The proposed three-year cooling-off period under Section 144 of the Corporate Laws (Amendment) Bill, 2026 taken with India’s existing 10-year audit tenure limit, could prevent an outgoing auditor from providing any services to a company, its holding company and subsidiaries for up to 13 years.
The move could upend a business model that these firms have carefully built over many years, just as their India operations are becoming some of the brightest growth engines within their global networks and growing across consulting, tax and other non-audit services.
“By itself any change causes complexity and we need to avoid attempting too many changes which end up impacting both ease and cost of doing business for all market participants, without any measure of results,” said Vishesh Chandiok, CEO, Grant Thornton Bharat LLP. “The financial services sector already has a one-year cooling-off period. In my view, regulators should extend that to three years, assess whether it improves audit quality, and only then consider extending it to other sectors.”
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Indian leaders involved in discussions with global teams say that in the last few years India has emerged as one of the most attractive destinations for investment within international networks. They added that measures such as these could label India into a “compliance-heavy, obstacle-laden” operating environment.
Currently, India has one of the world’s largest pools of accounting and consulting talent ,and is increasingly seen as a global delivery and back-end hub amid a shortage of certified public accountants in several developed markets.
Global teams are puzzled because no major jurisdiction imposes similar restrictions. Auditor independence rules in the European Union, US and UK bar only services that create conflicts of interest, while permitting a range of tax and advisory services if there are sufficient safeguards and audit committee approval.
The proposed approach could sharply reduce the pool of firms available to companies seeking specialist advice in areas such as transfer pricing, tax planning, technology integration and mergers and acquisitions.
Companies may also face higher audit costs as firms attempt to recover revenue lost during the extended ban period.
“Companies could find themselves caught between two opposing forces: services splintered across multiple providers while audit mandates become concentrated in fewer hands,” said a partner with a Big Four firm on the condition of anonymity. “That means higher coordination costs, longer onboarding and a greater risk of conflicting advice. More importantly, it could disrupt the deep client understanding and group-wide expertise that global corporations depend on to manage complex businesses across markets.”
The impact could be especially pronounced for multinational companies that operate in India through integrated global governance models relying on coordinated audit, tax and advisory services across jurisdictions.
“India could become a more difficult place to do business for global companies, as prolonged restrictions linked to the audit ecosystem would add a uniquely Indian layer of uncertainty, increase execution risk and run counter to the government’s broader push to improve ease of doing business,” said managing partner of an Indian firm with global affiliation.
The Corporate Laws (Amendment) Bill, 2026 was tabled in Lok Sabha on March 23, 2026, and has since been referred to a JPC for further study.
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