Vigorous growth with strong macroeconomic fundamentals has characterised developments in the Indian economy since long and continued with high acceleration.

Growth rate of 9 percent and 9.2 percent in 2005- 2006 and 2006-2007 respectively by most accounts surpassed expectations of the World. In our economy services contributed as much as 68.6 percent of the overall average growth in GDP in the last five years between 2002- 2003 and 2006-2007.The export of services during the last few years and particularly has increased threefold during the last three years; in 2005-06, with a growth of 42 percent, it reached US$ 61.4 billion. In 2005, while India’s share and ranking in the world merchandise exports were 1 percent and 29, respectively, today its share and ranking in world commercial services’ export was 2-3 percent and 11 respectively. By growing faster than merchandise exports, services exports constituted almost 60 percent of merchandise exports in 2005-2006. Today India is one of the largest workers’ remittances receiving country in the World. In fact remittances by Indian workers accounted for 13-15% of the total remittances to all developing countries. Remittances received by India constitute 3% of the GDP and finance almost the entire trade deficit.

World Trade Organisation (WTO) & General Agreement on Trade in Services GATS:

To achieve this mind blowing figures in economy the GATS as concluded during the Uruguay Round of WTO is perhaps the single most important development in the multilateral trading system has played the crucial role. The scope of the GATS rules encompasses all forms of international trade in services except those “supplied in the exercise of Governmental Authority”. It is of substantial interest to the world economy as it has the potential to strengthen economic reforms, to stimulate investment and capital mobility worldwide, and to create an institutional framework in various services transactions and also provides an international as well as a multilaterally accepted legal framework for the promotion of liberalization of trades in services.

Basic Principles of GATS

• Most favoured nation treatment: Treat equally to all members services suppliers i.e. no discrimination among member countries.
• National Treatment: Foreign services and services suppliers to be treated no less favourably than their own national services;
• Progressive Liberalization: The process of liberalization is irreversible because of binding commitments on the negotiated levels of market access;
• Transparency: All policies related to barriers to market access and discriminatory restrictions by the Members are to be notified.

GATS various modes of supply of services:

This has been defined under the GATS in terms of four modes of delivery viz.

• Cross Border Supply (Mode 1): Services are supplied from one country to another country (e.g. International telephony)
• Consumption abroad (Mode 2): Consumers make use of a service in another country (e.g. Tourism)
• Commercial presence (Mode 3): A foreign firm sets up subsidiaries or branches in another country (e.g. opening a consultancy firm on foreign soil)
• Movement of natural persons (MNP) - (Mode 4): Individual move from their own country to supply services in another country (e.g. persons working on foreign soil on a contract and time bound basis) but on temporary basis only.

Movement of natural persons (MNP) - Mode 4:

WTO members’ commitments under this mode normally relate to the temporary admission of foreign nationals or foreign permanent residents as service providers in their territory. This “temporary” presence means a presence between 90 days to 5 years but not of permanent nature. The role of movement of skilled professional’s mode 4 in GATS for circulating knowledge and promoting technological development is widely recognised now a days. Such movement enables countries to sustain fast growth without being limited by shortage of key workers, particularly in skill-intensive sectors. While on the one hand, temporary migration enables developed countries to have access to working age and skilled immigrants who have a positive impact on host countries economy, such movements also benefit developing countries like India by enhancing foreign exchange earnings as well as bringing in knowledge of new technologies and global practices. GATS plays a significant role in creating further opportunities for temporary workers. The GATS allows member countries to assume legally binding commitments concerning their use of trade related measures in individual service sectors. These commitments are laid down in country schedules for each member. By establishing guidelines for movement of service suppliers, Mode 4 of the GATS can facilitate greater flows and reduce the delays and uncertainty involved in entering a foreign market.

