Backing India's decision to open doors of its eduction sector, American corporates have opposed some clauses of the proposed legislation, saying that it has provisions that could deter foreign investments.
The financial requirements proposed in the Bill, as well as certain provisions, could dissuade some institutions from establishing partnerships in India," the US-India Business Council (USIBC) president Ron Somers has said in a letter to Human Resources Minister Kapil Sibal.
Reflecting the views of the American corporate sector on the Foreign Education Institutions (Regulation of Entry and Operations) Bill 2010, Somers said there are a number of provisions in the Bill that could deter foreign educational institutions from investing in India.
Noting that many colleges and universities are ready and willing to invest in India's educational system and are eager to partner with Indian schools, Somers said it is critical, however, that certain incentives be established to guarantee their participation in such an endeavour.
"As the world's largest free-market democracies, the United States must be leaders in driving global growth, innovation and entrepreneurship. To do so, both countries must equip the next generation with the education and skills necessary to compete and win in the 21st Century economy," he said.
USIBC has also submitted a set of recommendations to the Parliamentary Standing Committee on Human Resource Development, headed by Oscar Fernandes.
One of the major deterrent, USIBC said is the provision which that all FEIs must maintain a corpus fund of not less than Rs 50 crore (approx $11 million), only 75 per cent of which can be used for the development of their institutions in India.
"The large majority of FEIs interested in investing in India will be incapable of meeting this requirement. Many universities, institutions and investors are willing and able to invest funds into India, but they must be free to utilise the full amount to help meet start-up costs. The inability to access the full Rs 50 crore will deter these institutions from entering the Indian education sector," USIBC said.
Also there is lack of clarity whether the 50 crore funding requirement applies to small educational ventures, it said.