The Universities Grants Commission ("UGC") recently unveiled draft regulations for foreign institutions to set up campuses in India. Titled University Grants Commission (Setting up and Operation of Campuses of Foreign Higher Educational Institutions in India) Regulations, 2023 ("Draft Regulations"), they are available in the public domain for comment and feedback before the final regulations are notified. In the discussion that follows, we review the positives in the Draft Regulations, and the areas that may need further clarity.
- One of the soaring positives in the Draft Regulations is that they purport to provide a foreign higher educational institution with a significant amount of independence. This includes the following:
- The institution may be established as not just a public trust, charitable society, or not-for-profit company but as any trust, society, company, or any other legal form. This should boost its ability to operate as a for-profit enterprise.
- The institution would have the independence to devise its fee structure, as long as it remains transparent and reasonable.
- In tandem with the above, the institution would also have the autonomy to recruit faculty and staff domestically as well as from outside India in terms of its own recruitment norms.
- The Draft Regulations clearly state that qualifications awarded under them shall not carry further requirement of obtaining equivalence from any authority. This should provide considerable certainty to prospective students and make the operational model for the foreign institutions more viable.
- The foreign higher educational institutions will have the ability to offer not just degrees but also diplomas and certificates. This is likely to create wider choices for students and a wider student base for foreign institutions.
Aspects for Further Clarity
Several areas in the Draft Regulations require further clarity. Some of these are highlighted below with the objective that clarity would provide certainty to all stakeholders. This would be particularly important for the foreign institutions that the Draft Regulations would attract.
- Both the definitions of "Foreign University" and "Foreign Educational Institution" (that collectively make up "Higher Educational Institution") state that such entity would have to be "duly authorised" to offer academic and research programmes without clarifying who would count as such authorising person or regulator.
- "Fees" is a meaningfully defined term but does not appear to have been used thereafter as a defined term in the Draft Regulations.
- Foreign higher educational institutions that wish to set up campus in India would require prior written approval from the UGC. This is likely to require amendments to India's extant foreign direct investment regulations, as currently the education sector is envisaged as being under the automatic route.
- Not all foreign institutions would be eligible to apply for setting up campuses. Foreign universities would have to rank within the top 500 of overall or subject-wise rankings. How and who would decide this ranking, and for which year prior to the application to the UGC, remains unclear and is pending for the UGC to decide from time to time. Similarly, a foreign educational institution may apply if it is a "reputed institution" in its home jurisdiction. However, no parameter has been prescribed for measuring whether an interested entity meets this reputation test. Uncertainty on whether an institution is entitled to apply or not may also be read with the fact that an applicant has to pay a non-refundable processing fee.
- The approval procedure that the Draft Regulations prescribe are currently more general than specific. The following are a few illustrations:
- An applicant is required to furnish information on infrastructure facilities, availability of faculty, fee structure, and several other data points. However, it remains unclear whether this is entirely discretionary at the hands of the applicant or whether basic infrastructural requirements would be prescribed by the UGC. Further, whether there was an expectation that all infrastructure and faculty would be tied down by an applicant before making the application could also create a chicken-and-egg situation. It may not be possible for the applicant to have infrastructure (including real estate) and faculty in place before approval from the UGC; but if the application is made with only statements of intent and no certain infrastructure or faculty in place, there could arise a gap between what receives in-principle approval from UGC and what it inspects prior to issuing the final certificate for commencing operations.
- There is intent to protect students "in the case of a course or programme disruption or discontinuation", with the institution's parent entity having to ensure alternative arrangements. This appears widely worded, especially the usage of the word "disrupted" – courses getting rescheduled or programmes being cancelled due to varying degrees of student participation/interest being a common phenomenon in higher education institutions. A foreign institution would have to ensure that such students are reallocated in a manner that does not fall foul of such a provision.
- The applicant is required to give an undertaking that the quality of education at its Indian campus would be at par with that at its main campus in its country of origin. While well intentioned, any measurement for "at par" is subjective at best, even when a foreign institution attempts to comply with this requirement. A similar requirement is placed on qualifications of faculty members who are appointed for the Indian campus, inasmuch that they would have to be at par with the qualifications of the faculty in the main campus in the country of origin. Achieving such exact equivalence for each course/programme may be difficult for a foreign institution.
- An applicant would have to furnish such other documents as may be specified on the online portal where applications would have to be submitted. This too appears to widely worded and capable of having an impact on an applicant's viability. It is hoped that an indicative checklist in this regard would be available soon.
- While a certificate to commence operations would initially be granted for a period of ten years by the UGC, the Draft Regulations do not appear to envisage any penalty being levied on an institution should it choose to wind down its campus or operations in India much sooner. The only requirement appears to be protecting the student interest through reallocation. All stakeholders should have clarity on the legislative requirements in this regard.
- Programmes that are offered under the Draft Regulations cannot be offered for online, open, or distance education by the foreign institution. This is likely to strike at online or correspondence courses of a similar nature that already exist at the main campus, and are in demand and accessed by Indian students. Whether this comes in the way of twinning programmes or other such collaborations between Indian and foreign institutions remains to be seen.
- The foreign higher educational institution is not allowed to act as a "representative office of the Parent Entity to undertake promotional activities for their programmes in their home jurisdiction or any other jurisdiction outside India" may require reconsideration. It may be in the interests of the students to know about courses and happenings at other campuses, whereas the widely worded prohibition may have the effect of isolating the ongoings at the Indian campus from the campuses outside India.
- While cross-border movement of funds would have to comply with India's extant exchange control regulations, whether the need arises to create relaxations for the acquisition of immovable property by a foreign institution remains to be seen. This has been a long-standing area of concern by foreign education entities.
Why the Grey Areas Should be Resolved
It would be best if the grey areas saw early resolution, although the Draft Regulations do provide the UGC with the power to clarify doubts, difficulties are anomalies about their implementation. Outside of providing certainty to stakeholders, the wide powers the UGC wields under these Draft Regulations (as illustrated below) is another sound reason, which would also aid compliance:
- UGC's interpretation of the Draft Regulations would be final and binding in any fact situation
- The UGC also has the power to impose monetary fines as well as suspend/withdraw approval for an institution for a variety of reasons, including but not limited to contravention of the Draft Regulations or in case of "adverse findings". Read with the preceding position, it becomes important to understand the expectations of the regulator under the Draft Regulations, with a view to avoiding penalties.
- Disputes under the Draft Regulations would have to be governed by Indian law.
Interested stakeholders, especially foreign institutions, may find it useful to seek clarification and provide feedback on the Draft Regulations. Given that they represent a long-expected/awaited further liberalisation of the Indian education sector, the Draft Regulations represent an exciting development. The final regulations shall without doubt be of significance and provide greater clarity to students and Indian education entities, as also foreign educational institutions.
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