India’s human resources development minister Kapil Sibal has a new mission: He wants to create homegrown education “brands,” or elite universities with the same type of cache among the population as that enjoyed by the Ivy League in the United States. “We intend to nurture these select universities like the public sector navratnas, through generous financial support, freedom in access to external funding, and total autonomy so as to free them from the shackles of governmental control,” he told the 98th Indian Science Congress inauguration early this year. The navratnas are public sector undertakings that have been given a certain amount of independence in making operational and financial decisions. “We are working on the concept of having navratna universities, or an Indian Ivy League,” Sibal added.

The minister’s plan to nurture these education “brands” has two sides. One is to encourage U.S. institutions to open branches in India; the other is to facilitate the creation, or upgrade, of homegrown institutions. In March 2010, the Union Cabinet approved the Foreign Educational Institutions (Regulation of Entry and Operations, Maintenance of Quality and Prevention of Commercialization) Bill. Though quite a mouthful in name, its purpose is simple: to allow foreign universities to set up campuses in India and confer degrees. The bill has, however, met with resistance both inside the governing coalition and outside on grounds that it promotes elitism. It is yet to become law.

The bill requires that all foreign universities planning to set up shop in India be at least 20 years old. These institutions have to maintain a corpus fund of a little more than US$10 million (Rs 50 crore). This is essentially to separate the chaff from the wheat. “A number of foreign educational institutions have been operating in the country, and some of them may be resorting to various malpractices to allure and attract students,” according to the bill. Estimates show there are more than 150 foreign universities with “twinning” programs with Indian schools that allow students to spend part of their time on each campus. In addition, foreign universities send their faculty to the country to conduct short-term courses. This too is unregulated at the moment, however.

The other issue is that Indians spend large sums to study abroad. Every year, some 500,000 students travel elsewhere to attend college, spending around US$10 billion. The new bill could help save at least US$7.5 billion, according to a study by ASSOCHAM, which represents India’s business community. “This will also prevent brain drain, as students who go overseas for higher education usually prefer to work abroad,” the report added. Foreign institutes in India will also attract students from third-world countries.

The government’s insistence on the US$10 million corpus to prove financial muscle and a 20-year heritage underscores the importance of the brand. But Ivy League schools are not exactly falling over each other to set up shop in India. They fear that adding an India campus may dilute their brand, experts say. The worst-case scenario is that only second-rung institutes start campuses here, producing only second-level graduates at home while the outflow of talent and money overseas continues.

“India is fast becoming an important economic zone globally and it would be in the interest of institutions abroad to engage with the country on an equal footing,” notes Pankaj Chandra, director of the Indian Institute of Management (IIM) Bangalore. “The challenge will be to ensure that only quality institutions enter India to forge partnerships or start their own campuses.”

The Dangers of Dilution and the Rise of ISB

The foreign institutions are getting their visa to India at a time when the debate about Indian education brands is becoming more intense. On the one hand, the private sector is entering the field of primary and secondary education with for-profit models. This has caused the expected heartburn amongst those who feel that education at that level should be free. The more germane issue concerns the highly-rated Indian Institutes of Technology (IITs) and the India Institutes of Management (the IIMs), which are known all over the world. There are hundreds of IIT graduates teaching at U.S. universities. They form the backbone of many tech companies, becoming so ubiquitous in the Internet era that Michael Lewis wrote in his book, The New, New Thing, “The definitive smell inside a Silicon Valley start-up was of curry.”

The IIMs have also made their mark, though in different places. In China, where there is no need to import engineers, there are IIM alumni associations in Beijing and Shanghai. The IIMs are the most difficult institutes in the world to get into, according to The Economist. Alumni have gone places in corporate India. According to a survey by executive search firm EMA Partners, “33% of the CEOs from top Indian companies are from IIM. Some 16% are from IIT.” EMA managing partner India K. Sudarshan describes the institutions’ domination as “undeniable. No other institute in the country comes close to them.”

