Rupa Chanda of IIM Bangalore has been studying the implications of GATS for higher education in India. She made a comprehensive presentation on GATS, Higher Education Services and India (ppt) at a Higher Education Summit, organized by FICCI in New Delhi on December 2, 2004.. Here're some bits from her presentation - her entire presentation is worth reading.
GATS defines services trade as occurring via four modes of supply all of which are relevant to education
- Mode 1: cross border delivery: delivery of education services via internet (distance education, tele-education, education testing services)
- Mode 2: consumption abroad: movement of students from one country to another for higher education (foreign students in US universities)
- Mode 3: commercial presence: establishment of local branch campuses or subsidiaries by foreign universities in other countries, course offerings by domestic private colleges leading to degrees at foreign universities, twinning arrangements, franchising
- Mode 4: movement of natural persons: temporary movement of teachers, lecturers, and education personnel to provide education services overseas
The main subsectors under the GATS in the area of education are
- Primary education
- Secondary education
- Higher education
- Post secondary technical and vocational, university degree or equivalent
- Adult education
- Other education services
India has received requests (for opening up of services) from several countries (Australia, Brazil, Japan, New Zealand, Norway, Singapore, USA) in education services in the new round of service trade negotiations launched in January 2000 (GATS 2000 round), which mostly focus on higher education, adult education, and other education services. USA also specified training services and educational testing services and Brazil has also requested in primary and secondary education services, while there were no requests from the European Community. All requests to India are for full market access and national treatment commitments in modes 1, 2 and 3. India has not made any offer in education services in the GATS 2000 round due to sensitive public good nature.
It is understandable for the U.S. to want opening up of training and educational testing services, but quite interesting to note that Brazil has requested opening up of primary and secondary education services. I wonder what prompted Brazil to do so.
Rupa Chanda provides a list of India's interests in import and export of educational services.
India's import interests in education services
- Mode 2: Indian students studying in foreign universities (US, UK, Australia)
- Over 40,000 studying in US courses (This is more like 75,000 added per year)
- Several thousand in Europe
- Mode 3: foreign institutions entering India through twinning and franchise arrangements
- Indian students getting foreign degrees, doing professional courses at local branch campuses of foreign institutions in India
- UK-based Wigan and Leigh College
- Indian School of Business tieup with Kellogg, Wharton, and London Business School
- Western International University,Arizona
- NIIT tieup with ITT Educational Services, USA
- Tata Infotech tieup with Hertfordshire University, UK
- Mode 1: Prospects for distance education and degrees from foreign academic institutions
- Mode 4: Foreign faculty and scholars teaching in India
India's export interests in education services
- Mode 1: Prospects for tele-education in management and executive training.
- Experience with distance learning, use of new technologies (IGNOU)
- Education process outsourcing with remote tutoring from India (along the lines of efforts by Career Launcher, Educomp Datamatics etc.)
- Mode 2: Students from developing countries studying in Indian engineering and medical colleges.
- Around 5,500 students from neighbouring developing countries (2001)
- Exchange programmes and twinning arrangements
- Mode 3: Setting up of overseas campuses, franchising by Indian institutions
- MAHE, BITS, Central Institute of English and Foreign Languages
- Over 100 CBSE schools abroad, catering to diaspora
- Mode 4: Indian teachers, lecturers teaching abroad in Middle East, Africa, researchers/scholars on visiting arrangements abroad
- Some 10,000 secondary school teachers overseas
- Recruitment of Indian teachers in Maths, Science, English
- Potential as a regional hub for exporting higher education services
Writing in The Financial Express (December 14, 2004), Rupa Chanda says
There’s a widespread perception that from January 1, 2005, India is obliged under the WTO to open up its higher education sector to foreign providers and to end public subsidies, with adverse consequences for the quality and affordability of higher education.
But how genuine and well-founded are these concerns? What does GATS oblige India to do in the education sector? What is the experience thus far with foreign education providers in India? If the likely impact is negative, where is the source of the problem?
First and foremost, GATS does not require India to do anything at present in education services.
It’s worth noting that India did not schedule education services either in the Uruguay Round or in its revised commitments under the ongoing Doha Round. Hence, India has no multilateral obligation under the WTO to open up higher education services to foreign participation. Whatever liberalisation has occurred in this area, such as allowing 100% FDI on automatic route and permitting foreign participation through twinning, collaboration, franchising, and subsidiaries, has been autonomously driven. Of course, it’s likely that in future GATS negotiations, India will come under increasing pressure from certain countries to multilaterally bind the liberalisation undertaken thus far in this sector. But it’s unlikely that India will acquiesce to such demands.
The issue then is largely a domestic one. The impact of opening up higher education services is shaped not by the WTO but by domestic factors, including the domestic regulatory framework and the state of the domestic education system in terms of quantity, quality, costs, infrastructure and finances. In this context, evidence suggests that some of the concerns about opening up education services may not be so misplaced.
