Knowledge unlocked: Foreign universities in India

The University Grants Commission (UGC) is a statutory organisation set up by Union government of India for the coordination, determination, and maintenance of standards of university education. It grants recognition to universities in India and provides funds to government-recognized universities and colleges. To put the National Education Plan, 2020 ("NEP") into practice UGC has published "Setting up and Operation of Campuses of Foreign Higher Educational Institutions (Foreign Institutions) in India Draft Regulations, 2023" ("Draft Regu­lation"). The Draft Regulation was published in January to promote public discussions of all stakeholders and to get a better knowledge of their needs.

Currently, foreign universities are not allowed to open branches in India. As per the estimation from the Ministry of External Affairs 1,324,954 Indian Students were studying abroad in the year 2022. 61 percent of which were studying in USA, UK, Canada, and Australia and 6 percent of which were studying in Europe where­as approx. 35,000 Students were studying in Germany and almost 6,000 in Italy which is the third highest number of Indian students in Europe. As the NEP rightly states the world is changing rapidly into a knowledge landscape. Technological advances, AI and machine learning may take over many unskilled jobs. Therefore, the NEP "envisions an education system rooted in Indian ethos that contributes directly to trans­form­ing India, that is Bharat, sustainably into an equitable and vibrant knowledge society, by providing high-quality education to all, and thereby making India a global knowledge superpower".

Under the current circumstances it is not surprising that no university shall set up a branch without prior approval by the UGC. In contrary to the above, except regarding the amount of the non-refundable fee, the Draft Regulation defines a stringed approval process at which end the granted approval shall be valid for 10 years. Subsequently, the Foreign Institutions can apply for an extension.

The fact that the initial approval is only valid for 10 years could raise doubts within the landscape of the Foreign Institutions as setting up a campus not only includes finding a suitable geographical area for the campus and infrastructure or the right academic personnel. Moreover, it means building up a reputation which may take years if the university is not known all over the world like for example Harvard, Yale, LSE, or Bocconi to only name a few. As per the Draft Regulation the commission shall grant the renewal for a further period of 10 Years. It is to be awaited, if the final Regulation will further determine requirements for the renewal and what happens once 20 years have passed. 

As per the Draft Regulation cross-border movement of funds and maintenance of Foreign Currency Accounts, mode of payments, remittance, repatriation, and sale of proceeds, if any, shall be as per the Foreign Exchange Management Act (FEMA) 1999 and its Rules. In case the Foreign Institutions is profitable, profits may be repat­riated to the country of origin, as setting up a campus in a foreign country would have required a substantial investment by the Foreign Institutions.

It is to be noted that outwards remittance is strictly governed by FEMA and a remittance has to be linked to a specific allowed remittance purpose. Therefore, it will be important to structure the relation between the For­eign Institutions and their Indian entity as to what services are being granted by the Foreign Institutions, e.g., licenses and to what extent the Foreign Institutions can charge fees for this service. Another option may be the payment of dividends to the Foreign Institutions being the shareholder of the Indian entity. However, the payment of dividends is a strictly regulated process which has to be followed. Overall, this assessment should be carried out before starting the whole approval process to make sure the establishment of an Indian Campus will be a success and will not be hampered by preventable mistakes. 

The International Financial Services Centre Authority (IFSCA) allowed the Australian Deakin University to set up campus in GIFT city. With this approval the Deakin University is the first foreign university to set up an International Branch Campus in GIFT city. Further foreign universities have already shown interest in setting up their own branch as well. IFSCA introduced their IFSCA "Setting up and Operation of International Branch Campuses and Offshore Education Centres Regulations, 2022" already one year before UGC has published their Draft Regulation.

Similar to the UGC Draft Regulation setting up a branch in India it is possible for such Foreign Institutions securing position within top 500 in global overall ranking or subject ranking in the latest QS World Universities ranking, and Foreign Education Institutions of "repute". Unlike the Draft Regulation the IFSCA Regulation is being more detailed in this topic, which gives Foreign Universities more clarity.

The University will be allowed to offer courses in Financial Management, FinTech, Science, Technology, Engineering and Mathematics, free from domestic regulations, except those by the IFSCA to facilitate avail­ability of highly qualified professionals for financial services and technology. This point may exclude other reputed Universities but is not surprising as GIFT city being a special economic zone would try to get only to those universities which students would be an asset for the companies situated there. However, it is to be noted, that the University has to set up their required infrastructure within 180 days and the approval will be valid only for 5 years, with an option for renewal for another 5 years. Ultimately setting up in GIFT city may be an option for universities who do not want to wait any further, but UGC final regulation could offer a better long-term solution giving more flexibility when it comes to the location to be chosen. Only time will tell. 

On the other side it is not only the Foreign Institutions interest which will play a role in how successful the concept of getting foreign universities to India will be. As of now studying abroad at top notch universities, may it be for a graduate or post-graduate program, is a very costly affair only a few are able to afford. These degrees would allow the former students to apply for jobs abroad as their degrees will be recognized. This may not be the case with all Indian Universities. The Draft Regulation prescribes in section 4.2 (ii) that the Foreign Institu­tions must provide an undertaking during the approval procedures, that the qualifications awarded to the students in the Indian campus shall be recognised and treated as equivalent to the corresponding qualifica­tions awarded by the Foreign Higher Educational Institutions in the main campus located in the country of origin for all purposes, including higher education and employment.

However, an important fact is that to apply for an Employment Visa in the respective home country of the Foreign Institutions or in another country the given undertaking could not be sufficient to work abroad. It is missing out the fact, that there are certain governmental bodies which decides on the fact which foreign degrees will be accepted as equivalent to the degrees obtained in the home country.

This said, a development in this regard can be seen in the Education framework "Mechanism for the Mutual Recognition of Qualifications" entered by Australia and India on 2 March 2023. This framework is set to in­crease the mobility of students and jobseekers. Furthermore, it is supposed to enhance the recognition of qualifications between the two countries.

The European Union and India are currently in ongoing discussions on entering into a Free Trade Agreement. Those discussions failed in 2013. One reason was that India's request on easing out the Draft Regulations for Indian jobseekers was not heard by the EU. Even in the current ongoing discussion the access to the European labour market for Indian citizens is again on the table. It will have to be seen what India and the EU will decide in this regard. Considering the shortage of skilled work in Europe giving Indian students the chance to obtain recognized degrees in India would be the right move to tackle this homegrown issue.  

On a secondary level it will be interesting to see on what fee structure the Foreign Institutions would decide. The fees for some of the top universities are as mentioned very high. So are the fees for top universities in India like IIT's and IIM's. It will be interesting to see if the Indian Campus of the Foreign Institutions may offer dis­counted fee's or special scholarships to attract India's talents who may wish to study abroad at those universities but decide to stay in India for several reasons or simply cannot afford it. 

Overall, the Draft Regulation has to be seen as a very reasonable first step towards bringing top notch educa­tion to India and further strengthen the capabilities of Indian Students and prospect industry leaders in the world. Furthermore, it will give India an opportunity not just to become a manufacturing hub but also a know­ledge hub and further strengthen India's role within the global landscape of leading nations. On the other hand, it will give Foreign Institutions the chance to increase their reputation in India and grasp for the Indian talents that may have never gotten the chance to enroll for their programs. Especially Europe who is suffering under a shortage of specialized work force could benefit from a smoother process for Indian skilled workforce to seek employment in Europe.