Delivering the convocation address at Madras University, he said varsities appeared to be failing in their task of developing talent, and because of this large corporations were establishing institutes of higher education and training.
"I urge the Indian universities to read the writing on the wall and reinvent themselves and offer relevant courses," he said.
In the global war for talent, developing countries, which cannot offer enough to attract and retain talent, end up being the losers, Chidambaram said. Thus, the two fastest growing economies of the world -- China and India -- are engaged in a fierce race to attract and retain talent.
On government spending on higher education, he said the view that the government should spend money only on primary education should be resisted. But there were serious questions on how money should be spent on higher education.
"Should there be more private-public partnership? Should the government continue to promote a liberal system of education loans to help the needy and meritorious or should it continue to finance all sections of students, including those who can afford to pay more?" he asked.
Though India has been advised to focus its revenues on primary education, in reality, the government should play a central role in imparting higher education, besides retaining focus on primary and secondary education.
Chidambaram said the Centre has sanctioned Rs 100 crore (Rs 1 billion) for a research department or research programme to mark the completion of 150 years by Madras University. This should be used for setting up five new research centres -- on ocean and coastal studies, environmental studies, population studies, herbal studies and infrastructure studies.
The Centre welcomed another initiative of the university to set up a National Centre for Nanosciences and Biomedical Nanotechnology that will offer five-year integrated postgraduate degree courses and a five-year integrated PhD programme.
