Enhancing India’s Education Exports

By Rajesh Narula

Globalization and the changing market dynamics have transformed the educational model, from the ideology of Guru Brahma, Guru Vishnu, Guru Maheshwaraya to that of just another commercial service provided by professionals. In fact, in the knowledge economy, the very concept of education has seen a paradigm shift from the industrial era when it was perceived as an activity localized in time and space, to the modern view of lifelong learning and development.

Yet, despite the enhanced acceptance and demand for educational services globally, India has a negligible share of the global trade in this sector. Ironically, with the number of foreign students in India hovering around a pitiful 6000 in the past few years, the country’s attractiveness as a destination for education is far less than in the ancient days of Nalanda University!

While radical groups would be quick to take that as an indication of the superiority of our ancient educational ethos over modern commercial priorities, the hard hitting economics of the trade can not be ignored. The world trade in education services accounts for $35 billion, or 3% of the total trade in services. Education services exports are among the top three or four services export sectors for countries like Australia and New Zealand. One in every seven University students in Australia is of foreign nationality. On the other hand, India, which has a negative balance of trade in education services, can set up ten IITs using the lost foreign exchange through annual student mobility abroad. In addition, the tremendous brain drain if averted, could significantly add to our competitive advantage.

What then, is the fate of India’s educational service export? Will the sector like IT and other knowledge sectors be polarized into a few hugely successful service providers at the top end while the majority of the institutes struggle to survive? This will indeed be the harsh reality unless drastic measures are taken soon. But let us first take a closer look at the environment of our education exports.

The Role of GATS

India’s participation in the GATS set it on an irreversible path of globalization of education. After the ten year grace period provided to it by virtue of being a developing nation expired in 2005, the country is now obliged to open its borders for foreign education service providers. Expectedly, foreign universities are queuing up to attract Indian students. A proposal to invite FDI in the sector is also under discussion.

The scope of education services under GATS includes Primary, Secondary or Higher education as defined by UNESCO. Only government controlled non-commercial education is excluded from the ambit of deregulation. Since very few states have purely government controlled education, practically all the world’s education services come under the purview of GATS regulations.

Further, GATS recognizes four modes of trade in education services:

i) Student Mobility to the supplier’s country

ii) Supplier Mobility to the foreign country (e.g. setting up a foreign campus)

iii) Teacher Mobility pertaining to faculty teaching abroad, and

iv) Cross Border Education, e.g. Distance learning

The first and the fourth modes are particularly attractive to the government, given India’s inherent strengths. Utilising precious resources to establish campuses abroad, while the domestic needs are barely fulfilled, evidently does not make either political or economic sense. Teacher mobility is an emerging area of growth, as demand for teachers increases in the developed world. However, it comes with the attendant risk of intellectual amnesia arising from the migration of the country’s best teaching resources.

The GATS includes, in addition to a core body of 29 agreements, a number of annexes and schedule of commitments on market access etc, given by the governments of participating countries. However, only 44 of the 147 WTO members have made commitments, and only 21 of these have included higher education in these commitments. Of the latter 21, only three (USA, Australia and New Zealand) have submitted a negotiating proposal outlining their interests.

The Structure of the trade

The global trade in educational services is distinctly polarized, with the developed countries of the world being education providers, and the developing nations providing the students. Seventy five per cent of the export revenues are hogged by the leading countries of USA, UK, France, Germany, Australia, Canada and Japan. USA alone accounts for a third of the global market in education services exports.

The UK is clearly an exporter as very few Britons go abroad for studies. Even France, Germany and Japan, despite their language barriers, have emerged as popular academic destinations on the strengths of their scientific, technological and economic achievements.

Not surprisingly, these countries are further increasing their spend on education, while the government spend on education in India is actually declining. As a benchmark, Great Britain, which has 46% enrolment in higher education and has produced 44 Nobel Laureates, spends nearly $10 billion on education, or 5.6% of its GDP. In contrast, India’s investment in education has actually declined to 3.7% of its GNP. Let us not talk about Nobel Laureates.

