Govt Reviews Reforms To Boost Growth Of Domestic Accounting & Consultancy Firms

New Delhi, Sep 27 (KNN) The government is moving to accelerate a review of regulations that limit the growth of domestic accounting and consultancy firms, with an aim to create large homegrown players capable of competing with global giants, according to people familiar with the matter.

A high-level meeting held on Tuesday, chaired by Shaktikanta Das, Principal Private Secretary-2, Prime Minister, discussed measures to strengthen the competitiveness of Indian firms and support the emergence of entities comparable to the Big Four. 

Senior officials from the Prime Minister’s Office and the ministries of finance and corporate affairs participated in the deliberations.

The proposed strategy under consideration includes easing rules to encourage mergers and aggregation of local firms, allowing the establishment of multi-disciplinary partnership firms, enabling smoother collaborations with global entities, and providing greater operational flexibility in areas such as advertising and fundraising. 

The corporate affairs ministry has already initiated stakeholder consultations on the framework for multi-disciplinary consultancy firms.

Such firms would bring together professionals including chartered accountants, lawyers, company secretaries, and actuaries under a single structure, a model currently restricted by existing rules. 

Policymakers believe this reform could help Indian firms tap into the USD 240 billion global auditing and consultancy market, which remains largely inaccessible due to their limited scale.

Industry data highlights the challenge: of the 95,000 domestic chartered accountancy firms, only about 400 have more than 10 partners. 

Smaller firms are often perceived as lacking the capacity to audit large corporations or provide comprehensive consultancy services, leaving the Indian audit market dominated by global players such as EY, Deloitte, KPMG, PwC, Grant Thornton, and BDO. 

The combined revenue of the Indian affiliates of the Big Four is estimated to have exceeded Rs 45,000 crore in the last fiscal year.

The corporate affairs ministry has also identified key obstacles hindering domestic firms, including bans on advertising and marketing, fragmented licensing across professional regulators, restrictive public procurement and empanelment norms, and weak global partnerships. 

These issues are expected to be addressed following stakeholder consultations.

(KNN Bureau)