India’s strengths in tech and talent to fuel rise of homegrown audit giants, says Dinesh Kanabar of Dhruva Advisors

As the government pushes for the creation of large Indian accounting firms to rival the global “Big Four,” top industry leaders believe the nation’s core strengths in technology and a deep talent pool are the keys to success. The consensus among experts is that with the right regulatory framework, Indian firms are poised to leverage technology and make a significant global mark.Dinesh Kanabar, CEO of Dhruva Advisors, highlighted that much of the groundwork for global audits is already being done in India. “It might be a surprising thing to know that some of the global audits actually happen from offices in India,” Kanabar told CNBC-TV18. He explained that for US-based audits, “about 90% of the work will be done in India, all verification, everything else, subject to just a review overseas. We have the talent and we have the technology. The question is the framework, and that’s where the government is moving towards.”
A committee of secretaries is reportedly being formed to devise a framework after consulting with industry bodies and professionals. The goal is to identify and implement changes in regulations and government norms to encourage local firms to grow and consolidate.

This initiative is not without precedent. Rakesh Nangia, Founder and Managing Partner at Nangia & Co, pointed to the successful reform in the BFSI sector as a positive trial. The government opened the sector to non-Big Four firms, an experiment that Nangia described as “extremely productive, extremely fruitful,” with new firms filling the gap effectively.Lessons can also be drawn from international examples. Both China and South Korea, Nangia noted, have successfully cultivated their own “humongously big non-Big Four firms,” suggesting that a robust economy requires a broader base of large audit players rather than relying on a handful.However, a significant hurdle for Indian firms is the lack of consolidation. Ajay Bahl, Co-Founder & Managing Partner at AZB & Partners, stressed that creating large institutions requires smaller firms to merge. He questioned the existing regulatory landscape, pointing out that there are only 12 accounting firms in India with 50 or more partners. “You’ve got to ask yourself the question, what is exactly holding that back?” Bahl remarked. “The issue of creating a big firm, a domestic firm, has to be linked to consolidation. You can’t become big overnight.”Bahl also argued that the term “global Big Four” is a misnomer in the Indian context. He described them as Indian firms, owned and run by Indian partners, that have access to global know-how and technology. “I have not seen foreigners floating around in their offices or corridors,” he said, emphasising that these firms have grown organically within India.Experts unanimously agree that the objective is not to undermine the existing Big Four but to foster a more competitive and diverse ecosystem. Vishesh Chandiok, CEO of Grant Thornton Bharat, stated, “This is not about stopping any Big Four or anybody else. It is about enabling the whole ecosystem.”For an economy aspiring to be the third-largest in the world, the push for homegrown audit giants is seen as timely. Chandiok believes the “window of opportunity is closing,” and India must build its own institutions to champion its capital on the global stage.A key challenge for emerging Indian firms will be building a global brand associated with quality. The Big Four’s preference in high-stakes assignments stems from decades of brand-building. Indian firms need to cultivate a similar perception of reliability and excellence to compete effectively.The discussion comes after Commerce Minister Piyush Goyal said India is on track to creating its own Big Four firms that can match the scale and capability of the current giants—Deloitte, PwC, EY, and KPMG. These firms employ over three lakh people in India, but their audit revenues make up less than 10% of total business, with consulting and advisory being the mainstay.Edited excerpts:Q: Why is there a need for India to have its own version of the Big Four? It is said that we want to reduce our dependency on foreign consulting firms and auditing firms, but why is there a need now, in your opinion?Kanabar: Audit currently constitutes a relatively small portion of the Big Four’s overall practice, ranging from 8% to 15%, depending on the firm. Tax accounts for approximately 18% to 22%, with a significant portion of their business being consulting.In this industry, tax and consulting remain largely unregulated. While tax is subject to some level of regulation, it is not as strictly governed as audit, which falls under the purview of the Institute of Chartered Accountants of India.Therefore, when the Commerce Minister spoke about the necessity for firms to restructure and expand, his remarks predominantly applied to audit practices. Consulting and tax firms, by contrast, operate without a rigid regulatory framework, allowing them greater flexibility in their structure and operations.Over time, the Big Four have established themselves as global giants, having invested decades in brand-building, quality assurance, and reputation management. As a result, they are often favoured for government assignments and other projects, while Indian firms struggle with scale and capability in comparison.Interestingly, in the competition for major consulting contracts, the Big Four are not primarily contending with domestic firms, but rather with IT giants such as TCS, HCL, Wipro, and others. These IT firms, rather than traditional Indian consultancies, pose the biggest competition in the market.Indian firms must establish their presence globally, strengthening their capabilities and reputation to match the stature of the Big Four. I fully endorse the government’s vision that Indian firms need to scale up and make a meaningful impact on the global stage.Q: The narrative and objective behind the initiative to establish India’s own Big Four firms—an alternative to the existing Big Four—is that the country needs to reduce its dependency, diversify its options, and develop its own consulting firms, ensuring it does not rely solely on four or five global firms. How do you view this argument and the current deliberations?Chandiok: I completely agree with Dinesh Kanabar and your initial perspective, including Minister Goyal’s remarks. Firstly, I am delighted that this issue is back on the agenda. Seven years ago, the Prime Minister outlined this vision, and now, with the Prime Minister’s Office actively championing it, I am absolutely pleased to see it gaining momentum.The second point is the “why.” Let me provide an analogy from other regulated industries. Dinesh Kanabar correctly pointed out that the discussion primarily concerns regulated businesses, since tax and consulting remain largely unregulated and firms can be established without significant constraints.Now, consider banking—imagine a scenario where there were only four or five multinational banks, with the rest being regional rural or cooperative banks, and no large Indian banks such as HDFC or ICICI. Similarly, take the credit rating industry, which is also regulated. We are in a situation