The document discusses the present scenario and need for foreign direct investment in higher education in India. It notes that while India has a long history of higher education, modern universities were only established in 1857 and there were just 20 universities and 500 colleges at independence in 1947. Currently there are over 600 universities but the gross enrollment ratio remains low at 18.8%, below many other countries. The government aims to increase this to 30% by 2020 but lacks the resources, creating a need for private investment. Allowing foreign investment could help meet targets by improving infrastructure, technology, and quality of education, but it may also risk commercializing education and benefitting foreign countries more than India.

1. 14 RESEARCH ANALYSIS AND EVALUATION
International Indexed & Refereed Research Journal, ISSN 0975-3486, (Print) E-ISSN-2320-5482, July,2013 VOL-IV *ISSUE- 46
India has been the land of teachers and learners and
knowledge has always regarded as the highest virtue
in Indian society. The trend of Higher Education was
established in our ancient Indian Society and
Takshasila, Nalanda were the main centres of Higher
Education. But the modern Higher Education started
in ourcountryafterthe establishment ofuniversities in
Bombay,CalcuttaandMadrasin1857andbyindepen-
dencein 1947 there wereonly20universities, 500 col-
legesandroundabout2,30,000studentsenrolledinthe
higher education.
ObjectivesOfTheStudy
• To highlight the present scenario of higher educa
tion in India.
• To study the need of Foreign Direct Investment
(FDI)inhighereducationintermsof proandcons.
ResearchMethodology
The present study is based on the secondary
datawhichhasbeencollectedfromthevariousgovern-
ment organizations, journals, books, websites and
newspapers. The data is presented in the form of
tables, graphs and trend line.
Present Scenario
Indian Higher Education system is one of the
largestintheworldintermsofnumbersastheseare613
universities which comprise of 299 state universities,
130 deemed universities, 44 central universities and
Research Paper—Commerce
July ,2013
Present Scenario and Need of Foreign Direct
Investment(FDI)InHigherEducationInIndia
* Dr. SatinderSingh Randhawa
*Assot.Prof.Dept.ofCommerce,Govt.CollegeSujanpurTihra,DistrictHamirpur(HP)
140 private universities. This figure was just 20 at the
time of independence.
Thereislotofincreaseinthe%ofEngineering
and Management Institutions in India during 2008-9
but this growth declined within four-five years to 3%.
The main reasons behind the decline are the lack of
proper infrastructure, teaching faculty, quality educa-
tion, slow placement, weak regulatory system and less
interest of the students towards these institutions.
The position of India regarding the spending on stu-
dents and education, GER, R&D expenditure etc on
higher education is not appropriate as compare to the
various countries of the world.
See Table 3
The extent of Higher Education is generally measured
by the Gross Enrolment Ratio (GER), New Enrolment
Ratio(NER)andEligibleEnrolmentRatio(EER)inage
group of 18-23 years. The GER in India has increased
from0.7%in1950-51to8%in2001-02and18.8%tillJuly,
2012. The growth of GER from the adoption of LPG
(Liberalization,Privatization,andGlobalization)policy
of the Govt. in 1991 has been phenomenal and there is
7timesincreasein20yearsfrom1991-2012. Themain
reason behind this growth is the increase of private
institution.
Thegovernmenthassetatargetof25.2%GER
by the end of 12th plan and in order to achieve this
target government has proposed various drastic mea-
suresintheareaofequity,excellenceand funding. The
higher education budget of the government for 10th
and 11th plans was 3294 Cr, 46449 crore respectively
and it is 1,10, 700 crore for the12thplan an increase of
178%. Butmerelyincreasingthebudget,No.ofhigher
education institutions and GER will not achieve the
goal until and unless special attention has been paid to
Table-1 No. of Universities/college & Enrolment
Years Universities Colleges Enrolment in
Millions
1947 20 496 0.4
1990-91 184 5748 4.4
2000-01 266 11146 8.8
2005-06 346 17625 10.5
2011-12 610 33023 31.47
March 2013 613 - -
Source: UGC
Table-2 Growth of Management & Engineering Institutions in India
Year Engineering % Growth Management % Growth
Institutions Institutions
2006-07 1511 - 1132 -
2007-08 1668 10 1149 2
2008-09 2388 43 1523 33
2009-10 2972 24 1940 27
2010-11 3222 8 2262 15
2011-12 3393 5 2385 5
2012-13 3498 3 2407 3
Source: AICTE

