India shows an open mind

Feb 16, 2009
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India shows an open mind

KOLKATA - With the largest student population in the world, an estimated market of US$40 billion per year and scorching, it is a wonder that after nearly two decades of economic liberalization India's education sector is still closed to foreign players.

But propelled by the urgent need to deregulate the higher education sector to meet the demands of a burgeoning economy, the cabinet last week took a big leap by approving a bill allowing foreign universities to open campuses in the country and offer degrees.

The Foreign Educational Institution (Regulation of Entry and Operation) Bill, 2010 still has to go to parliament for approval later this month, but experts are calling it a milestone.

An excited Human Resource Development Minister, Kapil Sibal, who has been struggling for the past four years to open the
education sector to foreign universities, feels the bill will usher in a revolution "larger than the telecom sector". For others, though, it will at least enhance the profile of higher education in the country.

"This bill, if passed, will bring in a revolution for sure with the potential of having the same impact that the Indian economy experienced following the liberalization and deregulation of the early 1990s," says Harish H V, a partner in the global consultancy firm Grant Thornton. Grant Thornton, claims Harish, is advising three foreign universities on their India strategies.

For India's education sector, particularly higher education, this bill is indeed welcome. Experts say that heavy regulation and over-protection of the education sector from global forces may have allowed Indians to get education cheap comparatively. But the growth and quality of higher education has suffered immensely as a consequence of that protection, resulting in an inability to cope with the surging demands of university education.

Not that there haven’t been attempts to reform this sector. A feeble try to open education was first made in 1995 through a similar bill. But due to a lack of political support it failed. In 2006, the present United Progressive Alliance (UPA) government that is led by the Congress party tried again, but its bill failed because of objections by the left parties that at the time propped up the coalition. The left believed that opening up the education sector would lead to unregulated fees and admission procedures that favored only the affluent class.

However, it appears that having been unshackled of the left in elections last year, the now stronger UPA government has finally decided to push ahead.

"It is a welcome development in India's higher education sector that promises greater access to quality education; a dire need in India," says Mithilesh Kumar Singh, senior fellow at the Apeejay Stya Education Research Foundation, a New Delhi-based education management outfit.

Currently, although foreign universities are allowed to conduct classes in India, they cannot grant degrees; for that Indian students have to go to the institution's origin.

This bill will not only allow foreign universities to invest at least 51% of the total capital expenditure needed to establish a campus in India, it will also grant foreign entrants with university status the ability to offer degrees in the country. To discourage fly-by-night operators, only accredited universities will be allowed permission and franchises will not be encouraged.

"Besides enhancement of educational opportunities there are many other benefits that the entry of foreign institutions can bring to India," says Brahma Deo, dean of faculty affairs at the Indian Institute of Technology in the city of Kanpur.

Experts say that aside from making foreign degrees more affordable to a much larger number of Indian students, while increasing availability and improving the quality of teachers, the bill will usher in global best practices in India’s higher education sector.

The Associated Chambers of Commerce and Industry of India says the economy, too, will benefit since the country could save $7.5 billion in foreign exchange outflows each year. The lobby said over 500,000 students choose to go overseas every year for higher education, causing an outflow of $10 billion a year.

Foreign university campuses could prevent at least three-fourths of India’s students from leaving the country, said a lobby spokesperson, adding that an indirect benefit would be the prevention of brain-drain.

According to data collated from reports, India has more than 20,000 colleges and almost 370 universities, including about 156 foreign educational institutions that conduct their courses in India in collaboration with local institutions.

India has about 220 million enrolled students, out of which 14 million are enrolled for higher education.

To get a sense of the estimated growth in the education sector, the Indian middle class is expected to expand significantly, from 350 million people today to well above 600 million people in 2025. By 2025, about three-quarters of India’s urbanites will be part of the middle class, compared with slightly more than one-tenth today.

Still, as India opens its doors, the response from the world has been mixed.

According to Sibal's ministry, close to 50 foreign universities - including Duke University, Georgia Institute of Technology and Imperial College London - have applied for government clearance, though the response from many marquee ones has been lukewarm. Yale University, for instance, has officially said it is not in a hurry to enter India, and reportedly similar sentiments have been echoed by Harvard, Cornell, the Massachusetts Institute of Technology and Boston University.

Harvard, like Columbia University, is following a different strategy that involves setting up centers in India that focus more on research and exchange programs than offering degrees.

"There are many challenges for setting up a campus in India," says Grant Thornton's Harish. "For one the bill has imposed tough conditions - on fees, curriculum degrees, etc - that could make India unattractive to many, at least immediately."

The other challenge, according to Harish, is India's infrastructure bottlenecks that make it very difficult to attract world-class faculties, and even students.

"I do not think besides large cities, where land prices have become too expensive for setting up a green-field university, the general infrastructure in India is capable of supporting a world-class university campus," he said. "These challenges are expected to force many to tie up with existing universities instead of setting up a new campus."

Moreover, point out other experts, since the new bill has not ensured level playing fields for local higher educational institutions, many foreign applicants could face resistance from powerful education as well as political lobbies.

"Yet there's no denying the fact that higher education is becoming increasingly global, and many foreign institutions are looking beyond their home countries to have an international footprint," says Harish. "Besides, higher education is not just a matter of degrees. This bill is certainly going to improve the quality of Indian education and a large number of privately held educational institutions that are not top class will be forced to shape up."

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