Evidently, there is little scope for India to become a significant education exporter without first getting its act together at home. The country has 43% illiteracy and only 7% of the youth have access to higher education. To this, 2 million students are added every year. This does not imply that our education infrastructure is poor. India has a strong educational system with 300 Universities, 15000 colleges including 1000 management institutes, and millions of students. As per AICTE, there are 4145 institutions that conduct graduate, post graduate and diploma courses in engineering, pharmacy, management etc. It consistently produces quality knowledge workers who are in demand worldwide for their abilities. Wonderfully, this entire system is considerably low cost and affordable as compared to that of developed countries. It is a strong backbone of our prowess in the knowledge sectors like IT and Bio-tech. Nevertheless, that advantage has been obtained after years of emphasis by previous governments and needs to be consolidated and expanded, especially, if the country has to live up to its hyped image as a potential leader of the knowledge economy.

The Threats

As elsewhere, the most visible threat to India’s competitiveness comes from countries such as China which are steadily building the cultural gap with the West through systematic language training programmes and development of infrastructure and capacity building. There is also, a steady trickle of Americans and Europeans moving to China, to learn about its culture and market structure. They are driven by the desire to enhance their own competitiveness in view of the perceived opportunities in China’s domestic market and the threat from its exports.

Less visible is the slow poison from India’s own lethargic response to the changing market dynamics. The increasing life expectancy and decline in birthrates in developed countries have resulted in the ageing of population in America and many parts of Europe. On the other hand, the population of India is getting younger. Hence, as logic dictates, India is exporting both students and teachers to these developed countries. This will in time lead to a devaluation of our own educational resources and intellectual thought leadership. As it is, a significant number of the intellectual property rights and patents filed by America originate from Indians living there. This will only increase, as more Indians contribute to the competitiveness of foreign countries than their own motherland. Moreover, the influx of foreign universities in India poses its own challenges of enhanced costs of education, fraudulent educational services to gullible students taken in by foreign labels, and a widening chasm between the elite who have access to the best education versus the economically challenged who cannot afford any education.

Threats and weaknesses depend also on India’s ability to negotiate favourable terms under GATS so as to protect its interests. These include issues such as protection of intellectual property in traditional areas such as ayurveda, yoga and the crafts and similar other negotiable issues.

A Roadmap

A roadmap for enhancing our competitiveness now becomes clearer if one wants to avoid the harsh reality of a skewed education services industry as discussed earlier. This requires a three pronged approach dealing with:

i) Government Level Initiatives

ii) Academic Industry wide steps

iii) Individual Education Service Exporters’ measures

I. Government Level Initiatives:

At the government level, two critical areas that demand attention are:

  • Negotiations at WTO under GATS

  • Policy reforms in the education sector.

At the WTO, India should:

  • Attempt a detailed definition of the educational services with a view to protecting its interests in nascent services.

  • Ensure removal of non-tariff barriers such as visa restrictions in the US post 9/11

  • Seek free movement of people with specific countries, on the lines of the proposal before the EU.

  • Ensure clarity on the issue of subsidies and grants to domestic institutions

  • Allow phased access to specific markets. Perhaps initial access should be provided to foreign institutes in core areas of higher and specialized education where skills are lacking in our country, while areas such as leisure, hobby and non-mainstream courses may be restricted.

  • Ensure protection of Intellectual Property, particularly in areas of research, Aurveda, Yoga and traditional systems of medicine, and ethnic art and handicraft.

  • Ensure parity and recognition for Indian educational courses abroad, and transferability of credits.

Reform the Domestic Education Sector

The education sector in the country is fragmented, disorganized and not cohesive enough to provide any significant competition. The government should:

  • Create a strong reserve of public education system - Globalization should not be at the expense of government investment in education. A solid foundation of public education should be laid down irrespective of private and foreign investment in the area.

