The government is likely to allow up to 26% foreign investment in legal, audit, and accounting services. This commitment has been stated in a draft Cabinet note circulated by the commerce ministry as a part of India's improved offers currently being discussed at WTO. There will be some restriction, however, on statutory auditing by foreign players.

The overall note on improved access to foreign investors in the area of services also expands scope of foreign banks' operations in India. In a significant move, the upper ceiling on the share of foreign banks in the total banking assets(mainly credit) could be raised from the present 15% to 25%. As of now foreign banks collectively are not permitted to increase their lending beyond 15% of the total banking assets.

Also, the foreign banks will be permitted to open many more branches incrementally in a year. Currently, all foreign banks together are allowed no more than 15 additional branches a year. The new offer may double this to 30 branches a year. Invest in financial services

However, all other issues, such as foreign investment limit in private banks and other regulatory matters, will be decided as per existing norms as decided by the RBI. India's improved offer is also likely to permit foreign banks to invest in domestic financial services up to 10% of owned funds.

The note also states for the first time the improved foreign investment offer in the telecom sector. It says the government will allow foreign direct investment and foreign institutional investment to the tune of 74%.

Sources said once this is formally placed before the WTO India will stand committed to it and cannot go back at a later stage. The draft note also says the improved offer in telecom services is subject to availability of spectrum and other constraints such as the Universal Service Obligation, which is a fund to subsidise rural telephony. All private operators contribute to this fund.

There are also improved offers in the area of maritime and shipping services.

Interestingly, India does not appear to be keen on making an improved offer to foreign investors in the insurance sector. The current foreign investment ceiling of 26% has been retained for insurance sector. This is probably because the government cannot possibly disregard Parliament as any further liberalisation of the foreign investment limit in the insurance sector will have to be passed by Parliament.

The government's fundamental plank at the WTO is to make improved offers to foreign investors in critical services sectors and in return get better deals from the developed countries on work visa regime for Indians.