As government-supported organizations, however, the IITs and the IIMs have several crosses to bear. Government meddling in academic matters is one. Low pay scales for professors, which makes it more difficult to attract the best talent, is another. But the biggest problem is dilution of the brand, experts note. The government has addressed the lack of quality higher education institutes in India by opening new campuses and labeling them IITs and IIMs. There are 15 IITs now, more than half of them having come up in the past two to three years. Sibal has already expressed unhappiness with the growth, saying that the new IITs lack adequate infrastructure. Until a couple of years ago, there were seven IIMs. In 2009, the Union Cabinet approved another seven, which are in various stages of being set up. “IIMs are of varying vintage,” says IIM Ahmedabad director Samir K. Barua. “Each IIM is an independent institute and has its own legacy. As any averaging process helps those below the average and harms those above the average, umbrella branding will hurt the older and well-established IIMs.”

“Just the act of setting of more campuses may not dilute the mother brand,” adds K. Raman, head of infocomm, media & education at Tata Strategic Management Group (TSMG), an independent management consulting firm. “However, if the processes to ensure quality of inputs and access to experts and industry are not in place, that is when the dilution starts. This is true of any industry. An uncontrolled expansion without the underlying process will impact brand equity of any product or service.”

There are fingers being pointed at the IIMs. With all their credentials, they have been unable to break into the top league of global B-schools. “It’s a problem of image,” admits IIM Calcutta dean Sougata Ray. Adds director Shekhar Chaudhuri: “We are making all efforts to tackle this problem.” This is the 50th year of IIM education in India and the older institutes are doing some soul searching. “We have to continue to be relevant and the best,” Chaudhuri says.

The IIM-Calcutta director is not afraid of the arrival of the foreign universities. The best won’t come, he says. Others will take time to establish themselves. The foreign universities that set up shop in Ras al Khaimah in West Asia have not been able to attract enough students. Besides, those who can afford it will always prefer to go abroad. Education abroad gives students more than just learning; it gives a worldview — international exposure.

What is probably more worrying for the IIMs — though not admitted — is the rise of the Hyderabad-based Indian School of Business (ISB). The ISB has just entered its 10th year. Yet, in the Financial Times global B-school rankings, it was No. 12 in 2010. (London Business School was No. 1, Wharton No. 2 and Harvard No. 3.) The IIMs were not in the top 100, nor were the high-profile B-schools attached to the IITs. “FT ranks only programs that admit students with a minimum of two years’ work experience,” says Chandra of IIM-Bangalore. “Most of the students in the IIMs have no experience.” This means the institute starts at a disadvantage and several IIMs don’t even bother to participate in the survey.

“This year, IIM-Ahmedabad submitted its details for getting ranked [by FT] for the first time but for its one-year program, which has students with experience, and not for the flagship two-year course,” Chandra says. “In this ranking, IIM-Ahmedabad was No. 11, which is terrific for a first-time applicant.” Adds Barua of IIM-Ahmedabad: “IIMA’s flagship program did not qualify for inclusion in the list as it is not a post-experience program.” But this fact is not at all well known in India and the publicity given to the lack of an IIM presence in the top order affects its image.

The ISB success — and insistence on students entering with the benefit of previous work experience — has lessons for education branding. How did ISB do it? “We had to break many established beliefs within the academic community to speed up the establishment of our reputation,” according to ISB dean Ajit Rangnekar. “We identified five key areas in the beginning, partly based on Peter Lorange’s excellent work at the [International Institute for Management Development in Switzerland] — an outstanding student body, a world-class curriculum, global faculty, a strong infrastructure and a very committed staff to look after the ‘business’ part of the school.” Officials at Wharton and Northwestern University’s Kellogg business school helped ISB develop its curriculum, and to create a model to attract global faculty to teach at the school, Rangnekar said. “[We] attracted brilliant students from the beginning. The presence of the who’s who of corporate India on the ISB board was also a huge help in getting instant credibility.”

When building an education brand, “trust is everything,” Rangnekar says. “Trust among the students that they will get the promised level of education, that they can significantly enhance their careers by completing the course, that industry recognizes the value of their education and that the school will support them over their career.” Also important, he adds, is trust among the faculty that the school will provide them a strong, supportive environment for furthering their careers, and trust among the corporate world that students or executive education from that institution will help further the organization’s goals.

