While presenting the Union Budget for FY (Financial Year) 2022-23, the Hon’ble Finance Minister proposed to allow the entry of world-class foreign universities and institutions in GIFT-IFSC (‘Gujarat International Finance Tec-City – International Financial Services Center), to offer courses in subjects connected to financial management, fintech, science, technology, engineering, and mathematics, to facilitate the availability of skilled human capital for financial services and technology.
Various foreign universities were waiting with bated breath for the Indian Government to formalise guidelines so that they could set up campuses in the country.
In line with the Budget Announcement, the Government has notified its first policy for foreign universities to set up shops in India. The IFSC Authority (‘Authority’) has come out with a formal set of regulations vide notification no. IFSCA/2022-23/GN/REG027 dated 11th October 2022 paving the way for setting up of International Branch Campus (IBC) and Offshore Education Centers (OEC) by Foreign Universities and Foreign Educational Institutions respectively.
Who are the regulations applicable to?
- An International Branch Campus (IBC) of a Foreign University; or
- An Offshore Education Centre (OEC) of a Foreign Educational Institution
seeking registration under the regulations.
A Foreign University means a university established outside of India which is duly accredited to award a degree for courses including research programmes in the permissible subject areas, within and outside its home jurisdiction.
A Foreign Educational Institution means an education institution outside of India, which is not a university, and is authorised to offer courses including research programmes in the permissible subject areas, within and outside its home jurisdiction.
Procedural Aspects: Registration
- In case the applicant is a Foreign University, it should have secured a position within Top 500 in global overall ranking and / or subject ranking in the latest QS World Universities ranking.
- If the applicant is a Foreign Educational Institution, it should be a reputed institution in its home jurisdiction
- The applicant is to satisfy the IFSC Authority in terms of its financial capability to set-up the proposed activities and necessary infrastructure.
- The application for registration must be accompanied by a resolution of Trustees or other Governing Body to establish IBC or OEC, details of infrastructure facilities proposed, details of course curriculum, undertakings that degrees/diplomas/certificates issued will be recognised in the home jurisdiction of IBC/OEC, quality assurance audit reports etc.
- Following the receipt of application, it’ll be referred to the Committee of Experts for appraisal and recommendations. An initial timeline of one hundred and eighty (180) days will be granted to the applicant to set-up the necessary infrastructure, which with sufficient reasons may be further extended by another ninety (90) days.
- The registration granted shall be valid for a period of five (5) years and renewable for a further period of five years.
Courses and Recognition
- Acceptable courses including research programmes in Financial Management, FinTech, Science, Technology, Engineering and Mathematics shall be permitted in GIFT IFSC;
- The Regulations provide for Course recognition by IBC or OEC subject to the condition that it’ll be identical in all due respects with respect to curriculum, award of degrees etc. provided by the Foreign University or Foreign educational institution in their respective home country. Any modifications to the curriculum need to be approved by the Board or Academic council of the aforesaid university or institution as the case may and intimated to the Authority from time to time.
- The IBC or OEC will not act as a representative office for undertaking promotional activities for the Foreign University of Educational Institution as the case may be;
- IBC or OEC to use the same or similar name of the Applicant
- Policies and mechanisms to be established by IBC or OEC for student and faculty selection, student complaint and grievance amends, to be in line with Applicant’s policies
- IBC or OEC will undergo a quality assurance audit and submit a report to the Authority, at the time of renewal of registration
- IBC or OEC to adhere to dispute resolution policy as specified by the Authority;
- Authority will have the right to inspect the IBC or OEC, at any time including the post-registration approval period
- IBC or OEC will ensure that none of the courses are discontinued, suspended, or closed without the prior written approval of the Authority and without making alternative arrangements in place by the Foreign University or Educational Institution as the case may be, to safeguard the interest of students.
- Free Repatriation of profits from IBC or OEC to Foreign Universities or Educational Institutions, as the case may be
Operation and Compliance by IBC and/or OEC
- Being in IFSC, all transactions will be undertaken by IBC or OEC in freely convertible foreign currency, however administrative expenses may be incurred in INR by maintaining a Special Non-Resident Rupee Account;
- The books of accounts by the IBC or OEC will be maintained in foreign currency;
- IBC or OEC will submit an annual report in the format specified by the Authority giving details of the number of students admitted, programmes conducted, total fee collected, amount repatriated to Parent Entity etc.
Deposit and Fee
The IBC or OEC responsible for undertaking permissible activities will be required to pay the following fees to the Authority
|Application Fee||One Time||US $ 1,000|
|Initial Registration Fee||One Time||US $ 25,000|
|Annual Fee||Second Year onwards||US $ 10,000|
|Processing Fee for applications seeking relaxation||—||US $ 10,000|
It is indeed a positive step by the Indian Government in bringing about the eagerly-awaited regulations paving the way for world-class education centers to be set-up in the country. The aforementioned regulations are also a welcome step as they indicate a single window clearance for foreign universities intending to set-up their bases in India. However, on an analysis of the notification, there are still questions that remain unanswered that do require some attention:
- The IFSC framework has not clearly outlined the structure through which IBC or OEC will operate. While the GIFT-IFSC regulations explicitly allow a profit, education within India even in privately-run institutions, is seen as a not-for-profit activity. This is an important consideration to incentivise foreign universities to make an investment to set up a campus in GIFT IFSC
- The framework does not clearly specify the implication of the existing Foreign Contribution Regulation Act (FCRA) which governs the regulation and entry of foreign contributions in nonprofit sector (including educational institutions) in India;
- Currently, Income Tax Rules provide for a 100% tax exemption on IFSC units for a period of 10 years subject to various conditions. However, it needs to be clarified whether such an exemption will be available for the proposed IBC’s or OEC’s to be established. Also whether IBC/OEC will be granted any GST (Goods & Service Tax) exemption.
- It’s not clear whether foreign universities will need to comply with the guidelines of Indian higher education regulatory bodies like the University Grants Commission (UGC).
- Rules regarding the operational mechanisms of IBC or OEC, as to what constitutes their infrastructure, marketing and advertising guidelines, or annual reporting format are yet to be formalised.
- Clarity is required in terms of quality assurance audits of IBC or OEC and its reporting mechanism with the Authority
While the above is an indicative list, it’s expected that the Authority will come up with supporting circulars to remove difficulties on various aspects of the notification.