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Foreign Varsity Campus a Distant Dream?

Manu Kaushik     October 15, 2020

In the middle of the pandemic, the Central government came out with National Education Policy (NEP) 2020. Even though the policy was in the works for quite some time - five years to be precise - its release in late July received mixed response. On the one hand, it talks about adding 35 million seats and achieving the gross enrolment ratio of 50 per cent by 2035 in the higher education category. On the other, it paves the way for global institutions to set up operations in the country.

"High-performing Indian universities will be encouraged to set up campuses in other countries, and similarly, selected universities e.g., those from among the top 100 universities in the world will be facilitated to operate in India. A legislative framework aiding their entry will be put in place, and such universities will be given special dispensation regarding regulatory, governance, and content norms on par with other autonomous institutions of India," according to the policy document.

Experts say while this is an enabling provision to attract top-league universities, there will be plenty of hurdles before these universities to set up base in the country. The biggest issues include unfavourable cost economics, lack of clarity on government support and potential apathy from students to enrol. "Allowing top foreign universities to set up a campus in India will not automatically bear results. Just look at the data. There are about 260 branch campuses started by educational institutes in foreign locations in 20 years. In five years alone, 50 new campuses have been set up outside of their home countries. In the Indian context, a good outcome could be 8-10 such campuses of foreign universities being set up over the next five years," says Amitabh Jhingan, partner, EY-Parthenon, a strategy consultancy.

The Roadblocks

It seems that the math does not favour India when it comes to attracting global universities. For instance, the annual tuition fee and other costs of doing an MBA in Harvard Business School (HBS) is $111,818. For someone doing a two-year full-time programme, total expenses would be around $224,000. The median compensation package for the same course is $172,090.

Compare that with the average international salary of $80,050 at IIM Ahmedabad - the top league B-School in the country. One can argue that IIM Ahmedabad charges a lot less - about $31,400 for a two-year post-graduate programme (PGP) - but Harvard is unlikely to reduce fees in India (if it sets up operations) because it would need to maintain the infrastructure to support its brand name and pay the faculty according to global norms. "Do we see India providing HBS kind of entry-level salaries? Unlikely. If they are not able to provide comparable salaries, they cannot charge tuition fees accordingly, and so they cannot pay their staff accordingly. This would lead to risking the main brand," says Akshay Munjal, President, BML Munjal University.

Former ISB (Indian School of Business) Dean Ajit Rangnekar says if a US institute comes to India, its income is going to be in rupees, but expenses will have to be paid in dollars. "The single-biggest expense is faculty. Therefore, fees have to be higher, which make no sense," he says, adding, if students are willing to spend equal number of dollars, they might as well go abroad for studies. "The university business runs on a number of things. Students who pay the full fees add to the value. That happens when students from the developing world come to the developed world. It's only the wealthy students who are able to pay that kind of fees. The number is relatively limited. Those who can afford would rather go overseas."

And it's not that all students completing MBA programmes of foreign universities in India would easily get a job. They will have to compete with over a dozen IIMs and ISB. So unless the students pass out of HBS, Columbia or Wharton, they would be struggling to get high-paying jobs despite paying tuition fees in top dollars.

The other big issue is getting quality faculty along. Most of the faculty in top 100 institutions are busy with their own research or teaching, and it's unlikely for them to leave all that and come to India for a semester or two. Experts, however, say this issue can be resolved. Instead of focussing on academics alone, collaborations in specialised research areas can work. The NEP talks about promoting research collaboration between Indian institutions and their global counterparts. "In the top universities, academics are a sideline to make enough money to do research. The purpose is to do research. Why would top 100 universities come here to do education? They will come here to do research," says ISBs Rangnekar.

The Way Out

India is not the first country to make the move of luring reputed academic institutions. This model has been tried and tested in several countries such as the UAE, Singapore, Malaysia and China. For instance, New York University (NYU) tied up with the UAE government to set up a campus in Abu Dhabi 10 year ago. The UAE government committed multi-billion dollars to bring NYU. Similarly, the Singapore government got Yale University (Yale-NUS College), and Duke University (Duke-NUS Medical School) to set up campuses over the past 15 years. It also spent huge amount to bring MIT (Massachusetts Institute of Technology) in 2010, but the education agreement ended seven years later. The tie-up is now restricted to research work.

Consultants say if the government wants the top 100 universities to set up campuses in the country, it has to give a lot of subsidies on top of free land. EY-Parthenon's Jhingan says the biggest hurdle in attracting foreign universities would be the availability of local capital. "Most such projects have been set up either with large amounts of government or CSR funding or by tapping into mainstream commercial capital. In a capital-constrained environment, the government could look to relax the not-for-profit mandate for such projects or consider other policy measures to provide the funding needed for such projects."

Also, at the turn of the century, when globalisation was picking up pace, many universities were keen to expand their base with the mindset that India, China and Far East were going to be integral parts of the global economy. While India opened up in 1991, by mid-1990s, it started gaining global prominence. But things have changed. Thanks to technology, the world has become far more integrated. Also, global collaborations by Singapore, China and the UAE have not gone anywhere. "In the last 20 years, it has been realised that unlike setting up a factory, setting up an educational institution at another location doesn't work," says ISB's Rangnekar.

Experts believe the policy will act an enabler for some universities. They might establish an outpost, and see what's happening. Later, they could offer longer-duration programmes. University of Chicago, for instance, has an executive education and research centre in New Delhi. Another possibility could be an online-and-offline model. This would include students doing their full course here (through online support), and travelling to the main campus for two-three weeks for practical knowledge.

The policy is the first step to bring top universities, specialised schools in India, but it will be a while before a full-fledged campus shapes up.


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