Published On: Tue, Nov 15th, 2011

CII demands easier FDI in Indian Higher Education

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Confederation of Indian Industry

CII demands easier FDI in Indian Higher Education

The Confederation of Indian Industry (CII) has demanded easier Foreign Direct Investment (FDI) norms for Indian Higher Education. It said that FDI in a Section 25 company against equity subscription should not come under the purview of the Foreign Currency Regulation Act (FCRA) at a Higher Education Summit hosted by it .

In higher education sector, most for-profit entities usually receive funds through a trust, society or Section 25 company.

According to legal authorities and accounting firms opinion investment in a Section 25 company in exchange for a share subscription does not come under FCRA. How ever investors are jittery as the FCRA legislation has harsh penal provisions.

The industry body said it had submitted a paper to the Planning Commission in this regard for inclusion in the Twelfth Plan.

Further CII has also sought a clarification from the Ministry of Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI), that if a Section 25 company issues capital to the public in an initial public offer or private placement, it should neither lose tax exemption nor its not-for-profit status just because the shares are valued above par.

At present, 100 per cent FDI is allowed in education. Since only a Section 25 company can issue share capital, it is the most preferred medium for investment instead of trusts and societies.