Should India Allow For-Profit Private Education?
- Dr Sp Mishra
- Aug 12
- 9 min read
Updated: Aug 12
Why India needs to rethink the regulatory framework for private schools, colleges and universities
Key takeaways
Private institutions already dominate Indian education in practice: 82.9% of colleges, 71.4% of college enrolment, and State Private Universities that have now overtaken State Public Universities in raw count (AISHE 2023–24).
India regulates private education as if it must be non-profit, yet many of these institutions already operate, compete and price like commercial enterprises.
Under UGC's 2023 regulations, foreign universities entering India may register as a Trust, Society, Company, or other legal form, and set their own fees, so long as they are transparent and reasonable. Indian entrepreneurs face no equivalent option.
The real risk to students is profiteering, not profit. India should regulate exploitation, fee transparency, related-party disclosures and outcome claims directly rather than using non-profit status as a proxy safeguard.
Different ownership model; public, philanthropic, non-profit and for-profit, could coexist under one common framework of quality, transparency, financial accountability and student protection, with the regulatory focus placed on institutional conduct rather than legal form.
This builds on a similar argument made by Asha Gupta (UC Berkeley CSHE, 2022), extending it to schools and to the specific opening created by India's foreign-university regulations.
India is opening its higher-education system to foreign universities. The National Education Policy 2020 envisaged greater internationalisation, and the University Grants Commission subsequently created a framework for foreign higher educational institutions to establish campuses in India.
I have previously argued in the India Career Centre article, "Why Foreign University Campuses in India Are Not the Panacea for Our Higher Education Woes", that while foreign universities can add value, their arrival is not a solution to India's deeper higher-education challenges. India ultimately has to strengthen its own schools, colleges, universities, research ecosystem, faculty, industry linkages and employability.
But that debate leads to a larger question: if India is willing to invite foreign universities into its education market, should we also reconsider the regulatory framework governing Indian private education, the entire system, from schools and colleges to universities and professional institutions?
This is no longer a theoretical question. Nor is it a new one. Asha Gupta made a related case in her 2022 paper for UC Berkeley's Center for Studies in Higher Education, "A Case for For-Profit Private Higher Education in India", arguing that a large share of India's nominally non-profit private higher-education institutions already function as for-profit enterprises in practice, and that India should confront this gap between form and reality rather than continue to legislate around it. My argument builds on that same premise but extends it further, beyond higher education to schools as well, and into the specific opening created by India's own foreign-university regulations.
Private education is already a pillar of the Indian system
According to the latest All India Survey on Higher Education (AISHE) 2023–24, India had 1,289 universities or university-level institutions and 48,246 colleges registered, with total higher-education enrolment reaching 4.50 crore students. The more revealing numbers concern private participation:
Indicator | Government / Public | Private |
Colleges (share of responding colleges) | 17.1% | 82.9% (70.0% unaided + 12.9% aided) |
College enrolment (share) | 28.6% | 71.4% |
State Universities, 2019–20 (count) | 386 (State Public) | 327 (State Private) |
State Universities, 2023–24 (count) | ~462 (State Public) | 464 (State Private) |
University-level enrolment, 2023–24 (share) | 29.3% (State Public) | 21.4% (State Private) |
Total higher-education enrolment, 2023–24 | 4.50 crore students | — |
Figures for colleges and universities are drawn from the AISHE 2023–24 final report (Ministry of Education). The State Public University count for 2023–24 is corroborated by, but not identical to, the most recent UGC institutional listing (~460).
State Private Universities, now the fastest-growing category of Indian university, have overtaken State Public Universities in raw count for the first time.
The message is difficult to ignore: private education is no longer a peripheral supplement to India's public education system, it is one of its principal pillars. That makes it worth asking whether the regulatory philosophy governing private education is still appropriate for India in 2026.
