Plan afoot to fast-track review of rules to help build domestic 'Big Four'

New Delhi: The government plans to expedite a review of rules that are discouraging domestic accounting and consultancy firms from gaining scale and take swift remedial measures, said a person familiar with the details.

A meeting on Tuesday chaired by Shaktikanta Das, principal secretary-2 to the Prime Minister, deliberated on steps that would not only foster the creation of large homegrown firms similar to the Big Four but also bolster their competitiveness, the person told ET.

A concerted strategy may be adopted under which the government could ease rules to encourage merger and aggregation of local accounting firms, create multidisciplinary partnership firms, facilitate easier tie-ups with global firms, and allow all these firms to operate, advertise, and raise funds with ease, said another person.

The meeting also dwelt on the corporate affairs ministry's latest bid to seek stakeholder inputs on allowing setting up of multi-disciplinary consultancy firms, among other steps, ET has learnt. It was attended by senior officials from the Prime Minister's Office and the ministries of finance and corporate affairs.

At multidisciplinary firms, various professionals including chartered accountants, company secretaries, lawyers, and actuaries can operate under a single firm structure. Currently, there are restrictions on creating such firms.

Attaining scale could help Indian firms capitalise on the estimated $240 billion global auditing and consultancy market. Homegrown firms are currently unable to tap this lucrative business opportunity, primarily due to smaller scale of operations undermining their competitiveness.

Small firms are also not perceived to have the required wherewithal to audit big corporations or offer credible consultancy services. Only 400 of 95,000 domestic chartered accountancy firms have over 10 partners each.

The absence of large homegrown firms has allowed the Big Four-EY, Deloitte, KPMG and PwC-along with Grant Thornton and BDO to dominate the Indian audit ecosystem. Some industry estimates suggest the combined revenue of the Indian affiliates of the Big Four at more than ₹45,000 crore last fiscal.

The ministry's note on multidisciplinary firms has also flagged several bottlenecks in the extant system: the ban on advertising and marketing, presence of different regulators for licensing in different professional services, restrictive public procurement, and empanelment processes and inadequate global collaborations.

Steps to remove these obstacles are expected to be initiated after stakeholder consultations.

Prime Minister Narendra Modi had in 2017 called for the creation of at least four large homegrown firms that would be counted among the world's top eight.