Days after Congress president Sonia Gandhi said that she personally favoured private sector participation in education, a Group of Ministers on Tuesday cleared a proposed legislation that will allow foreign universities to set up campuses in India.

Once approved by the Cabinet and passed as law, the Foreign Education Providers (Regulation) Bill will grant deemed university status to such institutions.

According to the proposal, the universities will have to set up campuses on their own and will not be allowed to adopt the franchisee route.

Prior approval of the University Grants Commission would be mandatory for such a project and the embassy of the country of its origin would have to certify the antecedents of any institution, sources said.

Making the announcement in New Delhi on Tuesday, Commerce Minister Kamal Nath said, "A consensus has been achieved on the ingredients of the bill. It looks into all aspects of education in India, and the need for quality education. The details, including the foreign direct investment limits, will take a month or so to be finalised. The intent is to create more educational opportunities. A number of safeguards will be incorporated, including government supervision."

The commerce and the human resource development ministries have been at loggerheads over the role of the private sector in higher education.

Sonia's remarks were seen as having tilted the scales in favour of reforms in higher education.

Earlier this year, the commerce ministry had come out with a 24-page document -- Higher Education in India and GATS -- supporting FDI in the sector.

Commerce Secretary G K Pillai had then said the idea was to evolve a consensus on opening up higher education to foreign investment, even 100 per cent FDI.

He had pointed out that India incurred an annual outgo of $4 billion on education and this money could be saved by allowing foreign institutions to set up shop in the country.

In contrast, the Arjun Singh-headed Ministry of Human Resource Development has proposed a tougher stance on FDI in higher education. In fact, answering a question in Lok Sabha on Tuesday, Singh said the GoM had not concluded its study yet.

The private sector, on its part, has been stressing the need for being allowed into the sector for some time now. Bharti Airtel [Get Quote] chairman Sunil Mittal recently said there should be a role for the private sector in the education sector.