The increasing trend of Indian students seeking higher education overseas, coupled with a significant drop in international student enrolments in Indian universities, is contributing to a growing financial challenge for India’s economy. Recently, India’s current account balance has shown a deficit of $6 billion, with educational expenses playing a notable role.
Over the last decade, the spending by Indians on educational travel has seen a dramatic rise, more than doubling from $2.46 billion in the fiscal year 2015 to a staggering $6.3 billion in 2024, according to the Reserve Bank of India’s (RBI) quarterly Balance of Payments data.
This substantial increase is closely linked to the rising income levels among India’s middle class and the allure of better-paying job opportunities abroad, with many students using education as a stepping stone to immigration.
The number of Indian students going abroad has seen a consistent rise. As per the Indian Student Mobility Report 2023, around 1.09 million Indian students pursued education abroad in 2019. This number increased to approximately 1.32 million by 2022, with projections estimating that by 2025, around 2 million Indian students will be studying overseas. The report predicts that the total spending by these students could reach $70 billion by 2025.
Countries like the United States, Canada, the United Kingdom, and Australia remain top choices, attracting Indian students with high tuition fees and living costs, which contribute to the significant outflow of funds. Other popular destinations include Germany, Ireland, Singapore, Russia, the Philippines, France, and New Zealand.
Unlike the vast number of Indian workers abroad who contribute to the economy through remittances, students do not send money back home, further widening the financial gap.
Demand-Supply Gap in Indian Education
Maheshwer Peri, founder and CEO of Careers360, an educational service provider, highlighted that India’s changing demographics, especially within the top 20% upper strata, are driving this trend. “The ballooning middle and upper middle class, rising stock markets, and increased funding through non-bank financial companies (NBFCs) for education loans have made paying for education abroad more feasible,” he said.
Peri noted that the cost of an undergraduate program at a top private university in India can range from $60,000 to $100,000, which has significantly narrowed the cost gap with institutions abroad. However, the growth of private institutions in India has not kept pace with the demand, creating a gap in supply. Admission to public institutions remains highly competitive, with only the top two percent of applicants having a realistic chance of securing a spot.
He further added that the quality of education at private institutions in India has not matched the growing aspirations of students. In fact, some globally ranked institutions abroad are considered a better investment, contributing to the sharp increase in the number of students opting to study overseas.
Peri also pointed out that immigration agents are increasingly using the study route to facilitate settlement abroad, which has led to a rise in student visas.
Decline in International Students in India
On the other hand, Indian universities are witnessing a significant decline in the enrolment of international students. Revenue from education-related travel to India has dropped sharply from $519 million in the fiscal year 2015 to just $247 million in 2024, nearly halving in a decade, according to RBI data.
Despite a slight recovery in foreign exchange earnings from educational travel to India in the fiscal years 2023 and 2024, rebounding from a low of $109 million in 2022 due to the COVID-19 pandemic, the figures remain significantly lower than the 2014-15 levels.
To address this decline, the National Education Policy (NEP) 2020 has emphasized internationalization, proposing various measures to enhance India’s appeal as a global study destination. The University Grants Commission (UGC), India’s higher education regulatory body, has introduced guidelines for academic collaborations between Indian and foreign institutions, including the option for dual and joint degree programs.
The Indian government’s push to establish international joint and dual degrees, along with branch campuses in Ahmedabad’s GIFT city, is often seen as an effort to curb the outflow of Indian students seeking education abroad. The UGC has also recommended setting up an Office for International Affairs within higher education institutions to attract and support foreign students.
Challenges with the ‘Study in India’ Program
However, these initiatives have seen limited success. The government’s ambitious ‘Study in India‘ scheme, launched in 2018 by the Ministry of Education as a flagship project, aimed to position India as a leading education hub for international students. The program offered scholarships and fee waivers to outstanding students and initiated student exchange programs with partner nations.
A senior professor at Delhi University, speaking anonymously, criticized the program for failing to attract foreign students due to insufficient investment. “We have not invested enough in our education sector. Private institutions charge high fees, and students prefer to study in Western countries where they receive quality education and better infrastructure, along with the opportunity to work post-graduation,” he said.
Data from the All India Survey on Higher Education (AISHE) final reports shows that the enrolment of foreign students increased by only 16.68% from the fiscal years 2015 to 2020, despite the government’s efforts. In the fiscal year 2021, the number of foreign students dropped to 48,035 and further declined to 46,878 in 2022, largely due to the COVID-19 pandemic.
Most of the foreign students in India come from South Asian and African countries, with Nepal sending the highest number. Nepal’s share of foreign students in India increased from 21% in 2014-15 to 28% in 2021-22. However, the percentage of students from Afghanistan, Bhutan, Malaysia, Sudan, and Nigeria has declined since 2014-15. Afghanistan and Bhutan accounted for 6.72% and 3.33%, respectively, in 2021-22, making them the second and sixth largest sources of foreign students in India.
In 2021-22, the United States accounted for the third-largest share of foreign students in India at 6.17%, followed closely by Bangladesh (5.55%) and the United Arab Emirates (4.87%).
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