Thinking Beyond Foreign University Branch Campuses: The Foreign Educational Institutions (Regulation of Entry and Operations) Bill, 2010

[This post is co-authored with Vikramaditya S. Khanna]

The Government of India has made higher education reform a critical priority with the HRD Ministry introducing a series of reform-oriented Bills.  Of these, the Foreign Educational Institutions (Regulation of Entry and Operations) Bill, 2010 has garnered a great deal of attention with its focus on regulating foreign involvement in higher education in India. The Bill may play a crucial role in enhancing higher education in India, and merits praise for that, but some further steps are necessary before the maximum benefits of foreign involvement are obtained.  While the range of potential foreign involvement is vast, the Bill appears to focus much of its efforts on a particular kind of foreign involvement – the foreign university branch campus. Although much commentary has focused on specific parts of the Bill, we think it worthwhile to go one step back and ask a few preliminary questions.   Are foreign university branch campuses the best way to meet the objective of enhancing the quality and quantity of higher education in India?  Do branch campuses add substantial value over other modes of foreign involvement?  And more importantly, would top foreign universities be enthusiastic to set up branch campuses and does the 2010 Bill provide the necessary incentives for this?

A number of Government of India reports and studies suggest that foreign involvement can be an important component of the strategy to reform higher education. The potential benefits include increased access, enhanced quality of teaching and research, improved management and governance among others.  The modes of foreign involvement are also quite wide-ranging and include – Indian students receiving education via distant mode, Indian institutions receiving support from foreign universities, joint research centers, exchange programmes, and models involving an award of a joint or dual degree from both the Indian institution and the foreign institution.  Many of these are already being pursued in India in some form under current regulations.  However, the discussion around the 2010 Bill puts greater emphasis on yet another mode – the foreign university branch campus.

The focus on branch campuses raises a number of questions – in particular, would foreign universities really set up branches overseas and even if they would, what benefits would accrue to India?  First, top foreign universities are generally reluctant to set up branch campuses both because setting up many branches might reduce the exclusivity of the foreign university’s “brand” as well as concerns that the foreign university might find it difficult to maintain similar quality at the branch and home campuses.  For example, to maintain similar quality in its branch campus, a foreign university may need to send some of its faculty to that branch. This creates a human resource problem for the university because the university still needs its faculty to be at its home institution (to teach and engage in research and so forth), but it would also want some of that faculty at the branch to ensure its reputation.  When this human resource constraint is combined with the other concerns noted above and the costs of starting a branch campus, one expects that many top foreign universities would be very cautious in setting up branch campuses.  Indeed, there is considerable evidence of this reticence in that top foreign universities have few branches even in their own home countries.  Moreover, even where foreign collaborations have arisen outside of India they have often required steps to reduce both the financial and human resources costs to the top foreign university.  For example, Yale University and the National University of Singapore (NUS) have recently agreed to establish a liberal arts college in Singapore.  However, the cost of establishing and maintaining this college would be borne by NUS and the Government of Singapore with no financial cost to Yale.  Moreover, this college would award its degrees through NUS and not Yale (thereby easing the human resources and “brand” concerns).  Even with these cost reductions, this collaboration is not a branch campus (as Yale is not awarding the degrees). This underscores just how large the costs are to top foreign universities of foreign branches.  Given these costs, the 2010 Bill would probably need to provide strong incentives to top foreign universities to set up branches.  In fact, very strong incentives are often at play in those countries where branches have been set up. The 2010 Bill, however, does not provide these kinds of affirmative incentives.

More importantly, we need to ask whether branch campuses add much more value than other forms of foreign involvement for Indian higher education?  In fact, most of the advantages of a branch campus are available through other methods of foreign collaboration. For example, research can be enhanced via joint research centers and educational facilities can be expanded with foreign support to local Institutions (e.g., some IIMs and IITs early in their growth).  To the extent that branch campuses have some marginal benefits over other types of collaborations it may simply be the level of commitment of the foreign university.  But this commitment is what imposes the human resource constraint on the foreign university and makes it less likely that branches will be set up.  Viewed in this manner, the foreign university branch campus will only sometimes be desirable for both sides and even then is likely to require affirmative incentives for the foreign university.

But the low likelihood of top foreign university branch campuses does not mean that other forms of foreign involvement cannot be successful. In fact, in most countries top educational institutions are rarely built as foreign university branch campuses, but rather as institutions that develop organically. There is often explicit support from foreign universities to enhance higher education which does not require branch campuses per se. The Indian School of Business is an example of an Indian institution that developed with the support of foreign partner institutions that provided visiting faculty and assistance in developing curriculum.  Recently, the Rajya Sabha passed the Nalanda University Bill, 2010. This institution may receive substantial funding support from overseas and within India and is being directed by world renowned academics including Amartya Sen.

Further, there are other models that can enhance the quality of higher education, which require less institutional coordination and less up-front investment.  Indeed, foreign universities are often interested in collaborations that may lead to important and path-breaking research.  Research endeavors do not require branch campuses, but rather joint or collaborative research centers. The Abdul Latif Jameel Poverty Action Lab (J-PAL) is a good example of how top notch research can be conducted without a foreign university branch campus.  This is a network of 44 affiliated professors with its headquarters at the Economics Department of the Massachusetts Institute of Technology (MIT) but its South Asia office is based at the Institute for Financial Management and Research (IFMR) in Chennai. Working with government agencies, non-profit organizations, and leading corporations in India, this initiative has conducted studies relating to health, education, indoor air pollution, government corruption, and the optimal use of micro-credit. There is a strong case for encouraging such collaborations, but the 2010 Bill does little to encourage them over the status quo.

As it stands, there are two broad ways of involving foreign educational institutions – branch campuses on the one hand, and the more indirect modes on the other. The 2010 Bill makes some desirable first steps but places undue emphasis on branch campuses and provides little, if any, incentives for other kinds of foreign collaboration. Moreover, many of the benefits of branch campuses can be obtained through other forms of foreign collaboration and those other forms are less costly and more appealing to foreign universities. This, of course, does not mean that branch campuses are never helpful. They can be helpful at times, as a part of a broad mix of foreign collaboration options, but one should be pragmatic about the likelihood of a branch campus eventuating and the additional benefits it may provide over other forms of collaboration.