Includes license requirements for key professional services that are open to US service providers
According to Economic Survey published by the Government of India’s Ministry of Finance, the services sector now accounting for around 55 percent of total size of the economy and Gross Value Added, making it one of the driving forces of the Indian economy. Over the years, various policy reforms have taken place in India in several services sectors, such as banking and financial, telecom, air transport, healthcare, postal, and other professional services. However, India still has restrictions on providing certain professional services by foreign nationals. The restrictions may include the number of employees allowed, transaction value, the supplier’s legal structure, or amount of foreign capital involved. For example:
- There are many restrictions for accounting and audit services, but U.S. accounting firms have been able to navigate those by having a local (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 (i.e. registered in The Council of Architecture) must sign to get an architectural plan approved for a local project.
- Foreign law firms or foreign lawyers cannot practice the profession of law in India either on the litigation or non-litigation side, 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 fly in and fly out for rendering advice on a temporary basis.
Nonetheless, India is one of the signatories to the WTO negotiations under the General Agreement on Trade in Services (GATS), which came into force on January 1, 1995. 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. Under the GATS framework, India has progressively made several commitments, and India is actively involved in comprehensive multilateral negotiations regarding trade in services.