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India’s new NEP lauded by PM, but questions about implementation remain

The National Education Policy 2020 will help to "establish India as an international education destination", but overseas institutions and stakeholders question how it will affect operations in the country.
September 23 2020
5 Min Read

India’s National Education Policy has been lauded as a means to establish India as an international education destination. However, institutions are grappling to understand how it will affect operations in the country and how the government’s extension of an “equalisation levy” will impact HEIs that may be providing services to students electronically.

Announced in July, the new NEP aims for the world’s top-rated universities to be facilitated to come to India, and top Indian institutions to be encouraged to set up campuses in other countries.

“It’s a great opportunity, not only for UK universities but for universities all over the world”

“The NEP will open up the education sector,” the prime minister Narendra Modi said during a recent conference.

It will play a key role in creating “Atmanirbhar Bharat” (self-reliant India) and will establish India as an international education destination.”

India’s youth will be able to learn from technology and innovate new technology, Modi continued, adding there are “infinite possibilities” for IIT students.

Speaking at an online event organised by the British Council, principal secretary, Higher Education, Government of Gujarat, Anju Sharma also shared a positive message about the new NEP.

“This entire thing is a great opportunity, not only for UK universities but for universities all over the world,” she said.”I look at it as a very progressive step.”

When a study in Gujarat initiative was launched investment was a major issue, she explained, suggesting the new policy could attract international funding.

Additionally, it will help to attract international talent – including Indians overseas – to India, Sharma continued.

However, speaking at another event, executive director of Education at Sannam S4, Lakshmi Iyer warned that it could be half a decade before an international campus is established in India.

“The legislative framework for a campus could only happen once the Higher Education Commission of India comes into play, so the first green shoots of an international campus in India could be potentially five years from now,” Iyer said.

“It’s not going to happen in a matter of two to three years.

“Nonetheless, I feel that the NEP certainly has showcased a very forward looking policy, which looks at education holistically,” she noted.

There has to be “mutuality in cooperation” with international institutions,  Iyer added.

“International institutions will want to have a longer-term ROI. Nobody is going to do anything without knowing that in the long run, it is going to pay back in some way. We need to figure that model out.”

The Indian government has extended an equalisation levy that will apply a 2% tax to e-commerce companies

In addition, the Indian government has extended an equalisation levy that will apply a 2% tax to e-commerce companies, including education providers.

Giving her interpretation of the levy, former lead, Taxation Law at Vidhi Centre for Legal Policy, Vidushi Gupta said it acts as a “stopgap solution” for the government to tax digital transactions where it felt it was not collecting due tax revenue.

Any e-commerce operators – meaning a non-resident who owns, operates or manages a digital or electronic facility or platform – providing services to Indian residents, people using Indian IP addresses and in certain specific cases to other non-residents as well, will be required to pay the levy.

“The problem by its very nature is extremely complex,” Gupta explained, suggesting a multilateral solution, which the OECD, the European Commission, the United Nations have all been working towards devising, would be preferable.

“In the meantime, many countries – including India – have implemented certain unilateral measures.

“In India’s case for example the equalisation levy is just that,” Gupta noted.

“It’s a very all-encompassing sort of provision, extremely broad, which in my opinion seeks to include higher education institutes that may be providing services to students electronically.”

Providers with permanent establishments in India, where they already pay income tax for India, will be exempt, Gupta continued.

“I think it’s important for organisations to sit back and take a look at the scope of their services,” she said.

“It’s really for those who are offering pure online services from the UK in this case,” partner & head, Education and Skill Development Practice at KPMG in India, Narayanan Ramaswamy agreed.

“Many of the large universities do have an Indian presence or even if they come under a permanent establishment where they are there for more than six months, and then they need not pay equalisation tax,” he said.

“From what we have seen on the ground, institutions are certainly intrigued and are interested in the changes that have been put forward,” Iyer at Sannam S4 continued.

The discussion has revolved around setting up international campuses, establishing an academic credit bank to enable students to transfer credits between institutions in India and the easier facilitation of research, teaching and faculty collaborations, she stated.

“However, international institutions are also wary of the prospective timeline that has been introduced in order to make some of these recommended changes into reality.

“We also have to remember that many institutions looked at the previous higher education foreign providers bill with a lot of interest and tell that some of the provisions in that bill were quite prohibitive, especially in terms of repatriation of profits,” she said.

Additionally, the “top 100 university number” is a placeholder, Iyer said.

“We know that India’s needs are hugely diverse. It can’t just be served by the top 100 institutions. In India, you cannot do anything without thinking about equity, access and quality. That cannot happen by just inviting the top 100 institutions.”

The “Americanisation of Indian education” – with the country embracing four-year undergrad – enables all forms of collaboration with US institutions, she suggested, as others hope for closer cooperation with other countries.

“The experience of the UK India Education and Research Initiative… shows that there’s a huge similarity between Indian universities and UK universities in taking joint research together,” said Navin Mittal, IAS, commissioner, Collegiate Education & Technical Education, Government of Telangana.

“That is something I see really growing as we move forward.”

“India’s needs are hugely diverse. It can’t just be served by the top 100 institutions”

The cost advantage of basic research in India and the large number of research students and postdoctoral fellows could prove to be attractive for international partners, Mittal suggested.

“The third thing being talked about is also more of student exchanges and credit transfers also, something which is difficult in the past.”

Untransferable credits have limited those opportunities, he said, while partnerships such as the one with France have been successful.

“Since the policy now provides it, it is something which I think both India and the UK must take forward to really strengthen this new partnership,” Mittal added.

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