New Delhi: Over $13 billion is spent annually by about 450,000 Indian students on higher education abroad, said Industry body Assocham.

Over 90 percent of students appearing for IIT and IIM entrance examinations are rejected due to capacity constraints, of which the top 40 percent pay to get admission abroad.

"Over 150,000 students every year go overseas for university education, which costs India a foreign exchange outflow of $10 billion. This amount is sufficient to build more IIMs and IITs," the body said.

The primary reason for a large number of Indian students seeking professional education abroad is lack of capacity in Indian institutions.

"The trend can be reversed by opening a series of quality institutes with public-private partnership by completely deregulating higher education," said Assocham President Venugopal Dhoot.

Higher education in India is subsidized as an IIT student pays an average $120 (about Rs 4,800) monthly fee, while students opting for education in institutions in Australia, Canada, Singapore, the U.S. and UK shell out $1,500 to 5,000 as fees every month.

Deregulation of higher education in the country will result in creating annual revenues of $50 to $100 billion, besides providing 10-20 million additional jobs in the field of education alone, the chamber said. India has only 27,000 foreign students, as compared to 400,000 in Australia.

Assocham also said that vocational education in India is only 5 percent of its total employed workforce of 459.10 million as against 95 percent in South Korea, 80 percent in Japan and 70 percent in Germany.