In a significant move aimed at transforming India's higher education landscape, finance minister Nirmala Sitharaman announced during her budget speech on Sunday a proposal to establish five new university townships near major industrial corridors. This ambitious initiative could serve as a golden opportunity for foreign educational institutions seeking to establish campuses in India, though sector experts emphasize that greater clarity on land allocation and regulatory approvals is essential for its success.
A Strategic Academic Infrastructure Push
The government plans to support state governments in creating these comprehensive university townships, which will host multiple universities, colleges, research institutions, skill development centers, and residential complexes. According to Suchindra Kumar, partner and leader of education at consulting firm PwC India, this model could be particularly attractive to foreign universities that have been hesitant about the substantial capital expenditures required to set up operations in India.
"Some foreign universities are wary of the heavy capital expenditures. These townships will provide the infrastructure for universities to set up on a 'plug and play' model similar to Gift City, potentially attracting more institutions to enter the Indian market," Kumar explained.
Addressing the Student Exodus
This initiative represents a strategic effort to stem the growing outflow of Indian students pursuing education abroad. According to the Economic Survey for 2026-27, the number of Indian students studying overseas has more than doubled from 6.85 lakh in 2016 to over 18 lakh by 2025, making India the world's largest source of international students.
Indian learners predominantly choose countries like Canada, the United States, the United Kingdom, and Australia due to perceived superior education quality, work rights, migration pathways, and strong institutional branding. The economic survey highlighted a significant imbalance: "In 2024, for every one international student coming to India, 28 Indian students went abroad, with significant associated foreign exchange costs." Annual outward remittance under the 'studies abroad' component has increased to USD 3.4 billion in FY24.
Expanding Educational Horizons
The finance minister's announcements extended beyond university townships to include several new specialized institutions: a new National Institute of Design, a second National Institute of Mental Health and Neurosciences (Nimhans), additional National Institutes of Pharmaceutical Education and Research, a National Institute of Ayurveda, more All India Institutes of Medical Sciences, a National Institute of Hospitality, veterinary colleges, and Indian Institute of Creative Technologies partnerships with colleges.
According to Narayanan Ramaswamy, partner and national leader for education and skill development practice at KPMG India, these initiatives expand educational options beyond traditional engineering, medicine, and liberal arts courses. "This helps students explore emerging fields at home instead of studying abroad," he noted.
International Interest and Existing Models
Several international universities have already established a presence in India. Australia's Wollongong and Deakin universities, along with a joint initiative by the universities of Birmingham and Melbourne, currently offer courses in the country. Meanwhile, prestigious institutions including King's College London, Cambridge, Oxford, Massachusetts Institute of Technology (MIT), and Stanford University are actively exploring partnerships and dual-degree models with Indian counterparts.
The Need for Clarity on Implementation
While the announcement has generated optimism, education sector leaders caution that implementation details remain unclear. Ashwin Damera, co-founder and executive director of edtech platform Emeritus, described the university townships plan as a potentially positive development but emphasized that timelines will likely be extended.
"We don't yet know where these townships will be, how the land will be provided, or what the financial framework looks like," Damera stated, adding that multiple layers of approvals would still be necessary. "State governments will have to come on board, land acquisition and titles will need to be sorted, and then there's the question of whether universities have to buy land or get it at subsidized rates."
Damera, whose company partners with global universities including the Illinois Institute of Technology and universities of Aberdeen, Bristol, York, Liverpool, Victoria, and New South Wales to establish campuses in India, noted that most foreign institutions are not looking to purchase land extensively when entering new markets.
Limited Impact of TCS Reduction
The budget also included a reduction in the tax collected at source (TCS) on foreign studies from 5% to 2%. While this move provides some financial relief, experts believe it will have minimal impact on students' decisions regarding overseas education.
Piyush Kumar, regional director of South Asia, Canada and Latin America at IDP Education, explained: "Even though the TCS reduction is a positive signal for Indian students planning to study abroad, contrary to the narrative set by the government in the past 2-3 years about avoiding foreign outflow of students, it may not have any direct impact on either encouraging or discouraging students from pursuing higher education abroad."
He elaborated that while the 3% benefit translates to approximately ₹1 lakh in better cash flow for students self-financing their education (with total costs often reaching ₹40-50 lakh for tuition and living expenses abroad), this amount would otherwise be locked without interest for over a year until claimed in income tax returns.
The success of India's university townships initiative will depend significantly on how effectively the government addresses implementation challenges while creating an attractive ecosystem for both domestic and international educational institutions.
