Clauses in FEI could deter foreign investments in India: USIBC

Lalit K Jha
Washington, July 3 (PTI) Backing India's decision to
open doors of its eduction sector, American corporates have
opposed some clauses of the proposed legislation, saying that
it has provisions that could deter foreign investments.
"The financial requirements proposed in the Bill, as
well as certain provisions, could dissuade some institutions
from establishing partnerships in India," the US-India
Business Council (USIBC) president Ron Somers has said in a
letter to India's Human Resources Minister Kapil Sibal.
Reflecting the views of the American corporate sector
on the Foreign Education Institutions (Regulation of Entry and
Operations) Bill 2010, Somers said there are a number of
provisions in the Bill that could deter foreign educational
institutions from investing in India.
Noting that many colleges and universities are ready
and willing to invest in India's educational system and are
eager to partner with Indian schools, Somers said it is
critical, however, that certain incentives be established to
guarantee their participation in such an endeavour.
"As the world's largest free-market democracies, the
United States must be leaders in driving global growth,
innovation and entrepreneurship. To do so, both countries must
equip the next generation with the education and skills
necessary to compete and win in the 21st Century economy," he
said.
USIBC has also submitted a set of recommendations to
the Parliamentary Standing Committee on Human Resource
Development, headed by Oscar Fernandes.
One of the major deterrent, USIBC said is the
provision which that all FEIs must maintain a corpus fund of
not less than 50 crore rupees (approx USD 11 million), only 75
per cent of which can be used for the development of their
institutions in India.
"The large majority of FEIs interested in investing in
India will be incapable of meeting this requirement. Many
universities, institutions and investors are willing and able
to invest funds into India, but they must be free to utilise
the full amount to help meet start-up costs. The inability to
access the full 50 crore rupees will deter these institutions
from entering the Indian education sector," USIBC said.
Also there is lack of clarity whether the 50 crore
funding requirement applies to small educational ventures, it
said. (MORE) PTI LKJ
MRD


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