News & Analysis

Deregulating Education, India Open to Overseas Capital

For the naysayers, deregulating education is akin to pushing a political agenda while those in favor believe India needs to open up investments that will provide the students with academic qualifications that make them global citizens without actually having to leave our shores. 

Of course, this conflict may never get resolved but the government is all set to bring policies that allow global investments in the education sector as part of its initiatives to create world class infrastructure to educate and skill the 255 million Indian youth in the 18-30 age group. “We aim to improve the gross enrolment ratio (GER) for higher education from 27% to 50% by 2030,” says union minister for education and skill development Dharmendra Pradhan.

Pradhan told the ET Roundtable that the University Grants Commission’s (UGC) primary task was complete and now is the time to consult with stakeholders to deregulate. “We are also talking to various prestigious institutions,” he said, adding that the timeline of enhancing GER by 2030 is augmented by the country’s demographic advantage. 

Way back in 2009, industry body Assocham had made a case for deregulating the education sector. It prevented repatriation of more than Rs.50,000 crore annually (the current figure is much higher) as nearly five lakh students go overseas to acquire better skills. By deregulating higher education, India could actually earn foreign exchange from overseas students and in the process also create fresh jobs in the academics. 

However, the minister’s limited point at this juncture appears to relate to growing the GER, which bears a direct correlation to enhanced productivity. “For this, we need to augment the existing strength, capacity and infrastructure in the education system. How do we do that? We must invite capital from everywhere. We must also ensure that market forces don’t overpower the institutions and there is no commercialisation. So, anyone is welcome to our system with one expectation—that it should not be exploited,” he said.

The minister said out of the estimated 255 million youth in the 15-25 age group, just about 110 million are in educational institutions, which means the remainder are either at work or not gainfully employed. “India can’t be a superpower unless the focus shifts to these students in order to give them the right orientation, training, knowledge and opportunity,” he added. 

Currently though India permits 100% FDI in education via the automatic route, there hasn’t been much traction from academic institutions overseas. Experts say that the main reason for this lack of interest is the regulation that such investments be routed through a not-for-profit entity, besides the UGC and AICTE barriers. 

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