Domestic chartered accountant (CA) firms are seeking relaxation of existing norms even as the government works toward Prime Minister Narendra Modi’s vision of creating India’s own “Big Four” advisory firms. The firms have raised concerns over current regulations under the Chartered Accountants Act, 1949, and the Code of Ethics, which they say are hindering their ability to scale. Key obstacles cited include capital constraints, a ban on advertising, and limited government support.

“Many small and mid-tier firms want to grow in size, but the regulations are not supportive. Unlike the US and the UK, where the audit firms are allowed to raise public and private capital, the Indian firms are restricted from doing so by the CA Act,” said the head of an audit firm.

As per the CA Act, the Institute of Chartered Accountants of India (ICAI) membership is mandatory to own and operate a CA firm in the country. The law also indirectly precludes non-ICAI members, including public or private investors, from holding a stake in CA firms, thereby preventing any capital infusion from non-CA firms. Similarly, the Code of Ethics prevents CAs from entering into a partnership with a person who is not an ICAI member.

The Prime Minister’s Office (PMO) recently held a meeting with senior officials from the Ministry of Corporate Affairs (MCA) and the Finance Ministry to discuss necessary policy interventions and chart a path for creating large Indian advisory firms capable of competing with the Big Four — EY, KPMG, PwC, and Deloitte.

A senior partner with a mid-tier firm told FE that there’s a lack of a level playing field for the domestic firms, who are not allowed to advertise their services under the law. “The big audit firms get to advertise through their consulting arms, but for us, it’s strictly not allowed. We believe that certain relaxation pertaining to advertisement should be there within the broader purview of regulations,” he said.

The part-I of the First Schedule to the Act prohibits a CA from soliciting clients or professional work either directly or indirectly by circular, advertisement, personal communication or interview or by any other means.

The local firms said that India needs to follow the “China model” of promoting domestic firms, wherein the Chinese government has informally told its state-owned companies to stop renewing contracts with the Big Four firms, and prefer local auditors, to put a check on the growing influence of foreign audit firms.

Just like China, India also aspires to counter the rising dominance of the Big Four. In FY25, the top audit firms cemented their position within corporate India as more firms engaged with Big 6 firms to get their audit work done. As per the primeinfobase.com, the top six audit firms handled 326 assignments of the 483 Nifty-500 companies as on March 2025, which was in line with the FY24 trend when Big 6 firms audited 67% of the Nifty 500 companies.