  • Institute Regulatory Controls – The AICTE in early 2003 ruled that foreign institutions offering technical education in India would have to register and follow regulations. Regulatory controls over foreign institutions should be exercised so as to prevent manipulation of the consumer and fraudulent or exploitative practices, without creating unnecessary bureaucratic restrictions.

  • The entry of foreign institutions could be linked to the fulfillment of specific criteria such as :

  • Recognition and accreditation in the home country of the education provider.

  • Fulfillment of social objectives, community development and research, protection of interests of minority groups, economically challenged, women etc.

  • Mutual recognition of our educational courses in the foreign country

  • Curriculum Control – The education system needs drastic reforms with a view to :

  • Ensuring consistency and quality of the curriculum.

  • Ensuring development and quality of teaching faculty.

  • Enhancing the infrastructure in educational institutions.

  • Streamlining the educational policies and curriculum of independent states.

II. Academic Industry Level Initiatives

The academic institutes in India must follow the dictum "united we stand, divided we fall". A collaborative and integrated approach to exporting their services will benefit them more than any effort at individual excellence. This is the age of collaborative commerce where even competitors are collaborating together to bid for major projects. There is no reason why academic institutes whose ideological purpose is the sharing of knowledge, should not look at sharing it with their own.

This collaboration can take the form of:

  • Networking of management institutes

  • Collaborative marketing

  • Curriculum Reform

Networking of Management Institutes: A networked pool of academic wisdom is an urgent necessity borne of the unique circumstances of our existence in the knowledge economy. This could be done through activities such as:

  • An online sharing of databases on research, and other knowledge resources.

  • Deputation of faculty to the partner institutes having complementary centres of excellence, and thus providing synergistic growth opportunities for all.

  • Collaborating on academic research, social development, and industry projects, etc.

  • Acting as a single coherent channel for coordinating issues concerned with education, research and consultancy.

  • Contributing to building Brand Equity for India Inc

Collaborative Marketing: This is particularly significant given the fact that none of the academic institutes, with the limited exceptions of the IITs and IIMs, have either the brand equity among international students, or the resources to build one on their own. Joint efforts at participating in international education fairs, campaigns and promotions will be economical, and benefit the entire industry.

Curriculum Reform: Standardization and constant updating of curriculum as well as introduction of the latest educational methodologies are important to ensure consistency and parity, obtain recognition abroad, and prevent student migration.

III. Academic Institute

At the institute level there is need to install measures for improving the quality of education and professional management of the institute. This requires measures such as:

  • Enhancing industry academic interface

  • Proactive education

  • Retention of teachers

  • Systematic marketing

Industry Academic Interface

In the modern competitive scenario, professional institutes gain acceptance only when they fulfill their role of preparing candidates for employment in the industry. All too often though, the pursuit of academic excellence becomes an end in itself without regard for the practical relevance of the courses. On the other hand, there are institutions with an excessive orientation towards perceived industry needs, resulting in managerial resources with an almost upstart street smartness but little intellectual rigor or strategic thinking. A mutual common ground would offer a win-win situation and mutual advantages.

By involving the industry in the design and conduct of educational courses, the institutes would significantly enhance the demand and acceptance of their courses both in India and abroad, as well as contribute to preventing student migration.

Proactive Education:

As a visiting professor of marketing at various management institutes, I find that most of the institutes are not bothered about introducing subjects such as Yoga, meditation, sports, Vedic management practices, emotional intelligence, or personality development and grooming at the B-School level. Their only focus is on conforming to the bare minimum requirements needed for statutory approval. Yet, the success of an individual depends more on how well he is able to manage himself and his relationships, than on any textbook knowledge. Hence, a proactive approach to providing education according to the needs of the students, and the induction of the best processes, technologies and learning opportunities, will go a long way in differentiating the institutes.

