National Medical Commission’s 2023 regulation allowed only Section 8 companies to set up medical colleges. Under Section 8 of Companies Act, such a company is a non-profit organisation in which surpluses can only be reinvested in charitable objectives. The amendment will allow all companies incorporated under Companies Act, 2013 to start medical colleges.In Jan 2017, the erstwhile Medical Council of India amended Establishment of Medical College Regulations, 1999 to allow all companies registered under Companies Act, 1956 to be listed among organisations permitted to set up a medical college. The same notification also allowed any autonomous body/society/trust to be converted into a company. However, MCI was disbanded and replaced by NMC in Sept 2019. The fresh regulations for establishment of medical colleges drafted by NMC allowed only Section 8 companies to set up colleges.In May 2017, Vedanta, the mining conglomerate, established the first private limited medical college, Vedantaa Institute of Medical Sciences, in Palghar through the entity Vedantaa Institutes of Academic Excellence Private Limited. The institute wrote to Maharashtra govt that since it was registered as a private company, it was allowed to make profits and that its fees did not require approval of the state fee regulatory authority. Though the institute was later forced to submit to fee regulation, its fees remain among the highest among private medical colleges in the state (Rs 15.7 lakh for management seats in 2025), barring deemed university colleges.Ironically, fees charged by deemed university medical colleges, which are established by trusts and societies and are supposed to be non-profit, are among the highest, and states do not have any quota of seats with lower fees in these institutions. Fees charged by these colleges are not controlled by any regulatory body.SC held in 1993 and again in 2002 that education was charity and disallowed educational institutions from engaging in “profiteering” but allowed “reasonable surplus” to meet cost of expansion and augmentation of facilities. Till 2009, the official stance was that education could not be for sale or a for-profit venture. Hence, on paper, most private colleges were run by charitable trusts/societies despite their high tuition fees, illegal capitation fees and other charges. However, in Feb 2010, then govt allowed companies registered under Companies Act to open medical colleges with the caveat that “permission shall be withdrawn if colleges resort to commercialisation”.By 2016, govt was arguing the no-profit stipulation was discouraging companies from coming forward to set up colleges and that profits were being made in non-transparent ways and that if profits were legally permitted, it would at least yield income tax for the exchequer. This is what led to the 2017 amendment.
