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The lizard scuttling across the car park is about the only sign of life at the University of Strathclyde's Indian campus.

It is a sunny morning in the middle of the autumn term but the elaborate fountain in front of the building has been shut off and the name on the arched entrance gate covered over. Inside, the plush auditorium with seats for 250 is empty, the benches of the six lecture halls are unfilled and the library shelves are bare.

A year ago, Strathclyde's Business School, in partnership with the Indian logistics company SKIL Infrastructure, opened the three-storey building in Greater Noida on the far outskirts of New Delhi and sent its staff in to teach. They were frontier academics, some of the very first to deliver British degrees at a UK campus on Indian soil. But their expedition has so far failed. Strathclyde SKIL Business School managed to enrol just six students in 2011-12. Recruitment was so low for this year that in August Strathclyde retreated from the country while it carried out a "full review".

Its experience is a warning to those thinking of treading the same uncharted path and also a prompt for a close examination of India's higher education terrain. It is a landscape that is difficult to navigate and one that has, for some, already proved impassable.

In 2010, a year after the election that brought the Congress Party-led United Progressive Alliance to power, Kapil Sibal, India's new minister of human resource development, uttered words that promised to shake up and reinvigorate a higher education sector whose facilities, staff and resources were creaking under the weight of demand. "A larger revolution than even in the telecom sector awaits us," Sibal said at the time, announcing that the Cabinet had finally approved the long-awaited bill that would allow foreign universities to set up campuses and award full degrees in India for the first time.

A version of the bill was first mooted as long ago as 1995. But opposition from left-wing parties worried about the commercialisation of education and the "foreign hand", coupled with resistance from Indian universities concerned about competition for staff and students, hampered its progression towards the statute book for 15 years. But this time, Sibal, a graduate of Harvard Law School, seemed determined that the bill would get through both of India's houses of parliament and that world-renowned institutions of higher education would soon set up shop in the world's largest democracy, where 51 per cent of the population is under the age of 25.

Sibal's words are perhaps beginning to haunt him. Not only because the bill hasn't been passed yet but also because Sibal has been handed responsibility for the telecoms sector, too.

He must deal with the fallout from the 2G telecoms spectrum scam - the corruption scandal, the largest India has ever faced, centres on the allocation of licences to operate mobile phone networks and is estimated to have cost the economy $39 billion (?24 billion). It was exposed by the government's auditor in late 2010. Allowing foreign universities into the country appears to have slipped down Sibal's "to do" list. "Parliamentary time has been precious, as it always is in India, and (ministers) have been overwhelmed with things that are more important to the national interest," explains Nicholas Booker, co-founder of IndoGenius, a New Delhi-based education consultancy.

In the wake of a series of high-profile financial scandals, a wave of protests has swept the country as part of a national anti-corruption movement. Amid other problems, including a recent and highly unpopular decision to allow foreign supermarket chains into the country and economic figures showing poor growth, key partners have abandoned the governing coalition and left it teetering on the brink of collapse.

In recent weeks, the government has adopted a reforming agenda that seems to have pulled it out of immediate danger. But what does this change in gear mean for the Foreign Educational Institutions (Regulation of Entry and Operations) Bill 2010, which would regulate foreign universities?

Sujatha Kalimili, head of the comparative education and international cooperation department at the National University of Educational Planning and Administration, in New Delhi, is optimistic: things may move quickly now that legislators appear to be in a reforming mood. "There seems to be a serious intention on the part of the government to get it through," she says.

Parwan Agarwal, who is a member for higher education on India's Planning Commission, still hopes that the bill will pass before the end of the year. "It's part of the political process, and we do hope that we will get clarity on foreign provision in Indian higher education in the next few months," he says.

But to Philip Altbach, director of the Center for International Higher Education at Boston College, in the US, it appears that the bill will remain permanently on the shelf. Because of this, universities need to "think through a different strategy", he advises. Continuing uncertainty over the bill has led to "a good deal of frustration in the higher education community", he says, and has left some US universities "burnt" by their experiences.

The bill has been designed to regulate a sector that already exists but lacks a legislative framework. There were 631 foreign providers operating in the country in 2010, according to a study by the Association of Indian Universities. Of these, 440 did so from their home campuses while 186 were involved in twinning agreements or had some other arrangement with local institutions. Five institutions had set up branch campuses in India in the absence of a law either permitting the action or explicitly barring it. The Observatory on Borderless Higher Education says these were Lancaster University (UK) in Haryana, Leeds Metropolitan University (UK) in Bhopal, Monash University (Australia) in Mumbai, Schulich School of Business, York University (Canada) in Mumbai and the University of Strathclyde's Business School (UK) in Greater Noida.

