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Regulatory reforms aimed at improving clarity, professional mobility, recognition of qualifications and ease of doing business could help India unlock the full export potential of its professional services sector, according to a recent NITI Aayog report.

The report, titled India's Services Sector: Insights on Regulatory Regime in Professional Services, said professional services have emerged as a key component of India's services economy and have significant potential to strengthen the country's position in global services trade.

India was the seventh-largest exporter of services globally in 2024, with a 4.3 per cent share of global services exports. Professional and management consulting services accounted for nearly 20 per cent of India's total services exports in 2024-25.

Professional services accounted for 19.7 per cent of India's total services exports in 2023 and recorded a compound annual growth rate of 18 per cent during FY15-FY25, the report said.

"Professional services serve as critical enablers across the broader services sector and have immense potential to enhance India's share in global services trade," the report said.

Unpacking Regulatory Challenges

The report noted that the regulatory framework governing professional services remains diverse and sector-specific. While professions such as medicine, law, accounting and auditing have established legal and institutional frameworks, areas including engineering, landscape architecture and urban planning are either lightly regulated or lack formal oversight.

It identified several regulatory conditions that can influence market entry and international competitiveness, including nationality and residency requirements, educational qualifications, licensing, recognition of foreign qualifications and restrictions on permitted forms of establishment.

Stakeholder consultations also highlighted challenges related to qualifications, licensing, recognition of professional competencies and sector-specific restrictions.

The report said excessively restrictive domestic regulations can create barriers for both Indian and foreign service providers. "Excessively restrictive regulations can create significant barriers for both domestic and foreign service providers," it said.

A Four-Pronged Strategy for Growth

Against this backdrop, the report proposed a four-pronged strategy focused on continuous professional development, elevating professional services within the services value chain, adoption of best practices and advancing emerging trends.

Sector-Specific Recommendations

It also outlined sector-specific measures, including regulatory harmonisation and clarity, greater professional mobility, mutual recognition agreements, streamlined registration and licensing pathways, wider legal structures for professional practices, and phased accreditation pathways for foreign professionals.

For legal services, the report called for recognition of legal professionals beyond advocates, modernisation of legal forms of practice and review of advertising norms.

In accounting and auditing, it highlighted the need for stronger regulatory oversight and skilling, while for architecture it suggested streamlined registration, professional examinations and mechanisms for recognition of foreign qualifications.

For engineering, the report pointed to the absence of a comprehensive statutory framework governing professional practice, particularly for engineers involved in construction and related activities. It said a structured framework could improve consistency, accountability and clarity.

Emphasis on Skilling and Global Practices

The report also emphasised that reforms should be accompanied by skilling, professional mobility and adoption of global best practices. It said the proposed measures "could increase the efficiency and output in professional services, which will in turn boost India's services trade".

Vision for a Competitive Ecosystem

The study, based on stakeholder consultations, key informant interviews and analysis of trade and regulatory data, said a globally competitive professional services ecosystem could strengthen India's high-skilled employment, entrepreneurship and innovation potential while supporting the country's broader services-led growth. (ANI)