GATS and Higher Education in India: Implications and Concerns

Vijender Sharma


 Education at all levels will continue to grow. Predatory and powerful transnational corporations are targeting public education, particularly higher education, for profit making. Though pre-dominantly government supported service, most governments are, as a consequence of trade liberalization, withdrawing from it. Education is sought to be traded as a service through General Agreement on Trade in Services (GATS) covered in the World Trade Organisation (WTO). Several countries are exporting higher education and making huge profits. The United States has shown largest trade surplus in education. The trend of treating education, particularly higher education, as a tradable commodity has affected the economy and education system of many developing countries including India. Policy planners in developing countries are also succumbing to the pressures of developed countries, particularly that of the United States. In this paper, the general states of affairs obtaining internationally in the field of education have been discussed. The basic rule of GATS, forms of trades and the kinds of trade barriers have been described. The kinds of pressures to remove trade barriers, the Government of India has been facing and its response to them, have been analysed. Growth of transnational trade in education and huge profits made by several countries has been pointed out. The state of Indian higher education has been summarized. Recent initiatives and policy papers of the Government of India treating higher education as a tradable private good have been critically examined. The concerns and implications, for the people and our education system, of commercialization of higher education in India have been expressed. The necessity for the whole society to rise to defend the system of higher education in India has been emphasized.

Corporate sector has discovered an industry of over a trillion dollars. It is yet to be fully explored and exploited. This industry is in the area of education as ‘service’ with a huge global market in which students, teachers, and non-teaching employees constitute resources for profit making. In this industry, the students are consumers, teachers are expert speakers, the institutions or companies catering to education service are service providers, and the teaching-learning process is no longer for the building of a nation but a business for profit making.

Education cultivates human mind and makes them important and useful in all out development of a country. Therefore, education at all levels will continue to grow. However, for the corporate sector it will grow as a big service industry for profit making. Global public spending on education at present is estimated to be much more than one trillion US dollars, that is about Rs. 49,00,000 crores representing the cost of over 50 million teachers, one billion students and hundreds of thousands of educational institutions throughout the world. Predatory and powerful transnational corporations are targeting public education, particularly higher education, for profit making. Though pre-dominantly government supported service, most governments are, as a consequence of trade liberalization, withdrawing from it. The government of India through extensive privatization, commercialisation and deregulation has been supporting this trend.

The service sector accounts for more than 70 percent of production and employment in the advanced industrial countries. This sector accounts for two thirds of the European Unions’ (EU) economy and jobs, almost a quarter of the EU’s total exports and a half of all foreign investment flowing from the EU to other parts of the world. More than one third of economic growth of the United States over the last several years has been due to service exports. In 1996, the United States provided exports of education and training services that reached $8.2 billion. It had a trade surplus in education of some $7 billion. In 2005, the United States had a trade surplus of $13.5 billion and in 2007 it was $14.5 billion. Thus, trade surplus in education in the United States almost doubled in ten years. The higher education was the fifth largest service exported by the US. Therefore, the pressure of the United States on WTO Member countries in relation to trade in education service is very clear.


The World Trade Organization (WTO), established by replacing General Agreement on Trade and Tariffs at the Uruguay Round in 1994, is a forum for the corporate interests to push their corporate agendas down the throat of developing countries and people without any democratic accountability. The General Agreement on Trade in Services (GATS) covered in the WTO, also a product of the Uruguay Round, is a legally enforceable agreement aimed at deregulating international markets in services, including education. Before this agreement, trade agreements used to be in relation to tariffs and eliminating other barriers for the goods produced in one country and sold in other countries. Some services used to be exchanged but there was no mechanism for trade in services because services are place specific and were considered to be non-tradable. According to the European Commission the GATS is “first and foremost an instrument for the benefit of business.”

Objective of GATS is to liberalise trade in services as quickly as possible. It is clear from the preamble of GATS that it is a “multilateral framework of principles and rules for trade in services with a view to the expansion of such trade under conditions of transparency and progressive liberalization” and with a ‘desire’ (Read: compels its Members) for “the early achievement of progressively higher levels of liberalization of trade in services through successive rounds of multilateral negotiations.” Equipped with WTO-enforced trade sanctions, the “multilateral negotiations” would expand the takeover of service delivery by transnational corporations in such critical areas as: health care; hospital care; home care; dental care; child care; elder care; education – primary, secondary and post-secondary; museums; libraries; law; social assistance; architecture; energy; water services; environmental protection services; real estate; insurance; tourism; postal services; transportation; publishing; broadcasting and many others.

The WTO has defined and drawn up the rules so as to give itself enormous powers. According to the WTO website, “The GATS is the first multilateral agreement to provide fully enforceable rights to trade in all services. It has a ‘built-in’ commitment to continuous liberalisation through periodic negotiations. And it is the world’s first multilateral agreement on investment, since it covers not just cross-border trade but every possible means of supplying a service, including the right to set up a commercial presence in the export market.” The WTO has explicitly stated that one of the advantages of the GATS is that it will help “overcome domestic resistance to change“.

The US, the European Union (EU), Japan and Canada are the main forces behind the GATS. Though WTO membership consists of nation states, its agenda is shaped by the transnational corporations (TNCs) of these countries that sit on all the important “advisory” committees and determine detailed policy. While denying access to decent healthcare, education, housing, and long-term care to millions of workers and their families the world over, the agreement will confer ever-greater political power on these corporations as they control and dictate public policy. The role of the State is attacked and its services criticised, public education systems are being systematically under-funded like in India.

GATS has two components: (i) The framework agreement containing 29 articles and (ii) a number of Annexes, Ministerial decisions, etc., as well as the schedules of commitments by each Member government, which bind them to allow market access and/or remove existing restrictions to market access. This agreement covers all services including education.