While there are reputed foreign educational institutions operating, there are numerous less reputed, second or third tier ones as well who charge high fees for programmes of dubious quality. Given India’s capacity constraints in higher education, substandard foreign institutions are able to survive in India. But the problem is not liberalisation per se, but the lack of a supportive domestic regulatory framework, which can ensure that liberalisation is beneficial. This is not to suggest that one should add more layers of regulation in higher education. Already there’s a plethora of regulatory bodies duplicating each other’s functions. What’s required is more effective registration and certification systems, which prevent unapproved institutions from partnering, which protect and inform consumers, enable good quality foreign institutions to enter the Indian market, and which create a level playing field between domestic and foreign institutions so that the former can compete effectively in a liberalised environment. Once such a regulatory framework is in place, India needn’t fear scheduling education services under GATS. It could even inscribe additional conditions on the nature of foreign participation in higher education, something permitted under GATS commitment structure.
She concludes by looking at the opportunity that opens up for India in higher education as a result of the GATS.
Finally, a point often lost on critics is that India also has gone on the offensive in education services. A growing number of Indian educational institutions are beginning to export to other markets. So, globalisation of education services should also be seen as an opportunity, and the GATS as a framework to exploit this opportunity. In short, a pro-active rather than defensive approach is required to benefit from the liberalisation of higher education services, both unilaterally and multilaterally, on the import as well as export fronts.
Prof. Manoj Pant of JNU, writing in The Financial Express (May 28, 2005), provides more background on the options open to India in formulating its strategy for opening up of educational services under the GATS and echoes Rupa Chanda's thoughts on the need to protect and inform consumers' (students) about the quality of the various foreign service providers and enable them to verify their claims.
Having missed the March deadline for submissions under GATS, countries will have to make their submissions now by the end of May. One area in which India, too, will make submissions is educational services which includes higher education. While it is still not clear (at the time of writing) what the India offer is likely to be, it is important to understand how the post- WTO scenario preparedness differs in the case of services compared with submissions under Gatt. I will look at this issue specifically from the point of view of trade in educational services.
The main contention is likely to be the opening up of higher education under GATS. While India could offer only distance education and some professional educational services under the positive list approach, it is important to understand what the subsequent preparedness involves.
A perusal of newspapers may give the impression that higher education is already open to foreign service providers. This is not true. However, the reality is even more alarming. For, any provider of educational services who does not want UGC/AICTE recognition is free to enter any educational service without any regulation. What is more alarming is the lack of any forum where consumers can verify the claims of the multitude of service providers who promise all sorts of benefits to students. Many even offer unverifiable links to foreign institutions. Hence, the first task of the government must be to set up a regulator in the field of educational services. Only then can appropriate legislation be framed to protect consumers.
The second issue in the case of services is regarding foreign service providers. Unlike trade in commodities, the question of FDI in services is built into specification of the mode of delivery of services. In the case of educational services, the issue is whether, and with what restrictions, India would allow the FDI mode of entry of foreign providers (Mode 3).
The primary problem today is the inability of the university system to provide higher education to all who aspire for it. There is no political commitment of public funds and the quality of education in some universities is below par, to say the least. This is the slack that the unregulated private sector is taking up today at considerable cost to students. Should private foreign funds be allowed to compete in higher education? Should we allow this competition?
It is my own suspicion that, if higher education is opened up even in a limited way, the principal opposition to FDI is likely to come from the private sector. Finally, India’s submissions on educational service must also be seen in the context of bargaining strategies at the WTO—to win some you might need to lose some. This is particularly important in the context of known developing country positions on Mode 4 (movement of natural persons and the GATS visa) and India’s own efforts to keep markets open for its IT services.
One of the most aggressive demanders of opening up of trade in educational services, the US, is also the one trying to firm up its domestic legislation to restrict outsourcing of services by its domestic companies. While Indian negotiators have probably taken most of these issues into consideration in finalising their submissions on trade in services, one wonders if there is any move to undertake changes in domestic legislation necessary to meet the challenges of a post-WTO world. One hopes that the lessons of the Uruguay Round have finally been learnt.
As described in an earlier posts, the Government must mandate that every educational institution operating in India, whether Indian or foriegn, public or private, to
- publish an annual report with details of the infrastructure available, the staff, the fees charged, the number of students, the results of the examinations, the amount of funds available to the institution and the sources of funding, affiliation to any foreign bodies with details of those bodies etc.
- be rated by independent rating agencies like CRISIL, ICRA or CARE and publicly announce their rating
This will enable consumers (students) to be fully informed about the educational institutions and help them make their choices.
P.S. G. Srinivasan, writing in The Hindu (May 30, 2005), reviews India's options in the GATS negotiations in the run-up to revised submissions before the deadline of May 31, 2005, and a Commerce Ministry press release dated May 30, 2005 states
India will be making its Revised Offers shortly in sectors which include those in which commitments were made in the Uruguay Round or in which Initial Offers were made in the ongoing Doha Round of WTO negotiations. The sectors thus covered include business services, construction and related engineering services, health related and social services, tourism and travel related services, maritime services and transport services.
There is surprisingly no mention of education services. Presumably the deadline for revised submissions on education services is still farther away.