“Many factors have led to ISB establishing itself so quickly,” according to Gopal Shrikanth, a CEO coach & strategist. “These include: Ivy League partners; a board composed of industry icons and academic gurus; recruitment by corporate sponsors such as McKinsey; … candidates with five-plus years [work] experience; international exposure — [including] a semester at Wharton or Kellogg; and a shorter course [one year] compared to the IIMs. This makes [companies] more amenable to granting a sabbatical and families are also more supportive.” Adds Raman of TSMG: “ISB was established on a commercial model and has gone about building their brand more consciously and efficiently. Hence, in a shorter time they seem to have created a greater impact.”

Beyond the Alumni

One potential advantage for Ivy League schools setting up campuses in India is that they already have alumni in high places. More importantly, these schools have “engaged” with those alums from the very beginning because American colleges depend on graduates for financial contributions. The IIMs are funded by the government. They don’t need to woo past pupils now in a position to give back. It’s only today, with funds drying up for several reasons, that the IITs and IIMs are looking towards their alumni.

The alumni are important. But what else matters? According to Barua of IIM- Ahmedabad,“The factors that contribute to the brand include: the portfolio of activities; the relevance of the curriculum of the programs offered; the quality of the academic processes; the quality of the cohort admitted to the programs; the quality of teaching; the quality of the research, and the placement opportunities to students and graduates.”

CEO coach Shrikanth divides the essentials into four buckets: The “Academic Halo,” or tie-ups with leading international universities, global gurus on the governing board and visiting and full-time faculty from leading universities. The “Industry Halo,” including sponsorship by global companies and the induction of top CEOs on the governing board. Third would be infrastructure issues, such as proximity to major cities, proximity to a student pipeline and conference halls to host industry events. Lastly, there are public relations concerns, like the need to conduct high-power events in terms of external participation and a dedicated media management group.

Indian schools, particularly the newer variety, may not have all that. But nor will the foreign schools at their India campuses. That is why at the institutes nobody seems particularly worried. “The Indian management school landscape is quite mature,” says Chandra of IIM-Bangalore. “Our programs are quite relevant, robust and cutting edge. The only challenge that I see relates to faculty, as the pool is not very large.” Adds Ray of IIM-Calcutta: “The faculty is the challenge.” But there could be a problem for the institutes that depend on government grants. Their pay scales for faculty are dependent on government norms.

But Ray doesn’t expect a flood of foreign schools once the gates are opened. Neither does Rangnekar of ISB, who says it is unlikely that top foreign universities will rush to build full-fledged India campuses right away because “even top institutions are not exactly flush with funds, and building new campuses outside their home country does not seem to rank high on their list of priorities.” The preferred route, he says, will be through collaborations with existing Indian institutions. “The top foreign institutions are extremely conscious of the sanctity of their brand, and will want full assurance that the collaboration will enhance their own brand. That means Indian b-schools will have to convince their potential partners of their high governance standards. Such collaborations will also strengthen the competitive position of the various Indian b-Schools, and hence their ability to attract students and recruiters.”

But it is not necessary that every school that comes in will automatically succeed. “While India does offer an opportunity, it is a discerning market,” Barua of IIM-Ahmedabad says. “The entrant will have to very carefully choose the quality-price trade-off to make the programs ‘value for money’ propositions to the target segments.” Ray of IIM-Calcutta says that every institute — Indian or foreign — with the money can obtain the necessary infrastructure, such as classrooms and libraries. “It’s the software — the faculty, the right quality students, the alumni, the intellectual property… that is the challenge.”

Harsha Jhunjhunwala, one of first batch of alumni from one of the newest IIMs at Shillong in northeast India, uses another software analogy to describe education branding, particularly umbrella branding under the IIM marquee. “Confidence and trust in an institute are like software versions in reverse,” she says. “For software, the newer is better; but for institutes, the older is better.” Thus, she says, Harvard 2.0 or IIM 7.0 must go a long way in a short time to prove themselves.