India: Will UGC's Draft Regulations Change The Indian Higher Education Landscape

In a major stride for the higher education sector in India, the University Grants Commission ("UGC"), on January 5, 2023, released the draft University Grants Commission (Setting up and Operation of Campuses of Foreign Higher Educational Institutions in India) Regulations, 2023¹ ("Draft FHEI Regulations") for consultations from all stakeholders. Draft FHEI Regulations will pave the way for foreign higher educational institutions ("FHEIs"), which include foreign universities² and foreign educational institutions³, to set up its campuses in India. It seeks to regulate the entry and operations of FHEIs in India to conduct undergraduate, postgraduate, doctoral, post-doctoral, and other programmes and research and award degrees, diplomas, and certificates in all disciplines.

Framework of the Draft FHEI Regulations

Some of the norms proposed by UGC under the Draft FHEI Regulations are as under:

Eligibility criteria: Any FHEI intending to set up its campuses in India is required to obtain the prior approval of UGC. Only those foreign universities with a rank among the top 500 either in overall or subject-wise global rankings or the foreign educational institutions of repute in its home jurisdiction are eligible to apply.

Approval process: The applicant FHEI is required to submit an online application to UGC for setting up its campus in India along with certain documents including information on infrastructural facilities, availability of faculty, fee structure, academic programmes, and financial resources for setting up of campuses in India. Details of alternative arrangements in case of disruption or discontinuation of a course or a programme or closure of the campuses is also required to be provided to safeguard the interests of affected students including reallocation to the course or programme.

UGC has proposed constitution of a Standing Committee ("Committee") for examining matters related to the setting up and operation of campuses of FHEIs in India. The Committee would submit its recommendations to UGC within 45 (forty-five) days of receipt of the complete application by assessing the merits of each application including the credibility of FHEI, the programmes to be offered, their potential to strengthen educational opportunities in India and the proposed academic infrastructure. Post receipt of Committee's recommendations, UGC may initially grant in-principle approval and issue a letter of intent to the FHEI for setting up campuses in India within 2 (two) years from date of such approval. This two-year period may be extended by UGC on a case-to-case basis. The permission for commencement of the operation of a campus in India will initially be granted for a period of 10 (ten) years. From second year onwards, FHEI will be required to pay UGC such annual fees as decided by UGC. Renewal of approval can also be sought from UGC for a further period of 10 (ten) years.

Autonomy to FHEIs: Under the Draft FHEI Regulations, FHEIs have been given autonomy to evolve their admission process and criteria to admit domestic and foreign students, decide the fee structure, provide scholarships for foreign and domestic students as well as to recruit faculty and staff from India and abroad. However, FHEIs are required to ensure that the qualifications of the faculty so appointed are at par with the main campus of the country of origin and the foreign faculty appointed to teach at the Indian campus stays at such campus for a reasonable period.

Safeguards for students: Some of the provisions to safeguard the interest of students include the following:

a. the quality of education to be imparted in FHEI's Indian campus will need to be at par with that of the main campus in the country of origin;

b. the qualifications awarded to the students in its Indian campus shall be recognised and treated as equivalent to the corresponding qualifications awarded by the FHEI in its main campus located in country of origin without any further requirement of seeking equivalence from any authority and the degree will have all benefits as in case of degrees awarded by an Indian higher educational institution;

c. FHEIs cannot discontinue any course or programme or close the campus without the prior approval of UGC. In case any course or programme is disrupted or discontinued, the parent entity would be responsible for providing an alternative to the affected students; and

d. student grievance addressal mechanism would need to be in place with the Commission being the appellate authority.

Additional Obligations on FHEIs: The Draft FHEI Regulations require the FHEI to have adequate financial and other resources for establishing and operating its campus in India with adequate physical infrastructure in terms of built-up space for their academic programmes. UGC will have the right to inspect the campus of FHEI and its operations to ascertain the infrastructure, academic programmes and overall quality and suitability.

Restrictions on operation of FHEIs: Interestingly, FHEIs will not be allowed to offer programmes in online or distance learning (ODL) mode i.e., FHEIs can only offer full-time programmes in offline mode. Further, FHEIs cannot offer any such study programme which jeopardises the national interest of India or the standards of higher education in India.

