The Institute of Chartered Accountants of India (ICAI) has cleared a landmark draft regulatory framework that paves the way for domestic chartered accountancy firms to forge formal alliances with global audit and advisory networks, for delivering scale, expertise and international best practices to the Indian profession.
Approved by the institute’s apex council earlier this week, the draft regulation will for the first time mandate every Indian firm that enters, or has already entered, into a global affiliation to register the tie-up with ICAI and to nominate a senior partner as the nodal compliance officer. Such entities will be required to disclose names, registration particulars, constitutional changes and annual returns, and to certify adherence to Indian auditing rules and the institute’s code of ethics.
Want a deeper insight into the Income Tax Bill, 2025? Click here
ICAI president Charanjot Singh Nanda told Economic Times that the proposal, prepared after consultations with the Ministry of Corporate Affairs, is designed to support the government’s objective of creating “large, home-grown accounting champions” capable of competing with the Big Six international networks that currently dominate the audit landscape. Affiliates of EY, Deloitte, KPMG, PwC, Grant Thornton and BDO audited 326 of the NSE Nifty-500 companies in FY25.
The draft will be released for stakeholder comments within days and, subject to feedback, is expected to be formally notified by early July 2025. A person familiar with the text said overseas networks operating in India “will have to comply with all these regulations”, ensuring greater transparency and accountability. Stakeholders may submit comments online through the institute’s portal once the draft is published.
At present, foreign network arrangements are governed only by voluntary disclosures after a 2021 form-based regime was scrapped. The new rules resurrect reporting requirements within a comprehensive legal framework. Failure to register or to observe the ethical standards could attract disciplinary action under the Chartered Accountants Act.
How to Audit Public Charitable Trusts under the Income Tax Act Click Here
To complement the new architecture, ICAI last year relaxed its merger guidelines, granting firms up to ten years to integrate before mandatory demerger and waiving fees for name retention linked to firm registration numbers. Officials believe the twin measures will encourage consolidation and strengthen Indian practices seeking cross-border partners for specialised service lines such as ESG assurance, forensic accounting and digital risk.
The final framework, once notified, is expected to usher in a new era of collaboration, broadening opportunities for mid-sized local firms while assuring regulators and investors that international affiliations remain firmly under Indian oversight.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
