India's growth 'hamstrung by accountancy protectionism'

Sir Mike Rake has criticised the regulatory climate of India's accounting profession, warning that the country's economic development is being hampered by the situation.

Sir Mike's comments came after a sustained groundswell of opposition from major international accounting firms as they have been frustrated by India's resistance to allowing them to develop large local businesses. India's continuing efforts to shield  its audit marketplace from foreign firms has also been a bone of contention. 

Firms can service no more than 30 statutory audit clients per partner and local Indian firms are forbidden from joining a 'Big Four' international network unless the network's chiefs agreed not to have any other offices in the country.

Indian firms are also restricted to employing 20 partners while the number of new students allowed to be taken on annually at larger firms is limited to a ratio of two per partner.

Sir Mike believes that an accounting overhaul is needed if the emerging market is to realise its full economic potential: 'The restrictions put in place in India are inevitably going to hold back the ability of the profession to train accountants to service a fast growing economy,' the FT reported.