The government is considering amendments to the Companies Act to help domestic audit firms better compete with the global “Big Four” networks, according to sources. The Ministry of Corporate Affairs (MCA) is in advanced talks, and the changes may be introduced through an amendment bill. One key proposal is to relax partner composition rules, which currently restrict multi-disciplinary partnerships and limit the ability to attract diverse talent needed for evolving business demands.
Alongside legislative reforms, the government plans to reform tender norms to boost Indian firms’ participation in major government audits, typically dominated by Deloitte, PwC, EY, and KPMG. This includes mandatory inclusion of Indian firms and easing eligibility criteria to broaden bidder participation.
Policy discussions also focus on capital support to help domestic firms invest in technology, branding, and international expansion, addressing challenges like capital intensity in digital infrastructure and marketing.
Section 141 of the Companies Act, which requires a majority of partners to be chartered accountants, restricts multi-disciplinary collaborations. Revising this, along with changes to Section 144 on conflict-of-interest, aims to align regulations with modern business models and foster growth. The Institute of Chartered Accountants of India (ICAI) is aiding this transition, including creating a digital platform for firm mergers.
