NITI Aayog proposes reforms for India's legal services sector

NITI Aayog has proposed modernizing India’s legal services regulatory framework to enhance global competitiveness. In its report, ‘India’s Services Sector: Insights on Regulatory Regime in Professional Services’, the policy think tank suggested allowing law firms to operate as multi-disciplinary practices (MDPs).

To mitigate risks, the report recommends safeguards such as restricting non-lawyer ownership and voting rights, implementing strict confidentiality and conflict-of-interest protocols, and ensuring mandatory regulatory oversight. Additionally, the agency suggested revisiting current Bar Council of India rules that prohibit lawyers from soliciting work or advertising their services directly.

The recommendations also address the increasing involvement of foreign entities in the sector. NITI Aayog highlighted the need for greater regulatory clarity regarding the taxation of revenue from foreign law firms, the terms of partnerships between Indian and foreign firms, and the permissibility of foreign investment. The report noted that India currently ranks third among 51 countries in terms of restrictiveness in legal services according to the OECD Services Trade Restrictiveness Index.