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Foreign Educational Institutions In India Vaibhav Gupta


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Foreign Educational Institutions In India Vaibhav Gupta

  1. 1. VAIBHAV GUPTA, VGSoM, IIT Kharagpur Current challenges and proposed changes in regulations for entry of foreign educational institutions in India 1. Indian education market – global business opportunity. 2. Regulations, challenges and entry barriers. 3. Recent developments and positive scope. A Report by: VAIBHAV GUPTA MBA – Ist Year, VGSoM, IIT Kharagpur Mob: 09775578144 1
  2. 2. VAIBHAV GUPTA, VGSoM, IIT Kharagpur Indian education market – global business opportunity India, along with the rest of the world has recently witnessed a great Economic Recession of all times. This Global Economic Turmoil had a negative effect on all sectors and businesses. But, in these times of economic recession, there were few business areas which were able to not only sustain their existing growth rate, but were also able to accelerate it; Education being one of the most prominent among them. India has grown itself to be a knowledge based economy, with a large population of English educated people. This alone has been able to solve a lot of Economic problems of India and of Indians and hence has attracted a lot more people towards gaining formal education. Unlike 1970’s and early 1980’s; people now have understood the benefits of education. This is further elucidated by the number of people seeking education both at K12(primary, middle and secondary school) and professional levels. There is a tremendous need for Higher and better education. India possesses one of the biggest pools of population seeking Education at all levels. Around 18 million children seek admissions to primary schools every year. Following is table which will reflect the kind of demand we have India for the higher Education in India; Programme Seats Applicants Selection Ratio IIT (15) 6000 398000 0.0150 IIM(7) 1400 242000 0.0058 LAW 3000 30000 0.1000 MEDICINE 2700 141000 0.0191 CA 2645 76026 0.0347 Above table is clearly indicative of the fact that competition for admission to India's best Educational courses is very intense — less than one per cent of those taking admission tests for the prestigious Indian courses gain admission — and other high-quality education options are needed for the many talented students who are turned away from these. The attraction of study abroad for Indian students, as a supplement to the Indian higher education available within India, is therefore bound to continue for the foreseeable future. Moreover, the Indian student population is growing at a fast pace, and Indian institutions strapped for funds are hard-pressed to create seats to accommodate the demand. 2
  3. 3. VAIBHAV GUPTA, VGSoM, IIT Kharagpur Facility Indicators (as per 2008-2009) Let us now, try to see some key Educational facility indicators; Primary Upper Average Avg. Number Total % of schools School Primary Number of of students per School with schools rooms room Students computer 126335 48994 3.1 33 17936157 14.12% There has been a consensus that Indian Government needs to spend money to the levels of at least 6% of GDP on Education, which currently stands at about only 4%. But considering the size of nation and the Indian budget, this is a lot of money. There is an extensive government educational setup providing education at highly subsidised rate but it is not free of all glitches - Teacher absenteeism and phenomenally high drop-out rates due to economic pressures are plaguing the system. Less than 40 per cent of Indian adolescents presently attend secondary schools and by 2015 projections are that 29 million children will be out-of-school. Ministry of Human Resource Development has positive plans to involve more and more private players for capacity building in this sector, which in turn means active participation of Foreign Educational providers as well. Government Spending on Education ( as per 2005-2006) State of Relevant Total number Government Expenditure per Education age group (Rs. crores) Spending (Rs. Crores) student per year(Rs.) Elementary 6-14 19.4 81942.53 4224 Higher 14-24 21.8 21871.12 1004 Apart from these there are schemes of adult education and skill based technical education which incur an expenditure of Rs. 396.16 crores and Rs. 9018.07 crores respectively. Educational Infrastructure Lets now see the Educational setup which is already in place in India and is consuming such an exorbitant sums of Money. 3
