People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 21

May 27, 2007

FEI Bill: Crass Commercialisation Of Higher Education


Vijender Sharma


THE Foreign Educational Institutions (Regulation of Entry and Operation, Maintenance of Quality and Prevention of Commercialisation) Bill, 2007 was planned to be introduced in the parliament (Rajya Sabha), in the first week of May 2007. The moment it was learnt, the CPI(M) told the central government that the Party would oppose it right at its introduction stage because of its position on the issue of Foreign Universities and Foreign Direct Investment (FDI) in education in India. The Party further said that such a Bill could not be introduced in the parliament without discussion and the government agreed to that. Though the Bill has not been introduced in the parliament, it is necessary to know the provisions of the Bill and understand its consequences.


According to the Statement of Objects and Reasons of the Bill, a number of Foreign Educational Institutions (FEIs) have been operating in the country. Some of them may be “resorting to various mal-practices to allure and attract students, particularly in smaller cities and towns.” It further points out that there was as yet neither centralised policy, nor regulatory regime for FEIs in the country. It has given rise to “chances of fraud and cheating of gullible students and its crash commercialisation. In the absence of appropriate regulatory framework, or even a registering arrangement, no authentic statistics are available in respect of the number of FEIs in India.” Therefore, the Bill is meant to “maintain the standards of higher education within the country as well as to protect the interests of the students’ community” and to check and control “sub-standard or ‘fly by night’ operators.”




Foreign Educational Institution (FEI), as defined in section 2(e), means “an institution established or incorporated outside the territory of India which has been offering educational services in India or proposes to offer courses leading to award of degrees or diplomas through conventional method in the territory of India independently or in collaboration, partnership or in a twinning arrangement with any educational institution situated in India.” Further, the section 2(o) defines ‘twinning programme’ as a programme whereby students enrolled with the FEI complete their study partly in India and partly in any other educational institution situated outside India.


According to section 3(1), no FEI shall admit students, levy or collect any fee from a student in the territory of India for any course of study leading to the award of a degree or a diploma, by whatever named called, unless such institution has been notified by the central government as an institution deemed to be university under section 3 of the University Grants Commission Act, 1956. Once a FEI is declared as a deemed to be university, it will be known as Foreign Educational Provider (FEP) under section 2(f). This means no FEI can start independently any of the functions of an educational institution mentioned in this section unless it is declared as a deemed to be university (FEP).




However, under section 3(2), no provision of this Act, shall apply to a course leading to a degree or a diploma, if it is offered by a central university, a state university, institution of national importance, or any other institution of higher education recognised in accordance with law in collaboration, partnership or in a twinning arrangement with a FEI.


section 3 clearly means that if a FEI wants to start an educational institution independently, it will come under the ambit of this Act. And, if it instead makes a joint arrangement with any recognised institution, the provisions of this Act shall not apply. This is the provision which would be actually used by FEIs to enter India in the field of higher education. This is the provision which would also be used by any unscrupulous recognised private institution of higher education to have joint programmes with FEIs and be outside the purview of this Act and make high profits. Moreover, given the definition of ‘twinning programme’, the FEI is not obliged to offer part of the programme in its country of origin. It can offer part of its programme in “any other institution situated outside India.” Using this provision any predatory FEI might offer part of its programme in a country which suits them better for making more profits.


This provision would also encourage public funded colleges and universities, starved of funds, to enter into joint arrangements (collaboration, partnership or twinning programme) with FEIs to start self-financing courses in frontier areas of science, technology and other professions with high fee charges in order to raise resources. It is obvious that the revenue generated by these courses would be shared between the two depending upon the conditions in the memorandum of understanding.


Since additional public funds are not made available to start any new course, there is a thrust in these institutions to start more and more self-financing courses with high fees. Thus, this provision of this Act shall keep those students who cannot afford high fees away from enrolling in such courses. The central government and UGC have been encouraging the public funded institutions to raise their resources by such means that are commercial in nature. If this Bill is enacted as an Act, the funding agencies might themselves advise the public institutions to enter into arrangements with FEIs. This would lead to a drive towards commercialisation of public funded institutions as well.