Basic Rules of GATS

Basic rules of GATS will apply to services like education in following distinct ways:

 1. A general framework of obligations that applies to all member countries of WTO includes two principles of “Most Favoured Nations (MFN) Treatment” and “National Treatment”.

As per Article II, subsection 1 of GATS on “Most Favoured Nations”: “each Member shall accord immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country.” That is, there should be no discrimination between the Members of the agreement.

As per Article XVII, subsection 1 of GATS on “National Treatment”: “each Member shall accord to services and service suppliers of any other Member, in respect of all measures affecting the supply of services, treatment no less favourable than that it accords to its own like services and service suppliers.” That is once a service provider from a Member country enters another Member country under specific commitments, it cannot be discriminated from other domestic service providers in the other country.

The rules of “most favoured nations” and “national treatment” are aimed at eliminating all restrictions on big business. Under these rules, governments must treat each nation’s corporations equally, which will effectively end all attempts by the developing countries to insulate their economies to some degree from the world market. There are a host of “market access rules” making it illegal to restrict competition or place national restrictions of any kind on foreign ownership. Indeed the US is demanding the abolition of any special treatment for the so-called developing countries.

2. Each Member country will have to make a request offer for a particular service to be a part of the agreement. That is, a Member country can decide which service sector it would like to cover under GATS rule.

The lists of market access commitments (along with any limitations and exemptions from national treatment) are negotiated as multilateral packages, although bilateral bargaining sessions are needed to develop the packages. The commitments therefore contain the negotiated and guaranteed conditions for conducting international trade in services. If a recorded condition is to be changed for the worse, then the government has to give at least three months’ notice and it has to negotiate compensation with affected countries. But the commitments can be improved at any time.

3. As per Article IX of GATS, a Member maintaining practices which may “restrain competition and thereby restrict trade in services” is directed to “enter into consultation with a view to eliminating” them when requested by another member. In case of disagreement between members, the Council for Trade in Services under Article XXII “shall refer the matter to arbitration” and decision of which “shall be final and binding on the Members.

4. Members have to ensure that all measures (e.g.  all laws, regulations and practices from national, regional or local governments that may affect trade) are administered in reasonable and impartial manner, establish judicial/ arbitral/ administrative institutions for review to ensure it and not introduce any regulation that affect operation of an agreement.

In order to guarantee transparency, governments must publish all relevant laws and regulations.  Moreover governments have to inform the WTO of any changes in regulations that apply to the services that come under specific commitments.

Specific commitments are defined as individual countries’ commitments to open markets in specific sectors, and how open those markets will be, is the subject of negotiations. The commitments appear in “schedules” that list the sectors being opened, the extent of market access being given in those sectors (e.g. whether there are any restrictions on foreign ownership), as well as any limitations on national treatment (whether some rights granted to local companies will not be granted to foreign companies).

These commitments are “bound”: like bound tariffs. They can only be modified or withdrawn after negotiations with affected countries, which would probably lead to compensation. Because “unbinding” is difficult, the commitments are virtually guaranteed conditions for foreign exporters and importers of services and investors in the sector to do business.

Forms of Trade in Services

In terms of Article I, subsection 2 of GATS, the WTO has defined trade in services in the following four modes “as the supply of a service”:

1. Cross Border Supply: “supply of a service from the territory of one Member into the territory of any other Member.” This service in education includes any type of course provided through distance education, or Internet, or any type of testing service and educational materials that can cross national boundaries. When the institution of a Member country A provides distance courses, etc. to another Member country B, then A is deemed to be exporting education service to B.

2. Consumption Abroad: “supply of a service in the territory of one Member to the service consumer of any other Member.” This refers to the education of foreign students. When the students of a Member country A move to another Member country B, then B is said to be exporting education service to A.

3. Commercial Presence: “supply of a service by a service supplier of one Member, through commercial presence in the territory of any other Member.” This refers to the actual presence of foreign supplier in a host country. This would include foreign universities or providers of a Member country A setting up courses through branches or franchisees or entire institutions in another Member country B. A would be deemed to be exporting education service to B. This mode is also known as Foreign Direct Investment (FDI).  

4. Presence of Natural Persons: “supply of a service by a service supplier of one Member, through presence of natural persons of a Member in the territory of any other Member.” This refers to when foreign teachers of a Member country A move to teach in another Member country B. A would be deemed to be exporting education service to B.

All Education under GATS Umbrella

Article I.3 defines “services” to include “any service in any sector except services supplied in the exercise of government authority;” and “a service supplied in the exercise of government authority” means “any service which is supplied neither on a commercial basis, nor in competition with one or more service suppliers.”

That is, only when the services are entirely provided by the government, they do not fall within the GATS rule. For a service to be out of the purview of the GATS rule it has to be entirely free. However, when the services have been provided either by the government partially or some prices are charged (as happens in education where some fees is charged) or provided by the private providers shall fall under the GATS rule.

The idea behind this is the creation of an open, global marketplace where services, like education, can be traded to the highest bidder. GATS covers the educational services of all countries whose educational systems are not exclusively provided by the public sector, or those educational systems that have commercial purposes. Since total public monopolies in education are extremely rare, almost all of the world’s educational systems fall under the GATS umbrella.

The informal WTO Classification List (W/120) divides educational services into five parts: (a) primary education services; (b) secondary education services; (c) higher education services; (d) adult education and (e) other education services.

Pressure to Remove Trade Barriers

The WTO has identified certain barriers to trade. These barriers/ obstacles include the restrictions on free movement and nationality requirements of students and teachers, immigration regulations, type of courses, movement of teachers, modalities of payments or repatriation of money, conditions concerning use of resources, direct investment and equity ceilings, the existence of public monopolies, subsidies to local institutions, economic need tests, exchange controls, non-recognition of equivalent qualifications, etc. Because services are not objects, barriers to trading services are referred to as non-tariff barriers. The goal of ‘free trade’ regime under WTO is to get these barriers removed in order to further liberalize the world economy.

