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US B-schools to gain at IIMs’ cost


Friday 6 February 2004, by GOSWAMI*Urmi A.

NEW DELHI: Murli Manohar Joshi might have just played into the hands of the developed countries, specifically the US, by slashing IIM fees.

This is because financial pressure on IIMs would almost certainly nix their attempts to expand overseas into the Asian market, leaving the region open to US and other western educational institutes.

The Americans have been at the forefront of pricing open markets for education services under the General Agreement on Trade in Services (GATS), which came into force in 1996. GATS provides for legal rights to trade in all services except those taken care of entirely by the government.

Education is one of the 12 services included in the list of activities binding member countries to allow market access and to remove restrictions in the path. Higher education is the fifth largest service exported by the US.

According to some estimates in 1996, the US exports of education and training services reached a figure of $8.2 billion.

While trade surplus in education amounted to $7 billion. While it would like access to other markets, it would naturally prefer if it did not have to face competition.

This is where the HRD ministry’s decision to reduce fees seems to work in the US’ favour. Indian institutes of higher education, like the IITs and IIMs too could set up campuses abroad. IIT is already in the process of setting up campuses in South East Asia, but so could the IIMs.

As a matter of fact, experts feel that given the growing synergies between India and the ASEAN region, institutes like the IIMs would be best placed to provide academic, research and consulting framework in the region given common regional interests.

Reducing fees at the IIMs could result in capital crunch when considering such expansion activities. Even though the HRD minister has assured that funds would never be a problem, fact is even constitutionally mandated programmes like the Sarva Shiksha Abhiyan and the mid day meal programme have often faced problems because of scarcity of funds.

Experts say that in the Asia, India has the best chance of providing the region with the "knowledge infrastructure". In other words at least in the Asian continent, India can be a competitor to the US and EU in the area of educational services. This could also be an important bargaining chip when it comes to "reciprocity" talks with the USTR Robert Zellick.

However, by fiscally disabling the India’s best institutes of technical education (all of which are state funded), it seems to have frittered away an advantage.

See online :


The Economic Times, Friday, February the 6th, 2004.

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