Letters Of Intent Mark Beginning Of Foreign University Campuses In India

After more than a decade of deliberation, foreign universities were allowed to establish campuses in India in November 2023.

Since then, several top-ranking international universities have applied for and received letters of intent from the University Grants Commission to set up campuses in the country. Some more are currently under review. This is encouraging for many others who have been watching this space for a while.

Setting up a campus is a process. The LOI marks the beginning. Implementation typically starts post-grant. Multiple work streams ensue. Legal and regulatory being one of them.

The UGC regulations are light-touch, non-prescriptive and task the applicant universities to ensure compliance with applicable laws. Universities, therefore, need to understand and follow Indian law to ensure smooth functioning and reduce risk of non-compliance.

The crux of any such project lies in its structure. Unlike Indian universities, which have to be set up by a not-for-profit sponsor, foreign universities can choose between not-for-profit or for-profit structures, depending on the diktat of their parent charter requirements and expectations from the project. They can come into India on their own, in a consortium or with a joint venture partner — being a company or higher education institute in India.

These considerations open a plethora of structures from an Indian entry and operations standpoint. Each needs to be carefully evaluated from a legal and regulatory lens before marching ahead. Getting the structure right in the very beginning, ensures a lower likelihood for costly restructuring or repair.

The Indian campus will require capital investment for setup and operations. Funds that come in from overseas — require strict compliance with exchange control regulations and/or foreign contribution regulations as the case may be. Corporate structures will need to comply with the Indian companies law. It will be important for the foreign universities to understand the letter of the law and philosophy behind shareholder and director rights and obligations under Indian law.  

Foreign universities, therefore, should consider these aspects carefully and then sign off on a legally tenable structure, tailor made to their needs.

The UGC requires foreign universities to have independent campuses with physical, academic and infrastructure requirements to conduct its programmes. While these aspects may be fairly simple when a university comes to India on its own, complexities may arise in case of a joint venture or consortium arrangement where who controls what, and how, may need to be sketched at the initial structuring stages for clarity.

Development of India campus will require academics and other staff from foreign universities to spend time in India. There may be visa, social security, minimum wages, personal tax and other legal considerations attached to such requirements. All of these aspects should form part of the initial structuring exercise and be evaluated from a legal, commercial, tax and operational ease perspective.  

The importance of brand and intellectual property protection cannot be emphasised enough in the context of foreign universities. Part of the structuring and implementation plan also requires securing trademark and domain name registrations in a timely manner. Along with this comes the nuances of putting together robust agreements in place to ensure all the IP created as part of the project (brands, content, website, graphics, marketing material etc.) belongs to the university in the right manner. For this, legal and tax considerations connected with IP assignment and licence (nuances under copyright and trademark law, ownership of customised or derivative IP) need to be evaluated for structuring.

A key aspect of any project is taking the product to the market. With robust consumer protection laws, a content review of marketing material may also be a good idea to avoid any mis-advertising claims or backlash. The UGC is also likely to keep a keen eye on what the Indian campus is doing in this regard.

And as things begin to unfold, universities also need to think about customising their policies in Indian context (keeping in mind Indian culture and sensibilities), grievance redressal mechanisms and putting SOPs in place for seamless operations, while ringfencing directors' and key personnel liabilities in case of untoward situations.

In conclusion, establishing an offshore campus of a university represents a long-term commitment that must be executed correctly from legal, regulatory, operational and commercial perspective. This is of particular importance as the UGC regulations mandate universities to submit an annual audit report certifying compliance with the law. Foreign universities must address these aspects of their projects in India carefully to ensure a smooth run.

Vivek Kathpalia is a partner and Aarushi Jain is a partner (head — media, education and gaming) at Cyril Amarchand Mangaldas.

Disclaimer: The views expressed here are those of the author and do not necessarily represent the views of NDTV Profit or its editorial team.