 "New IIITs may have to be fully funded by HRDMin")
India's plans to set up Indian Institutes of Information Technology (IIITs) in the public-private-partnership (PPP) mode have dived even before these could take off.
If in 2008 it was the economic slowdown which had put the plan off track, now it is the parliamentary standing committee on human resource development (HRD).
Whatever hope the industry saw of partnering with academia in this venture have been dashed by the parliamentary standing committee on HRD fearing the PPP mode would give rise to conflict of interest between public and private partners.
This means, the IIITs, the ambitious initiative of the ministry of human resource development (MHRD) may have to be fully funded by the ministry in their initial years. The idea of IIITs in a PPP mode was mooted to address the challenges faced by the Indian IT industry.
"The committee would like to point out that in our country, there are well-established institutes that are fully funded by the government and there are institutes that are privately funded. The committee strongly feels that instead of having the IIITs under the PPP mode, what needs to be encouraged are industry-academia collaborations," the panel added.
Narayanan Ramaswamy, education head at KPMG said shunning the PPP mode in setting up IIITs was a retrograde mode. "This is a backward step and if implemented, would discourage private players from investing in the education sector," he said.
Some proposed IIITs have already received funds from corporates, which believe this PPP mode would not lead to a conflict of interest. IIIT Srirangam, for example, has been funded by Infosys Co-Founder and Executive Vice-Chairman Kris Gopalakrishnan.
"Pratiksha Trust, my family trust, has made the investment along with other organisations. I don't believe a PPP model would lead to conflicts - higher education is an area where PPP should work. Anyway, these institutions are 'not-for-profit' institutions," said Gopalakrishnan.
The capital cost of each IIIT is Rs 128 crore, to be contributed in the ratio of 50:35:15 by the central government, the state government and the industry respectively. In the Northeastern states, the industry participation for capital expenditure was to be kept at 7.5 per cent and central government's participation at 57.50 per cent, while state government's participation was to be at 35 per cent. The project is targeted to be completed in a phased manner.
According to MHRD's proposal, the maximum cost of establishing these institutions is to be borne by the central government, followed by the respective state governments. Only 15 per cent to 7.5 per cent is to be contributed by the private sector.
Officials from the existing IIITs said except a few private players, major corporates have not shown any interest in funding the new institutes under the PPP mode. The director of an IIIT said while the private sector's stake in any new IIIT would only be up to 15 per cent, they will be required to provide advisory services to the institute and help them in industry-academia interface for jobs and research opportunities.
The Indian Institutes of Information Technology Bill, 2013, seeks to incorporate the existing four Indian Institutes of Information Technology (IIITs) at Allahabad, Gwalior, Jabalpur and Kancheepuram under the Indian Institutes of Information Technology Act so as to provide these independent statutory status and to declare these 'Institutions of National Importance'. The Bill further seeks to establish twenty new IIITs in the not-for-profit PPP mode and also incorporate them as Institutions of National Importance.
Industry sources indicated that state governments would now have to play an active role in funding these new IIITs. A senior government official said in states like Tamil Nadu, where the state government has taken an interest in setting up IIITs, the complete onus will be on them to provide funds. "State governments, like that of Tamil Nadu, have been playing an active role in overseeing the establishment of the new IIITs within the respective states. If corporate funding is ruled out, the government would be willing to provide for it," said the official.
IIIT officials said the MHRD would have to play a crucial role in the setting up of new IIITs. G C Nandi, professor and dean-academics at IIIT Allahabad said the government had to take up a major role in setting up of the IIITs. "India needs at least 15 more IIITs, for which the MHRD is required to provide the funds," he said.
"The IIITs would take at least five-seven years more to attract the appropriate corporate attention. The major issue today is that corporates want a quick return-on-investment from the IIITs, which cannot be immediately provided to them. Since business returns may not be as quick as they anticipate, they neither want to fund the setting up of new IIITs, nor want to participate in IT-related research by the institutes," said the director of an IIIT.
According to the IIIT Bill, each IIIT would meet its entire operating expenditure on its own within five years of commencement out of students' fees, research and other internal accruals. The scheme also provides for a faculty development programme for which a sum of Rs 50 crore has been earmarked.
The parliamentary standing committee said instead of locating industry partners for investing in IIITs, the bill should suggest locating them for informal and formal collaborations for purely academic and industrial research-oriented purposes. It said industrial training could be made part of the curriculum in these institutes where industry partners can participate in terms of teaching and imparting practical skills. It added that private partners can also play a role in sponsoring industry-oriented research rather than funding them.
In July 2012, the proposals of three states - Assam, Tripura and Rajasthan - for setting up IIITs in the PPP mode were approved by the MHRD. Initially, the IIITs may be registered as societies under the Societies Registration Act, 1860, and subsequently would come under the umbrella of a Central legislation.
The major objective in establishing the IIITs is to set up a model of education which can produce best-in-class human resources in information technology (IT) and harnessing the multi-dimensional facets of IT in various domains. These institutions are conceived as self-sustaining, research-led institutions, contributing significantly to the global competitiveness of key sectors of the Indian economy and industry, with application of IT in selected domain areas.
