India needs to limit its reliance on multinational corporations (MNCs) for strategic audits and consulting in order to strengthen its economic sovereignty and achieve the goal of Atmanirbhar Bharat, the Ministry of Corporate Affairs (MCA) said in an office memorandum released on Wednesday.
While inviting comments from all stakeholders on the establishment of Indian multi-disciplinary partnerships (MDPs), the MCA noted that despite a world-class talent pool, domestic firms have remained marginal players.
This is particularly true in high-value audits and consulting, partly due to structural and regulatory barriers.
The MCA secretary Dipti Gaur Mukherjee led-committee on creation of an Indian Big Four firm had recently held its first meeting.
It discussed the way forward to support the expansion of domestic smaller accounting and audit firms, according to official sources.
“The MCA is actively working towards amending the relevant Acts, rules, and regulations to support the growth of domestic MDPs and enhance their international competitiveness,” the official memorandum said.
It stated that the global consulting and auditing industry is valued at nearly $240 billion, dominated by international networks and global strategy majors.
The MCA noted that the current asymmetry in India’s professional services landscape puts domestic firms at a disadvantage compared to global names.
“The recent free trade agreements (FTAs) of India have opened opportunities for Indian consultancy firms to expand their presence abroad,” MCA added.
Indian regulations do not allow professionals such as chartered accountants, company secretaries, lawyers, and actuaries from working together under a single firm structure, limiting collaboration.
They don't have the ability to offer integrated services like those provided by International firms.
Chartered accountants, company secretaries, and lawyers face restrictions on advertising and branding due to regulations set by their governing bodies.
“These rules were originally intended to uphold dignity, ethics, and independence in the profession, ensuring that services are chosen based on merit rather than marketing.
"However, this ban limits Indian firms from building strong brands,” MCA said.
The MCA note said a fragmented framework with different regulators for each professional service has also made it difficult to build multidisciplinary firms in India.
The government has sought views of stakeholders on the changes in the Rules and Regulations administering different professionals in India.
This is to ensure Indian firms develop into globally competitive players in the field of consultancy.
It has also asked stakeholders to share what regulatory safeguards are required to successfully implement the MDP framework.
The MCA has invited suggestions on measures the government and professional bodies can take to ensure Indian firms develop into globally competitive players.
In June this year, a meeting was held by the Prime Minister’s Office to discuss policy interventions needed for having a domestic advisory and audit firm which is in the league of the global Big Four.
Chaired by Shaktikanta Das, principal secretary to the Prime Minister, the meeting was attended by top government officials including then secretary, department of economic affairs, Ajay Seth; secretary, financial services, M Nagaraju, revenue secretary Arvind Shrivastava and the MCA secretary.