Current Scenario of Indian Accountancy Sector

Accountancy services are regulated by the Institute of Chartered Accountants of India which is responsible for providing education and training, for ensuring professional codes of conduct and standards are adhered to, and for granting recognition to foreign qualifications, among its other responsibilities. India can also benefit with liberalization move of GATS specifically in the areas of Accountancy, including bookkeeping and auditing. India is having a large supply of trained accountants and also considerable expertise in booking and auditing. India is also becoming an attractive location for accounting services for foreign airlines, banking and finance companies. Recently few famous foreign airlines like the Swiss Air set up its accounting head quarters in Mumbai, Singapore Airlines has opened accounting offices in Bangalore, Lloyds and Citibank have in- housing accounting centers in India. There is also a move from the side of professional bodies like Institute of Chartered Accountants of India (ICAI) to enter into collaboration with Institute of Chartered Accountants of Nepal (ICAN) and with Singapore to cooperate in regulating and developing the profession of chartered accountancy in the two countries. The most important issue in the present context of negotiation is Movement of Natural Persons (MNP). Developed countries have offered very little in terms of facilitating national treatment or making administrative arrangements in the area of MNP. At present their commitments are limited only to business intra- corporate transferees and commercial presence. Developing countries like India has abundant supply of these professionals and can immediately acquire competitive e advantages if MNP commitments are made by developed countries. On the other side these developed countries are having very stringent visa and quota regulations etc, even for temporary migration , there are several restrictive immigration and administrative procedures. However many of the barriers faced by foreign service suppliers are often not apparent. It is difficult to characterise migration from India, as data on legal out migration is not available on a regular and systematic basis.

In accountancy services India has limited trade at present due to various regulatory and other barriers. However there is a lot of scope for expanding both export and import of such services in future. The world market for accountancy services has been growing rapidly. Growth in world trade and FDI and the increased global presence of multinationals has contributed to growth in these professional services which supports businesses. In addition, new fields of practice have emerged alongwith traditional field like management consultancy services, business recovery and solvency, forensic accounting and related information technology services. In the case of accountancy services it is the big five accountancy firms based in US that dominate global trade with estimated market share of 90 percent.

Conclusions & Recommendations:

Today, relatively a larger section of the international business community shares the view that removal of barriers to the temporary movement of people would benefit both developed and developing countries. At the same time developments in global economy have created additional drivers for the liberalisation of movement of natural persons. In a world of increasing global business networks and shortening product cycles, companies need to be able to move key personnel around the world at short notice and for short periods to support the production, marketing, sale or after sale servicing of goods or services. With advancement in technology more companies including smaller ones are participating in international trade and the scope and scale of traded services are growing significantly. India’s Stand in WTO on the Movement of Natural Persons India has put forward a number of suggestions on the WTO platform for improving the MNP mode of trade in services. The important suggestions can be summarised as under:

• Each country should publish and make freely available procedures applicable for movement of personnel and the various entry procedures
• Equal treatment to all foreign nationals
• Standardization / harmonization of qualification and experience with the help of agreements
• There should be no restrictions on temporary movement of Professionals
• Salary and wage comparison should not be used as trade restrictive measures
• Requirements of local competency (Like Economic Needs Test or local certification cannot be used as nontariff barrier.
• Data bank should be authentic and available to each as there is lack of data and information and transparency of barriers to cross-border transactions and foreign entry. The effectiveness of GATS agreement in professional services has further been reduced because of lack of comparable cross country data in accountancy services.

The service sector occupies an important role in the Indian economy in terms of value added employment and trade. However, the prospects for expanding India’s services trade will depend greatly on the removal and easing of various regulatory and other restrictions on entry and conditions of competition. The current proposed agreement on accountancy sector under GATS can be useful for India in number of ways. This will provide new opportunities for Indian accounting professionals if the agreements on qualifications/ domestic regulations and licensing etc are done in tune with the letter and spirit. Once again if this agreement is complemented by some substantial breakthroughs in the area of MNP, then professionals can move abroad and take up the jobs or set up firms or also provide online services from WTO.