Why Is The MBA So Expensive In India?

The MBA is a highly coveted degree both in India and abroad. But it is not cheap to pursue. Find out why MBA study is expensive—and how you can find a good-value business school

The Master of Business Administration (MBA) is a great option for ambitious graduates as it opens several career paths at top corporate and multinational organizations, with competitive salary packages. Not just for engineers, the MBA is open to graduates from any background, such as science, commerce and the humanities.

However, despite the numerous scholarship options on offer, the MBA is a very expensive qualification in India. The cost of an MBA degree from a top college in India is INR 10-35 lakh (approximately $12-43,000). Why is this?

The MBA fee increases in India

Maheshwer Peri, founder of Careers360.com thinks that the high cost of an MBA is due to the recent big increases to fees led by the prestigious, government run Indian Institutes of Management (IIM). He says: "India's premier business school, IIM-Ahmedabad (IIM-A), has raised its fees from INR 4 lakh in 2007 to INR 27 lakh presently.” This marks a 575% increase over the last 15 years, he says, while income tax inflation index growth has been only 146% during the same period.

According to Maheshwer Peri, the annual increase in fees reflects the "lethargy of the board that refuses to challenge a yearly norm nor understands the raison d’etre of public institutions." The IIMs' steep fee hikes have contributed to higher education becoming expensive and unaffordable for many students, he argues.

"The IIMs don’t need to raise fees each year. They are rich, slush with funds, generate massive surplus and could charge just one-third [of the fees] and still be in surplus. In 2020, the IIM-A revenue from academics was INR 202 crores [around $25 million]. Of these, INR 105 crores were tuition fees," he adds.

Why does a decent MBA cost so much?

IIM Indore director Himanshu Rai defends the price point of the MBA, however. He says: "There is a good reason why management education is expensive, not just in India, but anywhere in the world. Management education requires transcending beyond traditional classroom teaching to fostering a rigorous academic ecosystem where research and experimentation are encouraged to aid in developing an innovation culture that facilitates the careful crafting of enriching experiences. This includes crafting a rigorous pedagogy that includes case studies, research literature, simulations, and hands-on learning experiences."

He adds that an MBA requires state-of-the-art facilities, such as labs, libraries, dedicated study spaces, research facilities, incubation centers and the like to develop critical thinking, problem-solving, and leadership skills.

“Institutions must provide residential facilities for students to develop nuanced management and leadership skills outside the classroom,” argues Himanshu Rai. He says that industry-academia collaborations, student exchange programs, and social impact partnerships are necessary to expand growth opportunities for learners—and these require a network of research collaborators, outreach to alumni and seasoned faculty members, he argues. Such efforts cost money.

As most business schools charge significant tuition fees, students want to ensure they receive a quality education and valuable resources. So how can you choose the right college for you?

How to choose the best-value college for your MBA in India

Here are four key points to consider when choosing the right college for MBA:

1. Reputation

Research the reputation of the college in terms of placements, alumni, and overall ranking. A good reputation can open doors for career opportunities.

2. Curriculum

Ensure that the MBA curriculum aligns with your career goals and provides you with the necessary skills and knowledge.

3. Industry interface:

Look for colleges that provide industry internships, live projects, and networking opportunities. This can help you gain practical experience, build industry connections, and get placed in reputed companies.

4. Return on investment (ROI):

Management education is regarded for its high ROI and relevance in today's globalized society. Students should always look for a college that would provide a higher ROI. Delhi University's Faculty of Management or FMS provides the best ROI in the country. The full-time MBA program offered by FMS has a more affordable fee of INR 2 lakh (around $2,400). However, despite the lower cost, the average annual cost to the company (CTC) for FMS graduates in 2023 is INR 34.1 lakh (around $41,313). This is slightly higher than the average CTC at India's top-ranked IIM Ahmedabad in 2022, which was INR 32.79 lakh (around $39,725).