After a gap of 34 years, India announced the new National Education Policy – 2020 (“NEP”) which has been welcomed across the board as a path-breaking reform agenda set by the Government of India. The NEP will modernise the country’s education system, make it ‘fit for purpose’ for its aspirational population and enable rewards of demographic dividend. The recent cabinet approval and the press briefing regarding the policy have released a wave of positivity, excitement, and debate In India and around the world about the future of the Indian Education System – thereby presenting new and significant opportunities for the higher education sector.
Education being the most important agenda in India’s goals for sustainable development under the 2030 SDG framework – NEP seeks to align with the demand for inclusive and equitable quality education and promote lifelong learning. This is being achieved revamping and reconfiguring the entire education sector (from K+12 to college and doctorate levels) under this policy.
For a summary and overview of the top 10 key takeaways from the new framework, please visit our recently released bulletin here.
The focus of this whitepaper is on understanding key implications for foreign universities in India. For the top global universities in the world today, NEP presents a significant change in approach by the government and creates a blueprint for significant expansion of programmes in India.
“Selected universities e.g., those from among the top 100 universities in the world will be facilitated to operate in India. A legislative framework facilitating such 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.” – NEP
When reading this with the announcement of a new and integrated regulatory body for higher education i.e. the Higher Education Commission of India (HECI) that would replace regulators such as the UGC1 and AICTE2 which have put in place existing rules for foreign universities in India, it is apparent that these top universities will be allowed to set up a robust domestic campus structure. There is also a healthy on-going debate wherein a demand for a similar allowance for top 200 or top 500 global institutions be also implemented as India’s needs are diverse and cannot all be met by just the top 100 institutions.
In order to make India the next major knowledge hub of the world, the government is encouraging Indian universities to build strong partnerships with international universities as well. Such partnerships could include academic as well as research or commercial engagements. The setting up of the National Research Fund or NRF should be noted as this can open avenues for foreign universities to bid for bi-lateral funding, besides other core areas such as CSR3, Executive Education, Corporate Partnerships, Consulting, etc.
“Research collaboration and student exchanges between Indian institutions and global institutions will be promoted through special efforts. Credits acquired in foreign universities…will be permitted to be counted for the award of a degree.” – NEP
What then would a top global university need to ideate and implement in order to gain a serious advantage in this competitive domestic and international market? Sannam S4 presents a four-point framework to enable the top foreign universities to build local initiatives directed under the NEP.
Reviewing and/or revamping your India strategy
Universities will have to, as part of planning and futureproofing, undertake a review of the India engagement till date with a view to creating or realigning the India strategy for the next 5-7 years, keeping in mind the new policy framework. For each category or theme – for e.g. with NRF, curriculum exchange, academic partnerships, CSR etc. appropriate goals and SoP’s would need to be defined. For the top 100 institutions, a blueprint for a campus or “operational” setup could be the primary focus to check viability, with appropriate budgets, pipelines and structures identified within the strategy. As the new HECI provides more clarity around relevant regulations, these strategies can be further refined and finalised – with the
next stage moving towards proposals, capital allocation and negotiations.
Aligning programmes and offerings under the new NEP, and establishing a framework for local collaborations and research
Developing a nuanced understanding of local institutions and their appetite & ability to partner will be key. COVID-19 has accelerated such interest in collaborations and there is now acceptance that blended learning is here to stay. This opens up the market above and beyond those students who could afford to travel overseas and access a campus based experience.
Implementing a ‘business’ structure
Alongside the above strategic analyses, Universities will also need to create an operating and legal framework in-country and subsequently implement this on the ground to create a brick and mortar presence that accesses all key opportunities identified. These corporate structures will enable local campus management, engagement with academic institutions, undertake promotion and alumni activities, work with India’s corporate sector, implement academic collaborations, executive education and research programs, create local jobs and hiring mechanisms etc
Universities need to be mindful of key regulatory aspects while setting up these local structures. Prominent areas include:
- Understanding FDI4 & FCRA5 implications and ensuring local structures are in compliance with these laws
- Setting up local entities, which can be one or a combination of:
- Local offices established under the provisions of RBI6
- Setting up a not-for-profit entity (company, trust or society)
- Setting up a commercial entity (a limited liability company or partnership)
- Setting up arrangements, structures and fund-flows keeping in mind regulations for inbound and outbound transactions
- Understanding governance frameworks as aligned with Indian legal requirements
For foreign Universities, these regulations shall also be benchmarked against rules framed by the HECI for campus operations.
Tax implications and maintaining local compliance
Apart from regulatory requirements, Universities would also need to be mindful of tax implications for operations in India. A key focal point for foreign universities would be to decode tax risks and implications and build transactional agreements accordingly. A key overview of tax aspects is summarized below:
Besides taxes, Universities will also have to assess and comply with other key regulatory and operational areas, some of which are summarized below:
Looking at implications, compliance and tax efficiency should be a top priority for global institutions as they look to expand further in the new higher-ed landscape. Local governments are generally taxaggressive and India’s rules and audit/appellate systems allow for prolonged litigation and a high interest/ penalty framework – institutions should definitely look to ensure a minimum risk-minimum cost mantra. India stands at the cusp of re-imagination of the education sector. With Covid-19 disrupting existing models and the new NEP policy opening doors for reform and international participation, the time is now ripe for institutions to engage more proactively with the 35.7 million strong student universe. The Government targets a 50% gross enrollment ratio by 2035 and with the current “high demand – low supply” gap that exists in domestic infrastructure, global institutions will have a pivotal role to play in the next 5-15 years in achieving this dream.
Abhinav Sood, Head of Client Relations and International Projects – Financial Consulting
For more details on how your institution can prepare itself to engage with India given the new opportunities that arise out of the new policy, please contact email@example.com
1University Grants Commission
2All India Council for Technical Education
3Corporate Social Responsibility
4Foreign Direct Investment
5Foreign Contribution Regulations Act
6Reserve Bank of India