Britain’s multibillion-pound legal profession is about to profit from a landmark change in India that will allow foreign law firms to set up shop there for the first time.

Senior Indian ministers told a City of London delegation led by the Lord Mayor this week that they would push through a parliamentary Bill allowing foreign firms to set up local operations by the end of the year.

Stuart Popham, the senior partner of Clifford Chance, the largest law firm in the world, which has annual revenues in excess of £1 billion, told The Times that a relaxation of the foreign lawyer rules would prompt him to act as soon as possible to establish a presence in India. Bombay has fast become a huge financial centre, where most of the world’s big investment banks have a presence. Opening the market-place to foreign law firms would accelerate its transformation into a global trading hub.

The Indian Government estimates that it must spend $320 billion (£160 billion) on infrastructure in the next five years to sustain economic growth of about 9 per cent a year. Analysts put the figure closer to $500 billion. These projects, mainly private-public partnerships, will require legal servicing but at present they are off limits to foreign lawyers on the ground in India, thanks to the Advocates Act, a 45-year-old law that restricts the profession to Indian advocates.

Indian lawyers, on the other hand, can practise in the UK.

A flood of cross-border corporate deals, including the $18 billion takeover of the mobile phone operator Hutchison Essar by Vodafone this year, is overwhelming local legal capacity in India.

Herbert Smith had to handle all its legal work for Tata’s £6.6 billion takeover of Corus from London.

John Stuttard, the Lord Mayor of London, said: “In London you can come in and buy anything. This freedom to move capital in and out results in efficiency and innovation. If Mumbai [Bombay] wants to be a successful international financial centre, it has to be totally open. Within the domestic market there is competition, but there are still closed shops.”

Allen & Overy, another of London’s leading global law firms, is also eager to establish its franchise in India as soon as the barriers come down.

Alex Pease, the chairman of A&O’s London-based India group, said: “If there is a liberalisation, we have to look seriously, as India is a huge potential market . . . We are interested in the long term, but we are following the rules.”

Slaughter and May, the City’s most profitable big law firm, has struck up “best friends” informal client referral relationships with India’s top firms without opening locally.

The Bar Council of India, the regulator, which exerts strong political influence, opposes the entry of foreign firms. However, its attitude may be softening, paving the way for a bilateral agreement.

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