Last week's decision by Minister of Human Resource Development Kapil Sibal to allow the Indian Institutes of Management (IIMs) to go global is a good idea, provided it does not draw on the manpower and financial resources of IIMs in India. The concept generated heated debate two years ago when Sibal’s predecessor Arjun Singh turned down IIM, Bangalore’s proposal to set up a campus in Singapore at the suggestion of that country's government. Singh’s argument then was that the IIMs should first concentrate on meeting domestic demand. Sibal has since reversed that stand, saying the IIMs would be free to go abroad provided they amended their memoranda of association. Rather than set up foreign campuses, IIMs should look at the franchise option to build their brand globally.
Sibal's liberalism deserves praise because it allows the IIMs to leverage an admittedly strong global brand-name and benchmark themselves against best-in-class institutes around the world. This is especially so in Asian destinations like Singapore and Dubai, which are positioning themselves as global educational hubs to attract talent and knowhow. Blue-blooded institutions like INSEAD and the Chicago Business School have already set up shop in Singapore. That privately-owned Indian B-schools have opened branches in the island state suggests that there is latent demand for Indian B-schools in the neighbourhood. In countries like Singapore, subsidised access to infrastructure is a plus. In fact, overseas IIMs can enjoy the cherry topping of free-market pricing, sparing the government the burden of student subsidies and grants that are increasingly proving constraints on faculty quality and expansion in India. Overseas institutions, thus, have the additional virtue of being self-financing rather than a charge on Indian tax-payers. They could also provide Indian faculty the opportunity for sorely needed international standards of academic exposure. This last requirement is becoming increasingly urgent with growing evidence that though the rigorous selection process to IITs and IIMs ensures high-quality student assets, teaching and research have lagged global standards and contemporary relevance.
The big question, however, is whether overseas campuses should be set up by individual IIMs or the franchise route is used with a revenue-share agreement. The first has the advantage of ensuring minimum quality standards but runs the problem of indirectly committing Indian taxpayer money to create a resource that has no direct national utility. Indeed, it is worth noting that Sibal paid due obeisance to the need to meet national demand before looking abroad and there is no doubt that the issue needs addressing. The numbers tell the story. In 2008, some 30,000 students sat for the entrance exams for just 1,350 seats (out of 1,700 seats, the rest being in the reserved category) in the seven IIMs that have come up in 48 years. The fact that the Eleventh Five-Year Plan, starting 2007, proposes to set up seven more IIMs by 2012 indicates the urgency of the problem. Overseas campuses, thus, are great for Brand IIM globally — but only so long as they don’t end up crowding out Indians in India from its advantages.