If in 2008 it was the economic slowdown which had put the plan off track, now it is the parliamentary standing committee on human resource development (HRD).
Whatever hope the industry saw of partnering with academia in this venture have been dashed by the parliamentary standing committee on HRD fearing the PPP mode would give rise to conflict of interest between public and private partners.
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"An individual entity having a stake in the ownership might give rise to conflict between the welfare objective of the government and the profit motive of the industry a few years down the line," the panel has said in its report on IIITs to the Rajya Sabha.
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This means, the IIITs, the ambitious initiative of the ministry of human resource development (MHRD) may have to be fully funded by the ministry in their initial years. The idea of IIITs in a PPP mode was mooted to address the challenges faced by the Indian IT industry.
"The committee would like to point out that in our country, there are well-established institutes that are fully funded by the government and there are institutes that are privately funded. The committee strongly feels that instead of having the IIITs under the PPP mode, what needs to be encouraged are industry-academia collaborations," the panel added.
Narayanan Ramaswamy, education head at KPMG said shunning the PPP mode in setting up IIITs was a retrograde mode. "This is a backward step and if implemented, would discourage private players from investing in the education sector," he said.
Some proposed IIITs have already received funds from corporates, which believe this PPP mode would not lead to a conflict of interest. IIIT Srirangam, for example, has been funded by Infosys Co-Founder and Executive Vice-Chairman Kris Gopalakrishnan.
"Pratiksha Trust, my family trust, has made the investment along with other organisations. I don't believe a PPP model would lead to conflicts - higher education is an area where PPP should work. Anyway, these institutions are 'not-for-profit' institutions," said Gopalakrishnan.
The capital cost of each IIIT is Rs 128 crore, to be contributed in the ratio of 50:35:15 by the central government, the state government and the industry respectively. In the Northeastern states, the industry participation for capital expenditure was to be kept at 7.5 per cent and central government's participation at 57.50 per cent, while state government's participation was to be at 35 per cent. The project is targeted to be completed in a phased manner.
According to MHRD's proposal, the maximum cost of establishing these institutions is to be borne by the central government, followed by the respective state governments. Only 15 per cent to 7.5 per cent is to be contributed by the private sector.
Officials from the existing IIITs said except a few private players, major corporates have not shown any interest in funding the new institutes under the PPP mode. The director of an IIIT said while the private sector's stake in any new IIIT would only be up to 15 per cent, they will be required to provide advisory services to the institute and help them in industry-academia interface for jobs and research opportunities.
The Indian Institutes of Information Technology Bill, 2013, seeks to incorporate the existing four Indian Institutes of Information Technology (IIITs) at Allahabad, Gwalior, Jabalpur and Kancheepuram under the Indian Institutes of Information Technology Act so as to provide these independent statutory status and to declare these 'Institutions of National Importance'. The Bill further seeks to establish twenty new IIITs in the not-for-profit PPP mode and also incorporate them as Institutions of National Importance.
Industry sources indicated that state governments would now have to play an active role in funding these new IIITs. A senior government official said in states like Tamil Nadu, where the state government has taken an interest in setting up IIITs, the complete onus will be on them to provide funds. "State governments, like that of Tamil Nadu, have been playing an active role in overseeing the establishment of the new IIITs within the respective states. If corporate funding is ruled out, the government would be willing to provide for it," said the official.
IIIT officials said the MHRD would have to play a crucial role in the setting up of new IIITs. G C Nandi, professor and dean-academics at IIIT Allahabad said the government had to take up a major role in setting up of the IIITs. "India needs at least 15 more IIITs, for which the MHRD is required to provide the funds," he said.
"The IIITs would take at least five-seven years more to attract the appropriate corporate attention. The major issue today is that corporates want a quick return-on-investment from the IIITs, which cannot be immediately provided to them. Since business returns may not be as quick as they anticipate, they neither want to fund the setting up of new IIITs, nor want to participate in IT-related research by the institutes," said the director of an IIIT.
According to the IIIT Bill, each IIIT would meet its entire operating expenditure on its own within five years of commencement out of students' fees, research and other internal accruals. The scheme also provides for a faculty development programme for which a sum of Rs 50 crore has been earmarked.
The parliamentary standing committee said instead of locating industry partners for investing in IIITs, the bill should suggest locating them for informal and formal collaborations for purely academic and industrial research-oriented purposes. It said industrial training could be made part of the curriculum in these institutes where industry partners can participate in terms of teaching and imparting practical skills. It added that private partners can also play a role in sponsoring industry-oriented research rather than funding them.
In July 2012, the proposals of three states - Assam, Tripura and Rajasthan - for setting up IIITs in the PPP mode were approved by the MHRD. Initially, the IIITs may be registered as societies under the Societies Registration Act, 1860, and subsequently would come under the umbrella of a Central legislation.
The major objective in establishing the IIITs is to set up a model of education which can produce best-in-class human resources in information technology (IT) and harnessing the multi-dimensional facets of IT in various domains. These institutions are conceived as self-sustaining, research-led institutions, contributing significantly to the global competitiveness of key sectors of the Indian economy and industry, with application of IT in selected domain areas.