  4. 4. VAIBHAV GUPTA, VGSoM, IIT Kharagpur SCHOOLS Primary Upper Primary Secondary and Senior Count (lakhs) 7.7 2.9 1.6 Student (crores) 13.2 5.2 3.8 Diploma and Certificate courses Teacher Training Technical, Industrial, arts and crafts Count 2021 5465 Student (lakhs) 1.61 7.5 Higher Education Universities(Central, State, Deemed, Colleges (General, Engineering, Architecture, Research centres and Institutes of Medicine, Polytechnic, Law, IT, Agriculture National Importance Count 490 20769 Students (lakh) 143.236 (Total) This widespread infrastructure and mammoth student enrolment figures show that there is flare among Indians to get educated. This very fact opens up vast untapped avenues for education providers of all types and at all levels. A recent Business World article says that apart from the mainstream education , the coaching or the supplementary education industry in India also is accounting for more than Rs. 10000 crores of turnover. On the other hand a whooping USD 4 billion is spent by around 1.6 lakh Indian students studying abroad in various degree courses both at graduate and post graduate levels. Also a large sum of money is spent by Indians in acquiring professional certifications from abroad. More than 50 foreign universities and/or institutes from US, UK, France, and Australia have already realised the potential of Indian Education sector and have started their programmes in India with local institutions, the phenomenon that is often called as Twinning — part of the course in India, the remaining abroad— which is an accepted form of Education by the Indian education department. Some of the best universities in the world including many Ivy League ones and the likes of Oxford and Cambridge - are also waiting in the wings to set up shop in India. 4
  5. 5. VAIBHAV GUPTA, VGSoM, IIT Kharagpur Regulations, challenges and entry barriers (Hurdles to be crossed) Mr. Kapil Sibal, minister of Human Resource Development, Government of India, has very ambitious plans to revamp the entire educational setup in India at all levels of education. In one of the recent press release he says that “There is an allocation of Rs.85000 crore for education in the 11th Five-Year Plan. But this is not enough," and argues that government alone could not finance the educational needs of the country and private (both local as well as foreign) sector undoubtedly has to play a more prominent role. He has proposed a Public Private Partnership programme to accelerate the capacity building and quality improving initiatives for education in India. Proposals have been floated in the Indian Parliament to allow more and more involvement of private players in the education sector. At present about 36% of the total educational institutions (at all level) are privately held. This is no hidden fact that these private institutions have over the years performed better and produced better citizens, so the new minister now wants to take leverage of the same fact and promote a lot more private investment and professionalism. Having said that, it should not be presumed that the entry of new Educational Institutions, that too from outside India is an easy task. There are a lot of regulatory rules and restrictions in this field. Indian education setup is very complex, with very many different types of institutions - central funded institutions, state institutions, city level institutions and institutes of national importance and so on, each having its own set of authorities and restrictions. Education in India is highly regulated sector. Till very recently India did not easily allow foreign universities to operate but now the things have improved, Foreign Education Providers (FEPs) are allowed, but with a lot of regulations. There is a well defined bill to regulate the entry, operation and maintenance of foreign education providers. It needs to be ensured that India does not become a happy hunting ground for mediocre universities. Bureaucratic setup In India there is multi tier bureaucratic setup to handle the K12 and Higher education. This poses a serious challenge for the FEPs who are not accustomed to this type of setup in their own countries of origin. The following diagram depicts a very broad view of the setup; 5
  6. 6. VAIBHAV GUPTA, VGSoM, IIT Kharagpur Indian Educational Setup Higher Technical Administrat Integrated Distance Planning & Reforms Education Education ion & Finance Statistics Languages Education Monitoring and North Division east region UGC Central Universiti es AICTE,IITs, IIMs,NITs Here, the University Grants Commission (UGC) is a regulatory body responsible for coordination, determination and maintenance of standards, and release of grants as well. For this purpose it has established Professional councils, responsible for recognition of the respective courses. These councils are enumerated below; AICTE •All India Council for Technical Education DEC •Distance Education Council ICAR • Indian Council of Agricultural Research BCI •Bar Council of India NCTE •National Council for Teacher Education RCI •Rehabilitation Council of India MCI •Medical Council of India PCI •Pharmacy Council of India INC •Indian Nursing Council DCI •Dental Council of India CCH •Central Council of Homoeopathy CCIM •Central Council of Indian Medicine •National Council for Rural Institutes •State Councils of Higher Education These regulatory bodies for higher education in India are responsible for regulating the respective educational programs and apart from regulating Indian Institutes are also concerned at the unregulated growth of foreign educational institutions setting up campuses in India or offering twinning programmes in partnership with Indian institutions. The statutory, apex body for higher education in India, the University Grants Commission, has proposed guidelines for recognition of programmes offered by Foreign Universities in India and these guidelines cover twinning programmes between Indian and foreign institutions. 6