The United States, on 18 December 2000, made a proposal to the Members of the Council for Trade in Services, WTO, in which US has included “all tertiary education, i.e. education beyond secondary education, adult education, and training services” under the umbrella of “higher education”. As per this proposal, “Such education and training encompass degree courses taken for college or university credits or non-degree courses taken for personal edification or pleasure or to upgrade work-related skills. Such education and training services can be provided in traditional institutional settings, such as universities or schools, or outside of traditional settings, including at workplace, in the home or elsewhere.”

The U.S. proposed the inclusion in education services the two types of services: (1) training services which are “less theoretical and more job-related than academic courses, and (2) educational testing services which are used to “evaluate the student as well as the course material,” and include “designing and administering tests, as well as evaluating test results.”

The US proposal calls for “an open regime in the education and training sector” and demands “market access, national treatment, and additional commitments” from Member countries who have been called upon to “inscribe in their schedules ‘no limitations’ on market access and national treatment” and to undertake “additional commitments relating to regulation of this sector.”

The US has identified several obstacles/ barriers which “make it difficult for foreign suppliers to market their services” which obviously must be removed for “an open regime in the education sector.” Some of the obstacles/ barriers are:

  1.  Prohibition of higher education offered by foreign entities.
  2. Lack of an opportunity to obtain authorization to establish facilities within the territory of the Member country.
  3. Lack of an opportunity to qualify as degree granting institutions.
  4. Inappropriate restrictions on electronic transmission of course materials.
  5. Economic needs test on suppliers of these services.
  6. Measurers requiring the use of a local partner.
  7. Denial of permission to enter into or exit from joint ventures with local or non-local partners on a voluntary basis.
  8. Where government approval is required, exceptionally long delays are encountered and when approval is denied, no reasons are given for the denial and no information is given on what must be done to obtain approval in future.
  9. Tax treatment that discriminates against foreign suppliers.
  10. Foreign partners in a joint venture are treated less favourably than the local partners.
  11. Franchises are treated less favourably than other forms of business organization.
  12. Domestic laws and regulations are unclear and administered in an unfair manner.
  13. Subsidies for higher education are not made known in a clear and transparent manner.
  14. Minimum requirements for local hiring are disproportionately high, causing uneconomic operations.
  15. Specialised, skilled personnel (including managers, computer specialists, expert speakers), needed for a temporary period of time, have difficulty obtaining authorization to enter and leave the country.
  16. Repatriation of earnings is subject to excessively costly fees and/or taxes for currency conversion.
  17. Excessive fees/taxes are imposed on licensing or royalty payments.

Thus, the United States by getting all these so called obstacles or barriers removed, wants to further liberalise the world economy and then control, manage and provide higher education everywhere in the global market and make huge profits. If these obstacles are removed then the system of higher education in developing countries, including India, will crumble and the future of democratic public education will be bleak. In fact, our very protest of corporate run education could be seen as an obstacle to investment.

However there are only 44 countries out of about 150 WTO Member countries that committed to trade in education service. Majority of them are from developed countries for all the four sub-sectors except for ‘Other Services”.

Japan has also opened up adult education sector. But in Japan under national law education can only be provided by recognised non-profit-making organizations. This is going to be a major barrier to foreign suppliers at least in that country.

Australia’s commitment for higher education covers provision of private tertiary education services, including university level. The European Union has included higher education in their schedule with clear limitations on all modes of trade except ‘consumption abroad’, which generally means foreign tuition paying students. Only four (Australia, New Zealand, USA and Japan) of the 21 countries with higher education commitments have submitted a negotiating proposal outlining their interests and issues.

New Zealand’s proposal indicated its commitment to private education, within primary, secondary and higher education levels, highlighting “other services” as areas of interest like short term training courses, languages training and practical/vocational courses on a range of subjects.

Recent Pressures and Government’s Response

A National Level Meeting of Vice-Chairpersons of State Council of Higher Education, Vice Chancellors and Experts on “Trade in Education Services under WTO Regime” was organized by NIEPA on 11 September, 2001. The meeting expressed concern that “the socio-economic implications of opening the education system globally and making education service for profit needs to be carefully examined. Even making it a full cost paying service has caused social and cultural trauma in many countries including developed countries. Making open to world competition with high cost of education might cause further social-cultural problems. These may be un-manageable in the developing countries and particularly in India. Global competition, full or profit cost pricing of education has several socio-cultural implications and may adversely affect the Constitutional obligations of equity.”

National Seminar organized by NIEPA on Privatization and Commercialization of Higher Education held on May, 2, 2006, re-iterated that the “State is primarily responsible for ensuring quality education at all levels and in all regions. This would entail strengthening of public institutions as also their quantitative expansion. It is evidently the obligation of the state to find ways and means of raising public resources for higher education.”

Commercialization of higher education can have adverse implications, both in terms of access and equity. Commodification of education, research and knowledge will not serve the long range interests of the nation. It could lead to truncated growth and lop sided development of higher education. Therefore, the NIEPA seminar recommended that “commercialization needs to be controlled.”

On Foreign universities, NIEPA seminar stated that the universities “are promoting the process of privatization and fuelling commercialization. Issues like regulation by the various professional bodies to control fees, fine tune quality and suitable legislation for the entry of foreign universities would have to be immediately attended to.”