Some think that proposed legislation will be less than inviting to overseas providers. It would not allow foreign universities that set up in India to repatriate profits. Each university would need a "corpus fund" of about ?6 million to stop them bailing out of the country and leaving students in the lurch. The bill also insists that branch campuses have an Indian advisory board of three national research professors per foreign institution. Kavita Sharma, director of the India International Centre, questions where the country will find so many distinguished national professors. "There's a huge faculty shortage of 35 per cent in India," says Sharma, who is author of Internationalization of Higher Education: An Aspect of India's Foreign Relations (2008). Booming student demand in the past five years and the lure of better salaries and facilities abroad has left Indian university departments depleted. "This bill itself, how is it going to be regarded by foreign institutions?" Sharma asks. "I'm not sure it would be acceptable to anyone."

The proposed law also stipulates that universities make public faculty salaries. "This might cause a lot of problems," Sharma says. In India, academics are paid according to salary bands, and public universities must reserve at least 50 per cent of places for students from certain minority groups. Will such quotas also apply to foreign institutions? "It's a question that has not been answered," she says.

In the absence of legislation or regulations, and without clarity around the proposed rules, there is a policy vacuum. "Only those who can work a vacuum will come in. Others need more transparent systems, policies and structures in which to work," says Sharma.

At Lancaster University G.D. Goenka World Institute, a two-hour drive from New Delhi, 22-year-old Amit Bhargava is explaining to his tutor in the UK via a live videolink how the supermarket giant Walmart works with its Indian partner Bharti.

"What[ever] Walmart says, Bharti just adapts to it," says Bhargava, who is studying for an MSc in marketing management and has just been on a field trip to Walmart's nascent logistics operation in India. The smart classroom in which he sits features two large flat-screen televisions that link directly to the office of Sharon Turnbull, a visiting senior research fellow at Lancaster University in the UK.

Along the corridor in another classroom, a group of 20 students - mostly young men dressed in jeans with aviator sunglasses tucked in to the open necks of polo tops and checked shirts - listen as Sujay Sinha, an ebullient assistant professor of business administration with an MBA from the University of Liverpool, talks to them about Apple's "channel management decisions".

Lancaster Goenka opened in 2009 with a management department. Last year, it added an engineering programme, and it now has just over 600 students. Its BA in economics, however, has just been discontinued because of inadequate enrolment. The fees for engineering courses are almost ?3,000 a year, compared with a nominal fee charged by public universities. At ?4,700 a year, its management course is about five times the cost of those at other private institutions in India. It offers some academic scholarships but no bursaries.

Students at Lancaster Goenka are mostly from very wealthy families, and those who do well enough in their first two years have the option of spending their final year in the UK, paying full international fees to study at Lancaster. Faculty salaries are above the national average and facilities are better than those at public universities in India, staff say.

But the institute, which has applied to become a university and is constructing a new purpose-built campus, is not recognised by the national accreditation bodies. Its degrees, which are awarded by Lancaster, are invalid in India, making it impossible for graduates to get jobs in the public sector or to study at postgraduate level at India's public institutions.

Suku Bhaskaran, the acting director of the institute and dean of management, insists that its graduates want work in private companies that offer more generous salaries and do not require an Indian-accredited degree. Accreditation from the All India Council for Technical Education "doesn't matter", he claims, noting that "India's top business school" is the Indian School of Business (ISB) in Bangalore, "and it's not University Grants Commission or AICTE" accredited. Bhaskaran argues that the institute's students are "not interested" in postgraduate study in India: "they want to go abroad." The AICTE, which regulates technical and engineering colleges, lists Lancaster Goenka as an "unapproved institution".

Kuncheria Isaac, member secretary of the All India Council for Technical Education, believes that degrees offered by such institutions should not be recognised. Although declining to discuss individual cases, he says: "Nobody can give programmes without approval."

In response, Lancaster says that it is in the process of acquiring university status for G.D. Goenka World Institute so that "the partnership will be in full compliance of all local regulations".

In a statement, Steve Bradley, pro vice-chancellor for international at Lancaster, says: "In the interim, we are very careful to make it clear to students and parents that we are not recognised by AICTE, although Lancaster's degrees are recognised globally for the excellent standards of education."

Naureen Shafinaz, who has just returned to the palm-tree-lined campus of G.D. Goenka World Institute to collect her degree after finding a job with Emirates Airline in her native Bangladesh, thinks the student body could be more diverse. "It's worth the money but not everyone can afford to study here and that's a bad thing - there should be student loans," she says.

Campus life is very different from that found at Lancaster, where the 24-year-old and her friends spent three weeks at a summer school. There is no freshers' week, no alcohol is allowed on site, there are no mixed halls of residence and there is no nightlife.

Despite this, Samidha Luthra, 21, from Jaipur, has stayed on after her bachelor's degree in business administration to pursue a postgraduate diploma in business management. "I didn't want to go overseas," she says. "But I wanted a foreign degree, so it was a good option. It's way more expensive than an Indian institution (but) it's worth it."

Value for money is a key to success for any institution in India, according to Karan Khemka, head of international practice at the Parthenon Group, a global education consultancy. He believes that is where Strathclyde's plans fall down.

