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National Consultation Services Trade and Domestic Regulation in India New Delhi, Thursday, November 29, 2007. Pritam Banerjee George Mason University. Debashis Chakraborty Indian Institute of Foreign Trade. Dipankar Sengupta University of Jammu.
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National Consultation Services Trade and Domestic Regulation in India New Delhi, Thursday, November 29, 2007 Pritam Banerjee George Mason University Debashis Chakraborty Indian Institute of Foreign Trade Dipankar Sengupta University of Jammu Integrating India’s Service Sector with the Global Economy-Case Study-Higher Education
Why Higher Education? India’s boom in service exports has been almost entirely attributable to IT and ITES services The nature of these services particularly in the IT segment is skill-intensive and requires constant knowledge upgradation given the swiftness of technological obsolescence The most important input - skilled manpower if this sector is to keep on maintaining its current rates of growth ever increasing flows of skilled manpower must be forthcoming every batch of these skilled entrants must be more skilled than the previous batch- they must be trained in the latest technology.
Dichotomy of India's IT Sector The paradox of India’s IT and ITES boom- it has grown away from the heavy hand of the government to carve a niche in most dynamic and knowledge intensive sector But is almost entirely dependent on State-owned/controlled educational institutions often characterized by institutional and academic inflexibility. India’s IT and ITES sector have taken advantage of the fact that their services use skilled human capital most intensively, a factor long available in India in quantities that have till recently greatly exceeded demand.
Higher Education in India: Background The Indian higher education system has been growing substantially post-Independence High level of investment in higher education was a political-economic decision designed to create a self-reliant economy in terms of human capital requirements. The numbers of universities in India increased from 28 in 1950 to 348 in 2005 Colleges from 578 in 1950 to 17625 in 2005 The total enrolment increased from around 200 000 in 1950 to about 10.50 million in 2005 Colleges that are affiliated to 348 universities constitute the bulk of the higher education system in India, which contribute around 90 percent of the total enrolment. Today, India offers the third largest higher education system in the world in terms of enrolment ranked behind China and USA
Evolution of Higher Education in India Aggarwal (2006) -3 phases in the development of Higher Education Phase 1 (1947-80)- State-led expansion of public university system as well as public-private aliances via Grants-in-aid Phase 2 (1980-2000)-emergence of private institions affiliated to State Institutions- State's role declines relatively-fuelled by middle-class demand Phase 3 (2000-)professional courses geared to the IT and ITES boom Also witnesses the entry of foreign players in collaboration with Indian partners, twinning programmes
The Nature of this boom Development of Professional Education in India ( Raychaudhari and De (2007),)
Development of Professional Education in India ( Raychaudhari and De (2007),)
Higher Education and the Economy The IT and ITES sectors are skilled-manpower intensive As the economy “climbs” the technology ladder, other industries will require increasingly skilled manpower investors.
India will be producing about 25.2 million students with tertiary education assuming 5% p.a. growth in capacity for this sector NASSCOM-McKinsey report of 2005, India would need about 2.2 million new workers in the IT and ITES sector alone by 2010- 3 million by 2016 12% of India’s new tertiary level graduates could be employed by the IT and ITES sector alone growth of around 7-8% p.a. then requirement for skills by other sectors of the economy, including agro-processing and retail would also increase substantially.
25.2 million might not be enough -around 35 million by 2016 India’s competitive trajectory and economic expansion (in terms of both domestic and external sector) may be able to efficiently absorb that skilled output Would mean the creation of approximately 120 million new middle-class consumers and investors
Implications Accentuation of Regional Inequality and Growth What figures do not reveal-The poor quality of education imparted in many of the poorer states
Three Challenges of General Tertiary Education gradual decline of demand for general tertiary education (pure sciences, social sciences and liberal arts) and a preference for professional or applied courses that have better job prospects. Number of colleges offering general education went up by 79% between 1992 and 2002-Number of institutes offering technical education increased by 172% in 1992-2002 Quality of most general tertiary education is extremely poor, further diluting the importance and demand for such education Incentive Structure- subsidized fees and the subsidized boarding and lodging facilities used students who use these facilities while pursuing other career options.
