Navigating financial challenges in India

Ed Dixon

Group Chief Operating Officer and Managing Director
Sannam S4
Weddings and education. Over generations, these have been the two signature investments for Indian families. But while Indian weddings are as large and lavish as ever, the shape of education is evolving.

The developing story is that UK transnational​ education (TNE) is growing in India, even as international student mobility to the UK is fairly static. Enrolments to UK-India TNE programmes have grown steadily over the last five years to 8,110, according to UUKi's recent report, The Scale of UK Higher Education Transnational Education 2015-16. This puts India 10th in the world for the number of UK TNE programmes being delivered.

In my view, there is no doubt that the market fundamentals remain strong and steady growth can be expected. But what sort of growth? Rather than allow the international branch campus model seen widely in other parts of Asia, the Modi Government has preferred the gradual development of international collaborative partnerships to support 'home grown' excellence. Collaborative programmes account for 80% of the TNE work in India, although there has been a recent announcement on online education (as yet unrecognised in India) which may rebalance that a little.  

The government's key move in higher education has been the recent announcement on the establishment of 20 'Institutes of Excellence', which the government hopes, in time, will make a strong showing in global rankings. The selection criteria for the 20 institutes includes showing a track record on partnerships, and once identified, they will have more autonomy than other institutions to pursue additional partnerships.

So, if you feel the growing TNE market in India could be a great opportunity for your institution, keep the following tips in mind:

  • Make sure institutional objectives are clear, and have the necessary buy-in. Is your proposed TNE activity to support existing activity, or to develop a new revenue stream? Although any successful activity in India requires long-term commitment, if you are willing and able to make the investment, collaborative partnerships are likely to be more relational and 'stickier' than student recruitment, which is essentially transactional. 
  • Choose your collaborative partner carefully. The brand association of a public institution may bring status, but a private institution is likely to be more dynamic and more commercially minded. Importantly, it is also likely to be able set higher fees.
  • In the planning stage, review and re-model enrolment assumptions regularly in case numbers do not flow as predicted. India is a price-conscious market and programmes enrolments are modest (compared to Malaysia, China, Singapore etc.), thus reducing the potential for delivering economies of scale. 
  • Carefully structured agreements (referencing liabilities, University Grants Commission/All India Council for Technical Education compliance, banking guidelines, payment terms and intellectual property protection) will help you avoid most standard pitfalls. Do not rush the development of an agreement - and definitely do not be tempted to try to apply a successful template for China to India.

  • India's new goods and services tax​ (GST) will apply to the more commercial side of TNE, for example executive education and corporate training and will be charged at 18%. So, it is imperative to consider the impact of that when developing the pricing strategy. However, local expertise can often minimise the impact of GST on TNE through careful structuring of agreements in order to take advantage of various exemptions (if applicable to your business model). 
  • Finally, when repatriating income, ensure students pay the UK partner directly whenever possible to mitigate tax and regulatory complexities. And wherever payments flow from Indian partners to UK institutions, make sure the agreement includes explicit clauses to cover liabilities, tax withholdings and responsibilities etc.

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