Cabinet clears Bill to allow foreign varsities

In a major decision that is expected to open up the country's education sector to foreign educators and investment, the Union Government on Monday approved a bill to allow foreign education providers to set up campuses in India and offer degrees.

The Foreign Educational Institution (Regulation of Entry and Operation) Bill, 2010, was cleared by the Union Cabinet. The Bill is now expected to be introduced in Parliament during the ongoing budget session.

"This is a milestone which will enhance choices, increase competition and benchmark quality. A revolution larger than the one in the telecom sector awaits the education sector," Union Human Resource Development Minister Kapil Sibal said after the bill got the Cabinet's assent.

The bill is one of the major reforms bills of the HRD Ministry and seeks to regulate the entry and operation of foreign institutions, which will set up a campus and offer degrees in India.

A foreign university aspiring to set up a campus in India will have to deposit Rs 50 crore as corpus fund.

Provisions of Section 25 of the Companies Act will be applicable and these institutes will not be allowed to take the profit back and will have to spend the amount for further expansion of the institutions here.

Foreign education providers will be allowed to take part in other activities like consultancy projects. The profit generated from these projects has been exempted from Section 25 of the Companies Act and can be taken back by these institutes.

The bill has been delayed for the last four years owing to opposition from various quarters. However, last year it was referred to a Committee of Secretaries which brought modifications to certain provisions which had come under criticism.

Official sources stated that the proposed law prescribes eight-month time bound format for granting approval to foreign educational institutions to set up campuses. They will go through different levels of registration process during this period and will be finally registered with a government regulatory body.

The Union HRD Ministry has already clarified that quota laws will not be applicable to foreign universities setting up campuses in India. Though 100 per cent foreign direct investment through automatic route is permitted in the education sector since 2000, the present legal structure in India does not allow granting of degrees by foreign educational institutions here. The new law is expected to facilitate the globally-renowned institutes to
participate in India's higher education sector.

Three other reforms bills, which were slated to be taken up in the Cabinet, were deferred to the next meeting. These are -- Prohibition of Unfair Practices in Technical, Medical Educational Institutions and Universities Bill, Educational Tribunal Bill and Accreditation Bill.