By Sunita Kambhampati

Since Narendra Modi came into power, there has been a push for skills-driven initiatives such as Make in India, Digital India, and Smart Cities. For India to be successful in these campaigns, it is necessary to have workers who can effectively execute skill-intensive projects. As seen with many other developing countries, India experiences “brain drain”, with some of its brightest talent going to developed countries in search of quality education, higher paying jobs, and generally more opportunities. How does India keep this talent in the country? While not a comprehensive answer for this skills gap and brain drain, reforming the regulatory system for higher education and opening up the country to foreign educational institutions (FEIs) could provide Indian students good education options at home and spur Indian universities to improve the quality of their education. It could also attract more American students to go to India for school, which would deepen the relationship between the United States and India.

The U.S.-India relationship has evolved to a strong strategic partnership. Reform and collaboration in the education sector is another avenue where the two countries can strengthen that partnership and help India create a strong, skilled workforce.

Increasingly, there is a greater flow of Indian students to the United States compared to American students studying in India. During the 2012-2013 school year, 96,754 Indian students were studying in the United States compared to the 4,377 American students studying in India. The leading destinations for American students studying abroad continue to be developed nations such as the United Kingdom. The lack of U.S. university interest in establishing a foreign campus may also be the reason for the large discrepancy in student flow between the two countries. In 2013, there were at least 52 American universities operating 83 campuses abroad in 37 countries and many more partnerships and student exchange programs are in place. A heavily regulated, convoluted education regulatory system is one of the reasons for the lack of foreign investment in India. The government should push through legislation that seeks to cut through the regulatory obstacles and incentivize FEIs to come to India to jumpstart this sector.

The Foreign Education Providers Bill in 2010 and 2013 sought to ease current restrictions in place for FEIs. However, the bill has been stagnant in parliament for a long time due to resistance from left-wing parties who are concerned about the “commercialization” of education and Indian universities who are worried about facing stiff competition for faculty and students.

A breakthrough did occur in 2013, when the University Grants Commission and the Ministry of Human Resources and Development (HRD) issued an executive order that allowed foreign universities to set up campuses in India as non-profit entities. The executive order has its limitations, though. While trying to attract investment in the education sector without passing actual legislation, the order also includes several stipulations that do not allow it to be as effective as possible:

• Only institutions ranked among the top 400 globally, based on the Times Higher Education, Quacquarelli Symonds, and Academic Ranking of World Universities databases, would be allowed to set up shop in India
• The institution also has to maintain a corpus fund of $3.7 million.
• Students attending FEIs must receive approval for their degree, upon graduating, from the Association of Indian Universities in the event they want to pursue further studies or work for the government in India

Partnerships with Indian universities also come with regulatory burdens. Indian universities fall under different purviews- at the central and state level. Further, different fields of study have different regulatory bodies. Thus, navigating multiple statutory bodies to receive the necessary licensing is a deterrent for FEIs.

While not an all-encompassing solution to addressing India’s skills gap and average higher education sector, reform in this sector is a step towards achieving a skilled workforce. Singapore’s regulatory structure is a notable example of higher education system that India should try to emulate. The Singaporean regulatory system is very structured and regulated. The Higher Education Division oversees nine statutory boards and five universities. The Singaporean government has maintained strong oversight while attracting top foreign universities such as INSEAD and Yale. A clear, more straightforward system in India would make it easier for FEIs to set up campuses.

Opening up the country to FEIs should spur competition amongst local and foreign universities, which has always been the main argument against FEIs. Having American universities in India would also be a way to keep talent in the country and provide students with different, high quality schooling options. Last, while many American universities fall well within the top 400 schools globally, relaxing that condition so that institutions such as community colleges can establish a presence in India would provide students with a cost-effective option of gaining an education.

Ms. Sunita Kambhampati is a researcher with the Wadhwani Chair in U.S.-India Policy Studies at CSIS.