Summary:
In continuation to Part I of the III part IFSC Education series available at Shaping Global Education: Foreign Universities in GIFT IFSC, this article focusses on certain frequently asked questions in the education sector, with the objective of bringing clarity to prospective universities intending to establish International Branch Campuses (“IBC”) in GIFT International Financial Services Centre (“GIFT IFSC”) either on a standalone basis or through an Academic Infrastructure Services Provider (“AISP”) model. These FAQs also explain how a Foreign Educational Institution can establish an Offshore Educational Centre (“OEC”) in GIFT IFSC, under the International Financial Services Centres Authority (Setting up and Operation of International Branch Campuses and Offshore Education Centres) Regulations, 2022 (“IBC and OEC Regulations”).
What is an IBC?
IBC means a campus set up as a branch by a foreign university on a standalone basis, or in such other form as may be permitted by the International Financial Services Centres Authority (“IFSCA”) in GIFT IFSC for the purposes of delivering courses, including research programmes in permissible subject areas, that are duly accredited under the relevant framework in their respective home jurisdiction. These are registered with the IFSCA.
What is an OEC?
OEC means a centre set up as a branch by a foreign educational institution (other than a foreign university) in GIFT IFSC on a standalone basis or in such other form as may be permitted by the IFSCA.
What is QS World Universities Ranking?
“QS world university ranking” refers to the annual publication of university rankings by QS Quacquarelli Symonds Ltd. For the purpose of these regulations, only the University’s global overall ranking “and / or the subject rankings” is required to be considered as specified in regulation 3(1)(viii) of the IBC and OEC Regulations.
What happens if the applicant is not able to set up campus within the 180 days as stated in the in-principle approval?
If the applicant is not able to set up required infrastructure within 180 days, it is required to make an application for extension of time to the IFSCA chairperson, 7 days before the expiry if such 180 days period. Subject to the request, the IFSCA chairperson may extend the period for not more than 90 days. An extension of the in-principle approval beyond that 270 days limit must require approval from the board of IFSCA.
Can the IBC or OEC set up on a for profit basis?
The IBC or OEC is expected to set up on a ‘for profit basis’, to enable capital transmission from home jurisdiction to the IBC or OEC set up in GIFT City.
Is the IBC/ OEC required to comply with Indian domestic laws enacted by Indian regulators in the higher education sector, such as the University Grants Commission, All India Council for Technical Education that govern different streams of academic programmes offered?
No, as per notification dated May 24, 2023, the University Grants Commission Act, 1956, and the All India Council for Technical Education Act, 1987, will not apply to campuses established in GIFT IFSC.
Do IBC/ OEC have minimum capital infusion or minimum capitalisation requirement?
No, the IBC and OEC Regulations, do not provide for any minimum capital infusion or minimum capitalisation requirements.
Do IBC/ OEC have a minimum space requirement?
No, the IBC and OEC Regulations do not provide for any minimum space requirements.
Can revenue be freely repatriated to the home country without any foreign exchange control restrictions?
Yes, IBC and OEC Regulations specially permits for the revenue earned by the IBC or OEC in GIFT IFSC to be freely repatriated to the home country..
Can the course, curriculum or content be modified to cater to GIFT IFSC requirements?
The IBC and OEC Regulations permit modifying the course curriculum or content with prior approval of the IFSCA and Parent Entity’s academic council, syndicate or any other competent body.
Can a Parent Entity have a representative office as an IBC or OEC?
No, an IBC or OEC cannot act as a representative office for the Parent Entity for undertaking promotional activities for their programmes in home and other jurisdiction.
What are the permissible currencies in which IBC and OEC can transact?
The IBC or OEC can undertake all transactions in any of the following currencies, which is required to be elected in its application to IFSCA:
- US Dollar,
- Euro (EUR),
- Japanese Yen,
- UK Pound Sterling,
- Canadian Dollar,
- Australian Dollar,
- Swiss Franc,
- Hong Kong Dollar,
- Singapore Dollar,
- UAE Dirham,
- Russian Rouble,
- Swedish Krone,
- Norwegian Krone,
- New Zealand Dollar,
- Danish Krone.
