Foreign universities can ‘repatriate profit’ from campuses in GIFT City: IFSCA regulations

By Sanjay and R. Radhika

NEW DELHI : Foreign universities and institutions that set up their educational campuses in Gujarat International Finance Tec-City (GIFT City), will be allowed to “repatriate profit” – typically raised from students fees and other sources – to their parent entity in another country “without any restrictions”. So far, shifting of funds out of India has not been allowed.

The union government has notified its first policy for foreign universities to set up shops in India but it has come from the International Financial Services Centres Authority (IFSCA) – a central regulator for financial products, services and institutions – based in Gujarat.

On Wednesday, the IFSCA, a statutory body, notified the ‘International Financial Services Centres Authority (Setting up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022’. These will govern the establishment of international branch campuses (IBC) and offshore educational centres (OEC) in GIFT City - International Financial Services Centre (GIFT IFSC) in Gandhinagar, Gujarat. With it, IFSCA aims to make the GIFT IFSC an international educational centre for both Indian and foreign students in specific disciplines. The top higher education regulator, University Grants Commission (UGC) is framing its own regulations.

In addition to allowing foreign universities to move fees collected from Indian students to their parent countries – a radical shift from the stand so far – IFSCA’s regulations provide foreign universities and institutions with several relaxations. The institutions will be allowed to set their own policies on fees, admissions and faculty appointments. Faculty appointments are regulated for Indian institutions while many public universities have lost the autonomy they had in admission matters.

Foreign university conditions

The IFSCA has set a handful of conditions for foreign institutions interested in the project.

Those looking to establish IBCs should have placed in the top 500 ranks in global overall and/or subject ranking in the latest QS World Universities ranking . For OECs, the university should be a “reputed institution” in its home jurisdiction. The courses they offer must have the “same recognition and status as if they were conducted by the parent entity in its home jurisdiction”, says the notification.

Foreign universities and educational institutions have to have the financial capability to set up and run their GIFT IFSC activities; they must also have suitable infrastructure and facilities.

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These educational campuses cannot promote their programmes outside GIFT IFSC and IFSCA will have the right to inspect the IBC or OEC for quality and suitability of infrastructure.

The institutions will also need “prior written approval of the authority” – IFSCA – to discontinue any programme and the “parent entity” will have to provide alternatives to affected students, the regulations say.

“These campuses will come up in GIFT IFSC or Gift City, Gandhinagar only. Suppose, If you go to pursue some foreign studies in London, you will get a two years working visa there. Same facilities or privileges you will get if you pursue your higher education in GIFT IFSC,” said IFSCA chairman Injeti Srinivas.

Violations of the regulations may invite penalties including suspension, cancellation of registration and/or imposition of penalty. Registration will be granted for a period of five years but will be extendable.

While allowing the universities to move “profits” out of India, the IFSCA will charge a range of fees from them. An IBC or OEC will pay the IFSCA Application Fee: USD 1,000 as a one-time application fee; USD 25,000 as a one-time initial registration fee; USD 10,000 as an annual fee every year from the second year onward; and USD10,000 for processing an application seeking relaxation. Based on October 14 exchange rates, USD 10,000 translated into Rs 8.2 lakh per year.

GIFT-IFSC and Indian regulators

The IFSCA regulations do not have any provisions to ask foreign universities to comply with guidelines of Indian higher education regulatory bodies like the University Grants Commission (UGC) or the All India Council of Technical Education (AICTE) among others.

It is also not clear whether these educational campuses will be required to comply with Indian laws against sexual harassment or for the protection of marginalised groups – Scheduled Castes, Scheduled Tribes, and disabled students.

It is also not clear whether the UGC’s policies on ragging will apply. Questions were emailed to UGC chairman, M Jagadesh Kumar, but till the time of publication, he had not responded. This copy will be updated if and when he does. Mriganka Sekhar Sarma, deputy secretary, UGC, directing the reporters to the chairman, added that “the regulations on the campuses of foreign universities are yet to be notified”.

Also, while the GIFT-IFSC regulations explicitly allow a profit, within India, education in even privately-run institutions is seen as a not-for-profit activity. This stand was reiterated most recently in the National Education Policy (NEP) 2020.

Subjects and courses

The foreign universities that will set up campuses in GIFT City or GIFT IFSC will offer courses and research programmes in financial management, fintech, science, technology, engineering and mathematics.

The IFSCA regulations aim to encourage research in banking, insurance, capital market, funds management, finTech, longevity finance, sustainable finance, and quantum computing in order “to provide high-end human resources in finance, technology and related fields”.

The foreign universities and institutions will be allowed to alter their approved curriculum by first informing IFSCA in case “the same is necessitated due to the change effected in the course offered by the parent entity”.

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In her Union Budget 2022 speech, union finance minister Nirmala Sitharaman announced that the “world-class foreign universities and institutions” offering courses in GIFT City will be “free from domestic regulations”. On June 30, 2022, IFSCA sought comments and suggestions from the public on the regulations.

“There was no committee formed for the drafting of the regulations and IFSCA members themselves have come up with these regulations,” said Srinivas.