The Institute of Chartered Accountants of India is pushing to reserve government consultancy contracts up to ₹5 crore for domestic firms. The proposal suggests shifting eligibility criteria from turnover requirements to direct project experience, aiming to reduce the dominance of international audit firms. The plan also includes allowing private equity funding for advisory services.
The Institute of Chartered Accountants of India (ICAI) has initiated a proposal to change how government entities select accounting and consultancy firms. Currently, many government tenders set high turnover or revenue thresholds as a requirement for bidders. This often excludes smaller, home-grown Indian accounting firms, even if they possess the necessary technical skills. The regulator is now lobbying the government to change these rules for contracts valued up to ₹5 crore.
Changing Rules for Government Tenders
The core of the proposal is to shift the eligibility criteria from financial size to specific project experience. By focusing on what a firm has actually delivered rather than just its annual revenue, the ICAI believes more local firms can qualify for state-led projects. This move is designed to create a more level playing field. International professional services firms, often referred to as the Big Four, frequently dominate the government consulting sector due to their large scale and global track record. This change could allow domestic firms to gain greater access to government business, which is a major segment of the professional services market in India.
Enabling Scale for Domestic Firms
To help smaller practices take on larger assignments, the ICAI is also working on guidelines for collaborative networks. These networks would allow independent Indian accounting firms to pool their resources, technical talent, and manpower without having to merge their businesses into a single entity. This model is intended to give smaller firms the operational strength needed to bid for larger contracts that they could not handle alone. By acting as a consortium, these local practices could potentially compete more effectively against international giants that already operate using similar network structures.
New Funding Path for Advisory Services
Beyond tender reforms, the regulator is in discussions with the Ministry of Corporate Affairs regarding amendments to the Chartered Accountants Act. The proposed change would allow firms to bring in private equity investment to fund their non-audit advisory wings. To address concerns about audit quality, the proposal suggests a strict operational firewall. Under this plan, the firm’s assurance and tax audit services—where independence is critical—would remain completely separate from the consulting side that receives external growth capital. This separation is meant to ensure that the influx of outside money does not influence or compromise the integrity of financial audits.
For investors and market participants, the key monitorable will be the regulatory timeline for these changes. The implementation of these rules could change the competitive dynamics of the Indian professional services market. If approved, domestic accounting firms may see increased growth opportunities and potential interest from private equity investors, while the market share of international firms in smaller-ticket government tenders could face pressure. Investors may look to track how the government responds to these proposals and whether the suggested firewalls between audit and advisory services are accepted as sufficient to protect financial oversight.