According to the Indian Ministry of Finance, the services sector accounts for over 50 percent of the economy and almost 53.7 percent of total FDI inflows.  Total FDI inflows into the services sector decreased by 29.2 percent between April and September 2021, reaching $16.72 billion.  India has implemented policy reforms over the years in several services sectors, including banking and financial services, telecommunications, air transportation, healthcare, postal services, and other professional services.  However, India still has restrictions on the provision of certain professional services by foreign nationals.  These restrictions may include the number of foreign employees, transaction value, the supplier’s legal structure, or amount of foreign capital.  For example:

• There are many restrictions for accounting and audit services, but U.S. accounting firms have been able to navigate these by having an Indian accounting firm as an affiliate.

• There are no restrictions for the practice of professionals in engineering, integrated engineering, and construction services.  However, foreign engineering and construction firms are generally not awarded government contracts unless local firms are unable to perform the work.

• International architectural firms are not allowed to provide direct services in India.  Foreign firms may only participate through joint ventures with Indian architecture firms.  An Indian partner registered with The Council of Architecture must be a signatory to get an architectural plan approved for a project in India; and

• Foreign law firms and foreign lawyers cannot practice law in India unless they fulfil the requirements of the Advocates Act, 1961, under the Bar Council of India.  However, foreign law firms (including U.S. firms) have been permitted to provide legal advice on a temporary basis.

India is a signatory to the WTO negotiations under the General Agreement on Trade in Services, which came into force on January 1, 1995.  Under this framework, India has progressively made several commitments and is actively involved in comprehensive multilateral negotiations regarding trade in services.  India is a proponent of the liberalization of trade in services, especially through Mode 4: Presence or movement of natural persons who are either service suppliers (such as independent professionals) or who work for a service supplier and are present in another WTO member country to supply a service.