Date: 16/03/2023

Relevance: GS-2: Issues Relating to Development and Management of Social Sector/Services relating to Education, Human Resources.

Key Phrases: Higher Education, Foreign Universities, Poor Governance, Leadership Qualities, National Education Policy, Private and Public Sector, Opportunities and Challenges, Gross Enrolment Ratio, Privatization, University Grant Commission.

Context:

• The decision by the University Grants Commission (UGC) to allow foreign universities to set up campuses in India with the freedom to structure courses and fees could drastically alter the higher education ecosystem.
  • The goal of allowing foreign universities is to improve access to higher education by inviting world-renowned Foreign Higher Education Institutions (FHEI) to establish satellite campuses in India, targeting those with a top 500 global rating or recognised reputation in their home country.

Key Highlights:

• India's higher education system is the world's third-largest in terms of students, next to China and the United States.
• India, with the world's largest population, has 1,113 higher education institutions, with 4.13 crore students, according to the Ministry of Education.

Need for Foreign Universities in India:

• The Ministry of Education recently clarified in Parliament, the number of Indian students going abroad increased from 4.4 lakh in 2021 to 7.5 lakh in 2022.
  • The related outward remittance spent on education in 2012-2022 was about $5.1 billion, as per the Reserve Bank of India bulletin.
• 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, which currently accommodate only about a quarter of enrolment.

Issues for Foreign Universities:

• Fees and cost
  • If foreign universities want to compete with premier Indian institutes such as the IITs, they will have to bear in mind the actual costs this involves.
    • For instance, IIT Madras, based on data filed with the National Institutional Ranking Framework, has about 7,000 students with an annual operating expenditure of ₹1,032 core (2020-21).
    • The fees only partially meet this expense. Government support enables the institution to charge fees as low as ₹2 lakh yearly for its core programmes.
  • If IIT had adopted an entirely fee-based model, it would charge at least ₹14 lakh a year to recover its operational costs.
  • This is the baseline figure that foreign universities will have to bear in mind.
• Quality of Service
  • The foreign universities have to offer services on par with what they offer at home — one of the key conditions of the University Grants Commission and a necessity for branding.
    • In that case, they must bring in foreign faculty and invest significant capital.
• Fragmented Local Market
  • Universities such as Shiv Nadar and Azim Premji, which are backed by philanthropic institutions, have managed to keep the annual tuition fees for four-year undergraduate courses low (around ₹1.6 lakh for humanities and sciences and ₹4 lakh for professional courses).
  • Institutes such as the Vellore Institute of Technology (VIT) take the volume route and charge a mid-level fee.
  • Others such as Ashoka University or Krea University follow the niche route and charge a relatively high fee.
• Creating a Premium:
  • Higher fees need not be a major barrier if institutes can create a premium 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.
    • For example, IIT Madras had 90% placement for its four-year undergraduate programme (2020-21). It fetches students a median entry-level salary of ₹13 lakh per annum.
    • The IIM model is high fees, high premium.
    • For instance, IIM Calcutta charges a fee of ₹31 lakh per year, manages almost full placement and fetches a median salary of ₹30 lakh per annum (2021-22).
  • Creating graduates who will be in demand is not easy.
    • Even decades-old elite private institutes are yet to reach IIT or IIM levels.
    • Their placement record is 60% -85%, and the median salary ranges between ₹5 lakh and ₹8 lakh.

Way Forward:

• While we have been producing many graduates, most of them have not been able to get the right job at the right wages.
  • The understanding is that these universities will bring their years of experience and quality to the Indian campuses as well, so the industry should give almost equal weightage to the degrees these universities provide in India.
• The success of foreign universities in India will depend on careful planning and execution.

Conclusion:

• Setting up foreign universities will not lead to a radical reduction in outward flow, but would marginally increase local options and redistribute students amongst the elite institutions.

Source: The Hindu

Mains Question:

Q. What are major challenges in the setting up of the foreign universities in India? Suggest the measures to solve those issues. (150 Words).