ASSOCHAM – ICRIER Joint Conference on ‘Globalization and Higher Education in India’ held on 1-2 November 2006 at New Delhi, came out with a 27-point charter that “ASSOCHAM would earnestly pursue.” Some of the demands are:

  1. Borderless learning would necessitate a 6-pronged approach of i) Attracting world class institutions, ii) Diversifying the range and modus of PPP, iii) Making India an educational destination, iv) Catalyzing education systems of “India Abroad”, v) Devising an India window programme for internship and vi) Promoting distance education in a hybrid model like IT & ITES undertaking a “Marketing Brand India Education Mission”.
  2. Commercial orientation of educational offerings should be tried as philanthropic approach alone cannot deliver both quality and quantity on the scale demanded in India.
  3. Favorable FEP (Foreign Education Providers) regime and setting up more and more model institutions of collaboration (like Oxford Business School on the anvil).
  4. Endeavor to try and test innovative models like “SEZ for Universities” for capitalization of knowledge through restructuring of Universities.
  5. Higher Education in India has by and large remained one of the most stringently regulated sectors that has only stifled growth with quality. It is therefore essential to redetermine the policy matrix by dismantling the hurdles and barriers, both implicit and explicit. The conducive policy should envisage a judicious mix for growth through private commercial orientation for the affordable and a financing support for the poor.
  6. To make teaching an attractive, respected and valued profession. Begin by delinking pay from the UGC scales and letting the market determine the remuneration structures.
  7. Passage of a legislation enabling easy setting up of private universities should be desirable in keeping with the recommendations made by Mukesh Ambani Committee.
  8. A beginning has to be made by enlisting companies in Higher Education that would work for “Not for Profit” and redeploy their accretions for the growth of the enterprise. This would be a precursor to the opening up of the sector for commercial orientation.

The FICCI Secretary General, Dr. Amit Mitra, while addressing a seminar on “The United States & India: Partners in Education” in New Delhi on  29 March, 2007, said “the long-term nature of our economic partnership is further strengthened by the convergence based on skills availability in India and human resource needs of the U.S. An English speaking, pluralistic society with an open economy that produces graduates by the millions and engineers, and scientists and doctors by the hundreds of thousands, will be a natural long-term partner for the United States in the era of the knowledge economy.”  Referring to various provisions in the proposed Bill to regulate foreign universities, like FEPs, have to obtain No-Objection Certificate issued by the concerned Embassy in India, the fee to be charged and the intake in each course to be offered by a FEPs shall be as prescribed by the AICTE, and only existing Indian institutions recognized by AICTE will be eligible to enter into collaboration/ partnership/twinning arrangements etc. with FEPs, Dr. Mitra called upon getting “the issue of FDI in higher education in India” addressed “appropriately leading to increased opportunity for qualitative collaborations and partnerships between India and USA.”

The corporate organizations have been making clear demands of deregulated FDI in higher education. FICCI made its choice clear that it wanted to make closer trade ties in the field of higher education with the United States. The ASSOCHAM is aggressively demanding favourable FDI regime with commercial orientation making India destination for FEPs for a “Marketing Brand India Education Mission”. It has demanded SEZ for universities to get huge facilities at cheaper rates and no tax regime so that profits could be maximized, delinking pay from UGC scales so that differential pay structure could be introduced and a suitable legislation for easy setting up of private universities. Only for profits and more profits.  

The Approach Paper

The Planning Commission issued, in June 2006, an Approach Paper to the 11th Five Year Plan titled “Towards Faster and More Inclusive Growth”. For the transition towards faster and more inclusive growth, the Approach Paper calls for new initiatives in many sectors including ‘education services’ and “a more comprehensive restructuring” which actually would lead to privatization and commercialization of education.

The Approach Paper points out that since “only 10% of the addressable global IT/ITES (Information Technology/ IT-enabled Services) market has been realized”, the remaining 90% of a “global potential market of approximately $300 billion still remains to be realised.” For this purpose, India’s advantage is, apart from talent, established track record, and a geographical location, that it “provides a 24 hour working day to American professionals.” Therefore, the Approach Paper recommends to “work through WTO to assure access to overseas outsourcing” and “build a much larger IT workforce through an HRD plan, and improve urban infrastructure through public private partnerships.” The Approach Paper recommends full exploitation of private sector initiatives in higher learning for expanding capacity towards human resource development.

The entire concept towards education in the Approach Paper is centered around privatization, and appeasing the US lobby interested in education that can be traded as a commodity for profit. That the higher level of education, which ensures quality, quantity and equity, in a country leads to all round development of the country does not figure at all in the Approach Paper. For it, limiting only the “quality of human resource development” limits the “growth process itself.” There is no concern for access and equity in education.

The Consultation Paper

It is expressed all over the world that education policies under the GATS regime are decided by the commerce and trade ministries and not by the education ministry. It is true now in India, and it appears that the Commerce Ministry is under pressure to make commitments in the higher education, as part of adjustments, to secure commitments in other sectors.

The Trade Policy Division of the Department of Commerce, Government of India, in September 2006, circulated a consultation paper on trade in education services titled ‘Higher Education in India and GATS: An Opportunity” in preparation for the on-going services negotiations at the WTO. The Consultation Paper, while pointing out the problems of higher education in India, has argued that with a multi-billion dollar industry involving foreign education providers, distance learning and franchisees, “GATS could provide an opportunity to put together a mechanism whereby private and foreign investment in higher education can be encouraged.”

According to it, education is generally considered more a merit good rather than a public good. However, this is based on the assumption that “the government steps in to provide education services, because it is ‘good’ for society. If this assumption is relaxed, education could as easily be considered a private good.”

Thus, a case is being made to relax the aforesaid ‘assumption’ in order to shift higher education from the category of even ‘Merit-II goods’ to ‘private goods’. It further stated that “higher education does display many characteristics of private goods in a number of countries.” This would lead to further degeneration of our higher education system rather than solving its problems.

