Entry of foreign universities in India: What will be the impact?

Following India’s liberalisation, the government had in 1995 drafted the Foreign Education Bill which had to be shelved. Another attempt was made in 2006, but the draft law could not cross the Cabinet stage. Then in 2010, the UPA-2 government brought the Foreign Educational Institutions Bill, which failed to get enough support in the Parliament. The bill lapsed in 2014 as UPA lost power. 

Now, the Centre in its Union Budget earlier this month announced that world-class foreign universities will be allowed to offer courses in financial management, fintech, science, technology, engineering and mathematics Gujarat International Finance Tec-City or GIFT City, free from domestic regulations.

This would complement efforts to provide high quality human capital to India’s financial services industry. This announcement follows the National Education Policy 2020, which said that select foreign universities will be allowed to operate in India. 

The government move seems to be yielding results. Business Standard recently reported that London Business School, King’s College in London, the University of Cambridge, and New York University have started preliminary discussion with the GIFT City authorities and the regulator to establish facilities at the GIFT International Financial Services Centre.

A recent report by consulting firm Redseer estimated that Indian students’ overseas spending is set to grow from current annual $28 billion to $80 billion annually by 2024. The number of Indian students opting for higher education abroad grew from 440,000 in 2016 to 770,000 in 2019 and is set to grow further to roughly 1.8 million by 2024, resulting in an increased overseas spending on higher education.

The significant increase in outflow of students is driven by factors like better educational quality and outcomes abroad, higher standards of living, gaps in the Indian education system leading to supply-demand imbalance, and upward income mobility of Indian households, among others.

India has more than 1000 universities and 42,000 colleges. Despite having one of the largest higher education systems in the world, India’s Gross Enrolment Ratio (GER) in higher education is just 27.1%, among the world’s lowest. 

Ashoka University’s Anirban Chakraborty talks about the policy challenges and the impact that entry of foreign institutions will have on the competitiveness among their Indian counterparts.

The lack of quality in Indian education is reflected in the QS World University Rankings 2022. IIT Bombay was the top-ranking Indian institute in the list with a ranking of 177. Only eight Indian universities made it to the top 400. 

 Apart from fostering a competition in quality, International branch campuses can also help in reducing the foreign exchange outflow.

Subsequently, it will help retain the best of Indian talent by controlling the problem of brain drain. More than eight lakh Indians gave up their citizenship in the last seven years. Finally, opening the door for foreign universities can improve India’s soft power as it will provide further impetus to the government’s Study in India programme that seeks to attract foreign students.