NITI Aayog Report on India's Regulatory Regime in Professional Services

Why In News?

NITI Aayog launched the report titled "India's Services Sector: Insights on Regulatory Regime in Professional Services".

What are Professional Services?

Professional services are knowledge-intensive services requiring specialised qualifications, professional standards and regulatory oversight.

• Legal Services: Lawyers provide litigation, arbitration, contracts, compliance and cross-border legal advisory.

• Accounting Services: CA firms provide audit, taxation, financial reporting, insolvency and advisory services.

• Architecture Services: Architects provide building design, planning, conservation and project-related professional services.

• Engineering Services: Engineers provide design, consultancy, infrastructure, construction and technical services.

• Management Consultancy: Consultants provide strategy, operations, risk, technology and organisational advisory services.

• Financial Advisory: Professionals provide investment, valuation, restructuring, risk and transaction-related advice.

• R&D Services: Research professionals provide basic research, applied research and experimental development.

• Technical Services: These include specialised scientific, engineering, environmental, IT and other technology-enabled services.

Highlights of the NITI Aayog Report

• India's services sector contributes nearly 55% of national Gross Value Added (GVA) in FY2023-24. 

• India becomes the world's 7th-largest services exporter in 2024, holding a 4.3% share of global services exports — up from just 2% in 2005. 

• Professional and management consulting services alone contribute nearly 20% of India's total services exports in 2024-25.  

• Professional services account for nearly one-fourth (25%) of India's total services exports, making them a critical growth pillar. 

• India's revealed comparative advantage (RCA) in professional and management consulting services rises from 0.95 in 2005 to 3.0 in 2024 — meaning India has moved from a position of no clear advantage to a strong global competitive edge in this segment. 

• Accounting, auditing and bookkeeping exports jump from $617 million in 2014-15 to $3.324 billion in 2024-25 — more than a 5-fold rise in a decade. 

Core Problem: A Fragmented Regulatory Regime

• NITI Aayog finds that India lacks a single, uniform regulatory law for all professional services — instead, each profession is governed separately.

• Highly regulated professions: medicine, law, accounting, and auditing — these have established statutory bodies and legal frameworks (e.g., Bar Council of India, ICAI).

• Lightly regulated or fragmented professions: engineering, landscape architecture, and urban planning — these lack formal statutory oversight in most cases.

• NITI Aayog identifies five specific barriers that cut across professions:

1. Educational qualification requirements

2. Licensing conditions

3. Recognition of foreign qualifications

4. Nationality and residency requirements

5. Restrictions on legal forms of business (e.g., partnership structures)

Case Study: A foreign-qualified engineer or architect often finds no single national licensing authority to approach in India, unlike a doctor (who deals with the National Medical Commission) or a chartered accountant. This regulatory vacuum creates uncertainty for both Indian and foreign professionals.

Sector-Wise Recommendations

Legal Services

• NITI Aayog recommends recognising different categories of legal professionals (in-house counsel, legal-process workers, paralegals, law clerks) — a step that reflects the modern legal market where not everyone practising law is a courtroom advocate.

• The report flags Rule 36 of the Bar Council of India Rules, which prohibits advocates from advertising or soliciting work, directly or indirectly. 

• NITI Aayog flags the absence of a mandatory Continuing Professional Development (CPD) framework for lawyers — unlike doctors, who must renew registration through CPD credits.

• On foreign law firms, the report calls for regulatory clarity on: taxation of revenue earned by foreign law firms in India, conditions for Indian–foreign law firm partnerships, and permissibility of foreign investment in legal services.

• NITI Aayog suggests allowing multi-disciplinary law firms (i.e., firms combining legal, accounting, and consulting services under one roof) — a structure already common in jurisdictions like the UK and Singapore.

Accounting and Auditing

• NITI Aayog recommends stronger regulatory oversight, greater emphasis on skilling, wider mutual recognition arrangements with foreign accounting bodies, and phased accreditation for qualified foreign professionals.

• Despite the sector's export growth (5x in a decade, as shown above), India's regime remains relatively restrictive for foreign accountants and audit firms.

Architecture

• NITI Aayog recommends simpler registration procedures, structured professional examinations, and mechanisms to recognise foreign qualifications.

Healthcare and Allied Health Professionals

• The report highlights the absence of a nationwide system for licence portability between states — meaning a doctor or allied-health professional licensed in one State cannot automatically practise in another.

• NITI Aayog supports full use of the National Commission for Allied and Healthcare Professions (NCAHP) Act, 2021, which already provides for national and state registers, course standards, and institutional checks.

• By 31 July 2026, 29 States and Union Territories had formed Allied and Healthcare Councils under the NCAHP Act.

• NCAHP published draft regulations in August 2026, showing the legal architecture is actively evolving even as NITI Aayog's report is released.

Engineering

• NITI Aayog notes the need for a clearer professional licensing framework, since engineering currently lacks the kind of statutory oversight that medicine or law has — even though engineering services score as relatively open on the OECD restrictiveness index.

Four-Pronged Strategy Proposed by NITI Aayog

1. Continuous Professional Development (CPD): NITI Aayog treats upskilling as essential, since technology (especially AI) is changing the nature of professional work itself — not just initial qualifications, but ongoing skill renewal.

2. Elevate professional services within the services value chain: NITI Aayog argues that professional services should move higher up the value chain, helping Indian professionals capture more value from specialised expertise rather than competing mainly on cost (a shift away from India's traditional low-cost service-provider image).

3. Adopt international best practices: NITI Aayog recommends learning from regulatory models of select foreign jurisdictions that the report benchmarks against.

4. Leverage emerging trends and technologies: NITI Aayog calls for using technology to reshape how professional services are delivered and consumed — for example, digital delivery of legal or accounting services across State/national borders.

Conclusion

India should move from protection-oriented professional regulation to competition + competence + consumer protection, making professional services a stronger pillar of Viksit Bharat @2047.

Source: PIB