A foreign university aspiring to set up a campus in India will have to deposit Rs 50 crore as corpus fund and cannot take back the surplus generated from education activities here. These tough conditions are part of a bill approved by the union cabinet today to allow entry and operation of foreign education providers in India.

After hanging fire for over four years, the Foreign Educational Institution (Regulation of Entry and Operation) Bill, 2010, was cleared by the cabinet presided by Prime Minister Manmohan Singh. This paves way for its introduction in parliament.

The major provisions of the bill are conditions like Rs 50 crore as corpus fund to be deposited by the aspiring institute to be allowed to operate in India.

Each institute will have to be registered with the University Grants Commission or any regulatory body in place at the time of registration.

The bill has a provision under which the government can reject an application of a university if it feels that venture will have an adverse impact on national security.

"This bill is a milestone which will enhance choices, increase competition and benchmark quality," HRD Minister Kapil Sibal said after the approval of the bill by cabinet.

Provisions of Section 25 of the Companies Act will be applicable for the foreign institutes. Under this provision, they cannot take the profit back but will have to spend the amount for further expansion of the institutions here.

The foreign education providers can involve in other activities like consultancy projects and the profit generated from those projects can be taken back by them.

This bill was hanging fire for over four years owing to opposition from various quarters, including the Left parties, over certain provisions. Last year, it was referred to a Committee of Secretaries which brought modifications to certain provisions earlier existed.

The bill was approved by the cabinet without any change today.

The proposed law prescribes a time bound format for granting approval to foreign educational institutions to set up campuses. They will go through different levels of registration process during this period and will be finally registered with UGC or any other regulatory body in place.

The regulatory body will scrutinise the proposals of aspiring institution as per India's priorities and advice government whether to allow the institute operate in India.

Sibal has already said that quota laws will not be applicable to foreign universities setting up campuses in India.

The passage of the bill in the Cabinet has attracted appreciations from educational institutions, including foreign universities.

"It is a milestone step. It will increase quality and access in the Indian education system. It is an opportunity programme for the foreign universities," George Joseph, assistant secretary for International Affairs of Yale University, told PTI.

Though Yale has no immediate plan for setting up a campus here, it has entered into more than 50 collaborations in India and is interested for more such partnerships, said Joseph, who is currently travelling India.

The cabinet passed the bill at a time when two major global institutions like Duke University from the US and Imperial College, London, have evinced interest to set up full-fledged campus in India.

"They are waiting for the passage of the bill in parliament," a ministry official said.

Though 100 percent foreign direct investment through automatic route is permitted in the education sector since 2000, the present legal structure in India does not allow granting of degrees by foreign educational institutions here.

The foreign education providers bill is one of the major reforms bills of the HRD Ministry.

Three other reforms bills, which were slated to be taken up in the Cabinet, were deferred to the next meeting.

These are -- Prohibition of Unfair Practices in Technical, Medical Educational Institutions and Universities Bill, Educational Tribunal Bill and Accreditation Bill.