According to section 9(1) “having regard to the reputation and standing of the Foreign Educational Institute, and such other criteria as may be prescribed”, the central government, on the advice of advisory board, may “exempt such Institution from any provisions of this Act.” There are two conditions to this provision: 1) FEI must invest at least 51 per cent of the total capital expenditure required for the institute, and 2) no part of the surplus in revenue generated in India by such FEI would be invested for any other purpose other than for the growth and development of the institute established in India.


This provision gives overriding powers to the central government and advisory board, which is composed of three national research professors and ex-officio members who are chairpersons of UGC, AICTE and MCI. What will happen to the surplus in revenue generated by rest of the 49 per cent investment has not been mentioned in the Bill. section 9 is another provision which can be used to defy Indian laws.




For being designated as deemed to be university or FEP, a FEI has to get its application to the Registrar (UGC Secretary) endorsed by the Embassy or High Commission in India of the country of its origin. Existing FEIs have to apply within six months of the commencement of this Act. The FEI will have to maintain a corpus fund of not less than ten crores of rupees. The FEI will also have to submit at the time of application its accreditation status in the country of origin if accreditation is applicable there. If accreditation is not applicable in a country, then which accrediting agency will assess, accredit or assure quality and standards has not been provided for in the Bill.


It may be mentioned here that the Private Universities Bill, introduced in Rajya Sabha twelve years ago in August 1995 had also stipulated a corpus fund of Rs 10 crore for starting a private university by our people. And now Rs 10 crore as a corpus fund for a foreign university coming to India for profit is a pittance.


Under section 5(1), a FEP will have to ensure that the programmes offered and delivered by it in India of quality comparable, as to the curriculum, methods of imparting education and the faculty employed or engaged to impart education, to those offered and delivered by it to students enrolled in its campus in the country of its origin. A FEP ranked of low quality in its country of origin, will not be under any obligation to raise quality in India under this section. The FEP will be free to have its own norms regarding qualification and pay scales to appoint faculty. Under section 5(2), a FEP will have to take note of cultural and linguistic sensitivities of people of India and will not offer a course “adversely affecting the sovereignty and integrity of India.”


According to section 5(3), a FEP shall not utilise more than 75 per cent out of the income received from the corpus fund for the purposes of development of its institution in India and the remaining 25 per cent will be deposited into the corpus fund itself. However, no restriction has been provided for the repatriation of surplus in revenue generated in India by way of collection of fee and other charges from the students.




Under section 7, if a FEP violates any provisions of this Act, the UGC Act or any other Act in force in India having bearing on the maintenance of standards, then its deemed university status can be withdrawn after due process. In such a situation, the central government will ensure alternative and appropriate educational facilities for the affected students. The central government may attach its corpus fund and such other property as it deems fit to make payments to any person employed by the FEP.


Any person, associated with an educational institution or a FEI not being a FEP, violates section 3 of this Act and releases misleading advertisements or gives wrongful information in the media will be liable to refund the fees collected, confiscation of any legal gains made and a penalty of minimum of ten lakh rupees and a maximum of fifty lakh rupees. This is a meagre penalty given the kind of business such institutes do and dupe the students. In case of a FEP, if it violates section 5(1) and (2) related to the maintenance of standards and culture of India, its corpus fund can be forfeited in whole or in part. It will also be liable to refund fees collected and a penalty of minimum of ten lakh rupees and a maximum of fifty lakh rupees. However, in case a FEP releases misleading advertisements or gives wrongful information in the media, no penalty is prescribed. There is no provision for any criminal action under IPC as is provided for in the AICTE Regulation 2005.




It should be noted that Foreign Direct Investment (FDI) in education, including higher education, is allowed in India under the automatic route, without any sectoral cap, since February, 2000. There is no offshore campus of any foreign university in India. There are, however, many foreign universities and education service providers operating in India through twinning programmes. As per the information available at the website of All India Council for Technical Education accessed on April 25, 2007, in India there are 106 institutions running technical programmes in collaboration with foreign universities and institutions. Of the 106 institutions, only two are approved by AICTE. Neither the rest of the 104 institutions nor the programmes offered by them are approved by AICTE under its Foreign University Regulation. These foreign educational institutions are running their business defying law.