However, administrative expenses and certain business expenses may be defrayed in INR, through a separate special non-resident rupee account (SNRR Account) opened by the IBC with the authorised dealer bank in India basis the IFSCA’s January 29, 2025, circular.
Can IBC or OEC withdraw or discontinue a course or programme?
Yes, the IBC or OEC can withdraw or discontinue a course or programme, for any reason, with prior written IFSCA approval. However, the Parent Entity must provide an alternative to the affected students (transition plan), and this may or may not include reallocation of the course or programme conducted by it.
Since Foreign Universities in IFSC form a part of “Financial Services”, are they required to comply with IFSCA (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022?
IFSCA through circular dated November 18, 2024, has exempted IBC/ OEC from the applicability of IFSCA (Anti Money Laundering, Counter-Terrorist Financing and Know Your Customer) Guidelines, 2022.
What is AISP?
An AISP is a service provider providing services to IBC/ OEC. These may include providing any one or more of the built up campus facilities, research and development facility, library, laboratories, incubation centres, teaching classrooms, and incidental support services such as campus facility management services, student onboarding, admissions and student welfare services, services for recruitment and management of non-academic staff, branding and marketing, payroll, and any other service directly or indirectly supporting or assisting the delivery of courses by IBC and OEC in IFSC as provided under the IFSCA AISP Circular dated December 14, 2023.
Is an AISP an IFSCA regulated entity?
No, an AISP is not IFSCA regulated, but is regulated by the provisions of the SEZ Act, 2005, and the applicable rules and regulations.
Is AISP eligible for IFSC income tax holiday under Section 80LA of the Income Tax Act, 1961?
No, an AISP is not eligible for income tax holiday under Section 80LA of the Income Tax Act, 1961.
What are the eligibility criteria for an AISP?
- AISP should be incorporated as a separate company in GIFT SEZ;
- AISP should have a minimum net worth of USD 1 million or equivalent for providing academic infrastructure services and it must be maintained at all times while providing services to IBC/ OEC; and
- An AISP or any of its group companies must have at least three years of prior experience of providing similar services to recognised universities/ educational institutions in India or overseas.
Are there any obligations on IBC or OEC for availing AISP services?
An IBC or OEC is not obligated to use the services of an AISP, but if it does engage with an AISP, then it must:
- Enter into a formal written agreement with the AISP, covering at the least the provisions required under the AISP Circular.
- Provide a copy of the AISP agreement to the IFSCA immediately upon execution and must notify the IFSCA of any modifications or terminations prior to the agreement’s expiry date.
- Provide written confirmation to the IFSCA that no academic functions are being outsourced to the AISP, either directly or indirectly.
Conclusion:
This article provides clarity on the regulatory framework under the IBC and OEC Regulations and will help foreign universities and educational institutions intending to establish IBCs or OECs in GIFT IFSC. GIFT IFSC presents a compelling opportunity for foreign universities seeking to expand their presence in India, offering the ability to operate on a for-profit basis with free repatriation of profits, exemption from Indian domestic higher education laws, freedom to transact in multiple currencies, and no minimum capital infusion or space requirements. Degrees, diplomas, and certificates issued by IBCs or OECs enjoy the same recognition and status as if they were issued by the parent entity in their home jurisdiction, ensuring academic credibility for students.
The IFSC represents one of India’s most progressive regulatory environments, with the IFSCA committed to transforming IFSC into a leading education hub.
(Please note that the FAQs are intended to be provided just for the information of foreign universities looking to set up in GIFT IFSC and does not constitute legal advice. Basis amendments and circulars, the FAQs are subject to further updation.)
For further information, please contact:
Ketaki Gor Mehta, Partner, Cyril Amarchand Mangaldas
ketaki.mehta@cyrilshroff.com
