Regulatory Alert - New Draft Regulations issued by the UGC for setting up of Foreign University campuses in India

Introduction

With a view to revamping its education system, the Government of India had introduced National Education Policy (NEP) in 2020. NEP envisioned that top foreign universities/educational institutions in the world will be facilitated to operate in India. For this, it provided that a legislative framework facilitating such entry will be put in place and such universities will be given special dispensation regarding regulatory, governance, and content norms on par with other autonomous institutions of India.

University Grants Commission (UGC) which regulates educational universities in India, has recently issued a draft of Regulations¹ to provide for a regulatory framework allowing the entry of higher-ranked foreign universities/educational institutions in India. It has sought comments from various stakeholders².

We, at BDO in India, have summarised the Regulations and provided our comments hereunder.

What are key definitions?

a) ‘Campus’ shall mean a campus set up by a foreign higher education institution in India to conduct undergraduate, postgraduate, doctoral, post-doctoral and other programmes and research.

b) ‘Course’ means one of the units which comprise a programme of study.

c) ‘Fees’ means all fees, including tuition fees and developmental charges, by whatever name called, payable by the students enrolled for the course(s)/programme(s) of study.

d) ‘Foreign University’ means a University, duly recognised and established or incorporated in any legal manner (such as Trust/Society/Company/Statutory/other legal forms) in the country of the foreign University and is duly authorised to offer academic and research programmes at the undergraduate or higher levels, within and outside its home jurisdiction.

e) ‘Foreign Educational Institution’ shall mean an educational institution in a foreign country duly recognised and established or incorporated in any legal manner (such as Trust/Society/Company/Statutory/Other Legal Forms) in the country of the foreign educational institution not covered under (d) above, but is duly authorised to offer academic and research programmes at the undergraduate or higher levels, within and outside its home jurisdiction.

f) ‘Foreign Higher Educational Institutions’ (FHEI) shall include both Foreign Universities and Foreign Educational Institutions.

What are the criteria for setting up in India?

An FHEI desirous of setting up in India must satisfy the following:

• Approval of UGC should be obtained.
• If the applicant is from a foreign University, it should have secured a position within the top 500 of overall/subject-wise global rankings, as decided by the UGC from time to time.
• In the case of a foreign educational institution, the applicant should be a reputed institution in its home jurisdiction.

What is the procedure for seeking approval from UGC?

Admission and Fee structure

• The campus of FHEI may evolve its admission process and criteria to admit domestic and foreign students.
• It shall decide the fee structure, which should be transparent and reasonable.
• The FHEI shall make available the prospectus on its website at least 60 days before the commencement of admissions, including fee structure, refund policy, number of seats in a programme, eligibility qualifications and admission process.
• Based on an evaluation process, full or partial need-based scholarships may be provided by the FHEI from funds such as endowment funds, alumni donations, tuition revenues and other sources.

Are there any restrictions on the appointment of faculty and staff?

It is proposed to grant autonomy to FHEI to recruit faculty and staff from India and abroad. The decision on qualifications, salary structure and other conditions of service for appointing faculty and staff shall be with FHEI. However, the FHEI shall ensure that the qualifications of the faculty appointed shall be at par with the main campus of the country of origin. Further, FHEI shall ensure that the foreign faculty appointed to teach at the Indian campus shall stay at the campus in India for a reasonable period.

Other important pointers:

• The qualifications awarded to the students in the Indian campus shall be recognised and treated as equivalent to the corresponding qualifications awarded by the Foreign Higher Educational Institutions in the main campus located in the country of origin.
• The qualifications awarded under these Regulations shall be equivalent to any corresponding degree awarded by the Indian Higher Educational Institution with the following stipulations:
  (i) there shall be no further requirement of seeking equivalence from any authority; and
  (ii) the degree shall have all benefits, rights, and privileges as obtained in the case of a degree awarded by an Indian Higher Educational Institution ordinarily.
• The Foreign Higher Educational Institution shall not discontinue any course or programme or close the campus without the Commission’s prior approval.
• Cross-border movement of funds and maintenance of Foreign Currency Accounts, mode of payments, remittance, repatriation and sale of proceeds, if any, shall be as per the Foreign Exchange Management Act (FEMA) 1999 and its Rules i.e. the exchange control regulations in India.
• The FHEI shall be required to maintain books of accounts and shall submit an audit report annually to the UGC.
• Non-compliance of the Regulations shall invite penal consequences.

BDO comments

In line with its vision to be an education hub, the Government of India has taken a step in the right direction.

While the final Regulations are awaited, an FHEI apart from complying with these Regulations should also evaluate and plan the entry strategy in India from a tax and regulatory efficiency perspective, which could inter-alia include:

• The legal mode in which the campus shall be set up – private limited company, limited liability partnership, branch of the parent entity.
• Any joint venture arrangements in India with third parties for setting up the campus.
• Modes of funding the Indian entity – Equity, debt, etc.

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