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September 24, 2010

FDI In Education

India’s education sector has become a prized one with the UPA mulling over issues like opening up the sector for foreign participation. Moreover the foreign education Institutions Bill which was earlier withdrawn after strong protests from the left parties now finally sees the light of day- however several universities have indicated that they will not be setting campuses in India.

But the ministry says that it is working on several ways to increase FDI participation, which will not just be restricted to setting a base. One must understand that “FDI encompasses a whole range of initiatives in the education sector- from JVs, twinning arrangements, skill developments, and universities.


1. FDI would solve problem of lack of funding- resulting in expansion.

2. Quality education would prevent outflow of Indian students and $4 billion spent by them- thus less expensive and retention of domestic talent achieved.

3. Increased competition leading to - international competitiveness, change of curricula, increased responsiveness to students needs, technological Innovation, improved infrastructure.

4. Degrees offered to be internationally comparable and acceptable.

5. Creation of new institutions to generate employment.


1. Money power of foreign institutions would attract best teachers and students from local institutions.

2. Main motive is profit making.

3. Since competition entails cost reduction, infrastructure, would find least investment and also teachers and non-teaching staff being appointed without necessary qualifications.

4. These institutes charge high fees resulting in local private institutions raising their fee to establish competitiveness– end burned on students

5. These institutes would tend to repatriate as much profit as possible back home - accelerating outflow of foreign exchange.

Looking at both the pros & cons its clear that if implementation as well as elimination of the drawbacks is achieved FDI can work wonders. One must understand that the industry is presently facing a dearth of skilled manpower that may hit its competitiveness. Opening up the sector seems like the only way out.

One must understand that FDI is not just restricted to universities. Its slated that primary and secondary education will attract that largest FDI. At the end of the day “FDI is not about universities alone. It’s about empowerment of 220 million children who will not be going to universities,”

“FDI in education sector is a channel of international benchmarking and should be welcome. But it should be monitored and regulated well, keeping in mind the national interest.”

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