Monday, March 15, 2010

Cabinet gives nod for foreign universities' campuses in India

The Union Cabinet today approved a bill to allow foreign universities to set up campuses in India and offer degrees. The Foreign Educational Institution (Regulation of Entry and Operation) Bill, 2010, was cleared by the Union Cabinet presided by Prime Minister Manmohan Singh. This paves way for its introduction in Parliament. "This is a milestone which will enhance choices, increase competition and benchmark quality," HRD Minister Kapil Sibal said after the approval of the bill by Cabinet. The bill seeks to regulate the entry and operation of foreign institutions, which will set up centre and offer degrees in India. This bill was hanging fire for over last four years owing to opposition from various quarters, including the Left parties, over certain provisions. Last year, it was referred to a Committee of Secretaries which brought modifications to certain provisions earlier existed. The bill was approved by the Cabinet without any change.

The proposed law prescribes eight-month time bound format for granting approval to foreign educational institutions to set up campuses. They will go through different levels of registration process during this period and will be finally registered with UGC or any other regulatory body in place. The regulatory body in higher education, either UGC or any other body that would replace UGC, will scrutinise the proposals of aspiring institution as per India's priorities and advice government whether to allow the institute operate in India. HRD Minister Sibal has already assured that quota laws will not be applicable to foreign universities setting up campuses in India.

Though 100 per cent foreign direct investment through automatic route is permitted in the education sector since 2000, the present legal structure in India does not allow granting of degrees by foreign educational institutions here. The proposed law would facilitate the globally- renowned institutes to participate in India's higher education sector. It will bring in foreign education providers for vocational education training also.

The foreign education providers bill is one of the major reforms bills of the HRD Ministry. A revolution larger than the one in the telecom sector awaits the education sector, Sibal said. Three other reforms bills, which were slated to be taken up in the Cabinet, were deferred to the next meeting. These are -- Prohibition of Unfair Practices in Technical, Medical Educational Institutions and Universities Bill, Educational Tribunal Bill and Accreditation Bill. A Group of Ministers (GoM) has already cleared these three reforms bills.

It needs to be noted that a foreign university aspiring to set up a campus in India will have to deposit Rs. 50 crore as corpus fund and cannot take back the surplus generated from education activities here. These tough conditions are part of a Bill approved by the Union Cabinet today to allow entry and operation of foreign education providers in India. The Bill also has a provision under which the government can reject an application of a university if it feels that venture will have an adverse impact on national security. In addition, provisions of Section 25 of the Companies Act will be applicable for the foreign institutes. Under this provision, such entities cannot take the profit back but will have to spend the amount for further expansion of the institutions here. The saving grace is that the foreign education providers can involve in other activities like consultancy projects and the profit generated from those projects can be taken back by them.

The Cabinet passed the Bill at a time when two major global institutions, Duke University from the U.S. and Imperial College, London, have evinced interest to set up full-fledged campuses in India and are waiting for the passage of the Bill in Parliament.

The Cabinet nod to the long-pending bill means a lot for foreign universities and may lead to an increase of in the corporate sector entering the higher education sector. It is estimated that approval for up to 200 foreign universities is pending with the Government. The universities include Yale, Harvard, Oxford, and Columbia University. The Human Resource Development Ministry will decide on the roadmap within this month. Up to 20 universities are likely to be given clearance in the first round. Entry is likely to be through tie-ups with premier Indian institutions. The entry of foreign universities is also possible through tie-ups with Indian companies as Reliance Industries, AB Nuvo, and Anil Dhirubhai Ambani Group have been eyeing the higher education space for quite some time now.

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