The government at the Centre is planning to introduce 100 per cent Foreign Direct Investment (FDI) in the education sector. Under the General Agreement on Trade and Services (GATS), the Union government had agreed at the WTO conference to allow FDI in the education sector by 2003.

This would imply that foreign educational institutions would be allowed to establish wholly owned subsidiaries in India, leading to a foreign education and certification for students. The move is aimed at increasing the number of foreign students pursuing higher studies in India, which stood at 7,000 in 2001, as well as retaining a proportion of the 48,000 Indian students going abroad each year.

The move will make foreign education/certification more accessible to Indian students as well as substantially reduce the costs involved for the student. The government is simultaneously attempting to allay fears on excessive commercialisation of higher education by limiting the nature of foreign institutions entering the sector through a condition that allows only registered societies and non-profit organisations.

But, is the announcement a real reason to rejoice for students or education providers?

Indian students, for a long time, have had access to foreign certification and education through various tie-ups.

Certification tie-ups such as the tie-up between University of London and ITM, which allow students to gain a degree from the university while studying in India, have existed for sometime now. Educational tie-ups such as the ones between Columbia University and Indian Institute of Journalism and New Media, Bangalore, entailing the provision of course content and teaching assistance by the premier American school for journalism to the Indian counterpart is also becoming a norm in the sector.

Also, reputed universities in the UK and the USA offer courses to international students through external education programmes rather than setting up shop themselves. Hence, the entry of institutions will be limited to smaller players. For the institutes, the announcement implies increased competition in a sector already facing a bottleneck due to an unprecedented mushrooming of private institutes. The only benefit accruing to them might be the additional avenue for capital.