where the major global credit rating agencies are owned by international organisations.This is precisely why, within the regulated audit sector, India—which aspires to become the world’s third-largest economy—must act swiftly before the opportunity diminishes. The nation must establish its institutions that will protect its capital over the next 10, 15, or 20 years, rather than relying solely on multinational entities. It is important to clarify that this is not about restricting the Big Four or any other firms; rather, it is about fostering a robust and inclusive ecosystem.There is often a misconception that this initiative seeks to displace the Big Four in favour of domestic firms. Instead, it is about ensuring a level playing field and supporting the 100 Indian audit firms that are already part of global networks. Since audit operations must be conducted within a network framework, where local partnerships in each country are essential, it is unrealistic to establish a single global audit firm. Therefore, the focus should be on enabling these existing networks to thrive.Q: The large audit firms all have Indian partners and their capital is owned by these Indian partners. One argument often put forward by the Big Four audit firms is that they are significant exporters of services from India, with their exports accounting for nearly 1% of the country’s total export basket. Given this context, do you believe there is a case for establishing large domestic audit firms?Bahl: Firstly, I believe it is a misnomer to refer to them as global accounting firms. As you rightly pointed out, they are Indian accounting firms. These firms have access to expertise, technology, and systems, and they are entirely owned by Indian partners. Having worked with them for years, I have never encountered foreigners occupying their offices or corridors. As Vishesh mentioned, this is not about diminishing one entity to elevate another.The key question is—what is preventing the expansion of domestic firms? If we examine the current statistics, only 12 accounting firms in India have 50 or more partners, despite the profession’s long-standing presence. The issue is not the dominance of the Big Four, Big Six, or Big Ten; it lies in the lack of consolidation. Currently, only 20 firms have between 26 and 50 partners. For a domestic firm to become truly large, consolidation is essential—it is not something that happens overnight.Look at what Dhruva has accomplished in its field—it has done a remarkable job. However, not everyone can replicate Dinesh Kanabar’s achievements. Other firms have also made strides, but the primary focus should be on embracing consolidation as a practical strategy. What efforts are being made to encourage the aggregation of firms? Regulatory constraints, such as naming restrictions, pose significant challenges. For example, if two firms with four-letter names merge, the resultant name would have eight letters, making branding and promotion difficult. The real issue is identifying what is preventing smaller firms from consolidating and expanding.Reflecting on the growth journey of various firms, I recall that PriceWaterhouse once operated from a small office in Himalaya House with approximately 20 employees. Similarly, when BSR first started in India, it had just 15 or 16 people. These firms have expanded by attracting new professionals who recognised the benefits of building a large institution rather than prioritising individual names. Their growth has been organic, driven by local efforts, not by external entities.Thus, I believe the term “global Big Four” is, in reality, a misnomer.Q: What changes must the Institute of Chartered Accountants of India implement? Recently, a committee was formed to facilitate the aggregation of CA firms, along with revised guidelines for mergers aimed at strategic consolidation. Additionally, draft guidelines for regulated pathways for networking and collaboration were introduced. Are we moving towards aggregation in the audit space among CA firms in India?Nangia: This demonstrates that the government is advancing towards consolidation, focusing on progress rather than looking inward. In my view, the recent measures taken by both the Institute and the government represent landmark decisions that pave the way for the establishment of major accounting firms in India.A compelling example is China, which has exceptionally large non-Big Four firms. Certain regulatory measures have supported their growth. Similarly, in Korea, there are substantial audit firms outside the Big Four. The need for more firms is evident, as the audit sector should not be concentrated among a select few companies.Another pertinent example is the government’s decision, two years ago, to open the BFSI sector to non-Big Four firms by introducing a ceiling. The outcome of this initiative has been highly successful, leading to the emergence of strong firms that effectively filled this gap and performed exceptionally well. Surveys and client feedback have been overwhelmingly positive.At this juncture, the government should take the next step—extending such regulatory measures beyond the BFSI sector to create further opportunities for growth and consolidation.Q: Dinesh Kanabar, we have reported on high-level meetings taking place, including a review at the Prime Minister’s Office, where Sanjeev Sanyal made a presentation. Could you provide insight into the government’s efforts to lay the groundwork for establishing large domestic audit firms?Kanabar: From what I understand—and I have no inside knowledge—a committee of secretaries is being set up to develop a framework. This committee will subsequently hold discussions with professionals, industry bodies, and other stakeholders to determine what modifications are needed in the current framework. Whether changes are required in the Institute’s regulations, the government’s preferential pricing norms, or other policy areas, the objective is to facilitate local talent in aggregating and building large Indian firms. This process will unfold over the coming months, with ongoing deliberations.I believe there are several key aspects to consider. Much has been said about what the government needs to do, but a crucial point—highlighted by Ajay—is that the Indian affiliates of the global Big Four started small and gradually expanded. The critical factor is quality: demonstrating that a brand represents excellence and ensuring that its audit sign-off is recognised globally as reliable and credible. Establishing this level of trust is essential.One observation I would make is that India has made significant advances by leveraging technology. The adoption of artificial intelligence could enable Indian firms to achieve substantial progress. In fact, it may come as a surprise that many global audits are conducted from offices in India. While the auditors may be US-based professionals working for multinational firms, approximately 90% of the actual audit work—including verification—is performed in India, with only a final review overseas.India possesses both the talent and the technology. The real challenge lies in creating the right framework, and that is precisely what the government is now working towards.

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