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Crackling News: India allows foreign higher educational institutions to set up in-country campus

In November, India opened its doors to foreign universities and institutes by permitting them to set up campuses in the country.

The light-touch ‘The UGC (Setting Up and Operation of Campuses of Foreign Higher Educational Institutions in India) Regulations, 2023’ (“2023 Regulations”), are in line with the commitments set out in the National Education Policy, 2020 (“NEP”), and the government’s vision of internationalisation of education in India.

The Journey

We will discuss some of the key provisions of the 2023 Regulations, and our analysis below:

Eligibility

  1. The 2023 Regulations permit Foreign Higher Educational Institution (“FHEI”) to set up a campus in India.FHEI intending to set up a India campus shall fulfill the following criteria:
    • A Foreign University which should have secured a position  within the top 500 in overall category of global rankings while applying; or
    • A Foreign Educational Institution which should have secured a position within the top 500 in the subject-wise category of global rankings at the time of application or should possess outstanding expertise in a particular area.
  2. “Global rankings” or “outstanding expertise in a particular area” have not been defined and have been left to the determination of the UGC. This gives flexibility as it gives UGC the option to consider different global rankings or evaluate the expertise of a FHEI even if it’s not ranked in the top 500 list.
  3. Further, the FHEI should be:
    • duly recognised and established or incorporated in any manner such as Trust, Society, Company, Statutory Body or other legal forms in the country of its origin; and
    • duly authorised to offer academic and research programmes at the undergraduate or higher levels, within and outside its jurisdiction.

Campus

  1. Campus” has been defined to mean a campus set up in India by a FHEI to conduct certificate, diploma, degree, research and other programmes at the undergraduate, postgraduate, doctoral and post-doctoral levels, approved under the regulations.
  2. Certification has not been a formal mode of offering a course/ programme, and many foreign institutes/ entities often offer certification programmes through various structured arrangements. Such arrangements will need a re-look and re-evaluation in line with the 2023 Regulations.
  3. The 2023 Regulations specify that a FHEI cannot set up and operate any campus in India without prior UGC approval. This provision gives primacy to the 2023 Regulations.
  4. The 2023 Regulations contemplate that the India campus will primarily function in the same way as the FHEI’s home campus. To this effect, the 2023 Regulations specify that:
    • education imparted in India should be similar in aspects like curricula, pedagogy, assessment, and other aspects as that of the main campus in the country of origin;
    • qualifications offered in the India campus of the FHEI should be awarded under the name and seal of the FHEI in the country of origin;
    • qualifications awarded to the students in the Indian campus shall enjoy the same recognition and status as if they were conducted in its home jurisdiction;
    • FHEI should have its independent campus with the physical, academic and research infrastructure and facilities required to conduct its operations and programmes in its campus in India.
  5. Unlike the IFSCA Regulations or the Draft Regulations, the 2023 Regulations permit two or more FHEIs to collaborate to establish campuses in India. However, each FHEI should meet the eligibility criteria individually. This enabling provision will provide flexibility and allow FHEIs to expand their footprint in India on a larger scale.

Entity Form

  1. The 2023 Regulations, read with the Frequently Asked Questions (“FAQs”) issued under the 2023 Regulations by the UGC, provide guidance on entity form. In essence, they permit a FHEI to set up any form of entity as long as it is in compliance with:
    • the Foreign Exchange Management Act, 1999 (“FEMA”); and
    • the Foreign Contributions (Regulation) Act, 2010 (“FCRA”), while receiving foreign contributions.
  2. The FAQs further state that the FHEI could enter into collaborations and joint ventures with Indian educational institutions, Indian companies or even establish a new Indian company to set up their campus in India. This in our view provides a high level of flexibility for a corporate structure to be utilised by the FHEI.
  3. In the event the FHEI forms a joint venture to set up a campus in India, the FAQs require:
    • FEMA and FCRA compliance while formulating joint ventures;
    • FHEI to be the applicant entity under the 2023 Regulations;
    • The FHEI to hold majority ownership/ equity in the joint venture setting up the FHEI;
    • The degrees/ diploma/ certificate/ doctorates/ post-doctoral degrees must be awarded in the name of the FHEI and should be at par with those issued in the home country of the FHEI;
    • Further, the India campus should have its own physical, academic and research infrastructure and facilities required to conduct academic and research programmes.

Common structures that are therefore likely to evolve are:

  1. FHEI sets up an Indian company which is 100% owned by it. 100% FDI is permitted in the education sector without any approvals. This will also provide funding flexibility to set up the India campus.
  2. A joint venture with an Indian company, in which majority ownership/ equity is with the FHEI. The Indian company can assist the FHEI with land leasing and other infrastructure, rendering of services, etc., as part of the joint venture arrangement. This could provide on-ground assistance and facilitate operations of the FHEI.

