The National Medical Commission’s (NMC) 2023 regulations permitted only Section 8 companies—non-profit entities under the Companies Act—to establish medical colleges. Under Section 8, any surplus generated must be reinvested towards charitable objectives rather than distributed as profit. The latest amendment, however, opens the door for all companies incorporated under the Companies Act, 2013 to set up medical colleges.
The policy marks a reversal of the NMC’s earlier position. In January 2017, the erstwhile Medical Council of India (MCI) amended the Establishment of Medical College Regulations, 1999 to allow all companies registered under the Companies Act, 1956 to establish medical colleges. The same amendment also enabled trusts, societies and autonomous bodies to convert themselves into companies. However, after the MCI was replaced by the NMC in September 2019, the new regulator restricted eligibility to Section 8 companies in its 2023 regulations.
The debate over profit-making in medical education predates these changes. In 2017, mining conglomerate Vedanta set up the Vedantaa Institute of Medical Sciences in Maharashtra’s Palghar district through Vedantaa Institutes of Academic Excellence Private Limited, becoming the first medical college promoted by a private limited company. The institute initially argued that, as a for-profit company, its fee structure did not require approval from the state’s fee regulatory authority. Although it was subsequently brought under the fee regulation framework, it continues to charge among the highest fees in Maharashtra’s private medical college sector, with management quota tuition touching Rs 15.7 lakh for the 2025 academic session—second only to deemed universities.
Ironically, some of the country’s costliest medical colleges are deemed universities run by charitable trusts and societies, which are legally expected to function on a non-profit basis. Unlike private colleges regulated by state fee authorities, tuition fees at deemed universities are largely outside the ambit of any fee regulator, and states do not have subsidised quota seats in these institutions.
The Supreme Court has repeatedly held that education is a charitable activity. In landmark judgments in 1993 and again in 2002, it ruled that educational institutions could not indulge in profiteering, while allowing only a “reasonable surplus” for expansion and infrastructure development. Until 2009, the government’s official position was that education could neither be sold nor operated as a commercial enterprise. Consequently, most private medical colleges were formally run by charitable trusts or societies, even as they faced allegations of charging exorbitant tuition fees, capitation fees and other levies.
The policy began to shift in February 2010, when the Centre allowed companies registered under the Companies Act to establish medical colleges, while stipulating that permission would be withdrawn if institutions resorted to commercialisation. By 2016, however, the government argued that the no-profit condition was discouraging private investment and that profits were already being earned through opaque means. Allowing companies to operate transparently, it contended, would encourage investment while also generating tax revenue—a rationale that paved the way for the 2017 amendment.
