NITI Aayog Report on Professional Services 2026: Regulatory Reforms for Law, Medicine, Accounting, Architecture and Engineering

Why in News

NITI Aayog released the report "India's Services Sector: Insights on Regulatory Regime in Professional Services" in August 2026, presenting a four-pronged reform roadmap to strengthen India's professional services sector. The report was launched by NITI Aayog Vice Chairman Ashok Kumar Lahiri at a meeting of the High-Powered Education to Employment and Enterprise Standing Committee. It covers five key professions — law, accounting and auditing, architecture, engineering, and healthcare and allied healthcare — identifying regulatory fragmentation, international competitiveness gaps, and structural barriers to growth.

Background

India's services sector contributes approximately 55% of GDP and accounts for ~47% of total exports (goods + services). While India is globally renowned for IT/software services, its professional services — legal, accounting, medical, architectural, and engineering — remain significantly under-internationalised, hampered by restrictive regulations, lack of mutual recognition with foreign qualification bodies, and fragmented state-level licensing.

The OECD Services Trade Restrictiveness Index (STRI) benchmarks regulatory openness across professional services globally. India's restrictiveness scores are among the highest for legal services (0.865), accounting (0.762), and architecture (0.537) — indicating major structural barriers that limit both inbound foreign professionals and Indian professionals seeking international recognition.

The report builds on the Union Budget 2023-24 announcement of a comprehensive review of professional services regulations and aligns with India's commitment to boosting services exports under the National Trade Policy and the negotiations for the India-EU Free Trade Agreement (FTA), where Mode 4 (movement of natural persons providing services) is a key agenda item.

Current Developments

The Four-Pronged Reform Roadmap

1. Regulatory harmonisation and ease of licensing: India lacks a uniform regulatory regime for professional services. Different states have different licensing requirements, qualification recognition processes, and practice rules for the same profession. The report recommends harmonising these through model regulatory codes and a National Professional Services Regulatory Authority concept.
2. Mutual Recognition Agreements (MRAs) and international integration: India's professionals — lawyers, chartered accountants, doctors, engineers — face significant barriers to practising abroad because India has few formal MRAs with foreign qualification bodies. The report recommends negotiating MRAs with the UK, EU, USA, Australia, and GCC countries, enabling two-way professional mobility.
3. Technology adoption and digital transformation: Emerging technologies (AI, blockchain, digital legal tools, telemedicine, Building Information Modelling for architecture) are transforming professional services globally. The report recommends that regulatory bodies update their frameworks to enable tech-enabled service delivery and cross-border digital professional services.
4. Continuous Professional Development (CPD) and upskilling: The report recommends stronger emphasis on lifelong learning, mandatory CPD requirements, and alignment with global professional standards — improving the quality and international competitiveness of Indian professionals.

Key Findings by Profession

• Legal services (STRI: 0.865): Highest restrictiveness among covered professions. Foreign law firms and lawyers cannot practise Indian law; Indian lawyers face barriers in international arbitration and cross-border practice. The report recommends phased liberalisation for international arbitration and transactional legal work, consistent with BCI (Bar Council of India) rules amended in 2023.
• Accounting and auditing (STRI: 0.762): ICAI (Institute of Chartered Accountants of India) has strong domestic regulation but limited MRAs. The report recommends ICAI-led mutual recognition with ACCA (UK), CPA Australia, and similar bodies; stronger regulatory oversight; and phased accreditation for qualified foreign professionals.
• Architecture (STRI: 0.537): Council of Architecture (CoA) governs registration. The report recommends harmonising state-level approval processes and pursuing MRAs through the Architects' Regional Council Asia (ARCASIA).
• Engineering: Multiple regulators (AICTE, state engineering boards, BIS for product standards) create confusion. The report recommends a single-window professional registration system.
• Healthcare and allied healthcare: National Medical Commission (NMC) and State Medical Councils have a complex regulatory layering. Telemedicine guidelines (2020) need updating; allied health professions regulation remains incomplete.

