The Bar Council of India dropped a bombshell in March, announcing that the behemoth Indian legal market is throwing its arms open to foreign law firms and practitioners – albeit with some strings attached.

As the news broke, international law firms – some of which spent years building their marquee India offerings - look on with cautious optimism. Baker McKenzie and Herbert Smith Freehills quickly put out written statements, both exuding excitement, touting their dedication to and knowledge of the jurisdiction, and pledging to serve Indian multinationals better as well as international companies doing business in one of Asia’s fastest-growing economies. Most other firms with India engagements chose to wait and see, perhaps refusing to jump the gun by commenting too much, too soon.

Meanwhile, big domestic Indian firms are wary of intensifying overseas competitions, while small Indian firms are bracing for upended market dynamics.

Long denied an on-the-ground presence, foreign law firms and lawyers are set to be allowed to practice transactional law and international arbitration on Indian soil based on reciprocity. Although akin to Singapore, foreign lawyers still can’t appear before the Indian courts, tribunals or other statutory or regulatory bodies, the BCI’s decision has been widely hailed as a giant leap forward when it comes to liberalising India’s staid legal market.

“(The news) has had a huge impact. The phones are off the hook,” says Reena SenGupta, executive director at the Lon-don-based think tank RSGI.

“Both Indian and foreign law firms are rapidly reviewing their strategic plans in Asia. There is huge pressure to move quickly, conclude alliances, set up shop and for many talented partners, there is a real opening to negotiate better deals with both current and potential employers,” she adds.

With major legal players exhilarated by India’s long-awaited U-turn busy mulling their next moves, SenGupta views the liberalisation as a strategic step taken by New Delhi, increasingly squeezed by the rise of China, to gain geopolitical and economic capital as Beijing wrestles the West.

She believes the reason driving India’s decision is “the emergence of what many commentators are calling a new cold war, with the U.S. on one side and China on the other.”

“India has the opportunity to lead the non-aligned nations as it did once before and take advantage of the ‘friend-shoring’ multinationals will do as they disentangle their operations from China. This, combined with an expanding Indian economy, means there is an opportunity here for India and the government no doubt sees a freer legal system as the grease on the wheels of growth,” notes SenGupta.

Indeed, the UK Law Society has branded India’s legal liberalisation as the culmination of the British government’s painstaking efforts to lower the walls of India’s sizable legal market. That comes on top of the $1.3 billion bilateral trade deal between London and New Delhi, which created plenty of legal advisory roles that foreign businesses prefer to be filled by friendly faces.

“For many foreign law firms, India is the missing piece of the global jigsaw puzzle. The pros will be that they will benefit from India as a huge market,” says SenGupta.

But no gold rush comes without pitfalls. “There will be a scramble and mistakes will be made, potentially costly ones,” she warns while adding that the pros in this case, however, outweigh the cons by a significant margin.

To avoid excessive trial and error, SenGupta urges law firms to be clear-minded when making deeper inroads across India with eyes on the prize – their strategic objectives.

“Front of mind should be the following questions: who are the clients they act for now? Who do they want to act for? What do they need?” asks Sen-Gupta. “For bigger firms, an alliance that has the potential to be a merger is the overall prize, but there are many ways to build an Indian presence. Cherry-picking teams and a certain opportunism should not be discounted.”

She is confident that the decision will unlock the tremendous potential underpinning India’s legal industry and economy in the long run, which could one day rival top legal hubs such as London and New York while dwarfing its Asian counterparts.

“Singapore has benefitted from India being closed; and Hong Kong may suffer in this new cold war. They will both be important Asian legal markets, but this opening up will put India up where it should be in the region and most importantly, liberalisation will help business and investment,” says SenGupta.