Foreign law firms' entry may intensify competition in India, say lawyers

The government’s proposal to allow foreign law firms in India is expected to intensify competition, but the question remains whether international and domestic interests can be balanced, lawyers said.

 

"The timing, amid pending litigation and the Bar Council of India’s (BCI) planned UK-focused rules, suggests a strategic intervention to expedite market liberalisation," said Ritesh Khare, advocate and managing partner at law firm Magnus Legal Services LLP.

 

On Thursday, the government introduced the draft of the Advocates (Amendment) Bill, 2025, which includes provisions to allow foreign law firms in India, empowering the central government to frame rules and shift the approval authority from the BCI.

 

Until now, the BCI had the power to determine rules and regulations surrounding the entry of foreign law firms. However, there were no provisions to regulate such firms. The government has invited comments on the proposed amendments until the end of February.

 

"As of now, it can only be said that if foreign law firms are allowed to practise in India, it will have a significant impact on the practice of domestic law firms, as corporate giants might be inclined to hire foreign law firms. However, domestic law firms should have an edge," said Tushar Agarwal, founder and managing partner of law firm C.L.A.P. Juris.

 

"Foreign law firms might have to hire domestic law firms to get their clients’ work done. So, it will increase business opportunities for local law firms," he added.

 

In the draft Bill, Section 49A empowers the central government to make rules governing the entry of foreign law firms or foreign lawyers in India. Furthermore, the Bill introduces provisions for the reciprocal recognition of foreign legal qualifications, enabling foreign lawyers to practise in India under regulated conditions.

 

Under Section 49B, the central government is empowered to issue directives to the BCI, ensuring consistent implementation of the new provisions.

 

"This centralised oversight mitigates the risk of fragmented regulatory interpretations and reinforces uniformity across jurisdictions," said Kunal Sharma, partner at the law firm Singhania & Co.

 

He added that despite the BCI opening up markets for foreign law firms, foreign lawyers are prohibited from representing clients in Indian courts, restricting them to advisory roles.

 

"This limitation significantly reduces their market scope, as litigation remains a substantial segment of legal practice in India," he said.

 

Currently, there is no formal presence of foreign law firms in India, primarily due to the restrictive regulatory environment and strategic challenges, Sharma said.

 

"However, several international firms operate through informal alliances, referral networks, and the fly-in, fly-out model, providing advisory services without establishing a permanent presence. These firms primarily engage in cross-border transactions, international arbitration, and advisory work for multinational clients," he added.

 

The entry of foreign law firms is expected to intensify competition, he said, particularly in high-end corporate advisory and international arbitration segments.

 

"This could lead to market consolidation, where only the most competitive Indian firms with specialised expertise and global reach will thrive," he added.

 

Unlike the fly-in, fly-out model— which has been criticised for its lack of continuity and limited local engagement— the proposed framework envisions sustained participation and deeper collaboration, said Shryeshth R. Sharma, partner at SKV Law Offices.

 

"Indian law firms may benefit from increased opportunities for partnerships, improved service standards, and enhanced global competitiveness while maintaining the necessary accountability. Overall, the new draft rules are positioned as a more sustainable and effective model compared to the temporary engagement model of the past," he said.