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Education Import Bill of India and New Education Policy

Admin September 23, 2020

During the year 2000, about 67,000 Indian students studied abroad and during the year 2019 more than 750,000 Indian students studied abroad. — Alok Singh


The import bill is the value of money that flows out of the country to receive a service or goods. In the case of the education import bill, it is the value of money which is paid to other countries by us to receive the education-related services. The new education policy is about five hundred page document. This document is an independent approach to revitalize the whole education system of India. But no section or paragraph or sentence or word in the document explicitly discusses the need to curb education import bill. The interpretation of this policy document will become more serious if it is visualized with the foreseen challenge of the rising education bill. Education may become in the near future the biggest contributor to import bill, even surpassing the oil import bill. During the year 2000, about 67,000 Indian students studied abroad and during the year 2019 more than 750,000 Indian students studied abroad.

The incentive to domestic academics should be fair enough to compete with the incentives offered by the other top-ranking world universities. The incentive and the agility of the employment contracts of Indian higher education services should motivate the Indian origin academicians working for foreign universities abroad to come to India rather than sending an invitation to foreign universities to open campuses in India.

The education import bill is thriving on a green pasture provided by the policymakers and the prevailing current state of the Indian education system.  Academic institutes have their own challenges and the students have their own constraints. A private Indian educational system that aims to be the rank holder in the world university ranking has a tough job as far as financial autonomy and sustainability are concerned. During the pandemic, the capability of the academics as well as of the industry has surprised many within and outside the country. The domestic academia-industry collaboration is yet to see its best.  If these private institutions aim to match the standards of education delivery and retaining faculties of globally best as benchmarked internationally, then it has a financial cost to bear. If these private institutes increase the fee then it risks the opportunity to attract a student for admission in their institute. The student perceives foreign education to be a much much better choice vis-a-vis the domestic institutions if the expense of education is not a significant differentiating factor. If the domestic institute and the foreign institute are providing the same level of output at marginally different cost then the domestic institutes lose the student to its foreign competitors. The other factor is of time. The number of preparatory years spent to get admission in a domestic institute of repute is also a driver of the domestic students to study abroad. This happens because more and more students are competing for the limited number of admission offers available at a reputed institute. Every year the ratio of the number of admissions offers versus the number of applicants keeps declining. It means that getting into a reputed institute in India is highly competitive. 

The policymakers should come up with a framework to incentivize the faculty as well as the students to work and study in domestic institutions. The disadvantages arising out of the education import bill can be countered byways to generate an education export bill.  The education export bill will rise if paths are created to incentivize and flourish the domestic academic institutions with a respectful global position in the ranking of the world university. During the initial years, the education import bill will be rising and the domestic institutions will be absorbing resources but in a decade or so the education import bill will be declining and the domestic institutions will become sustainable. How it is possible needs to be explored. It also means that the financial investments to incentivize the domestic academy now be seen as a checkmate to repercussions arising out of balance of trade due to the education import bill in the near future. 

The opportunity to foreign universities t open a campus in India won’t be off too much help to curb the education import bill. In fact, it may kill the domestic institutes which are struggling to have a foothold and are in the process of earning global credibility in their respective faculty. The foreign universities having campuses in India will also tamper the low budget students who will be their new customers. 

New education policy is a good start and the goodness should be in favor of the domestic institutions and curbing the education import bill should always be a factor. It will be mistaken to believe that a foreign university operating from an Indian campus will help save the living expense of an Indian student who studies abroad. They will create a new target customer for whom tuition fee to a foreign university and living expense in India is affordable but tuition and living expense both at the same time outside India to a foreign university is not affordable.  It will accelerate the education import bill as Indian students studying in India will also add to their income which they will send to their home country. Approximately 28 percent of the Indian population is below the age of 14 years while only 17 percent of China is below the age of 14. India is a new business generating land for foreign universities and their countries. One foreign company is sufficient to kill the whole traditional business. 

The policy draft allows the top 200 universities to open a campus in India -200 is a big number- and it is risky for the education import bill. The multiplier effect of opening a campus can be in generating businesses for construction, generating local jobs for staff, and many more. The multiplier effect of opening a campus can be accelerated by new domestic institutions as well. Establishing an institution is different from installing a manufacturing plant or launching an e-commerce platform. The dismantling of a manufacturing plant or closing an e-commerce platform is also relatively easier. Education is about nation-building. We have seen how mobile phone services have reached the rural household even before the arrival of electricity in their houses. We expect such a transition in the education sector. We have to prepare to bring our bright academicians home rather than the whole university owned by a foreigner. Anyway, academics are an important service and we need to be self-reliant in this sector. 

Alok Singh is fellow of Indian Institute of Management Indore and currently is  faculty of general management at NICMAR.

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