Even then the Commerce Ministry recommended that services negotiations (in WTO) could be used as an opportunity to invite foreign Universities to set up campuses in India. It further recommended striking “a balance” between “domestic regulation and providing adequate flexibility to such Universities in setting syllabus, hiring teachers, screening students and setting fee levels.”

In order to strengthen the case of commercialisation of higher education in India as demanded by the big business, the Consultation Paper even questioned the Indian Higher Education System. It stated, “While India is endowed with a large and growing base of skill professionals (21.4 million graduate workers in 2000), there are conflicting views about the quality of its endowment. According to McKinsey (2005), only 25% of Indian engineers, 15% of its finance and accounting professionals and 10% of Indian professionals with general degrees are suitable to work for multinational companies. The fact that many Indian professionals do not possess the global skill and quality is also evident from the fact that, despite large pool of middle managers available at home, some Indian firms are beginning to recruit them from abroad. The issues concerning scarcity of quality human resource have come out clearly in our consultations with various professional associations and industry bodies, particularly NASSCOM. There is a consensus in these consultations that reforms in higher education are required since this would lead to better human resource development.”

Export of Education Services

Over the last twenty years, there has been strong growth in transnational education. According to the OECD, there were 2.7 million tertiary students worldwide enrolled outside their country of residence in 2004, an increase of 41% since 2000 (1.9 million students) and over 200 % since 1985 (0.9 million students).

The USA is the largest exporter of education services in the world. The other large exporters are UK, Australia and New Zealand. Developing countries such as India and China are the largest importers of education in the world. According to the Consultation Paper, in 2004-05 the Asian countries had 3,25,000 students in U.S. colleges and universities, including 80,466 from India, 63,000 from China, 53,000 from South Korea and 42,000 from Japan. Further, 15,000 Indian students were enrolled in UK, 22,279 in Australia and 2567 in New Zealand. However, the Indian enrolments in United States dropped from 80,466 in 2004-05 to 76,503 in 2005-06 – a 4.9% drop represented the first decline since 1996-97. But it increased to 83,833 in 2006-07.

An estimate given by Global Alliance for Transnational Education indicate that about $27 billion worth of higher education is exported to Asia and Pacific by three countries namely USA, UK and Australia. A business of $37 billion trade in tertiary education services in Asia and Pacific region is projected in future.

In 2006-07, nearly 14.4% of all international students in the US were from India. During this year, education itself generated as much as $14.5 billion in export revenues for the US including Indian students’ contribution of over $2.08 billion (over Rs.9382 crore with US$1=Rs.45). The US has therefore profited enormously as a result of these revenues, which have come in through Mode 2 (Consumption abroad). Therefore, one can say that the US is aggressively promoting ‘educational imperialism’.

In 2004, Australia was the fifth largest destination for overseas students, attracting 6% of all tertiary students enrolled outside the country of their residence. In 2005, overseas students represented 18% of all higher education students in Australia.

The provision of education services to full-fee paying overseas students is emerging as an important industry for the Australian economy. Education services provided in Australia to international students were valued at over $9 billion in export earnings in 2004-05. This was the third largest export for Australia. Full-fee paying overseas students are also important revenue source for Australian universities. In 2005, revenue from full-fee paying overseas students represented 15% of all revenues within the higher education sector. This is used by the Australian universities to subsidise Australian students. In order to increase the revenue from overseas students, Australian universities are trying to increase the intake of overseas students.

The Consultation Paper therefore asserts that “there is a huge excess demand in India for quality higher education”, which is being met by “foreign campuses”. Indian students studying abroad keep these “foreign universities going and even subsidizing foreign students”. In comparison with 105 lakh students enrolled in higher education institutions in India, a meager 1.4 lakh students enrolled abroad does not amount to a “huge excess” demand. It is only 1.3 percent! These students could be retained in the country, had the Government invested in the higher education as promised in its National Common Minimum Programme. In any case, the Consultation Paper has clearly shown that India was not spending even as much as was being spent by other South East Asian countries.

Indian Scenario

In the beginning of the last decade, some foreign universities tried to market their higher education programmes in India. Representatives of several countries visited India to market certain percentage of their medical and engineering seats. Some foreign universities have also engaged Indian agencies and firms to recruit students to study in their universities. Others have started franchisee or commercial presence in India by allowing students to be enrolled in India and carry out studies for a part of the period in India and completing the other part of the degree in the institutions abroad. In certain cases even full degree institutions in India for giving foreign university conduct their programmes. Some also have twinning programmes between foreign and Indian universities. Some offer programmes through distance mode, through print, computer, television and electronic mode, i.e. the virtual university.

Thus the export of higher education to India by universities of several countries has been through modes of consumption abroad, cross border supply, franchisee, twinning programmes and virtual university. In 2005-06 about 1.4 lakh students went abroad for education mostly to USA, Australia, UK, Canada and France. However, on an average only 1500 students per year mostly from Gulf and South Asian countries come to India for education. It is not known as to how many Indian students are enrolled under cross border supply, franchisee and other modes. Fee charged from students ranges from Rs. 50,000 to Rs.3,40,000 per annum.

An analysis of the advertisements issued by foreign universities or on their behalf in India reveals that the courses offered by them mostly relate to hospitality services, management, medical and information technology. Some times concurrent degree programmes, i.e. two degrees in the same period are offered. No conditions of minimum qualification, i.e. percentage of marks, etc. are insisted upon, only 10+2 degree/certificate plus an interview is enough. Quite often the duration for getting degree may also be less than that required in India for the same degree. Largest number of universities advertising in India is from UK followed by Australia, Canada and Austria.

