Senior partners at law firms in London and New York are keeping a keen eye on the dénouement to a long-running case before Mumbai’s High Court. The judge’s decision could be the first big step towards allowing foreign practices to set up in the booming market – or just another roadblock on a route that has been littered with obstacles for the past 13 years.

Lawyers at the top global law firms are salivating at the prospect of cracking the multibillion-pound Indian jurisdiction. As Western economies flounder, emerging economies are seen by lawyers as a potential lifeline in attempts to limit damage to their bottom lines.

And India looks a juicy prospect. Last year there were nearly 600 cross-border mergers and acquisitions that involved an Indian element; in addition, the Delhi Government has launched an infrastructure programme that is reported to require $500 billion of foreign investment.

As a result, there is no shortage of interest in India from western lawyers. Illustrating the point is a set of chambers in Birmingham, the largest centre of UK-India commerce in the country. No5 Chambers is sponsoring a conference in Delhi next spring that it claims will be a networking platform for Indian, UK and European lawyers.

Ekwall Tiwana, the conference organiser and an Anglo-Indian barrister, says: "By the time we all meet in Delhi for the conference the legal landscape will be very different and both jurisdictions will be building much closer links to the huge benefit of Anglo-Asian business. This is all about mutual understanding of how India and Britain work much better together than they do apart."

No wonder, then, that even Jack Straw, the Secretary of State for Justice, adopted more of a trade and industry approach on a recent visit to India. "Liberal regimes in legal services are key to attracting the foreign direct investment on which development depend," he told his hosts. "The input of lawyers is vital to ensure that trade takes place in a structured, secure and predictable way."

The problem is that for years the Indians have been far keener on protectionism than liberalisation in their legal services. The current court case dates back to 1995 when two US firms – Chadbourne & Parke and White & Case – and the London-based Ashurst had fledgling offices in the country. They were closed down by the authorities at the behest of the Indian Bar Association on the ground that they had breached strict rules prohibiting foreign lawyers from practising in the jurisdiction.

Chadbourne and White & Case packed up immediately; Ashurst stayed on, but with an office staffed only by administrators and no lawyers. Ashurst with White & Case and the support of the Indian Government and the Law Society of England & Wales began the court challenge that is now moving towards judgment.

Tony McDaid, the practice director at No5 Chambers, is confident that practice rights in the country will be liberalised and that law firms, both domestic lawyers and their global counterparts, need to start preparing now. "There will be major developments in this area in the next two years," he predicts. "It is essential that relationships are formed now so an understanding of the market is met."

Indeed, the Indian Government is reported to want the restrictions overturned because it is keen to encourage relations with two of its leading trading partners and investors, Britain and the United States. Ultimately, if it does not win through litigation, it has a fall-back position of reforming legislation.

A draft law in the pipeline should have longer-lasting effect than the court battle. The Limited Liability Partnership Bill is designed to fill a lacuna in the country’s laws regulating professional firms, including legal practices. In addition to limiting liability, it will allow the creation of multidisciplinary partnerships, and, more importantly for the global law firm community, it will also allow foreign limited liability partnerships to practise in India, as well as permitting foreign LLPs to form joint ventures with Indian LLPs.

Alison Hook, the head of the international division at the Law Society of England and Wales, explains: "When the Bill is enacted, that will be the first irrevocable step towards opening the Indian market."

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