Accounting and Finance Services as Champion Sector
“In the last few decades, rapid industrialization and globalization has been witnessed around the globe, encompassing several business sectors and units. The worldwide demand for specialized professional services, such as accounting and auditing, has increased considerably because of expanded international trade activities including M & A activities, relaxed regulatory regime for foreign investors and regularly changing global accounting and auditing standards. Owing to the large base of low-cost talent pool and technology-driven outsourcing capabilities, emerging economies such as India, are expected to cater to the growing global demand of accounting and auditing services, contributing significantly to the sector in the near future. Read on…”
Launch of the 12 Champion Services Sectors & India’s Global Export Vision
On 15th May 2018, Shri Ramnath Kovind, the Hon’ble President of India, during the inauguration of the Global Exhibition on Services (GES) wherein the Institute of Chartered Accountants of India (ICAI) was one of the premier knowledge partners, launched the 12 Champion Services Sectors (the new brand identity for India’s services sector) to promote their development and realize their vast potential in international trade and exports.
Accounting and Finance Services was identified as one of the premier Champion sectors, recognized as one of the largest and most critical sectors with the highest potential for global trade, foreign investment, economic growth, and high-value employment. Significantly, the sector was ranked 4th in terms of export potential among all 12 designated Champion sectors.
Globally, the demand for rigorous expertise in international accounting (IFRS) and auditing standards, robust quality control mechanisms, and qualified professional personnel is escalating rapidly as multinational corporations and international institutions seek to safeguard corporate reputation, maintain transparency, and eliminate potential cross-border litigation risks.
Economic Profile & Export Dynamics of the Services Sector
According to the Economic Survey 2019–20, the Indian services sector accounts for approximately 55 per cent of the national economy and Gross Value Added (GVA) growth. Furthermore, the services sector generates two-thirds of the total Foreign Direct Investment (FDI) inflows into India and constitutes about 38 per cent of total national exports.
Monthly International Trade in Services (USD Million) – Source: RBI
| Month / Period | Receipts (Exports) | Payments (Imports) | Net Trade Balance |
|---|---|---|---|
| April 2019 | USD 18,062 M | USD 11,402 M | + USD 6,660 M |
| May 2019 | USD 18,679 M | USD 12,492 M | + USD 6,187 M |
| June 2019 | USD 18,552 M | USD 11,758 M | + USD 6,794 M |
| July 2019 | USD 19,084 M | USD 12,829 M | + USD 6,255 M |
| August 2019 | USD 18,244 M | USD 12,006 M | + USD 6,238 M |
| September 2019 | USD 17,536 M | USD 11,096 M | + USD 6,440 M |
| October 2019 | USD 17,698 M | USD 10,864 M | + USD 6,834 M |
| November 2019 | USD 17,996 M | USD 11,472 M | + USD 6,524 M |
| December 2019 | USD 20,004 M | USD 12,555 M | + USD 7,449 M |
| January 2020 | USD 18,985 M | USD 12,001 M | + USD 6,984 M |
| February 2020 | USD 17,725 M | USD 11,067 M | + USD 6,658 M |
| March 2020 | USD 18,163 M | USD 11,112 M | + USD 7,051 M |
| April 2020 | USD 16,450 M | USD 9,301 M | + USD 7,149 M |
| May 2020 | USD 16,766 M | USD 9,938 M | + USD 6,828 M |
Global and Indian Accounting Industry Horizons & M&A Catalysts
According to the Global Accounting Services Market Size Outlook 2005–2025 by IBIS World (December 2019), the market size measured by revenue of the Global Accounting Services industry reached USD 528.7 billion in 2020, recording an annual growth rate of 4.8% in 2020 and an annualized growth rate of 3.8% across 2015–2020.
In comparison, the Indian accounting and finance service industry is projected to achieve a robust Compound Annual Growth Rate (CAGR) of 8% over 2016–2021, propelled by rapid economic expansion, nationwide adoption of digital accounting, and transformative regulatory reforms.
The market is poised for robust expansion by 2022, energized by India’s expanding professional talent pool, rising Foreign Direct Investments (FDI), and landmark government flagship initiatives including Start-up India, Make in India, Goods and Services Tax (GST), Digital India, and Skill India, creating a powerful highway towards realized “Aatmanirbhar Bharat”.
