Foreign Universities in India: The case restated

Whether foreign universities would be permitted to operate in India, the way they do in Malaysia, United Arab Emirates, or even in China, has been one of the most vexing policy questions that never gets a straight answer. On this issue, it is India at its worst - it seems unable to make up its mind: The 'Foreign Universities Bill' remains always on the legislative agenda, but it remained so for more than 20 years now. Even its latest version, which was so restrictive that it would have excited no one, hasn't gone beyond the cabinet. The current Indian government, last great hope of the foreign institutions because it had a parliamentary majority, singularly failed to put this even on the agenda, despite making all sorts of noise about reforming Indian education. The interested foreign universities, after repeated disappointment, have now given up: The topic doesn't excite anyone anymore.

And, yet, the case for allowing the foreign universities in India was never been stronger. The easy globalisation of the 1990s, of which India was a major beneficiary, is coming to an end, with technological change seriously threatening the outsourcing industries that provided the middle class jobs. The government has made clear its intentions to overhaul the regulatory environment, and though only minor changes have been enacted so far, the recognition of the necessity of a 'cultural revolution' is already there. But, no one wants to talk about foreign universities being allowed in India.

Except the students. The Indian students going abroad for Higher Education continues to grow, as every middle class parent, if they can afford it, looks to send their children abroad in search of better education. Indeed, this is a problem not just of foreign currency outflow, which is significant, but also a sort of 'brain drain', as many of the students never return. This is precisely why foreign universities are interested in India - they know that this is world's most exciting market for Higher Education with a lot of well-qualified English speaking students - and this is one big reason India should be interested in foreign universities coming into India.

But there is even a bigger reason.  India's indigenous, private sector driven, educational expansion failed to meet India's demographic opportunity: In fact, after an era of massive expansion, India's higher education sector, particularly many private engineering colleges, is facing a crisis of confidence. Hardly a day goes by without the Indian industry leaders lamenting the quality of the workforce, demanding a serious overhaul of the education system. But this is a sector protected from competition and new ideas, and it is unlikely to have any incentive to change unless a competitive environment can be created. Good foreign universities can provide that competition, as well as bring process innovation that will help the sector as a whole.

The reason why successive Indian governments have balked at allowing foreign universities in India is the political clout of India's 'education industry', the large Indian groups who have amassed significant wealth, much of it undeclared, and political influence, to keep any competition at bay. India's broken election finance system means that their cash contributions can't be ignored. The case for allowing foreign universities may be obvious, but they, and their representatives in the parliament, ensures that no bill can ever pass. The maximum concession they are willing to make is a confused system where some can work with foreign universities whereas others can't, and the foreign universities can't ever operate on their own: That's the system India has got as of now.

If this sounds like Indian economy pre-liberalisation, it certainly is. It needed a foreign exchange crisis to shake things up for economic policy-making; India is fast approaching the job crisis that may do the same for educational policy. However, it needed political courage and emergence of new industries, IT services in this case, which drove the globalisation agenda that time: the new industries that can benefit from a new breed of Indian graduates with access to newer areas of knowledge and expertise are already in sight, but the political courage is missing.