  7. 7. VAIBHAV GUPTA, VGSoM, IIT Kharagpur A second statutory body, the All India Council for Technical Education (AICTE), has the duty to properly plan and coordinate development of the technical education system throughout the country, to promote qualitative improvement of such education in relation to planned quantitative growth, and the regulation and proper maintenance of norms and standards in the technical education system and for matters connected with it. The AICTE published a notification in May 2005 announcing regulations for entry and operation of foreign universities/institutions imparting technical education in India. A very discouraging example of Foreign Education Provider getting stuck up in Indian Bureaucratic setup is of CFA Institute (AIMR), which despite of repeated efforts is not being able to establish a test centre in India, even when there are hundreds of Indian applicants of the test. Restrictions/Barriers Apart from the bureaucratic issues there are certain practical issues which can pose to be serious barriers in the establishment of widespread FEPs base in India. They are; Quota profit low incomes repatriation Hurdles land and multilingualism building environment Labor Issues mismatch Quota System : India since long has been a following a policy of reservation and quota for certain classes of people with an aim of inclusive education and upliftment of socially backward classes. The FEPs are alien to such concepts and may feel trouble in implementing this, and producing the kind of professionals they are known for. 7
  8. 8. VAIBHAV GUPTA, VGSoM, IIT Kharagpur Low Incomes: Though India has been developing fast, but it is still on the path of economic development. The per capita income in India is still nowhere in comparison to the western world. In such a situation , we cannot expect a large part of our population to be able to afford the expense of education provided by the FEPs. Subsidies and scholarships may resolve the issue but it may not be possible for the FEPs to provide these facilities. Multilingualism: There are about 29 languages in India which are spoken by more than a million people. Most of the education in India is carried out in these regional languages. The FEPs would be able to provide education in only one or two most prevalent languages leaving out a large part of prospective clientele. Profit repatriation: most of the institutes and universities in India are setup by trusts, societies and charitable companies, where profits are not to be taken out and have to be reinvested. There could be serious issues as these FEPs can prove to be a major revenue earner and start taking back the profits to their native country. Land and Building: land acquisition is a major issue in India and for setting up any institute or organisation, land is a must. The capex costs of setting a campus in India will mean fees pretty close to those abroad especially since endowment money cannot be used to offset costs. This will lead students to question why they should study in India when they can go abroad. Environment Mismatch: Going abroad is an education in and of itself. Young Indians prize the opportunity to do so. Most of the Indian students who go or wish to go abroad is because of the overall social and economical environment prevalent there, which is more conducive for a healthy living. This set of people would not enrol for programs in India. Labour Issues: it would not be feasible to get all the staff from foreign. These FEPs would have to go for local people for most of the jobs. Even If Indian professors are hired, they will want the same salary as the expats for teaching the same course. So, apart from these primary issues there can be some secondary issues like ; Follow the rule of land, India is nation with substantially different set of rules and regulations as compared to those countries in west. The FEPs need to mandatorily follow the rule of land and hence may feel uncomfortable. FDI Restrictions on the investment in the education sector in India. Moreover, there is no current legislation in place to promote international partnerships between Indian and foreign institutions. 8
