India is shutting the door on Britain's top institutions

Since it began market reforms in the early Nineties, India has rolled out the red carpet for many British corporations. Vodafone, British Telecom and Rolls-Royce all have operations here, helping to push foreign direct investment to nearly £8bn last year. But while Britain's phone companies, cars and expertise in higher education are welcomed, its universities are not.

Despite overtures from dozens of British and American colleges, the Indian government has yet to allow any foreign institution to create a legally recognised degree programme in India. And outsiders may have to wait awhile – some say a long, long while – before that is likely to change.

The issue has become a political hot potato. Some administrators here are keen to allow foreign universities in, but efforts to do so have been strongly opposed by the communist political parties and some leading academics, who say the government would do more good by increasing the amount of money it puts into higher education than by giving the task to foreigners.

The resulting stand-off has caused a legislative stalemate. A draft bill allowing foreign universities to set up campuses in India was scheduled to be introduced in Parliament in March last year but has yet to see the light of day.

No one disputes that the country's higher education system needs help. Only 10 per cent of India's 90 million university-age citizens go to college. While the most underprivileged members of that age group don't even make it through high school, many students in the country's rising middle-class, too, are finding themselves squeezed out of public higher education because the system is so small.

Nor does anyone deny that some of the foreign universities interested in entering India are among the top institutions in the world. The huge under-served student market is a potentially lucrative one, and foreign institutions – including Oxford, Cambridge, LSE, Imperial, Harvard, Stanford and Columbia – have sent delegations to explore the opportunities.

Britain has agreed to spend almost £35m on research initiatives with Indian higher education institutions, through the UK India Education and Research Initiative, launched in April 2006. In April, Rick Trainor, president of Universities UK, led a group of British vice-chancellors to India to discuss increasing collaboration.

India's main communist party, though, likens those delegations to "travelling salesmen". For left-leaning politicians, allowing foreign players in would only exacerbate inequalities. "We don't want them here," says Nilotpal Basu, a member of the Communist Party of India (Marxist). "It's a minuscule portion of society that will really benefit, because fees will be so high that only they can get access to these foreign universities who come here."

Since India gained independence in 1947, the government has concentrated on subsidising higher education to make it accessible to all, regardless of income.

But the access argument is a faulty one, according to Pratap Bhanu Mehta, president of the Centre for Policy Research, an independent think-tank. Almost 160,000 Indian students go abroad every year to study, he says, depriving the country of £2bn annually. "The de facto reality is that students who can afford to go abroad are seceding from the system anyway," he says.

Others in favour of bringing foreign universities to India say that allowing them in would create a win-win situation for students and education providers. "If you develop joint campuses in India, you can offer a standard UK degree for 30 to 40 per cent of the cost of going to the UK," says Richard Stagg, British High Commissioner to India.

The language of the draft bill has complicated matters. It calls for strict regulatory controls over any foreign-based provider of higher education. The country's University Grants Commission would have the power to grant – and remove – university status. It could conduct inspections whenever it chose, just as it does with domestic universities. And foreign universities would be required to keep at least 100m rupees, or about £1.2m, in a reserve account in India.

As a result, some supporters of foreign-university involvement oppose the bill. If the only requirement is a healthy bank account and a willingness to subject oneself to endless regulation, they say, India may draw a lot of foreign interest – but not from the sorts of universities the country needs. "It's the kind of bill where you will get the worst of both worlds," says Mehta. "You will get many players, and you won't get high quality. The better the institution, the more it wants autonomy, because it has a name to protect."

Other supporters of foreign involvement like the bill, because it offers stringent oversight. "Realistically, no government would want institutions operating without any oversight," says Stagg. "We feel comfortable if the Indian government wants a regulatory structure. We think it is legitimate, but the degree of oversight is important."

A risk-based approach to oversight – stricter governance over second-tier rather than top institutions – would be best, according to Stagg. Some experts go so far as to say that India should allow only world-class institutions to set up branch campuses. "We should welcome only top foreign universities, such as Harvard and Cambridge, whose credibility is beyond question. But even they should be regulated," says P M Bhargava, a former vice-chairman of India's National Knowledge Commission, which advises the government.

Eager to get into India's lucrative higher education market but not permitted to do so independently, at least 130 foreign providers have forged partnerships with local, mostly unaccredited, private institutions. British institutions run 59 collaborations with local, private players, second only in number to the US, according to Sudhanshu Bhushan, the author of a government-commissioned study of foreign education providers in India. At the time of the study local institutions had collaborations with, for example, the University of Bradford, Warwick and De Montfort.

Twinning arrangements are the most popular form of partnership, the study showed, because they involve the least risk and most income for foreign institutions. The partners share tuition revenue for the part of the programme taught in India, but the foreign institution keeps all the fees students pay once they transfer.

The joint programmes are popular enough to enable the private Indian institutions to charge an average of 45 times the tuition at top public universities to Indian students. But critics say that's only because the private institutions hype their foreign collaborations, not because their programmes are necessarily good. "Indian students are gullible and need to be protected from fly-by-night operators," says Arjun Singh, India's minister for higher education.

It is no wonder that the draft bill contains such stringent regulations. It says that any university that is exempt from regulations must reinvest its profits into its operation in India. Some observers of international education, however, say requiring foreign universities to keep all of their profits in the host country is excessive. "Even for top institutions, part of the lure for foreign collaboration [or branch campuses] is to make money," says Philip G Altbach, director of the Center for International Higher Education at Boston College. "If you totally shut that door, it is a problem."

Interesting? Click here to explore further