Key Facts

• Report title: "India's Services Sector: Insights on Regulatory Regime in Professional Services."
• Released by: NITI Aayog; launched by Vice Chairman Ashok Kumar Lahiri.
• Platform: High-Powered Education to Employment and Enterprise Standing Committee meeting.
• Release date: August 2026 (launched August 10, 2026).
• Professions covered: Law, Accounting & Auditing, Architecture, Engineering, Healthcare & Allied Healthcare.
• OECD STRI scores (India): Legal — 0.865; Accounting — 0.762; Architecture — 0.537 (scale 0–1; higher = more restrictive).
• India's services sector: ~55% of GDP; ~47% of total exports.
• Four-pronged approach: Regulatory harmonisation; MRAs; Technology adoption; CPD and upskilling.
• Key regulators: BCI (Bar Council of India), ICAI, Council of Architecture, National Medical Commission (NMC).
• International benchmarks: ACCA, CPA Australia, UK's SRA (Solicitors Regulation Authority).

Constitutional Provisions

• Article 19(1)(g): Right to practise any profession or to carry on any occupation, trade, or business — subject to reasonable restrictions under Article 19(6). Regulatory frameworks for professions operate within this right.
• Article 246 + Concurrent List Entry 25: Education, including technical education, medical education, and universities — concurrent; professional qualification standards span Union-State jurisdiction.
• Article 246 + Union List Entry 73: Incorporation, regulation, and winding-up of corporations — relevant to professional service firms.
• Article 301 & 302: Freedom of trade, commerce, and intercourse throughout India — regulatory harmonisation across states supports the constitutional vision of a single national market for professional services.
• Article 253: Parliament can legislate to implement international trade agreements (WTO, FTAs) — MRAs in professional services may require supporting legislation.

Legal Framework

• Advocates Act, 1961: Governs the legal profession; Bar Council of India (BCI) is the regulatory body; foreign lawyers/firms excluded from practising Indian law (BCI rules amended 2023 to allow limited FDI in legal services).
• Chartered Accountants Act, 1949: Establishes ICAI; governs accounting and auditing profession.
• Architects Act, 1972: Establishes the Council of Architecture (CoA).
• National Medical Commission Act, 2020: Replaced the Medical Council of India (MCI); NMC governs medical education and practice.
• Allied and Healthcare Professions Act, 2021: First dedicated legislation for allied health professions (physiotherapy, optometry, etc.); National Commission for Allied and Healthcare Professions established.
• Foreign Exchange Management Act (FEMA), 1999: Governs FDI in professional services — liberalisation requires FEMA notifications.

Institutional Framework

• NITI Aayog: Report author and policy think tank; replaces Planning Commission; provides policy recommendations without line-ministry authority.
• Bar Council of India (BCI): Statutory body under Advocates Act, 1961; regulates legal profession and legal education.
• Institute of Chartered Accountants of India (ICAI): Statutory body under CA Act, 1949; regulates accounting, auditing, and CPA qualification.
• Council of Architecture (CoA): Statutory body under Architects Act, 1972; regulates architecture practice and education.
• National Medical Commission (NMC): Statutory body under NMC Act, 2020; regulates medical education and physician practice.
• OECD (Organisation for Economic Co-operation and Development): Publishes the STRI used to benchmark India's regulatory restrictiveness.
• WTO: General Agreement on Trade in Services (GATS) — India's professional services liberalisation commitments are part of its GATS schedule.

Economic Dimensions

Professional services are both inputs to economic production and exportable services in their own right:

• Services export potential: India's professional services exports — legal, accounting, architecture, engineering services (excluding IT) — are estimated at less than $15 billion annually, far below India's potential given its large pool of qualified professionals. Regulatory liberalisation could unlock significant export growth.
• FDI facilitation: Foreign investors consistently cite the absence of integrated legal, accounting, and engineering services as a barrier to large-scale project investment in India — reform would directly improve the investment climate.
• India-EU FTA: The EU's priority in services negotiations is Mode 4 (movement of professionals) — MRAs in legal, accounting, and architecture directly feed into FTA negotiations, potentially unlocking a landmark trade agreement.
• Banking & Financial Angle: ICAI-regulated chartered accountants are critical to the financial system — they audit banks, certify capital adequacy, and validate financial statements submitted to RBI and SEBI. Strengthening ICAI's international standing (through MRAs) improves the credibility of India's financial regulatory ecosystem in the eyes of global investors and rating agencies.
• Employment: India's professional services sector employs millions of graduates in legal, medical, architecture, engineering, and finance. Regulatory reform that enables digital and cross-border delivery can create millions of new employment opportunities.

