramaswamy, Head of Education Advisory, KPMG. But that does not lead to the fact that they will also establish their campus in India, adds Ramaswamy. Parmar adds that there are a sizable number of universities that have expressed interest and have even visited India; and that number would be well over 25. But currently they are scanning the market and are on the lookout for the right partnerships and opportunities. In fact, not many have actually taken any concrete steps in terms of partnership agreements or even letters of intent, adds Parmar.

Deterrent notes

But whats stopping these universities to test the Indian soils The deterrents are many. The Bill states that a foreign university aspiring to set up a campus will have to deposit Rs 50 crore as corpus fund and cannot take back the surplus generated from education activities here. Moreover, a foreign education provider shall, out of the income received from the corpus fund, utilise not more than 75% of it for the development of its institutions in India. The remaining income will be deposited in the corpus fund. The money will be used to find alternative educational facilities for students, if any foreign universities cease operations. Does this still make the proposition an attractive one Education experts feel that these stringent conditions in the proposal are going to deter credible institutions from coming in.

Most international universities have gone through a bad financial patch in the last two years and do not have funds or inclination to look at investments outside their geographies. The only places where they are considering campuses are where local governments are not only giving incentives but are also investing in the ventures (like Kuwait, Abu Dhabi and Saudi Arabia), says Parmar. The condition to invest Rs 50 crore is a big hurdle as a lot of the foreign players dont have that deep pockets. This will also stop the big names to come to India, says Ramaswamy. The issue of fees is also likely to be highly contentious, as the planned legislation prohibits foreign universities from repatriating profits. It may provide opportunities for the entry of lesser-known players who are keen on making money rather than imparting education.

What is also causing concern is the fact that once the foreign universities establish their presence in the country, the best students and teachers will be at risk of being lured away by foreign universities. The initial attraction towards better infrastructure and monetary benefits cannot be ruled out. So, one can expect some faculty movement, says Ramaswamy.

However, on a positive note, the legislation may help India keep at home money now invested in buying an education overseas. According to UNESCO, in 2007 over 2.8 million students were enrolled in educational institutions outside their country of origin. India sends 1,53,300 students abroad, the highest next to Chinas 4,21,100. With this, the government hopes to staunch the flow of students abroad and create a competitive market for Indian institutes. Eduvisors predict that this move could help India save $7.5billion.

But views differ on this issue as well. Partnerships with international universities or campuses in India can take care of just a small percentage of the demand. Therefore, I believe that number of students going abroad for further studies will continue to rise, says Parmar. Also, students who prefer foreign universities for a holistic experience and to eventually settle down in that particular country, will have to go the traditional way. The meritorious students who get scholarship will not settle for the replicas assuming the famous ones will come. The rich and affluent, who are now waiting for the third and fourth cut offs and look forward to joining private universities may join, says Saumen Chattopadhyay, Associate Professor, Zakir Husain Centre for Educational Studies, Jawaharlal Nehru University.

But the bill is definitely going to provide quality education, says Ramaswamy. But will the bill solve the anomalies plaguing the Indian education sector

The overriding feeling is that the entrance of quality foreign universities could help address the countrys massive education challenge. However education experts feel that encouraging the growth of home-grown institutions by liberalising the education sector may be a more realistic long-term solution.

Journey so far

Introduced in Rajya Sabha in August 1995, the Bill could potentially save the country billions of dollars by way of foreign exchange outgo. The Bill was approved by the Union Cabinet in March this year and was introduced in the Lok Sabha on May3, 2010. It has been referred to the Standing Committee on Human Resource Development, which is scheduled to submit its report soon. An earlier version of the bill was cleared by the Cabinet of the first UPA administration in 2007, but it could not be introduced in Parliament because of objection by Left parties.

Billing details

The Foreign Educational Institutions (Regulation of Entry and Operations, Maintenance of Quality and Prevention of Commercialisation) Bill will allow foreign universities to invest at least 51 per cent of the total capital expenditure needed to establish the institute in India. Such institutes will be granted deemed university status under Section 3 of the Universities Grants Commission (UGC) Act, 1956. The Bill aims to regulate the entry, operation and maintenance of quality assurance and prevention of commercialisation by foreign educational institutions, besides protecting the interest of the student community from sub-standard and fly by night operators.