The Bar Council of India (BCI) has managed to throw a spanner into the Government’s steps to allow entry of foreign law firms. The Government continues its efforts to attract foreign investment with new and innovative initiatives and strategies.

Entry of Foreign LawyersThe Bar Council of India (BCI) had always opposed the entry of foreign law firms for many years but had surprisingly mellowed down quite meekly after the current Government showed its firmness last year to open up the legal services sector. The BCI had drafted rules for entry of foreign law firms which were discussed in a meeting called by the Union Law Ministry on July 6, 2016. Some other associations and bodies representing certain sections of lawyers were also invited by the Government to attend that meeting or subsequently share their views, pursuant to which they submitted their recommendations, just as the BCI had submitted its draft rules. In a sudden turn of events, the BCI withdrew its draft rules two days prior to the scheduled meeting with the concerned Ministry officials – to discuss the same.

The BCI, the apex body for governing lawyers in India, fears loss of its supremacy on regulating lawyers. It has cited childish concerns, one of them ostensibly being the government consulting the Indian Corporate Counsel Association, which sent draft legislation, the Foreign Legal Practitioners’ (Regulation of Practice) Bill, in response to BCI’s draft rules. This draft bill proposes allowing FDI of 26 to 49%in the legal services sector within a two to five year period. It also calls for setting up a Foreign Practitioners’ Registration Board and restraining the BCI’s role to a single position on the five-member board.

BCI further warned that the government would have to wait for the Supreme Court to decide on the issue, otherwise it would be “tantamount to contempt of court”. This appears to be an afterthought, since it was never raised earlier when the BCI had drafted the rules in the first place. If it tantamount to contempt of court now, would BCI have been outside the ambit of contempt proceedings when it had drafted the rules in July?

This is seen as a huge setback for liberalization of legal services and brings uncertainly for now. It now seems to be another waiting period for entry of foreign lawyers until the Government comes out with any further announcement on this.

Government identifies 150 Companies for FDI From making general initiatives and specific policy changes towards increasing FDI inflow, the Government has now got more proactive in identifying potential investors. It has identified 150 companies as potential investors and is meeting their top management teams individually as it seeks to ensure that FDI inflows rise for the fourth straight year. The idea is to tap companies which are looking to set up shop in India or are eyeing expansion. DIPP is also addressing situations where companies had planned to invest in the country but deferred their plans due to regulatory hurdles. In these cases, the department is seeking to get the government agency or the state concerned to address the problem. There is a mechanism to deal with complaints from Japanese companies and a fast-track system has also been put up for German firms. This new strategy to seek investment, which some are calling Make in India 2.0, is also focusing on a country-specific pitch, especially to medium-scale enterprises.

Government barters tariff reduction for FDI India is willing to let go of the three-tier structure for tariff reduction for goods under the proposed Regional Comprehensive Economic Partnership (RCEP) if it gets commitment on foreign direct investment in services from its fifteen partners. India may agree to do away with the basic tenet of the RCEP that involves tariff reduction on the basis of each country’s free trade agreement with ASEAN and other members if it gets suitable offers on services and investment. RCEP is a comprehensive free trade agreement subsuming goods, services, investment, competition, economic and technical cooperation, dispute settlement and intellectual property rights between the ten countries under the Association of Southeast Asian Nations and their six free trade agreement partners – Australia, China, India, Japan, Korea and New Zealand. With India showing flexibility, though, the RCEP agreement is likely to take shape by the next ministerial conference in November. Trade ministers of sixteen countries, including India, China and Japan, will meet early next month to review the progress in the RCEP and resolve issues holding back the talks.

 

Posted by Sourish Mohan Mitra

Sourish Mohan Mitra is an India-qualified lawyer from Symbiosis Law School, Pune and currently working as an in-house counsel with a global research firm in Delhi, India; views expressed are personal; he can be reached at sourish24x7@gmail.com; Twitter: @sourish247

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