While the regulations contemplate a joint venture with an Indian Higher Education Institution, there is lack of clarity on the role of the Indian institute in such a joint venture arrangement. An option could have been to use the resources of the Indian Higher Education Institution. However, the regulations require the FHEI to have their own infrastructure/ land/ physical resources/ human resources, leaving little room for contribution by the Indian Higher Education Institution. Further clarifications on this aspect will be helpful in the long run.

Application Process

  1. Applications must be filed only online and anytime during the year via the dedicated portal at https://fhei.ugc.ac.in/.
  2. FHEI can set up more than one campus in India, but different applications have to be filed for each campus.
  3. After fulfilling the eligibility criteria, the FHEI must submit the requisite documents as required by the UGC. A detailed checklist of the documents required to be submitted is available here.
  4. The UGC will provide a single-window clearance process to the applicant FHEI.
  5. A non-refundable one-time processing fee (which will be decided by the UGC) has to be paid by the FHEI. The FAQs clarify that FHEIs don’t need to pay any additional annual fee.
  6. After the documents are submitted, applicants will be assessed on merits by a Standing Committee that will be constituted by the UGC.
  7. If a FHEI possesses outstanding expertise in a particular area, the Standing Committee can consider, inter alia, its strengths, outstanding contribution and research capacities.
  8. Recommendations of the Standing Committee have to be placed before the UGC within 60 days of application.
  9. The UGC may grant in-principal approval within 60 days, based on the Standing Committee’s recommendations.
  10. The UGC will then issue a Letter of Intent to the FHEI. 
  11. The FHEI’s campus must be set up within two years of approval (unless the timeline is extended).

Renewals

  1. The Draft 2023 Regulations include a term of renewal for a further period of 10 years. Further, the IFSCA Regulations state that registration granted will be valid for five years and renewable for an additional period of five years.
  2. In a welcome move, the 2023 Regulations do not have provision for renewal and contemplate a one-time approval. This is a great provision and will bring relief to many who were sceptical about the possibility of non-renewal, should they decide to start operations in India.

Online Mode

  1. The 2023 Regulations state that no programmes shall be allowed in online or open distance learning mode. However, online lectures can be offered to up to 10% of the programme requirements.
  2. Interestingly, the Draft 2023 Regulations did not envisage this 10% requirement. The IFSCA Regulations also don’t have a provision for online programmes at all.
  3. While the relaxation will provide some flexibility in programme offerings, 10% may be too less in today’s world.

Admissions, Fee Structure and Faculty

  1. FHEIs can evolve their own admission process and criteria to admit domestic and international students.
  2. They have the freedom to determine their fee structure, and can provide scholarships to students, and give tuition fee concessions to Indian students.
  3. They also have the autonomy to recruit faculty and staff from India and abroad as per recruitment norms. However,
    • qualifications of the faculty appointed shall be on par with the main campus in the country of origin;
    • the international faculty appointed to teach at the Indian campus should stay in India for at least a semester.
  4. FHEIs cannot discontinue any programme without prior UGC approval. In case of discontinuation, the parent entity of the FHEI is responsible for providing an alternative to affected students. Similarly, the addition of any new programmes also require prior UGC approval.

Other Important Provisions

  1. Qualifications awarded by a FHEI will be considered equivalent to any corresponding degree in an Indian Educational Institution. There will be no further requirement of seeking equivalence from any authority.
  2. FHEIs must submit annual reports, specifying details of programmes offered, number of students, etc., to the UGC. This annual report also has to be published on the website of the FHEI. In addition, the 2023 Regulations make it mandatory for FHEI to submit an annual audit report to the UGC, certifying that its operations are compliant with FEMA and FCRA and all applicable laws, including State laws.
  3. Student protection measures have also been built in. The FHEI should have:
    • a grievance redressal mechanism for students, the decisions of which could directly be appealed to the UGC; and
    • alternate plan for students, in case of closure of campus, or discontinuation of programme.
  4. In case of disputes related to the 2023 Regulations, the courts in India will have exclusive jurisdiction.
  5. Importantly, while the UGC has powers to visit campus, inspect, order suspension or cancellation of permissions, the 2023 Regulations do not envisage any penalties, as was the case with the Draft 2023 Regulations. Such a provision is likely to help bring decision-making at the FHEI’s level.

To conclude, regulations permitting the entry of foreign universities and higher education institutes in India have been long overdue. The 2023 Regulations are light-touch but require some clarifications, especially with respect to the role of Indian Higher Educational Institutes (what is permitted/ what is not) in joint ventures, the applicability of state laws to the campuses set up by FHEI, affirmative action, pay scales. We should expect more clarifications on these points as applications start coming in.