THIS ARTICLE GIVES AN INITIAL GO TO MARKET STRATEGY FOR FOREIGN EDUCATION PROVIDERS WILLING TO START OPEARTIONS IN INDIA.

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
Vaibhavgupta.delhi@gmail.com
Mob: 09775578144
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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.
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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.
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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 et.al.)
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.
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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;
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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.
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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.
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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.
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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.
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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.
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11. VAIBHAV GUPTA, VGSoM, IIT Kharagpur
Key References
1. http://www.unicef.org/infobycountry/india_statistics.html
2. http://youthink.worldbank.org/
3. http://www.indiaeducationstat.com/default.aspx
4. http://www.educationforallinindia.com/page31.html
5. facility-indicators-DISE-NUEPA-2008-09
6. http://www.cbse.nic.in
7. http://www.mospi.gov.in/
8. http://scripts.mit.edu/~varun_ag/readinggroup/images/2/2a/UEE2006.pdf
9. Educational Statistics at a glance, Ministry of HRD, GOI.
10. Global Education Digest- 2007 by UNESCO
11. http://www.iienetwork.org/page/99388/?p_v=pg/
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