As far as India is concerned, the foreign education providers are interested in higher education with the use of all the four modes of trade. They are targeting at economically affordable group in the society in order to maximize profits. The impact of GATS would be that the non-organised private education providers in India would be the first ones to take an advantage. There would be unfavourable balance of payments as far as trade in education services are concerned. The public education providers would be marginalized in the race due to unequal play rules and ground.

10th Five-Year Plan Proposal

In view of the ongoing WTO negotiation on trade in services including trade in educational services, which presents issues that have very serious implications for higher education, some of the recommendations made in the 10th Five Year Plan Proposal are the following:

  •  “Although India has approved to complete liberalization on Trade in Educational Services, it may not be able to withstand the international pressures unless she prepares well for the second round of WTO negotiations. The matter is urgent and the Government should therefore appoint Committee/ Task Force to advise on (a) negotiation on higher education issues in WTO, and (b) issues relating to erecting the safeguards for the post-negotiations market access regime.
  • Serious thinking is required to extend the benefits of higher education to the less privileged section of society. For this an Educational Development Bank should be created.
  • Private relevant institutions of higher education should be encouraged provided they adhere to equity parameters determined by appropriate regulatory mechanism.
  • Optimum utilization of public infrastructure and manpower in the higher education sector should be ensured.
  • Universities should also consider setting up a cell for taking care of internationalization of higher education, both for import and export. Universities may devise ways and means to mobilize their own resources through various means.”

Explaining its approach for internationalization of higher education, the 10th Five Year Plan Proposal suggested “special incentives” to universities: “Universities which are willing to raise say 25-30% of their recurring expenditure from the fees of foreign students should be permitted to retain 10% of the collection towards a designated fund for updating equipment and facilities. The university should be within its rights to admit as many foreign students as necessary to raise the target amount. For five years Government should also consider making a matching grant towards their designated fund. This would progressively reduce the dependence of such a university on the Government.

The Proposal warns, “The paradigm of development has changed. International arrangements in trade in commodities, services and intellectual property rights are occupying greater importance and the place. Some of the State policies and rules have to give way to international arrangements.”

NIEPA’s Report on Policy Perspective

According to the Report of a “Policy Perspective Seminar on Internationalisation of Higher Education and Operation of Foreign Universities in India” organized by NIEPA, in 2000, education should be seen from the point of view of “promotion of knowledge and development of knowledge and skills among the people which are mutually beneficial and oriented towards development of mankind and also reducing the gap or the factors which cause the gap in knowledge and skills among people. If this point of view is accepted then it is necessary to allow free flow of knowledge cutting across the geographical boundaries of nation states. Though this idea sounds well and high, but in practice it might as well result in selected flow of information/ knowledge and skills from one set of countries to another set of countries in one direction whether in a single or multi-disciplines subjects. If this happens then it might as well result in draining of resources of receiving country as well as strong cultural and political influence by one set of countries on other set of countries.

Some of the recommendations made in the Report are:

  • Setting up of a “national level mechanism” for registering foreign universities in India and promote the Indian Higher Education abroad.”
  • Clear guidelines and laws about “VISA, infrastructure facilities, social and welfare programmes and accommodation facilities for students coming to India and students going abroad.”
  • An “Ordinance should be passed” to allow universities to open their campuses abroad.
  • The acceptance of the “certification/ credit given by the respective institutions should form the part of agreement.”
  • The accredited Indian universities or Institutes of higher education should have “15-20% full payment seats for foreign students in every subject/ programme as a supernumery position not cutting into the available seats of India students.”
  • In order to have an international context in education, the course content should “focus on requirements of job market and should have provision for innovative and flexible programmes.”
  • Indian universities should be “allowed to offer programmes through twinning, franchisee as well as distance mode.”
  • Foreign students studying in India should have “work permit for a period of three months per academic year. Total duration of work permit would not exceed one year six months.”

 The Facts About Indian Higher Education

We entered the twenty-first century with unprecedented demand for higher education: general as well as professional. Instead of meeting this demand for higher education and ensuring further growth of the country, the Central Government at the Centre and UGC have resorted to several measures with ever-faster speed of actions under the dictates of the World Bank and as a part of ongoing negotiations with WTO on trade in services. Raising of fees, autonomy to institutions with practically no controls but wide ranging powers to managements, funding linked mandatory assessment and accreditation, and students loan scheme are some of their decisions taken on the eve of the turn of the century for massive privatization and commercialization of higher education.

 “Major efforts have been mounted for mobilization of resources and it has been recommended that while the Government should make a firm commitment to higher education, institutions of higher education should make efforts to raise their own resources by raising the fee levels, encouraging private donations and by generating revenues through consultancy and other activities,” said the HRD Minister, Murali Manohar Joshi in the Country Paper presented in the UNESCO World Conference on Higher Education held at Paris, in 1998.  Justifying privatization of higher education, he added, “It is not only justifiable but desirable to raise money from private sources in order to ease pressure on public spending.”  Trying to befool us that privatisation will not lead to commercialization of higher education, he said, “The Government wants to encourage private initiatives in higher education but not commercialization.” What we have been witnessing all these years is, in fact, commercialization of education at all levels. These Governments have been implementing the very same World Bank prescriptions that we have been fighting against for the last twenty years. They have also been implementing the prescriptions of WTO and GATS for privatization and commercialization of higher education.

Mukesh Ambani and Kumarmangalam Birla, in their Report on “A Policy Framework for Reforms in Education” submitted to the Prime Minister’s Council on Trade and Industry in April 2000 considered education as a very profitable market. These two industrialists made a case for full cost recovery from students and immediate privatization of entire higher education except those areas of education involving “liberal arts and performing arts.” Ambani-Birla Report sought to convert the entire system of higher education in the country in to a market where only profit making will be the only consideration. Only those who will be able to pay exorbitant amount of fee will enroll in higher education. For Ambani and Birla, education is a very profitable market over which they must have full control and for their industrial requirements “education must shape adaptable, competitive workers who can readily acquire new skills and innovate.” In view of this, Ambani and Birla proposed the enactment of a legislation “banning any form of political activity on campuses of universities and educational institutions”. Even the normal trade union activities will not be allowed.

