Govt Plans Amendments To Companies Act, Tender Rules To Boost Indian Audit Firms Against Big 4

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The government is considering amendments to the Companies Act as part of a broader plan to strengthen domestic audit firms and help them compete more effectively with the “Big Four” global networks — Deloitte, PwC, EY, and KPMG — according to people familiar with the matter told Moneycontrol.

The Ministry of Corporate Affairs (MCA) is in advanced stages of consultations, and the proposed amendments could be introduced through the Companies Act Amendment Bill, the report said. One of the key proposals under review is the relaxation of partner composition norms, which experts say currently restrict multi-disciplinary partnerships (MDPs) and limit firms’ ability to attract professionals from diverse fields — a capability increasingly essential as businesses evolve.

Tender reforms and capital support

Alongside legislative changes, the government is also considering reforms in tender norms to enhance domestic firms’ participation in large-value government audits, which are currently dominated by global players. Moneycontrol reported that the proposals include mandatory inclusion of Indian firms in public tenders and relaxed eligibility criteria to widen the pool of qualified bidders.

Policy discussions also focus on capital support mechanisms to help Indian audit firms invest in technology, branding, and overseas expansion. According to officials cited by Moneycontrol, capital-intensive requirements such as digital infrastructure and international marketing continue to prevent Indian firms from competing at global scale.

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

The ICAI has been working with the government to align India’s regulatory framework with international best practices. The institute is also finalising a digital platform to facilitate mergers among CA firms, aimed at encouraging consolidation and competitiveness. These initiatives are expected to be rolled out alongside the legislative changes in the coming months.

Structural constraints and proposed reforms

Experts told Moneycontrol that amendments to the Companies Act are vital to reform the domestic professional services ecosystem. “Once these changes are implemented, the playing field could shift substantially over the next five to seven years,” a source said.

Currently, Section 141(1) of the Companies Act mandates that a majority of partners in an audit firm practising in India must be chartered accountants. While this upholds professional standards, it also prevents firms from forming multi-disciplinary partnerships — structures that combine professionals from fields like law, IT, and consulting, and which have helped global networks dominate large, complex assignments.

The government is also considering revisions to Section 144, which deals with conflict-of-interest provisions, to ensure that regulations align with the changing dynamics of the audit and advisory business, Moneycontrol said.

Restrictions on non-audit services have also limited diversification opportunities, making it difficult for Indian firms to develop integrated offerings comparable to their global peers. Removing these barriers will likely form the core of the government’s policy reforms.

Why Section 141 matters

Section 141 defines auditor eligibility criteria but restricts firms from forming MDPs. Easing this clause could allow Indian firms to bring in professionals from varied disciplines, helping them expand capabilities and scale operations like global counterparts.

Multi-disciplinary partnerships (MDPs)

Moneycontrol explained that MDPs integrate multiple expertise areas — including audit, tax, legal, consulting, and IT — within a single structure. This approach underpins the global success of networks like Deloitte and PwC. While MDPs are allowed in India in principle, existing legal and tender rules make scaling such models difficult, particularly for audit-focused firms.

Potential tender reforms

Government tenders for large audits often impose high thresholds on turnover, staff size, and international affiliations, which favour Big Four firms. As per Moneycontrol, the government is now considering mandatory inclusion of Indian firms and lower eligibility thresholds to create a more level playing field.

If implemented, these reforms could mark a major policy shift — potentially reshaping India’s audit landscape and enabling domestic firms to compete globally against the established Big Four networks.