The Government of India, over the last 60 years, has made provisions for full policy support and considerable public funds to create one of the world’s largest systems of higher education. However, these institutions, with a few notable exceptions have not been able to maintain the high standards of education or keep pace with developments in knowledge and technology sector. Financial constraint with ever increasing enrolments, over a period of time, and an explosive demand from primary and secondary education has led to the deterioration in the financial support provided by the government. India has an immense population of uneducated children and the Indian Constitution provides for free and compulsory education up to the age of 14. India also has the dubious distinction of one of the highest levels of illiteracy in the world. The system of public education at all levels is in urgent need of repair and reforms. Subsequently, Governments both at the Center and in the States need to allocate substantial resources to ensure that future generations are adequately equipped to engage meaningfully in the new knowledge based economy. Therefore, India has to find a strategy that will enable it to effectively address the numerous challenges in the education sector of improving literacy, universalizing access to basic and secondary education and simultaneously ensuring an adequate supply of higher skills and technically trained manpower. It should be noted that the gross enrolment rate of higher education in India is roughly 6 per cent. This will need to touch 15 per cent by 2015 if India dreams of joining the pantheons of super powers by the next decade. This will involve thousands of crores of Rupees of investment and since the Government will not be able in a position to meet the huge financial requirement, all other sources of funds will need to be tapped. In the given scenario of well defined constraints on public funding of education, the role of the private sector especially in the provision of higher education and technical training has become increasingly important.