NITI Aayog Report on Services Sector Shows Jump in India's Competitiveness but Avoid Reference to High 18 percent GST Barrier to Export

The report examines India's regulatory framework for professional services and identifies regulatory gaps that may restrict domestic growth, international trade, professional mobility and competitiveness. It covers:

· Legal services

· Accounting, auditing and bookkeeping

· Architectural services

· Landscape architecture and urban planning

· Engineering services

· Healthcare and allied healthcare services

The analysis considers three dimensions:

1. Laws and regulations governing professional practice

2. Professional competency — qualifications, licensing and examinations

3. Restrictions on service delivery — legal forms of establishment, advertising, fees, etc.

2. Importance of services to India

· Services contributed about 55% of India's GDP in FY 2023-24.

· India was the 7th-largest global services exporter in 2024, with a 4.3% share of global services exports.

· Professional and management consulting services accounted for nearly 20% of India's services exports in 2024-25.

· Professional services are considered high-value, knowledge-intensive activities with substantial potential for employment, entrepreneurship and exports.

The report notes that India's revealed comparative advantage in professional and management consulting services increased from 0.95 in 2005 to 3.0 in 2024, indicating a strong competitive position.

3. India's regulatory structure

India has two broad layers of regulation:

A. Horizontal/cross-sectoral laws

· Companies and LLPs

· Partnership and proprietorship

· Foreign investment/FEMA

· Taxation

· Labour and employment

· Consumer protection

· Competition

· Technology/data protection

· Establishment and trade in services

B. Sector-specific regulation

Each profession has its own requirements concerning eligibility, licensing, qualifications, permitted business structures and restrictions.

4. International trade dimension

The report explains the four WTO/GATS modes of supplying services:

*Mode*	*Meaning*	*Example*
*Mode 1*	Cross-border supply	Indian architect sends designs electronically abroad
*Mode 2*	Consumption abroad	Foreign patient comes to India for treatment
*Mode 3*	Commercial presence	Foreign company establishes an Indian branch
*Mode 4*	Movement of natural persons	Indian professional temporarily works abroad

India's domestic professional regulations are increasingly important in FTA negotiations and international services trade.

5. Major regulatory problems identified

The consultations identified issues particularly concerning:

· Educational qualification requirements

· Licensing requirements

· Recognition of professional qualifications

· Foreign professional access

· Restrictions on legal forms of establishment

· Fragmented or inconsistent regulations

· Limited professional mobility

· Lack of adequate regulatory frameworks in some professions

A major distinction is that law, medicine, accounting and auditing are relatively strongly regulated, while engineering, landscape architecture and urban planning are comparatively lightly regulated or lack formal oversight.

6. Key healthcare issues

The report identifies several healthcare regulatory challenges:

· Interstate professional mobility is constrained by registration requirements.

· The NCAHP Act, 2021 remains only partially operationalised at the state level.

· As of 2025, only 26 States/UTs had constituted the required State Allied and Healthcare Councils.

· The National Exit Test (NExT) had not yet been introduced despite statutory provisions.

· India has relatively limited MRAs/reciprocity arrangements for medical, dental, veterinary, nursing, midwifery, paramedical and physiotherapy professionals.

7. Four-pronged strategy proposed

The report proposes four broad priorities:

1. Continuous Professional Development

2. Transparent and good regulatory practices

3. Elevate professional services within the services value chain

4. Advance emerging trends in professional services

8. Sector-specific recommendations

Legal services

· Recognise legal professionals other than advocates

· Modernise legal forms of practice

· Revisit advertising norms

· Improve skilling of allied legal professionals

Accounting/Auditing/Bookkeeping

· Improve regulatory oversight and skilling of bookkeeping professionals

· Pursue Mutual Recognition Agreements (MRAs)

· Develop phased accreditation pathways for foreign professionals

Architecture

· Consider a professional examination for licensing

· Streamline registration

· Permit a wider range of legal structures

Engineering

· Develop a regulatory framework for engineers involved in construction and related activities

· Pursue MRAs

Healthcare & allied healthcare

· Recognise allied professionals

· Facilitate implementation of NExT

· Streamline multi-level regulation

· Enable interstate licence portability

· Fully operationalise the NCAHP Act, 2021

· Improve skilling

· Streamline licensing

· Pursue MRAs.

9. Important qualification about the recommendations

The report makes clear that these recommendations are not prescriptive government decisions. They are insights/reference points arising from stakeholder consultations and are intended to stimulate further discussion, analysis and evidence-based policymaking. Implementation would require broader consultation with relevant stakeholders.

[ABS News Service/17.08.2026]

Ashok Kumar Lahiri, Vice Chairman, NITI Aayog, launched the third report under the Services Thematic Series at the forum of the High-Powered ‘Education to Employment and Enterprise’ Standing Committee, in the presence of Smt. Nidhi Chhibber, CEO, NITI Aayog, and Dr. Saurabh Garg, Secretary, MOSPI, on 10th August 2026. The launch was attended by senior officers from the Ministries/Departments, State Governments, Industry Associations, and Experts/Academia, who are members of the High-Powered Committee.

The report, “India’s Services Sector: Insights on Regulatory Regime in Professional Services”, presents a unique factual assessment of India’s regulatory framework in professional services and benchmarks it against select foreign jurisdictions. Drawing on extensive stakeholder consultations, it also identifies key challenges and outlines a way forward to strengthen the sector and unlock the full potential of India’s professional workforce.

Professional services is a key sub-sector in the services economy, accounting for nearly a quarter of India’s total services exports. As high-value, knowledge-intensive activities, they enable efficient delivery of downstream services, support job creation and remittance inflows, and form the backbone of the services value chain. Understanding the regulatory ecosystem governing these services is therefore critical to unlocking further growth.

The report adopts a balanced approach and provides sector-specific insights, alongside a four-pronged strategy to enhance the efficiency and output of professional services: harnessing emerging trends to transform professional services; elevate professional services within the services value chain; adoption of best practices in professional services, and continuous professional development for professionals.

As India approaches its demographic peak, professional services oﬀer significant opportunities for high-skilled employment, entrepreneurship and innovation. A well-designed regulatory ecosystem can further strengthen service exports, cross-border mobility of professionals and the ease of doing business.

The report provides an indicative pathway for future policy dialogue and deeper examination of the regulatory foundations of professional services. As India advances towards Viksit Bharat @2047, such eﬀorts will be integral to building a globally competitive, inclusive and future-ready services sector.