  9. 9. VAIBHAV GUPTA, VGSoM, IIT Kharagpur Recent developments and positive scope More and more Indian students have started viewing quality education as a means for upward social mobility and economic security. Recent industry studies reveal a glaring fact that there is huge gap between qualification and employability – to the extent that only 1 out of 4 Indian engineers is directly employable in the industry after education. This type of gap can be filled by the Activity Based learning systems prevalent in the western world. Indian students also are no more satisfied by “one size fits all” type of education and are in quest to go for more liberalised education with alternative models of education and streams of knowledge. U.S. institutions, known for preparing students for the job market both through coursework and career preparation services; can enhance the quality and relevance of education to contemporary India. These things are alien to Indian education system and hence a huge number of Indian students have to travel abroad in quest of these models of learning. In such a situation, Foreign Education Providers (FEPs), providing the western learning in India can go a long way in the development of India. Opportunities Indian government has realised that it is impossible to provide for the facilities of quality education at the pace at which its demand is increasing. So, there have been a lot of constructive and reformist steps towards this area. According to a Business Standard report Government of Maharashtra has already approved proposals by Stanford and Georgia Institute of Technology to build their overseas campus near Mumbai. Foreign Education Provider bill is one such step towards formalising the foreign education in India and providing a conducive atmosphere to make this a win-win situation for Indian students as well as FEPs. Some of the key points of the bill are :  Foreign providers to set up Independent colleges which will be treated as deemed universities, offering independent degrees without having to seek affiliation from an Indian university or tying up with one in partnership.  Foreign universities will be able to offer degree programmes independently in India.  100% foreign investment will be allowed in the sector.  No need for FEP colleges to come under the UGC supervision, and no need to go through accreditation process but be subject to regular reviews. 9
  10. 10. VAIBHAV GUPTA, VGSoM, IIT Kharagpur  Proposal to free these FEPs from the ambit of Quota and free education.  Proposal to create a new category of institutions for the FEPs.  Minimum experience of 10 years in the country of origin before entering India.  Provide a certificate of accreditation from a reputed body of their own country.  No restrictions on fees from government’s side.  Scrutiny by central government agencies only for starting a degree program, certificate programs need to registration. Roadmap for FEPs to enter India As an FEP one needs to think that universities and institutions from west have already succeeded in setting up successfully in more conservative areas of world like China, Singapore and the Gulf, so surviving in the Indian market is very much possible. U.S. educational institutions are increasingly interested in India as a nation which is, and will continue to be, an important world force in the coming decades. University presidential delegations from, to name a few, Harvard, Yale, Stanford, Carnegie Mellon, and Purdue Universities, and other high-level delegations including one from the Asia Society, have come to India in the past two years to learn more about and from the country. Twenty prestigious U.S. universities have partnered with Amrita Vishwa Vidyapeetham for active collaboration in higher education and research through e-learning and India's educational satellite, EDUSAT. Many others offer twinning programmes, under which the curriculum in India is approved by a foreign university, which facilitates the transfer of academic credit for students to complete their studies at these universities. India as suggested by the prominent Yashpal committee report is ready to welcome with open arms the institutes and universities which are in the top 200 of global rankings, and are duly accredited by reputed bodies in their own countries. Indian government is more than ready to freely allow FEPs , if ;  They are able to create a healthy competition stimulating the Indian institutions to revamp themselves.  FEPs are ready for long term investment and lend hand in bridging the gap between the demand of quality education and supply form government’s side.  FEPs bring with them students from other parts of the world as well, making India more prominent in the world education map.  FEPs help in making India a regional and gradually an international hub of modern education. 10
  11. 11. VAIBHAV GUPTA, VGSoM, IIT Kharagpur Key References 1. 2. 3. 4. 5. facility-indicators-DISE-NUEPA-2008-09 6. 7. 8. 9. Educational Statistics at a glance, Ministry of HRD, GOI. 10. Global Education Digest- 2007 by UNESCO 11. 11