Profit is not the same as profiteering
India's reluctance to allow for-profit education is understandable. Education is not an ordinary consumer product, students and parents often cannot assess an institution's quality before making a major financial and career decision, so there is a legitimate public interest in protecting them from exploitation.
But we need to distinguish between profit and profiteering. Profiteering involves unreasonable fees, misleading claims, poor-quality education, exploitation of information asymmetry or extracting excessive value from students. Profit simply means an enterprise earns more than it spends. A school, college or university may generate a surplus and use it to build laboratories, improve infrastructure, invest in technology, develop faculty or expand capacity. Even today, institutions are permitted reasonable surplus for continued operation and development, while profiteering and commercialisation are prohibited.
So perhaps the more important question is not whether an institution generates surplus, but what happens to that surplus, who controls it, and whether the arrangements are transparent.
India's private education paradox
Private educational institutions already operate in a competitive economic environment. Schools charge fees, recruit teachers and invest in infrastructure; colleges and universities develop programmes, compete for students and faculty, invest in campuses and laboratories, and respond to the employment market. In economic terms, these are characteristics of an enterprise, yet the institution itself is generally expected to operate on a not-for-profit basis.
There is nothing wrong with the non-profit model; a well-governed trust can ensure surplus stays within the institution and serves educational purposes. But should non-profit remain the only legitimate model for private education? That is the question India should now debate, particularly since educational institutions inevitably engage commercial entities for construction, technology, transport, hostels, food services and maintenance. A related-party transaction is not automatically improper, but it makes transparency essential.
Rather than asking whether an institution is a trust, society or company, regulators should ask: who controls it, who receives payments from it, are related-party transactions disclosed and conducted at market rates, how much goes into teaching and research, and what happens to the surplus. Transparency should matter more than the label.
Then India opened the door to foreign universities
The UGC's 2023 regulations allow eligible foreign higher educational institutions to establish campuses in India, and importantly, recognise foreign institutions that may be established in their home country as a Trust, Society, Company, Statutory Body or other legal form. The institution is not required to fit India's non-profit template merely because it is entering the Indian market. The regulations also allow foreign institutions to determine their own fee structure, subject only to it being transparent and reasonable.
This creates an obvious policy question: if India is willing to regulate a foreign university based on academic credibility, financial capacity, quality and conduct rather than legal form, why should an Indian educational entrepreneur be treated differently?
Why should nationality matter?
Imagine an Indian entrepreneur wants to invest ₹1,000 crore in building a university, strong academic team, substantial capital, an ambitious research programme. Why should the law prevent her from establishing it as a conventional company, attracting investors and providing legitimate returns?
If the concern is exploitation, regulate exploitation. If it is excessive fees, regulate fee transparency. If it is poor quality, regulate quality. If it is misleading placement claims, regulate placement reporting. If it is related-party transactions, regulate related-party transactions. Why must the solution be to prohibit the profit-making form itself?
This is not an argument for unregulated commercialisation, quite the opposite. Greater freedom in ownership should come with greater transparency and accountability.
The reform should cover schools too
It would be a mistake to limit this debate to universities. Parents experience private schooling as a paid service, tuition plus charges for transport, activities, technology and examinations, yet the institution is generally expected to operate within a non-profit framework, and the regulatory response has focused heavily on controlling fees.
But if the real concern is protecting parents from excessive or arbitrary fees, why should the school's legal form be the primary lever?
A private school could operate as a company while being required to disclose its complete fee structure, publish audited financial statements, meet prescribed academic and infrastructure standards, comply with student-safety requirements, disclose related-party transactions and prohibit capitation or arbitrary fee increases. The same principle could apply to colleges and universities. The details would differ because school and higher education sit under different regulatory frameworks but the underlying philosophy need not be different.
One framework, many forms
India does not need one regulator or one fee formula for every institution, schools, colleges, universities and professional bodies have different purposes, and state governments, the UGC and professional regulators will keep their distinct roles. What India needs is one underlying philosophy: different ownership models permitted, but every institution held to common principles of quality, transparency, financial accountability, student protection and truthful disclosure.