The decision to set fees for Strathclyde SKIL Business School at ?7,906 for 2012 would have made it seem bad value, he claims. "It's nothing to do with how good or bad British schools are: Strathclyde in India is a poor investment for its students because they can get the same job (by earning) a good local MBA in India at less than half the price. We actually met with SKIL team (investors in Strathclyde India) in 2010 and warned them about this outcome."

In an emailed statement, Strathclyde says: "Given the volatility in the marketplace due to the impact of changes in visa requirements in the UK and the uncertainty in parliamentary approval for the Foreign Educational Institutions Bill in India, we have decided that a full review is required to allow us to create the highest-quality product for an Indian market."

Last year, Middlesex University was forced to pull out of a planned campus in Noida when its partner, education conglomerate JSS, said it did not wish to proceed. Requests to Middlesex for comment about future engagement with India went unanswered.

Despite the problems and continuing uncertainties, interest in the country from foreign universities and colleges in the UK remains strong. Sally Goggin, director of education, India for the British Council, says many institutions are looking for ways to enter the country within existing frameworks. Goggin is also head of the UK-India Education and Research Initiative (UKIERI), a scheme launched in 2006 designed to make the UK India's "partner of choice" in education. As an example of what it aims to achieve, she cites partnerships such as the one between WMG, the advanced engineering and manufacturing research group based at the University of Warwick, and the Indian Institute of Technology Bhubaneswar, which intends to foster subject linkage and research. "It's that sort of relationship, where there's a mutuality to it", that is beneficial and provides a good example of collaboration between the two countries, she believes.

The University of Nottingham has entered a twinning programme with Manipal University in Karnataka that allows students to spend two years in India and two in Nottingham. Student and faculty exchanges with India are also becoming much more popular. This summer, some 165 undergraduates from more than 12 UK universities took part in the month-long Study India programme, sponsored by King's College London and UKIERI, during which they spent time at an Indian university and took part in a week-long internship with Indian businesses. Staff from King's will take part in two "summer schools" in Mumbai and Delhi later this year.

IndoGenius' Booker thinks more programmes like this will emerge in future, alongside greater use of online technology for delivering courses to students in India.

In a press interview on a visit to New Delhi in September, the University of Cambridge's vice-chancellor Sir Leszek Borysiewicz said that there were more than 250 projects between its academics and Indian colleagues, which he said was "probably the largest number for any UK university". He expressed a desire to foster more research collaborations between Cambridge and Indian universities.

Namrata Jha, director of the Institute of International Education in New Delhi, says that US universities are also very eager to work with Indian institutions on exchange programmes, joint degrees and other partnerships. "This is something they can begin to implement quickly, and then gradually build up further ties as the relationships get stronger," Jha explains.

Universities are setting up centres in India to raise their profile among the nation's students and academics through research partnerships and overseas study programmes. Such centres also help them "to understand the system better" and explore "partnership opportunities", Jha adds.

In 1999, Virginia Tech was the first US institution to offer a degree programme in India, in partnership with S.P. Jain Institute of Management and Research. The university now has plans for a campus in Tamil Nadu. However, while waiting for the foreign universities bill, Virginia Tech is concentrating on research initiatives and supporting its partner MARG Swarnabhoomi in setting up an institute for critical technology and advanced science, says Vijaya Kumar, vice-president international business development at MARG Swarnabhoomi Education Services.

India's University Grants Commission is also planning non-legislative routes to allow foreign universities to operate in a regulated manner. It intends to allow only institutions that appear in the top 500 of either the Times Higher Education World University Rankings or the Shanghai Jiao Tong rankings to come into the country in collaboration with Indian universities rated "A" by the National Assessment and Accreditation Council.

But this policy raises problems about the number of foreign institutions already operating in the country that would fail this requirement, which would allow only around three dozen UK institutions to come in. What's more, many top Indian institutes of technology are not accredited by the NAAC.

This interim plan has been put before the Ministry of Human Resource Development, according to Ved Prakash, chairman of the UGC. "We expect it (to be approved) before the end of this year - imminently," he says.

The long wait for clarity is certainly not over yet. Universities that are keen to operate in India need to "be more patient", Altbach says - "it's a complex environment." In the meantime, he advises, "do your homework, figure out where you want to be, don't overreach and don't expect to make money."

By numbers: The big picture

India plans to expand its higher education system rapidly. Places for an extra 10 million are planned in the next five years

Over the past decade, 250,000 students from India have gone abroad for higher education, but traffic the other way has been less than 5,000, according to the British Council.

Enrolment in higher education (the gross enrolment ratio) runs at 18 per cent, according to India's Planning Commission. Higher education experts believe the figure is rather lower, at 12 to 15 per cent.

India has 43 nationally governed public universities, 289 state administered (non-federal) public universities and 180 private universities. In addition, some 130 institutions have been granted the status "deemed to be a university" by the Ministry of Human Resource Development, meaning they have autonomy over admissions and tuition fees. The country has 33,000 colleges, according to the University Grants Commission.

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