Foreign Universities in India: A Reality Check

With the recent approval of the foreign universities bill by the cabinet, many people interested in Indian higher education are riding a wave of optimism and expecting that there will be a number of highly reputed institutions like Harvard and Yale which would be establishing their campuses in India. On the other hand, there are few people who believe that this will open floodgates for poor quality institutions which would enter India to take unfair advantage of students.

Both these views are at the extremes and require a dose of reality. In these times of budget cuts and decreasing endowments for universities, there are very few reputed foreign universities which would be willing and capable of establishing campus in India. Public universities in UK and US are facing severe financial turmoil and private non-profit universities which rely on tuition and endowments are facing worst fall in their endowments since recession.

Apart from increasing constraints on financial resources, building a world-class institution takes significant amount of time and resources. The trend of off-shore international campuses at other destinations like Gulf, gained traction because of the substantial financial incentives provided by the host countries.

Having a global brand name and financial support may be necessary but it is not sufficient. Some of the off-shore campuses of foreign universities in the Gulf are finding it difficult to fill classes. In addition there are other big names who had to shut down their operations in an embarrassing manner. For example, the University of New South Wales, Australia had to close down its Singapore campus and was labeled as “one of the Australian higher education sector’s worst business failures” for the reasons of enrollment shortfall.

Thus, reputed universities are now even more cautious about their brands and at the same time look for substantial financial support and autonomy to be present as a off-shore campus. In the Indian context, government is not in a position to provide any financial incentives nor it could ensure complete autonomy from sociopolitical influences. Overall, this makes the case for reputed institutions entering in India quite weak.

Only segment in higher education which had been prospering even in these troubled times is the “for-profit” higher education, which includes University of Phoenix. A recent cover story in the Chronicle of Higher Education states that “At a time when American public higher education is cutting budgets, laying off people, and turning away students, the rise of for-profit universities has been meteoric.” This is clearly evident in the financial growth of universities like DeVry whose revenue grew by 34% from 1.09 billion to 1.46 billion in the year ending June 30, 2009. However, government is not interested in inviting this sector to India.

This means that for-profit universities are not allowed by the government and reputed not-for-profit universities are not finding it feasible to start their own campuses. Does that mean that there will be no impact on the interest of foreign universities in India with this bill? No. There is an interest and there will be increasing interest by foreign universities, however, the form and nature of their presence needs to be rationalized. As Alan Ruby rightly pointed out that “The push and pull factors will coalesce in distinct ways for each university as it considers the emerging opportunities in India.”

There are three segments of universities interested in coming to India with different needs and objectives:
1) Prestige-enhancing (top-50 research universities): This is the segment of universities which are not interested in India as a source of revenue. They are primarily interested in adding to their existing prestige and relevance by offering access to their faculty and students to the emerging and increasingly important market of India. These universities would not establish their own full-fledged campus in India in next five years. However, they would be very keen to establish partnerships with universities in the form of student exchanges, faculty exchanges and collaborative research projects. For example, Yale has just clarified that they do not see starting a campus in India, instead they are interested in expanding partnerships. They may also establish their own research centers and executive education centers. For example, Harvard Business School established its India Research Center for this purpose.

2) Prestige-seeking (next-tier of 100 universities): These institutions seek internationalization to build their prestige and at the same time seek opportunities of revenue enhancement. They may be open to establish campuses by themselves or in partnership. In addition to activities undertaken by prestige-enhancing universities, this set of universities are open to engage in more extensive arrangement including joint-degrees and twinning programs. For example, National Management School has partnered with Georgia State University to offer joint-MBA program. This also includes universities from UK forming partnerships to offer degrees in India. For example, Lancaster University partnered with GD Goenka to establish GD Goenka World Institute.

Indian universities and potential partners need to understand that even though this segment does not include Harvard or Oxford, it still has very high quality institutions as compared to what is available in India. Bob McKinlay, deputy vice-chancellor of Lancaster  University said that “… finding a partner in such markets [India] is not so easy. Lancaster made three trips to India and spoke to more than 50 institutions before it alighted on Goenka – and that only happened because Goenka approached Lancaster.”  Indian corporate houses or high-achieving alumni could help in contributing towards the investment requirements and address financial concerns. For example, India’s richest man, Mukesh Ambani announced his intentions to start a world-class university. Likewise, there are several other corporate houses which have expressed interest in higher education and could be courted for potential partnerships.

3) Revenue/profit maximizing: These institutions are primarily looking for additional sources of revenue/profit by scaling enrollments. In this category, lesser known public universities engage in twinning programs but they do not have resources to start their own off-shore campuses. While the private for-profit institutions are very interested and financially capable to enter India and have a full-fledged presence, they are not welcomed in India under the current policy framework. Kapil Sibal has further clarified that education will remain a not-for-profit sector. Thus, despite having the potential and interest to enter India with full campuses, private for-profit sector may also have to content themselves with partnerships. For example, Educomp-Raffles partnership in the area of design. It is also important to note that this is also the segment which is most susceptible for fly-by-night operations and requires closer monitoring.

Interestingly, despite different needs and objectives, all the above segments of foreign universities are facing challenges in entering in India. These challenges not only exist in the form of unrealistic policy direction but also in terms of institutional expectations mismatch. Government is interested in attracting highly reputed universities and likewise, every Indian institution aspires to collaborate with top brand names only. This overlooks the whole spectrum of quality and diversity available in the global higher education system.

Policymakers should not forget that the financial investment needed for expanding access (~US$25 billion projected by the end of 2012) cannot be met by government alone or even partnerships with a handful of prestigious institutions. Some of this has to come from the profit/revenue maximizing institutions which have the efficiency and incentives to scale the offerings.

The real test of quality assurance system is to differentiate wheat from the chaff. Thus, government should focus on creating effective and robust regulatory mechanism for ensuring that malpractices do not take place in the name of foreign institutions. There is a spectrum of institutional quality and types and they serve different needs of student segments. India needs both the high quality teaching and research provided by the research institutions but also the massification which could be catalyzed by next tier of institutions. Undoubtedly, foreign universities bill is a positive development as it will improve quality and practice of higher education. However, it has to be enacted in the context of the needs of India and deeper understanding of the landscape of global higher education.

-Dr. Rahul Choudaha

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