A philanthropic school could remain philanthropic. A non-profit college could remain non-profit. A private university could operate as a trust. And, subject to appropriate safeguards, a school, college or university could operate as a conventional company. The regulator should focus on what the institution does, not merely what legal form it adopts and allowing for-profit education would not require India to abandon the non-profit model. Public institutions can remain public, philanthropic ones philanthropic, and for-profit institutions could simply become another category, competing on quality, research, innovation and outcomes. That is likely healthier than forcing every private institution into the same ownership philosophy.
A company is not automatically exploitative. A trust is not automatically virtuous.
We instinctively associate a trust with public interest and a company with private interest. But legal form is not a substitute for good governance: a company can be transparent and highly accountable; a trust can be as well but the reverse can also be true.
Suppose one university is a non-profit trust with weak infrastructure, outdated laboratories and poor employment outcomes, while another is a for-profit company that invests heavily in research, faculty and industry partnerships and delivers excellent outcomes. Which is better for the student?
The answer should not be determined by ownership structure alone. The student should be at the centre of the regulatory framework and not the legal form of the institution.
India needs capital as well as accountability
India's educational ambitions; better schools, stronger universities, world-class research infrastructure, international faculty, industry-linked programmes, greater internationalisation, require enormous investment that government, philanthropy and existing trusts cannot finance alone. Private capital will inevitably remain important. The question is whether that capital should operate through structures where ownership and returns are constrained and often opaque, or through a transparent framework where investment, ownership, profit, taxation and governance are openly acknowledged. I believe India should seriously examine the latter.
The real reform India should consider
I would not frame this as "education should become a business" that is too simplistic. The real proposition is: India should allow multiple ownership models across private education while creating a common framework of quality, financial transparency, accountability and student protection.
A trust should not receive a presumption of virtue merely because it is a trust; a company should not receive a presumption of exploitation merely because it is a company. If an institution charges students money, it should be accountable for the value it delivers. If it makes profits, those profits should be transparent and appropriately taxed. If it claims employment outcomes, those claims should be verifiable. If it has related-party transactions, they should be disclosed. Preventing profiteering and preventing profit are not the same thing.
A debate whose time has come
India's education system has changed dramatically, and private institutions now carry a substantial share of a system serving 4.50 crore students in higher education alone. At the same time, India is inviting foreign universities to participate.
Perhaps this is the moment to ask a larger question: if India wants its own institutions to become globally competitive, should we not also examine whether our regulatory framework gives them sufficient institutional freedom, access to capital and professional governance to achieve that? Foreign universities may bring valuable competition and collaboration, but they cannot solve India's education challenges for us. India will ultimately have to build its own world-class institutions.
Perhaps that requires rethinking an assumption that has shaped private education for decades: does an institution have to be non-profit to serve the public interest?
The better principle may be simpler, let different institutions have different ownership models, but hold every one of them, public, private, non-profit, for-profit or foreign, to high standards of quality, transparency and accountability.
That is a debate India should now have.
References:
All India Survey on Higher Education (AISHE) 2023–24, Ministry of Education, Government of India.
UGC (Setting up and Operation of Campuses of Foreign Higher Educational Institutions in India) Regulations, 2023.
Asha Gupta, "A Case for For-Profit Private Higher Education in India," CSHE 8.22, Center for Studies in Higher Education, UC Berkeley, October 2022.
Dr SP Mishra, "Why Foreign University Campuses in India Are Not the Panacea for Our Higher Education Woes"
About the Author:
Dr SP Mishra is the Founder of India Career Centre, a Hyderabad-based career guidance, study-abroad consulting and educational research organisation. He writes and speaks on career decision-making, higher education, skills, employability and the future of work in India. Also hosts the India Career Centre Podcast. Connect on LinkedIn.
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