Retention of faculty

The corporate world has long grappled with the issue of employee turnover and has developed specific human resource strategies for retaining special groups such as creative professionals, programmers etc. The academic world, newly grasped by the problem of faculty turnover, is at a loss to understand the circumstances that drive such behaviour. The problem is fast reaching critical proportions, and at recent estimates, a shortfall of 134,000 teachers is expected in technical education within the next four years.

To understand the situation better, it is necessary to look into the motivations that drive academicians. The profession of a teacher is not a financially lucrative career. The industry offers considerably better opportunities. Individuals who choose this profession would therefore have some or all of the following motivations:

  1. A desire to teach and watch people grow.

  2. A desire to study, learn and grow.

  3. A desire for respect and status in a society that traditionally reveres teachers.

  4. A growth motivation in favour of intellectual and social standing.

  5. A preference for a predictable, secure and relatively stress free lifestyle.

  6. A desire for independence

  7. A desire to avoid the political and competitive business environment.

  8. A desire to be seen as a thinker, and to pursue intellectual interests rather getting involved in operational issues.

  9. A desire to find employment that permits utilization of multiple skills, or permits time to discharge multiple professional and social obligations.

A look at the best practices followed by proactive institutes show measures such as:

  1. Housing in tranquil green environments near the workplace

  2. Opportunity for international travel

  3. Consultancy assignments/ Long leave for consultancy assignments. e.g. IIMs

  4. Encouragement to conduct research, write and publish articles and books etc.

  5. Freedom from Non-Teaching tasks and operations.

  6. Sabbaticals

  7. Optimum balance between time for teaching and time for research and creative pursuits.

Systematic Marketing

Systematic marketing and promotion of the institute among target audiences in India and abroad is a necessary measure, if the institutes expect to have any semblance of success in exporting their services. International institutes have long realized the need for such steps and have built up the resources to conduct marketing and promotion activities. Indian academic institutes on the other hand, have been too demand driven to bother about concerted marketing processes. However, the international arena is a different playing field and requires a more professional approach to marketing and promoting courses among foreign students.

Conclusion

In short, if we want to stand up and be counted as a significant player in the world trade in educational services, then it is necessary for the government, industry, and individual academic institutes to work in collaboration and overhaul their systems, processes, curriculum and marketing efforts before going global.

[The author is a Marketing Consultant]

 

Exim Bank signs MoC with GIC

A Memorandum of Cooperation (MoC) was signed between Export-Import Bank of India (Exim
Bank) and Gulf Investment Corporation (GIC) on August 13, 2007, in Mumbai. Executive Director of the Bank Mr. S. R. Rao signed the MoC with Mr. Muhammed Al-Melhem, Head of Diversified Projects Division of GIC.

The MoC would facilitate exchange of relevant information and joint identification of avenues to improve two-way trade and investment between GCC region and India. It envisages, among others, regular exchange of information on trade, business and investment opportunities to facilitate increased co-operation between the two sides; locating suitable joint venture/trade partners in order to promote the realization of business opportunities and facilitating trade and investment between GCC region and India; co-financing and co-investment of projects.

With India emerging as an attractive investment destination, companies from GCC countries could increasingly look for opportunities in India. FDI into India from the region amounted to only about US$ 542 mn, during period August 1991 - April 2007 (total FDI - US$ 56 bn), indicating that there is immense room for enhancing mutual cooperation.

Indian project exporters have been successfully implementing projects in a variety of sectors and in diversified markets overseas. Exim Bank has been supporting such activities of Indian companies, including projects executed in GCC region, which is, by far, the largest destination for India’s project exports.

In view of the opportunity for enhancing bilateral trade and investment relations with the West Asian region, Exim Bank of India recently opened a representative office in the prestigious Dubai International Financial Centre (DIFC), which is increasingly emerging as a major hub for financial activities in the region. The Dubai representative office of Exim Bank is set to play a key, catalytic role in enhancing the trade and investment between India and the West Asian Region.

 

Federation of Indian Export Organisations
New Delhi, INDIA.