Importance of General Tertiary Education and Role of the Private Sector strong tertiary general education infrastructure provides the intellectual diversity that creates competitive managers, entrepreneurs, administrators and social sector workers. The need for contextual, information intensive skills imparted by such disciplines is an asset for the business processing profession, hospitality and the creative arts. Industry bodies- CII recognized the shortage of such skills relative to the projected requirements of India’s growth. Enormous amount of effort is required to upgrade quality, link it to job strategies and practical applicable skills and invest in infrastructure A big part of that strategy has to be incentives to attract private investment, including foreign direct investment and participation into this sector
Strong tradition of public-private collaboration in the general tertiary education sector, especially at the undergraduate level Private colleges that are affiliated to public universities are common in India and many such private colleges receive up to 80% of their funding from public resources with student fees and other endowments making up the rest
Opportunities for Foreign Players India's import-$ 291 mill. (2005) Asian Imports of Education (Mode 2) from OECD economies (Bohm et al)
Market Access and Nature of Foreign Presence Market access in education services in the Asia-Pacific region
Nature of Foreign Presence Mode 3 presence there approximately 131 Indian institutions collaborating with foreign institutions 107 providing vocational courses, 19 technical courses and only 5 for general education. Some of the foreign institutions have been operating in India before the guidelines for foreign educational institutions came into effect-did not take permissions accordance with the law of the land nor registered with concerned governments Such unregulated presence can present potential problems for both customers as well as well reputed education service exporters as students receive poor quality education which in turn affects the reputation of quality education providers who have not yet entered the field Despite the substantial liberalization of the higher education sector by India, partner WTO countries continue to seek greater market access India has received requests (for opening up of education services from Australia, Brazil, Japan, New Zealand, Norway, Singapore, USA. These requests focus adult education, and other education services that remain closed.
Domestic Regulations governing Foreign Players AICTE The fee to be charged and the intake in each course to be offered by a Foreign University/ Institution leading to a degree or diploma shall be as prescribed by the AICTE, giving due hearing to the concerned Foreign University/Institution The Foreign University / Institution shall be bound by the advice of AICTE with regard to admissions, entry qualifications and the conduct of courses / programs in technical education, as may be communicated to them from time to time
Potential Impact Creation of a market for lemons institutional inflexibility Potential Barrier of Entry
Regulations that affect Private Domestic and Foreign Players Lack of Uniform Guidelines as Education is a State level subject SC judgements though give considerable powers to the UGC Private Universities Establishment and Regulation Bill (2005) Allowed to lapse- lack of political support
Private Universities Establishment and Regulation Bill (2005) Key provisons Private universities will have to maintain a permanent endowment fund of Rs. 100 million. No authority to affiliate other colleges or institutions Only 1 campus Within three years of establishment the private university will have to get accreditation for the University Grants Commission (UGC) and renew it every five years One representative each of the state and federal governments and one academician will be nominated to the governing body of this university by the UGC All officer and employees of the University shall be deemed to be public servants
Role of UGC Jurisdiction of the private university is restricted to the state where it is established. Special permission is to be granted in rare cases for to open out-of-state campuses or study centres. Prior permission is required for from UGC for starting any diploma or degree courses. This requires the submission of curriculum, information on teaching methods and processes and examination methods and processes. Admission procedure and fee fixation shall be according to the norms of UGC and those of other applicable statutory bodies such as AICTE
Summing up-Regulatory barriers facing foreign higher education in India
To Sum Up.. India’s IT and ITES sector caters to a clientele that is not only technologically the most advanced, but also the one where technical change is the most rapid. Demand of skilled personnel increase, but these personnel must be trained in skills more advanced than preceding batces. shortages of skilled personnel at various levels.
` The regulatory regime must ensure the following The sector must be open to players from Developed Countries so as to allow advanced educational incorporating inputs that embody the latest advances in various fields and disciplines There must be sufficient institutional flexibility for upgradation of courses as well as introduction of new courses to take care of niche and new areas The institutes must be free to generate sufficient resources so as to ensure that resource persons engaged in human skill formation and training are adequately compensated so that the quality of instructors remain high.
