Regulating foreign universities: 7 ideas for Indian policy-makers

I wrote about the case for allowing foreign universities to be allowed to operate in India. In this connection, I mentioned the Foreign Higher Education Providers Bill, which has appeared in different names and versions since the 1990s before the Indian cabinet and parliament and never went anywhere. I argued that though the foreign providers have more or less given up on the Indian government providing a workable legal framework and settled for various expedient semi-legal arrangements with politically influential education barons, the jobs and skills crisis should force Indian policy-makers to rethink the approach. 

However, even if this conversation is reopened in the new parliament in 2019, simply passing the bill as it was proposed wouldn't get us anywhere, and this point is worth belabouring. Several reasons for this, including that the bill in its current form is unattractive for any foreign provider, and it is unlikely that anyone would prefer to operate within such a framework. India is indeed attractive for more reasons than one, not least because a quarter of new students going to college in the next decade may do so in India, and it is the second-largest source of students studying overseas in the world. But the vastness of the Indian market alone is not going to tempt a university to take the risk of getting itself into endless bureaucratic knots, as the bill in its current form and Indian government's general approach promises to be, and risk its reputation at home. A simpler, leaner approach is certainly needed, and it is worth exploring what this could be.

Indian approach, as it stands, displays what happens if private sector consultants meet public sector bureaucrats to produce a policy. It combines worst of both the worlds - a neo-liberal obsession with university rankings with entrenched love for license raj. Therefore, it limits itself to Top 400 universities in the world, acknowledging three league tables but not defining any specific criteria, and then lays out a set of daunting criteria that demands the 21st century equivalent of a Harvard president prostrating himself in front of an Indian Assistant Secretary of some description! It expects the universities to make huge capital investments in India without having the right to any repatriation of surpluses, and that the university would have to operate within the Indian regulatory system which the government itself has acknowledged to be counter-productive (why else would India need to create a separate category of its own institutions, the Institutions of Eminence, which are to be regulated differently to be able to compete globally?).

One can possibly the see the hand of vested interests in such a policy, and therefore, if and when the conversation is reopened, one needs to be looking at the policy, aligning it with India's strategic needs and creating right incentives for right universities to open campuses in India. 'Universities' are a catch-all label we are used to, but, while making policy, it pays to be mindful of the diversity of the sector and what different kinds of universities can bring. Opening the door to top 400 universities sound attractive, but considering that this would exclude many universities from Asia which are better geared to handle the sorts of challenge India faces, or that this would exclude many fine universities which are more technology focused, that kind of categorisation is madness. The wisdom of tying policy with the vagaries of commercial league tables is also questionable. Asking the universities to come to India and make capital investments without a hope of repatriation of surpluses betray a lack of understanding how universities operate, and asking them to submit to Indian regulations as it exists today defeats the whole purpose. 

So, here are 7 policy ideas for Indian policy-makers to consider, which may make the approach simpler and more consistent, attract the right universities to come to India and contribute towards India's strategic needs. I am working with colleagues to develop these into fully fledged policy proposals; below is a short summary of the same.

1. Hence, the new set of ideas have to really start from the beginning: Which universities should be allowed into India? The simple answer is that any university that is fully accredited as a degree-granting institution in a country whose quality assurance system is acceptable to India should be allowed to operate in India. This approach will take away the vagaries of league tables: The proposed legislation was unclear about what happens if a university drops out of the ranking. Indeed, if a university loses its accreditation in its home country, that would be a separate and more serious matter, and provisions around this would be more defensible in courts of law. 

2. As India has proposed a separate regulatory regime for Institutions of Eminence, allowing them greater autonomy, it should also create a separate regulatory body for foreign providers, which will align its regulatory approach with some of the key countries and process frameworks (such as the Bologna process). This body should be able to approve any campus or partnership proposal, clear investments with Cabinet approval and regulate the operations.

3. One of the most daunting aspects of the Indian regulation is that education is a joint subject and both the Union government and the states can make policy. However, this is hardly unique and there are central institutions in India which, while they may be located in the states, fall under the Central government. In fact, the states often compete to host the central institutions, as they bring educational options, jobs and investment. The approach to foreign institutions should be similar, and indeed, as it happened in some other industry sectors, the states may be allowed to opt out. It is likely the opposite would be the case - the states would vie to host good institutions. This, than the ranking based systems, is a better filter to ensure only the institutions deemed desireable come to India.

4. The other problem with education in India is that the government tries to stipulate the fees. It is incompatible with private investment, and so far, the government has tried to maintain the system by allowing monopolies of a sort for accredited institutions. But this leads to inefficiencies and corruption, and not many foreign institutions would be amenable to such controls. But these controls are completely unnecessary for the foreign institutions, as they are unlikely to charge very high fees in India. Competition with Indian institutions, and other foreign institutions, and indeed, with their home campus, is likely to keep the fees at an acceptable level. 

5. India doesn't allow For-Profit institutions in higher education, which means that the government loses out on tax revenues as hugely profitable institutions don't pay taxes. It may make sense for the government to let foreign institutions to set up as For-profit companies, tax their profits at the prevailing rate. It may be worthwhile to reconsider whether the indirect taxes, the General Sales Tax, should be levied on Higher Education, as this would burden the students. One may consider this to be a zero-rated category, as it is when the service is provided by a charity. Indeed, this may mean a backdoor route to allow For-profit Higher Ed, but considering that these institutions are likely to be fully accredited institutions in their home countries, the risk is minimal. [One may point out that American regulatory structure is fragmented, and there are many 'universities' which may not be considered as such elsewhere, but the easy way out is to define which regulators are acceptable to India]

6. The above will also mean that the entities set up in India should be allowed to repatriate any surpluses, under the usual conditions applicable to other businesses. This should not be objectionable, as the taxes will be paid on any such surplus. Besides, we should not overestimate the profitability of a university campus, at least in the first few years of its operation. This is hardly going to be billions leaving India, and it is very likely to be offset by the savings made from students opting to study at home.

7. Opening the possibility of foreign campuses in India should lead to India acknowledging the foreign degrees from these universities at par with Indian degrees, and allowing such degree holders to apply for jobs in government. India should also seek reciprocal recognition of Indian degrees, either through bi-lateral arrangement or by participating in a global process such as Bologna, so that Indian degree holders also get treated at par in other countries. This may indeed help Indian lawyers, doctors and nurses; this may mean giving small privileges at home but gaining significant concessions above.

Now, these proposals assume that the Indian government is open to globalisation, which is a lot to ask in the current state of the world. But that is exactly the point: India has been a big beneficiary of globalisation, and even the current government while being culturally nativist, is globalisation-friendly as far as the economy is concerned. This is unlikely to change, and whatever happens in 2019, the globalising approach is unlikely to go away. The challenge is elsewhere: Opening up a sector which has been a fief of a few powerful players is the central challenge. However, as I mentioned elsewhere, the jobs and skills crisis is likely to be the catalyst of change, and vested interests can be overcome in the face of a crisis. 


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