The IIM-C board of governors at a meeting decided to raise the fees from Rs 9 lakh to Rs 13.5 lakh from the academic year 2010.
Speaking to reporters, board chairman Ajit Balakrishnan said, "The hike was necessary to cope with the increased expenditure in infrastructure, greater faculty allocation and spending in research related activities."
Balakrishnan also noted that additional funds will also be utilised to give fee waiver to more students.
The board also decided to reduce the student strength for the programme to 375, though the institute had initially planned to accommodate 462 students.
Dinesh Verma, the institute's chief administrative officer, said the number of students have to be reduced this year due to lack of infrastructure.
"With the addition of the under construction new campus, this problem will surely be solved," he said.