As per the provision of the AICTE notification, promulgated on May 16, 2005, on Regulations for Entry and Operation of Foreign Universities/ Institutions imparting technical education in India, every institution, foreign or Indian, has to get the approval from the AICTE. The existing institutions were obliged to take approval from the AICTE within six months from the date of promulgation of this notification. As per the punitive provisions prescribed in the notification, “In case it comes to the notice of the Council, that a Foreign University is running diploma or/and degree at undergraduate, postgraduate and research level in technical education in India directly or in collaboration with an Indian partner without obtaining a certificate of registration, Council shall take immediate steps to initiate action under the Indian Penal Code for Criminal breach of trust, misconduct, fraud and cheating and under other relevant Indian Laws.” While the AICTE website has listed 104 unapproved institutions having collaborations with over 125 foreign universities and institutions, it has not made known as to whether any action under IPC or any other relevant Indian Laws has been initiated against any institution running illegally.




It is stated in the Financial Memorandum of the Bills that there may be occasions, where “a Foreign Education Provider may have to be provided with development grant. In such event, the expenditure shall be met from the Consolidated Fund of India. Since the grants shall depend upon the circumstances prevailing at the future time of making allocation to such institutions, it is not possible to estimate such grants now.” It means that if a FEP has good political clout in the central government, it can get development grants and make profits with public funds.




It is argued by those who welcome FDI in higher education that due to lack of funds, investments in public funded institutions is being reduced and it is not possible to increase the number of state funded universities and colleges. Therefore FDI in higher education would solve this problem. Another argument is that since a large number of Indian students go abroad for higher education, allowing foreign educational institutions to open their campuses in the country will arrest the outflow of Indian students. As a result, a relatively larger number of Indian students would be able to access quality higher education in the country itself which would be relatively much less expensive in terms of fees, travelling costs and living expenses abroad. This would also not allow the outflow of our foreign exchange reserves.


It is also argued by them that foreign higher educational institutions would create competition with the local institutions enabling them to become internationally competitive. This competition would force the local institutions to change their curricula and respond to the immediate needs of the students. And by this, the degrees offered by these institutions will become internationally comparable and acceptable. Further, the FDI in education would create new institutions and infrastructure and generate employment.


In fact, the FDI in any field does not have an attached objective of fulfilling the social agenda of a welfare state. It is guided by profit and market alone and if these are not fulfilled, the investors look for other destinations for FDI. Foreign investors aim to increase their profits that leads to commercialisation. In the field of higher education, FEPs would launch courses in frontier areas of science and technology, design courses which the market needs, create false impression about their courses through advertisements, charge exorbitantly high fees for courses which have immediate employment potential.


By their money power FEPs would be able to attract best teachers and financially well off students from local institutions affecting them adversely. Since competition entails reduction in costs, infrastructure, laboratories and libraries would find least investment and the teachers and non-teaching staff would be appointed without necessary qualifications on such terms which would be exploitative as is in existence in most private institutions today. Teaching, learning process and award of degrees would also not be as rigorous as is required.


FDI would impede the development of indigenous and critical research within our university education system, aggravate the tendency towards commercialisation and strengthen the stranglehold of neo-liberal ideas in our academia. The FEPs would be concerned about their profits and not about our culture and society. Therefore the courses which would appreciate and strengthen our ethos would not only be not started by the FEPs, but such courses would get marginalised in public funded higher education institutions also due to competition.


These tactics of the FEPs would also result in local private institutions raising their fee charges to establish competitiveness affecting adversely those students who are studying in local private institutions. The FEPs would tend to repatriate as much profit as possible back home thus accelerating the outflow of foreign exchange from the country. The Bill, as pointed out above, does not put any restriction on repatriation of surplus in revenue. Therefore, the argument put forward by those welcoming FDI in education that outflow of foreign exchange from the country could be reversed has no sound footing.




In a market-model university like the FEP, departments that make money, study money or attract money are given priority. Heads of universities assume the role of travelling salesmen to promote their programmes. The thinking and attitudes of students, now called consumers, are manufactured and an education system is created that produces standardised people. Thus the whole idea of culture will be threatened as this standardisation eliminates cultural focuses, thoughts, language, and educational themes. No longer will truth be sought, except whatever suits the corporate interests. As this standardisation is institutionalised through international equivalency, the uniqueness of each educational institution will vanish.


The Bill, even when read section by section, does not take care of any of the concerns expressed above and rather promotes crash commercialisation of higher education. Therefore, the foreign direct investment in education cannot be accepted and it should be opposed. In view of this, no foreign university should be allowed in India and so no Bill is required.