The IIM Bill – What does it really mean?

Earlier this year, after over 2 years, the IIM bill was finally cleared making the 19 IIMs ‘Institutions of National Importance’ like the IITs, NITs and AIIMS. So, what does that mean for the IIMs, for other non-IIM management institutes and for MBA aspirants?

Prior to the passage of the IIM bill, these leading management institutions of India were not allowed to grant degrees like universities, IITs, NITs or AIIMS. Hence, students completing their 2 year post graduation in management from the IIMs have been awarded Post Graduate Diploma in Management (PGDM) rather than a Masters in Business Administration (MBA). Similarly, IIMs only awarded Fellow Program in Management (FPM) degrees instead of PhD degrees to their doctoral level candidates. Of course, both these degrees have been given equivalence by the Association of Indian Universities (AIU) to MBA and PhD degrees, thereby allowing PGDM candidates from IIMs being eligible for admission to PhD programs, their PGDM degrees being considered equivalent to a Masters in Business Administration. Industry recruiters also did not differentiate between a PGDM degree and an MBA, the credentials of the awarding institution being held as a better indicator of employability than the letters of the degree. Moreover, over 75% of the top 20 management institutes in the country have been awarding PGDM degrees and only a handful of MBA awarding university management departments (FMS Delhi and Jamnalal Bajaj being 2 notable exceptions), institutes of national importance (such as the schools of management at the IITs) and private universities (only 2 of these make it to the top 20 list). The list of top institutions other than the IIMs that award a PGDM degree include XLRI Jamshedpur, Management Development Institute (MDI) Gurgaon, SP Jain Institute Mumbai and the Goa Institute of Management.

What does this do for the IIMs?

In India, the IIMs enjoy a market leader reputation amongst students, faculty and industry recruiters. To these 3 constituent groups, an MBA or a PGDM degree doesn’t make much of a difference. However, the IIMs also have global ambitions to be ranked among leading business schools of the world. In this quest, moving to globally accepted degree nomenclature will definitely help. Also, the IIM Bill is not only about the enabling the IIMs to offer an MBA and PhD degree, but also it gives them more autonomy to make leadership appointments. The bill transfers more controls and powers from the government to the governing board of each IIM.

Does the Bill affect students?

Even though the AIU has granted equivalence to the PGDM degree awarded by most of the reputed institutions, this equivalence is not universally accepted, especially internationally. Students applying to doctoral programs overseas sometimes encounter difficulties in obtaining acceptance of the PGDM degree and then in turn need to obtain additional documentation or go through agencies like World Education Services (WES) in order to establish equivalence and eligibility. Comparatively the FPM program enjoys even lesser acceptance as equivalent to a PhD than a PGDM being considered equivalent to an MBA. With the passage of the IIM Bill, students graduating from the IIMs will now have degrees with globally accepted nomenclature (ie MBA & PhD) thereby further increasing the acceptance of their degrees.

Are other management institutes that offer the PGDM program feeling threatened?

The fact that the IIMs were awarding PGDM degrees lent a lot of credibility to the PGDM degrees that were being offered by all the autonomous management institutes in India. When most of the top management schools in India like IIM Ahmedabad, Bangalore, Calcutta and Lucknow offered a PGDM, the hundreds of other business schools in the country that awarded the PGDM degree got a lot of legitimacy and credibility for their PGDM degrees and also found it easier to gain equivalence internationally & nationally from academic institutions as well as from industry. With IIMs moving to an MBA degree, it is natural that the other management schools would be apprehensive of the future of their PGDM programs. It is likely that leading institutions will take one of 2 paths: petition with the government to allow leading nationally and internationally accredited management institutions to award masters degrees; or move from being stand-]alone management institutes towards becoming management universities like Singapore Management University. A couple of leading management institutes in India have already taken the latter route like NMIMS University, XIMB University and Symbiosis Universities and we can expect many more to follow suit.