Govt likely to amend companies act, tender norms to help Indian audit firms take on Big 4

Alongside legislative changes, the government is also looking at changing to tender reforms to increase the participation of domestic firms in large-value government audits, which are dominated by Deloitte, PwC, EY, KPMG and other international players.

Mandatory inclusion of Indian firms in government tenders and adjustments to eligibility criteria to enable a wider pool of bidders are the changes being discussed, sources said.

Policy discussions also include capital support mechanisms and other enabling measures to help domestic firms invest in technology, branding and overseas expansion.

Capital intensity, particularly in areas such as digital infrastructure and international marketing, prevents Indian firms from competing at scale, sources said.

“Policy interventions on tender norms and capital support can accelerate capacity-building in the sector. Domestic firms need both regulatory space and financial backing to scale,” a senior Institute of Chartered Accountants of India (ICAI) member said on condition of anonymity.

ICAI has been engaged to align regulatory frameworks with global practices. As part of this, the institute is finalising a digital platform to facilitate CA firm mergers. These measures are expected to be rolled out in the coming months in parallel with legislative action.

What are the structural constraints?

“Amendments to the Companies Act are critical to enable structural changes in the domestic professional services ecosystem. Once these are in place, the playing field could shift substantially over the next five to seven years,” one of the sources cited above said.

Section 141(1) of the Companies Act says that if a firm is appointed an auditor, a majority of its partners practicing in India must be chartered accountants. While intended to uphold professional standards, this provision has limited Indian firms’ ability to form multi-disciplinary partnerships, a structure that has enabled global networks to dominate large assignments.

Changes to Section 144, which governs conflict-of-interest provisions, are also being explored to ensure that regulatory norms align with evolving business models in the audit and advisory sector.

Restrictions on non-audit services have constrained diversification of service offerings, making it difficult for Indian firms to build integrated capabilities at scale. Addressing these barriers is likely to be at the core of the government’s policy push, the source said.

What is Section 141 and why does it matter?

Section 141 lays down eligibility conditions for auditors but also limits firms’ ability to form multi-disciplinary partnerships by bringing in professionals from fields such as law, IT, or consulting. Easing this could enable firms to diversify talent and scale like global networks.

What are multi-disciplinary partnerships?

Multi-disciplinary partnerships allow firms to combine expertise from different professional streams (audit, tax, legal, consulting, IT) under one structure.

Global players such as Deloitte and PwC are built on multi-disciplinary partnerships.

India allows MDPs in principle but legal and tender norms make scaling difficult, especially for audit firms.

How could tender norms change?

Government tenders for large audits often set high thresholds for turnover, employee strength or global affiliations, which favour Big Four firms.

The government is considering mandating inclusion of Indian firms and lowering eligibility thresholds, enabling them to bid alongside international players.