A large number of students enrolled in universities and colleges situated in townships and tehsils are first generation learners. These students could go to institutions of higher education because of the subsidy given to higher education and the prevalent fee structure. But this is also a fact that only about 7-8% of the students in the age group of 17-23 years could afford to go to universities and colleges. What about those 92-93% who are left out? They could not bear even the so-called “paltry fees” which the government wants to increase several folds. More than 88% of all students are enrolled at undergraduate level. About 83% of all students are enrolled in colleges. About 82% students opt for liberal arts, commerce and science and the corresponding figure for girl students is 87.2%. Only 5.4% of girl students are doing engineering and medicine. About 90% students are enrolled in general higher education and about 10% are in professional higher education. A substantial number of students from weaker and less privileged classes are availing the benefit of higher education.

The total enrolment of over one crore students appears to be large in absolute numbers, but the enrolment of students in the age group of 17 to 23 years was about 7 percent in 2003-04. This ratio is less than the average of lower middle income countries in the world. Various studies have pointed out that no country could become an economically advanced country, if the enrolment ratio in higher education is less than 20 percent.

While women students constitute about 40 percent of all students, enrolment of Scheduled Caste students is only 11.3 percent and that of Scheduled Tribe students is 3.6 percent. These ratios are far less than their corresponding ratios in total population. The women belonging to Scheduled Castes and Tribes living in rural areas are most disadvantaged and on the whole, both in rural and urban areas, scheduled populations are much behind the others.

There were 4,56,742 teachers in 2003-04, which meant the number of students per teacher has risen from 12.6 in 1965-66 to 21.8 in 2003-04.

As a percentage of the GDP, the government expenditure on higher education was 0.46 in 1990-91 which decreased to 0.37 in 2003-04. It is shocking to note that expenditure per student has declined from Rs. 7,676 (in 1993-94 prices) in 1990-91 to Rs. 5,522 in 2002-03. This amounted to a decline by about 28 percent in just twelve years.

The process of privatisation of higher education was accelerated by starting profit making institutions called “self financing” institutions, which do not get funds from the government. The number of general higher education and professional colleges increased from 568 in 1950-51 to 16,865 in 2003-04. In forty years from 1950-51 to 1990-91, about 5,180 new colleges were started. More than this number, i.e. 5,398 new colleges were started in eleven years from 1990-91 to 2001-02. A phenomenal number of new colleges, i.e. 5,719 were started in just two years from 2001-02 to 2003-04. Thus in thirteen years 11,117 new colleges were started. Most of these colleges are “self financing” institutions.                                                                                                                                                                                                                                                                                                                                                                           By

By reducing the subsidy and financial support to the institutions of higher education and with a big rise in annual charges, the students from the lower middle class, weaker and less privileged classes would be denied access to higher education. Therefore, a decrement in the enrolment from even such a low figure of 7-8%, which is less than the average of that in developing countries in Asia, to a lower value would be inevitable.

In order to strengthen national intelligence, to increase contacts with the scientific and intellectual community of the world, and to increase capabilities and upgrade knowledge for further development, our country has no option but to strengthen its public higher education system.  In any case these key issues cannot be delegated to private institutions.

Surrender to WTO and GATS

It is absolutely clear from the recommendations given in 10th Five Year Plan Proposal and the Report of the NIEPA Seminar that the Government is going in the direction of bringing higher education under the umbrella of GATS. The Central Government has already taken steps in line with the provisions of the GATS. The Central Government made offers on 24 August 2005 under GATS with no limitations on National Treatment under Modes -1, 2 and 3, and no limitations on market access under Mode-2 (Consumption abroad). Limitation on market access under Modes-1 and 3 included that the Foreign Service providers will be subject to Indian regulations. All the modes of trade in education service are being used. The UGC has already issued instructions for reserving 15% seats in addition to already existing ones as supernumery seats for foreign students. Thus the class size and the workload of teachers and employees are going to be increased without any additional funds.

The UGC guidelines for declaring an institution as a deemed university required that the institution should be of 10 years standing with courses recognized by the relevant accrediting bodies and infrastructure, including building for administration and academic purposes of about 4000 square metres, worth Rs. 50 lakh and corpus fund of Rs. 5 crores in case of professional education and Rs. 3 crores in case of general higher education. For the De-novo institutions in the emerging areas with the promise of excellence, no such conditions were required. These deemed universities were allowed to open their campuses anywhere in the country or abroad. Thus, any private institution or a new one with meagre funds and facilities was encouraged to get the status of a deemed university in order to run courses for profits. In December 2007, the UGC issued the new guidelines for deemed universities. The effect of these guidelines is still not known.

The UGC is not giving any funds for starting new courses or upgrading the existing ones. However, it is ready to spend huge amounts for starting courses on Jyotirvigyan and Karmakand. By starving the universities and colleges of funds, a case is being built for private funding and full cost recovery. The idea of giving incentive to universities ready to export education is to make them financially independent so that the Government is allowed to give up its responsibility towards higher education.

The globalisation has forced the education system to reinvent itself. The main role of universities to create, assimilate and disseminate knowledge is being given up in favour of the marketplace. A full professor of English in an American University earns no more than a starting assistant professor of accounting. More than half the full time faculty is hired on short-term contracts. Universities in the USA woo prospective undergraduate students by promising quality campus life, as if they were selling shares, with the offer of apartments rather than dorm rooms, high tech gadgetry and gyms. Faculty at some schools feel the pressure to keep grade-point averages high to keep the students as their customers happy. The emergence of for-profit competition among the multisite schools, called multiversity or busni-versity, like DeVry Institute, Phoenix University and Jones International University, which exist only virtually have made “any time, any place” higher education a near reality. In a market-model university, departments that make money, study money or attract money are given priority. Heads of universities are now assuming the role of traveling salesmen to promote their programmes.

