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Foreign law firms to enter via Reg 24 of FEMA, cabinet to examine in a month

The government is close to finalising its proposal to allow foreign legal firms to operate out of India via investment in partnership or proprietary concerns, reported the Express.

The legal sector would be opened up gradually according to the report. An unnamed official said that “permission will not be in the form of foreign direct investment. Instead, it is likely to be granted under regulation 24 of the Foreign Exchange Management Act that permits investments in firms of proprietary concern”.

The Foreign Exchange Management (Investment in Firm or Proprietary Concern in India) Regulations, 2000 allow “a non-resident Indian or a person of Indian origin resident outside India may invest by way of contribution to the capital of a firm or a proprietary concern in India”.

Former commerce secretary Rajeev Kher said last month that this proposal had been accepted in principle by the Bar Council of India (BCI) and the Society of Indian Law Firms (SILF), which was the reason for the plan to move forward now.

The Express reported that the department of industrial policy and promotion (DIPP) was working on the proposal; a committee of secretaries was examining its modalities. The source told the paper: “It is being finalised taking into consideration the views of the Bar Council of India. It is likely to be taken up to the Union Cabinet in a month’s time or so.”

Legally India reported on 30 June that the final proposal would be sent out to the Union Cabinet headed by the Prime Minister by July as the government had initiated proper talks with the BCI and SILF.

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