Audit and accounts: FHEIs will need to undergo a quality assurance audit and submit the report to UGC at the time of an extension. FHEI will also need to submit to UGC an annual report, giving details of programmes offered, the number of students admitted and passed out, and qualifications awarded.

The cross-border movement of funds and maintenance of foreign currency accounts, mode of payments, remittance, repatriation, and sale of proceeds, if any, will need to be in accordance with the Foreign Exchange Management Act, 1999 ("FEMA") and its rules and FHEI will need to submit an annual audit report certifying that the operations of the FHEI in India are in compliance with FEMA.

Action against FHEIs: UGC will be empowered to impose a penalty and/or suspend/withdraw approval awarded to an FHEI at any time in case the campus of an FHEI inter alia fails to adhere to or violates any provisions of the Draft FHEI Regulations.

Views of Stakeholders

The Government's decision to allow FHEIs to set up their campuses in India has been received with mixed and divergent views. While many have welcomed the new regulations as a progressive step to retain Indian students from going abroad by localising the advanced and high-quality education imparted by foreign institutions, others have expressed concern regarding the increased liberalisation and privatisation of the higher education sector. UGC has argued that the regulations are in tandem with the National Education Policy, 2020 ("NEP") and is aimed at transforming India into an attractive global destination for higher education. The proposal is intended to arrest the loss of foreign exchange due to Indian students studying overseas as well as to attract overseas students to India.

Unlike the UGC's previously proposed regulations to attract FHEIs, incentives have been provided to FHEIs under the Draft FHEI Regulations to set up operations in India without any requirement to keep a corpus fund in India and to repatriate their surplus funds to the parent university in accordance with FEMA. Maintenance of high corpus funds in India and non-repatriation of surplus funds was a huge disincentive for FHEIs to set up campuses in India under the earlier initiatives of UGC. However, questions have been raised on this enablement as it creates disparity between FHEIs and Indian higher education institutions as the latter are required to reinvest surplus funds. Indian private universities are therefore demanding that the UGC should ensure equal level of academic, administrative and financial autonomy to Indian higher education institutions as being offered to FHEIs.

Concerns have also been expressed over considerable autonomy being provided to FHEIs in deciding the method of admission of students without any reservations, the process of appointment of faculty and staff and framing of syllabi and curricula without any intervention from UGC or the Government. Similar to the autonomy given to Indian private universities with regard to fee fixation, FHEIs have also been given freedom to decide their fee structures. While the Draft FHEI Regulations require the fee to be "transparent and reasonable", there is no mechanism to ensure its compliance and therefore concerns are being raised on commercialisation of the higher education sector and the potential for charging exorbitant fees from students for various programmes.

Conclusion

In our view, the Draft FHEI Regulations is a step in the right direction in creating 'internationalisation at home' envisaged under the NEP and promoting quality education within India. The Draft FHEI Regulations would need to provide more details on exercise of powers by FHEIs with respect to admissions, applicability of reservations, use of surplus funds and repatriation, applicability of other UGC norms/regulations on such campuses etc. The intent to invite FHEIs to set up campuses in India to retain Indian talent and foreign exchange, promote economic growth and excellence in Indian higher education is appreciable but in our quest to become a global destination for higher education, the Government would need to ensure that it doesn't lose sight in improving its own funded institutions and the quality and standards of education offered therein (where majority of students will still enrol) is not compromised.

Footnotes

1 https://www.ugc.ac.in/pdfnews/9214094_Draft-Setting-up-and-Operation-of-Campuses-of-Foreign-Higher-Educational-Institutions-in-India-Regulations-2023.pdf

2"Foreign University" means a University, duly recognised and established or incorporated in any legal manner (such as Trust/ Society/ Company/ Statutory/ other legal forms) in the country of the foreign University and is duly authorised to offer academic and research programmes at the undergraduate or higher levels, within and outside its home jurisdiction.

3 "Foreign Educational Institution" means an educational institution in a foreign country duly recognised and established or incorporated in any legal manner (such as Trust/ Society/ Company/ Statutory/ other legal forms) in the country of the foreign educational institution not covered under Clause 2.6, but is duly authorised to offer academic and research programmes at the undergraduate or higher levels, within and outside its home jurisdiction.