2. 15RESEARCH ANALYSIS AND EVALUATION
International Indexed & Refereed Research Journal, ISSN 0975-3486, (Print) E-ISSN-2320-5482, July,2013 VOL-IV *ISSUE- 46
quality education. There are 19 states in the country
where the GER is below the average.
See Table 4
Although there is increase in GER in India during the
last 10 years but it is far behind from the various coun-
tries of the world. In the developed countries the GER
ranges from 44% to 86% and in the developing coun-
triesit is 36.5%.
See Table 5
quirementforsuchagigantictask.There areestimated
150million people in the age group of 18-23 years in
Indiaandduetothelowliteracyrate,highconcentration
in urban areas, and growing per capita income, attract
the private/foreign player to make investment and at
present Indian education sector has been recognized
as 'sunrise sector' for investment.
The proposal of India to open higher
education sector to foreign players is due to the
variousdomesticfactorssuchaslowstateofeducation
system in term of quality, quantity, infrastructure,
finance, cost, GER, teacher-student ratio, trained and
excellent faculty and most importantly political
interferences in day to day functioning of higher
education institutions.
At present, India is allowing 100% FDI in
higher education from 2003 through automatic route.
ArgumentsInFavour of FDI
• SolvethepresentproblemofGrossEnrolmentRatio.
• MoneyandBraindraingoing abroadwillbestopped
• Improvement in the educational infrastructure.
• Use of latest technology and methods.
• Upgradingtheuniversitiesand collegeeducationin
the country.
• Providetheopportunityto largenumberofstudents
to prove their mettle.
• Exchange of knowledge, skill and technology.
• Growth of Indian universities and colleges.
• Boon to enhance the standard of Indian Education
system.
• Reap the benefits of improved managerial and orga
nizationalskill.
• Promote competitiveness in the education system
as a whole.
• Lead to export of Indian Education abroad.
• Bringmoreresourcesandmeetthedemandofhigher
education.
• Collaboration for research project and exchange of
students programmes.
• More incentives for excellent and creative faculty.
• More avenue of employment by FDI in higher edu
cation.
Table-3ComparativeStatementofIndia,USAandUK
Basis India% USA % UK%
Spending on Education % of GDP 0.6 1.0 0.9
Gross Enrolment Ratio 16 82 59
Public Spending Per Student $1162 $10616 $10060
% of Tuition fees in Higher Education 19 36 34
Research & Development Expenditure % of GDP 0.81 2.60 1.89
Student Population Rank 3 2 6
Source: UGC & The Tribune 14 February, 2012
Table-4GrowthofGrossEnrolmentRatioinIndia
Years GER%
1950-51 0.7
1960-61 1.4
2000-01 8.0
2005-06 11.5
2009-10 15.0
2011-12 16.0
July31,2012 18.8*
Sources:UGC
*All India Survey on H.E. Ministry of HRD 28 Sept,
2012
Table-5 Gross Enrolment Ratio of different Countries
of the World
Country %
USA 89
Russia 76
UK 59
France 55
Malaysia 40
China 24
India 18.8
Source: UNESCO & OECD Education Report 2012 & UGC
Needof FDI InHigherEducation.
The government has set up the target of in-
creasingthegrossenrolmentratio from16%to30%by
2020 and to meet such target, huge investment will be
required in termsofcapitaland operatingexpenditure.
Thereisneedof27000 additionalhigheredu-
cation institutions. It willrequire an additional invest-
ment of 9.5 lakh crore and at least 1% of the GDP on
higher education. Due to lack of resources centre and
state governments are not in a position to achieve this
target.Thereforethereisaneedofprivate/foreignsector
to make investment in education sector by providing
best infrastructure and quality education as per re-

3. 16 RESEARCH ANALYSIS AND EVALUATION
International Indexed & Refereed Research Journal, ISSN 0975-3486, (Print) E-ISSN-2320-5482, July,2013 VOL-IV *ISSUE- 46
ArgumentsAgainst FDI
• Motives seems to be commercialized.
• Make education a trade and commoditization of
education.
• Eyeing only on management and technical sector
• Discourage the existing system and institutions.
• Plough back of profit to their own countries.
• Exploitative environment in education institutions.
• Fees not affordable to poor and rural areas students.
• Foreign exchange loss to India
• Will not take care of underprivileged societies.
• Increase the gap between rich and poor.
• Misleading to the students due to the non recogniz
ing of certain courses or institutions at international
level.
• Lead toculturalimperialism
• Lack of objectives of social interest social agenda
and the welfare state.
• More promise less results
• Well offer only twining programmes or franchising.
Conclusion
Higher education plays a very important role
in the society and it is backbone and powerful tool to
build a powerful knowledge based society because it
opens the doors of opportunities. It should not be
treated as any kind of business but a service industry.
Indiawilldefinitelybenefitedfromtheliberalizationof
higher education if government follow strict accredi-
tation and certification system in short listing the pre-
ferred universities, fees affairs, course structure, up-
dating syllabus and teaching learning process and hop
e that private/foreignentrepreneurs will give a desired
push to higher education.
1. Agarwal, P. (2006) "Higher Education in India- The Need for Change" Working Paper 180. ICRIER, India.
2. Parkash, V. (2007) "Trends in Growth and Financing Higher Education in India." Economic & Political Weekly August
4, 2007.
3 The Higher Education Myth. The Indian Express April 2, 2012.
4. India Bags Higher Education Enrolment Business Reporter Nov 5, 2012.
5. UGC Annual Reports Various Years.
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