Foreign Universities' Bill

There are two issues about the Foreign Universities' Bill. Will it cause an influx of quality institutions from abroad? And should foreign universities be subject to quotas and other norms applicable to government institutions?

On the first issue, I agree with what many others have said. It is unlikely that we will have full-fledged universities with campuses set up by quality institutions. The economics militates against this possibility. Ours is a cost-sensitive market as so many foreign firms have discovered. Today, foreign car manufacturers all want to get into the small car segment. Volkswagen, Skoda, Ford all have launched small cars. Carlos Ghosn of Nissan says he would like to introduce a car that is even cheaper than Nano!

The same applies to education. To succeed, you need to be able to tap the mass market. I would say this is even more true of education than of manufacturing. Because you get the talent only if you tap the mass market. The secret of the success of IITs and IIMs is that they attract the very best- and they do so because they are affordable, despite the steep increase in fee at the IIMs in recent years. A high quality US school coming into the Indian market would be viable only at a steep cost. I would assume that an MBA fee would somewhere between the Rs 20 lakh that ISB charges and the Rs 45 lakh at a US school- say, Rs 35 lakh.

Now, somebody who can afford Rs 35 lakh will also be able to Rs 45 lakh and would prefer to go abroad and get the broader international exposure. Secondly, a price tag of that order automatically screens out the best talent in India. It will be a rich kids' school, which means its products will not be highly valued by the market.

It is striking that foreign universities have not taken off even in more affluent markets than ours- such as Singapore, China and Israel, as a very good story in today's TOI points out:

Singapore can justifiably boast about attracting some top-notch institutes — the University of Chicago, INSEAD, Tisch School of Arts, DigiPen Institute of Technology — but even today, the sector is undeveloped. .... This, despite the manner in which the country “courts the universities: the EDB played up Singapore’s cosmopolitan nature, and then used tangible material resources in the form of financial and other incentives,’’ observes Kristopher Olds, a professor at the University of Wisconsin-Madison who’s taught at the NUS for six years.

....The University of New South Wales (UNSW) also benefited from subsidies upwards of $80 million. Even so, within months of being set up, UNSW folded up citing its “unsuitable financial model’’. Three years ago, the John Hopkins Centre, which received $52 million in funding since its 1998 arrival in Singapore, also closed down as it did not meet the performance benchmark. And the UK’s Warwick University, which was to set up a full campus in the real sense of the term, backed out at the last minute.

The two universities that China can boast of are Nottingham and Liverpool - no great shakes, by world standards- and both have local partners, as required by law. Even Israel, with all its close links to the US, managed to attract only the low-grade institutions. We have to face up to the fact that no country has developed a great university sytem through imports. All great universities are home grown.

As for foreign universities being subject to quotas, well, since private universities in India are not subject to these, it's hard to see how we can impose these on foreign universities. Will the IITs and IIMs suffer as a result? Well, they haven't lost out in any way to domestic private institutions on this account, so quotas certainly won't be the reason for losing out to quality institutions from abroad- assume these come in in the first.