Social Dimensions

• Access to justice: Regulatory reform in legal services, including technology-enabled delivery, can improve access to affordable legal advice for underserved communities.
• Healthcare access: Telemedicine and allied healthcare regulation updates can extend healthcare to rural India, reducing the urban-rural healthcare divide.
• Professional mobility for diaspora: MRAs enable Indian professionals abroad to have their qualifications recognised in their country of work — addressing a longstanding demand of the Indian diaspora.
• Women in professions: Flexible regulatory frameworks (digital practice, cross-border recognition) can improve women's participation in high-skill professions by reducing geographic and institutional barriers.

Challenges

• Regulatory capture: Professional bodies like BCI and ICAI have historically resisted liberalisation to protect incumbent practitioners — reform requires overcoming vested interests.
• Federalism: Professional licensing often straddles Union-State jurisdiction; harmonisation requires Centre-State coordination.
• Quality concerns: Rapid liberalisation without adequate quality assurance (CPD mandates, competency standards) risks lowering professional standards.
• Reciprocity: MRAs work only if partner countries offer equivalent recognition; India's ability to negotiate favourable terms depends on the perceived quality of its professional standards.
• Digital divide: Technology-enabled professional service delivery (telemedicine, digital legal services) benefits urban users most; rural India may be left behind without targeted interventions.

Government Initiatives

• BCI Rules (2023): Amended to allow limited FDI in legal services and permit foreign lawyers to advise on international arbitration — a first step toward legal services liberalisation.
• Telemedicine Practice Guidelines (2020): Enabled digital healthcare delivery during COVID-19; needs updating for permanent framework.
• Allied and Healthcare Professions Act, 2021: First regulation for allied health professions — implementation ongoing.
• National Education Policy (NEP) 2020: Integrates professional education reform into a broader multidisciplinary framework; aligned with CPD recommendations.
• PM Gati Shakti and National Logistics Policy: Create demand for engineering and architecture services — market-side push complementing regulatory supply-side reform.

Way Forward

• The 2nd Administrative Reforms Commission (2nd ARC) recommended comprehensive review of professional regulatory bodies to eliminate redundancy and improve accountability — the NITI Aayog report operationalises this recommendation for professional services.
• Establish a National Professional Services Regulatory Coordination Committee — an inter-ministerial body to harmonise regulations across professions and between Centre and states.
• Fast-track MRA negotiations with the UK (post-Brexit), UAE, and Singapore — partner countries where large Indian professional diaspora communities create immediate demand.
• The Economic Survey 2025-26 should include a Professional Services Competitiveness Index to track annual progress on OECD-STRI scores.
• Link professional services reform to the India-EU FTA negotiations — specifically Mode 4 commitments — to create diplomatic momentum for domestic reform.

Possible Mains Questions

1. "India's professional services sector remains highly regulated and internationally uncompetitive. Critically examine the NITI Aayog's 2026 report recommendations and assess their feasibility." (GS III — Economy/Governance)
2. "How does regulatory fragmentation in India's professional services sector affect FDI, services exports, and employment? Suggest a reform framework." (GS II/III — Governance/Economy)

FAQ

What is the OECD Services Trade Restrictiveness Index (STRI)?

The OECD STRI measures barriers to international trade in services on a scale of 0 (completely open) to 1 (completely closed), covering professional services, digital services, and other sectors. India's high scores for legal (0.865) and accounting (0.762) services indicate significant regulatory barriers compared to OECD averages.

What is a Mutual Recognition Agreement (MRA) in professional services?

An MRA is a bilateral or multilateral agreement between countries' professional regulatory bodies (e.g., BCI and the UK's SRA) to recognise each other's qualifications, enabling professionals qualified in one country to practise in another without repeating full qualification requirements. MRAs are crucial for Mode 4 trade in services.

What are India's major professional regulatory bodies?

Bar Council of India (BCI) — law; ICAI — chartered accountancy; Council of Architecture (CoA) — architecture; National Medical Commission (NMC) — medicine; National Commission for Allied and Healthcare Professions — allied health. Each operates under a dedicated statute and is largely self-regulating.

Further Reading

• NITI Aayog Reports: niti.gov.in
• OECD Services Trade Restrictiveness Index: oecd.org
• Bar Council of India: barcouncilofindia.org
• Allied and Healthcare Professions Act, 2021 — India Code: indiacode.nic.in