Regulatory Alert

BACKGROUND

With an aim to strengthen Indian Education, the University Grants Commission (UGC¹  or the Commission) under the recommendations of the National Education Policy (NEP) 2020 has initiated several measures for the internalisation of higher education in India. In January 2023, UGC issued draft regulations²  catering for the regulatory framework for Foreign Educational Institutions /Foreign Universities to set up and operate in India. The regulations were open for recommendations from stakeholders. After considering the public recommendations, UGC has notified the final regulations for setting up and operation of campuses of Foreign Higher Educational Institutions (FHEIs) in India³.

We at BDO in India, have hereunder analysed and summarised key changes made in the said notification as compared to the draft regulations⁴. 

Changes in Definitions

a) Campus - It shall now also include a campus set up in India by a FHEI to conduct certificates, diplomas, and degrees.
b) Foreign Higher Educational Institutions - It shall now include both a Foreign University or a Foreign Educational Institution;
c) Programme - The term ‘programme’ has now been defined which would mean a study programme leading to the award of a certificate, diploma or degree by a campus of a Foreign Higher Educational Institution approved under these regulations.

Changes in Eligibility

Where two or more than two FHEIs intend to collaborate to establish campuses in India, each FHEI should meet the eligibility criteria. 

Changes in Procedure

a) Setting up of more than one campus by FHEI
In case the FHEI intends to set up more than one campus, it shall be required to make a separate application to the UGC as per the procedure laid down in these regulations.
b) Revision in time-limits
The final regulations have extended the time limit for providing recommendations by the standing committee to UGC and approval by UGC to FHEI, from the existing 45 days to 60 days.
c) Period of Approval
As per the draft Regulations, the approval once granted was valid for a period of ten years and the FHEI can apply for renewal of the permission by making an application one year before the expiry of ten years. The renewal so granted would be valid for another ten years.
Further, FHEI was required to pay the Commission an Annual Fee (second year onwards) as decided by the Commission from time to time.

However, under the notified regulations, the above conditions have been removed.

Changes in Fee Structure

As per the notified regulations, the FHEIs may give tuition fee concessions to students who are Indian citizens.

Changes in Staff related provisions

FHEI shall ensure that international faculty appointed to teach at the Indian Campus stays in India for at least a semester.

Additional General Conditions

(a) Lectures in online mode may be allowed only to the extent of ten per cent of the programme requirements
(b) FHEI shall seek prior approval from the commission before starting any new programme through the UGC portal
(c) FHEI shall ensure that the Foreign Contribution (Regulation) Act, 2010 (42 of 2010) and the rules and regulations are complied with where there is a receipt or utilisation of foreign contribution by any person
(d) Where FHEI desires to receive or utilise donations from any foreign sources, it has to obtain prior permission from the Central Government and compliance with the provisions of the Foreign Contribution (Regulation) Act, 2010 (42 of 2010)
(e) FHEI may enter into a joint venture with Indian higher educational institutions or Indian companies.

BDO IN INDIA COMMENTS

The final regulations are more or less in line with the draft regulations except that the draft regulations did not mention anything about joint venture arrangements between one or two FHEIs. Further, as per notified regulations, it seems that the approval would not be for any fixed period rather it may vary from case to case subject to certain conditions. 
It is pertinent to note that apart from complying with these regulations, FHEIs should also evaluate and plan the entry strategy in India from a tax and regulatory efficiency perspective, which could inter-alia include-
-    Legal mode in which campus can be set up in India (i.e. private limited company or Public-private partnership, Limited Liability Partnership or Trust);
-    And the mode of funding i.e. equity or debt.
Further, considering that the final regulations are notified with certain changes, one may expect additional clarifications in due course.
 

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¹ UGC is an Indian authority which regulates educational universities in India.
² University Grants Commission (Setting up and Operation of Campuses of Foreign Higher Educational Institutions in India) Regulations, 2023
³ University Grants Commission (Setting up and Operation of Campuses of Foreign Higher Educational Institutions in India) Regulations, 2023 dated 7 November 2023
⁴ To read our detailed analysis on draft regulations please click here