The Bar Council of India (BCI) will allow international law firms and counsel to practise foreign law in India in a significant shift of policy designed to attract more foreign direct investment.

The announcement, published in the Gazette of India, came as the BCI promulgated rules for registering and regulating foreign lawyers and foreign law firms in India.

The BCI said, in its preamble, that opening up legal practice to foreign lawyers in foreign law cases would go a long way in helping the legal profession grow locally to benefit Indian lawyers.

This would include advice on “diverse international legal issues in non-litigious matters and international arbitration”. The BCI added that the changes would be "mutually beneficial" and "address the concerns expressed about the flow of foreign direct investment in the country and making India a hub of international commercial arbitration".

"Let us ensure that an opportunity for creating development and growth for the legal profession and in the legal sphere in India is not lost," it concluded.

The rules clarify that international lawyers must not practise law in India without registration with the BCI. Litigation before courts and tribunals in India will not be permitted.

However, appearances in an international arbitration involving international clients or foreign law issues will be allowed. Existing 'fly in and fly out' arrangements can also be maintained for advisory or advocacy purposes. Such visits will be limited to 60 days in any one year.

While international transactional activity – such as M&A work – will be allowed on a reciprocal basis, only Indian lawyers can work on property deals, a key carve-out for the domestic market.  Detailed registration rules involving the BCI, the Indian government, and relevant regulators will apply.

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The announcement follows a recent four-day trade visit by the Law Society of England and Wales to India last week, aligned to the Commonwealth Law Conference held in Goa, at which the issue of liberalisation, among other matters, was discussed.

Laurence Lieberman, Taylor Wessing's head of India, said: "This is a very welcome announcement which has been a long time coming. It formalises and expands on the strong level of existing cooperation between UK and Indian law firms and clients. 

"The ability for UK firms to go beyond the 60-day' fly in, fly out' rule and establish a permanent presence on the ground, giving foreign law advice to Indian corporates in their time zone, is a very attractive proposition."

With international arbitration a significant focus, Lieberman said the reforms would "[enable] the smoother management of cases by foreign firms, and the accelerated application of best practices, technology, access to experts and other benefits".

Nick Peacock of Bird & Bird agreed, calling this "a development of real significance". He said the news was "consistent with the desire of the Indian government and judiciary to support India's growth as an arbitration-friendly jurisdiction [which] can benefit from on-the-ground international participation to improve the ecosystem further."

Baker McKenzie was among other firms to welcome the new regime. Ashok Lalwani, chair of the global India group, said the firm had advocated for a greater international legal presence in India, strategically and in supporting foreign direct investment into India.

Bakers has around 300 lawyers in more than 40 countries working on India-related matters outside India. The Singapore-based partner said: "With our long history of working on India-related matters and the scale of our India-focused team today, the possibilities that this announcement opens up are hugely exciting," as it reviewed the regulations more closely.

The opening up of India's legal market to international firms has been anticipated on and off for more than 30 years.

Last October, Dentons announced a landmark combination with India’s Link Legal in a move global chairman Joe Andrew said made it “a first-mover in a market that matters to our clients”. To comply with the establishment rules, Dentons said Link Legal's Indian lawyers would represent clients inside India and Dentons lawyers would represent Link Legal’s clients outside of India.