India and the UK on Monday decided to step up the process of mutual recognition of qualifications in the accountancy profession, with both sides agreeing to set up a sub-group to look into this issue.

Once the mutual recognition of qualification is finalised, chartered accountants from India and UK may be able to work or practice in either India or the UK.

The sub-group would be formed within the accountancy grouping of the India-UK Joint Economic Trade Committee (JETCO), the visiting Lord Mayor of the City of London, Mr Alderman John Stuttard, told Business Line after his meeting with the Minister for Corporate Affairs, Mr Prem Chand Gupta.

At the meeting, Mr Gupta said: "As far as arrangements in various agreements of services such as accountancy are concerned, the cardinal principle is that of reciprocity. Hence, these issues as we are concerned are under WTO".

Meanwhile, the first of the formal meeting of the sub-group would happen in early July. Ahead of this meeting, there would be a number of informal meetings beginning on Tuesday. The names of the members of the sub-group were agreed on Monday. The sub-group comprises representatives of the two Governments and the professions at both the countries.

Mutual progress

"Mutual recognition is something that we have to make progress. It was thought about for many years. We now need to push into action. By working together, we are going to increase the number of qualified accountants in India," Mr Stuttard said.

The London City Mayor said that he had, in his meeting with Mr Gupta, referred to the shortage of accountants in India, which, he said, would hold back the development of Indian economy and its financial services industry.

"There are only 1,50,000 qualified accountants in India. This is too small for a big country like India. We have 3,00,000 accountants," Mr Stuttard said.

He said that Mr Gupta highlighted the limited liability partnership (LLP) Bill was going through Parliament, and that foreign nationals would be permitted to enter into partnerships through LLPs. "This is very good. If you want to develop the professional sector, involving foreign nationals is extremely effective," Mr Stuttard said.

Legal services

The London City Mayor also raised the issue of opening up of legal services by India during his meeting with Mr Gupta. He also plans to take up the same issue on Tuesday, when he meets the Union Finance Minister, Mr P. Chidambaram.

"This is a issue (legal services) clouded with misunderstanding. It is very short-sighted of those people who are arguing against it. Really this thing needs to be moved along and it's in India's interest," Mr Stuttard said.

He said that 90 per cent of lawyers in India are involved in advocacy. "The actual permissions that UK and international firms want is not to go to Court, but to work behind the scenes on mergers and acquisitions, deals and transactions between the two countries," Mr Stuttard said.

India in UK

From a level of 30 Indian companies five years ago, he pointed out that there are currently 500 Indian companies operating in the UK. All these companies are doing things cross-border and need legal and tax advice, and international law firms are best placed to deal with this new area of activity, Mr Stuttard said.

Meanwhile, Mr Stuttard in his address at a FICCI meeting here on Monday,made a case for opening up the Indian accountancy and legal services sectors.