A reality check for foreign universities

Source- The post is based on the article “A reality check for foreign universities” published in “The Hindu” on 14th March 2023.

Syllabus: GS2- Issues related to development and management of education

Relevance– Higher education

News– The government has proposed to invite foreign universities to set up their campuses in India.

What are the government’s assumptions behind this move?

The number of Indian students going abroad increased from 4.4 lakh in 2021 to 7.5 lakh in 2022. The outward remittance spent on education in 2012-­2022 was about $5.1 billion. India is anprofitable market even if foreign universities can attracta fraction of this outward flow.

Second supporting factor is the enrollment figures. The All­ India Survey on Higher Education estimates that 4.13 crore students are enrolled in higher education.

If the policy target is to achieve a 50% enrolment ratio by 2035 from the current 27.3%, the intake of students will almost double in 15 years. Much of this is expected to happen in private institutions.

What are the challenges in front of foreign universities for setting up in India?

The OECD’s global study on the internationalisation of higher education pointed out that financial aspects of setting up an offshore campus are likely to prevail despite good intentions.

First, how foreign universities willposition themselves in terms of fees and cost.

If foreign universities want to compete with premier Indian institutes such as the IITs, they will have to compete in terms of cost as well.

For instance, IIT Madras has about 7,000 students with an annual operating expenditure of ₹1,032 core in 2020-­21. The fees only partially meet this expense. Government support enables the institution to charge low fees.

Second, as per the key conditions of the UGC, they have to offer services on par with what they offer at home. In that case, they must bring in foreign faculty and invest significant capital. Then fees would be very high.

Third, creating graduates who will be in demand is not easy, even after charging a high fees. Even decades old elite private institutes are yet to reach IIT or IIM levels.

Fourth, Students travelling abroad pay more fees for better opportunities and enriching cultural experiences. Realising this, countries such as the UAE, offer 10 ­year visas for exceptional students and five year visas for others to seek work. This makes it attractive for students.

What are options for foreign universities to open their branches in India?

First, the local market is fragmented. Some universities such as Shiv Nadar and Azim Premji, backed by philanthropic institutions have managed to keep the annual tuition fees low. Whereas Institutes such as the VIT take the volume route and charge a mid-level fee.  Others such as Ashoka University or Krea University charge a relatively high fee.

In this landscape, foreign universities could position themselves as premier institutions and compete with elite private institutes.

Second, Higher fees need not be a major barrier if institutes can providepremium placements for students. Recruiters should be willing to pay enhanced entry level remuneration, which may offset higher education costs.

The IITs and IIMs offer two different models. The IIT success mantra is low fees and a high Premium. The IIM model has high fees, high premium model.

The 2019 Global Education Monitoring Report on the internationalisation of higher education in Gulf Cooperation Council countries too points it out. It says that despite GCC nations heavily investing in branch campuses of foreign universities, the employment workforce nationalisation has not been as expected.