An important cost recovery measure being proposed as an alternative to state financing of higher education and for the benefit of the market in higher education is to give loans to students so that they are able to meet the enhanced fees. This proposal is based on the market principle that those who benefit must pay. It is being advocated that the poor students who cannot pay the fees, instead of dropping out from higher education, should take loans, get jobs and then pay back loans. There are several serious problems associated with this proposal. But education does not guarantee employment. With no employment or no ability to repay, people from relatively poorer sections will be worst affected. The Central government has already declared students loans and the limit of loans has been increased upto Rs.15 lakh. They prefer to cater to economically better-off students. The conditions of guarantee based on co-obligation, the mortgage of immovable property, etc. would further exclude a large section of students. Since dowry is an important social phenomenon in several countries including India, loans to students would work as a ‘negative dowry’ resulting in decline in the enrolment of girls in higher education. It is being argued that the student loan programme may be revitalized to generate some resources for higher education in the long run. A margin money of 5 to 15% is also proposed. By this measure those who do not have resources to study would be forced to pay further for future investment. Instead of student loan programme the government must bear the full cost of education and the students belonging to the weaker sections should be given scholarships to meet fees and other expenses. In fact the student loans upto Rs. 15 lakh for studying abroad basically develop the higher education of other countries.

Young women in USA and Europe, main forces behind the GATS and WTO, are resorting to selling their eggs for thousands of pounds a time to childless couples as a way of paying off their fees and student loans they had taken to meet the cost of higher education. The average graduate begins the search for a job with debts of more than 10,000 pounds. According to a report, “American clinics are allowed to reward donors handsomely for the unpleasant and potentially risky procedure. Some of them, aware of British students’ financial problems are now targeting women here. Graduates and those with high IQs are in particular demand. Many commissioning couples, desperate to have children, are also prepared to pay premium prices for specific physical attributes and good looks.” Depending upon the looks, educational background like Ph.D., ‘good’ family profile, rare ethnic groups like Jewish, Asians and east Africans, the women get about 2,400 to 10,300 pounds. Eggs are collected from women by administering drugs to induce artificial menopause. The menstrual cycle is then restarted with more drugs designed to cause multiple eggs to ripen, instead of the normal one-a-month released naturally. A young healthy donor can produce 15 or 20 eggs, sometimes many more, in a single cycle of treatment. The procedure is very painful and sometimes causes severe trauma to the donor. According to another report, one girl (18 years of age) under debt while pursuing higher education decided to sell her virginity to the highest bidder. She claimed “she has been inundated with offers, including one of 10,000 pounds, since she placed an advert on the Internet.”

This being the situation in USA and Europe as a result of the policies adopted by them regarding privatization and commercialization of education and liberalization of trade in ‘education service’ under GATS and WTO regime, one can understand what will happen to the enrolment of girls in higher education in India. The fall in their enrolment is going to be inevitable.

In Conclusion

The world’s trade representatives under WTO, who are leading the assault on education, are attempting to establish ‘New World Government’ based on profit threatening and arm-twisting the nation governments. This would be a government of and for the corporate sector–an extremely undemocratic, authoritarian institution. In this assault, they have discovered the possibility of manufacturing the thinking and attitudes of their consumers, and creating an education system to reproduce standardized people. The whole idea of culture will be threatened as this standardization eliminates cultural focuses, thoughts, language, and educational themes. No longer will truth be sought, except whatever suits the corporate interests. As education standardization is institutionalized through international equivalency, the uniqueness of each educational institution will vanish.

The GATS regulation of education can jeopardise the sovereignty and autonomy of nations on a path that can lead to the loss of cultural diversity and local values; thus, hampering countries and their people’s lives while reinforcing homogeneity and making room for a new form of cultural/educational colonialism.

Under the dictates of the World Bank, WTO and GATS, the cherished function of higher education, for the search, creation and dissemination of knowledge and for instilling sensitivity or social awareness in its students in India is under fire today. The steps (e.g. reducing state funding of and limiting access to higher education, heavy cost recovery, loans to students, terming higher education as a non-merit good, assessment and accreditation of institutions, autonomous status to colleges, self-financing courses and institutions, and privatization and commercialisation of higher education, etc.) taken by successive governments at the Centre would lead to the dismantling of the state funded higher education system. The World Bank, WTO and GATS dictated policy on higher education must be reversed. As citizens of India, we have to ensure that the Government takes care of public interests and act to protect public services like health and education from the predatory elements that preach the ideology of the marketplace as the solution to every issue. Otherwise, the country would be dependent on developed countries for its requirements in qualified manpower essential for it’s all round development. Therefore, the future progress of our country is at stake. We cannot afford to be complacent any longer. It is the responsibility of the whole society to rise to the occasion and take measures so that the process of dismantling the higher education system in the country is reversed.


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NOTE: This paper was presented in the International Seminar on Democratic and Secular Education organised by the Ministry of Education, Government of Kerala, from 4th to 6th December 2008 at Thiruvananthapuram. It has been published by the Students Federation of India in 2008 in its book “Denial of Education“, available from 11, Windsor Place, Janpath,  New Delhi-110001.

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One Response to “GATS and Higher Education in India: Implications and Concerns”

  1. b.b.goyal Says:

    yes, your suggestions are invaluable. but pls guide me whether vinayaka mission university, global open university etc are valid and recognised universities? why dont UGC does anything in the matter to curb notorious universities?

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