Growth is further accelerated by heightened cross-border mergers and acquisitions. Despite a 34.4% deal value slowdown from 2018, Indian M&A activity in 2019 surpassed USD 67 billion in aggregate transaction value, marking India’s second-best deal-making year in history. Crucially, public market exits in 2019 surged by approximately 45% over 2018 (M&A Report 2020: India by International Financial Law Report), generating massive sustained demand for advanced transfer pricing, valuation, and due diligence advisory services.
| Key Parameters | India’s Position (Baseline) | Vision 2022 Targets |
|---|---|---|
| Finance and Accounts Business Process Management (F & A BPM) Exports |
USD 5.72 billion (0.003% of Global Market Size of USD 1,803 bn) |
USD 10 billion |
| Total Number of Accounting and Finance Professionals | 29 lakh | 54 lakh |
Government Expectations & Vision 2022
With an overarching national objective to achieve a USD 5 trillion economy, enhance India’s standing on the World Bank’s Ease of Doing Business (EoDB) Index and the World Economic Forum’s Global Competitiveness Index (GCI), catalyze startup scale-up, reinforce the MSME ecosystem, and expand Special Economic Zones (SEZs), the Government of India formulated its comprehensive Vision 2022 to commemorate India’s 75th year of independence, prescribing rigorous, measurable targets for each Champion Sector.
Illustrative Scope of Exportable Accounting & Finance Services
To enhance cross-border service exports under current international regulatory regimes and subject to the applicable laws of host nations, the illustrative spectrum of services rendered under the Accounting and Finance Sector is classified into eleven broad functional domains:
| Sr. No | Broad Services Category | Detailed Functional Inclusions & Export Scope |
|---|---|---|
| 1. | Accounting Services |
• Reviewing annual and interim financial statements and other accounting information. • Compilation of financial statements from information provided by the client. • Preparation of business tax returns. • Compilation of income statements, balance sheets, analysis of balance sheets, and other accounting services such as attestations, valuations, and preparation of pro forma statements. |
| 2. | Financial Auditing Services | • Examination services for accounting records and other supporting evidence of an organization for the purpose of expressing an opinion as to whether the financial statements present its position fairly and accurately as at a given date and the results of its operations for the period ending on that date, in accordance with generally accepted accounting principles (GAAP/IFRS). |
| 3. | Bookkeeping Services | • Classifying and recording business transactions in terms of money or some unit of measurement in the books of account. |
| 4. | Payroll Services |
• Payroll processing, including online administration. • Direct deposit or cheque preparation services. • Remission of payroll taxes and other statutory deductions. • Preparation, digital viewing, and secure cloud storage of payroll ledgers, reports, and compliance documentation. |
| 5. | Tax Consultancy and Preparation Services (Direct and Indirect Tax) |
• Providing advice and strategic guidance concerning corporate taxes, as well as preparing and filing tax returns of all kinds. • Tax preparation and tax planning services for unincorporated businesses and high-net-worth individuals. |
| 6. | Financial Management Consulting Services |
• Providing advice, guidance, and operational assistance concerning financial decision areas, including: – Working capital and liquidity management, and determination of optimal capital structures; – Quantitative analysis of capital investment proposals; – Strategic asset management; – Development of modern accounting systems, budgeting, and budgetary controls; – Financial consulting related to M&A, including valuation methods, settlement modes, control mechanisms, and international finance. |
| 7. | Project Management Services |
• Project management services encompassing project budgeting, cost accounting, expenditure control, procurement oversight, scheduling, coordination of subcontractors’ works, site inspection, and quality assurance. • Preparation of comprehensive financial feasibility studies and viability reports for greenfield projects and brownfield expansion schemes. |
| 8. | Business Consulting Services | • Providing strategic advice, benchmarking guidance, and operational assistance concerning corporate performance, restructuring, and productivity enhancement. |
| 9. | Information Technology (IT) Consulting & Support Services | • Provision of specialized technical expertise to resolve complex problems in computer systems, including IT audits, information systems security reviews, and assessing/documenting server, network, or ERP architecture for component integrity, performance, and cybersecurity compliance. |
| 10. | Mergers and Acquisition Services |
• Services of professional counsellors and lead negotiators in structuring cross-border and domestic M&A transactions. • Advising corporate boards on statutory amalgamations, corporate reconstructions, hostile/friendly takeovers, carve-outs, and overseas expansion schemes. |
| 11. | Corporate Finance and Venture Capital Services | • Services of syndicating and structuring corporate financing solutions, including debt financing, external commercial borrowings (ECBs), equity private placements, and early-stage venture capital/private equity financing. |
ICAI as Nodal Agency: The 10-Point Strategic Proposal
ICAI, acting as the designated Nodal Agency for the promotion of accounting and finance services in India, has maintained continuous high-level dialogues with the Ministry of Corporate Affairs (MCA) and the Ministry of Commerce and Industry to implement monitored Action Plans, augment GDP growth, generate high-skill employment, and multiply service exports to international markets.
The formal proposal submitted by ICAI to the Government includes the following ten focused, time-bound initiatives:
- Overseas Campus Placement: Conducting dedicated international campus recruitment drives to place qualified Indian Chartered Accountants directly into global financial centers.
- Foreign Language Courses: Introducing intensive foreign language proficiency modules (such as French, German, Spanish, Japanese, and Mandarin) for CA members and students to conquer linguistic barriers in non-English global jurisdictions.
- Start-up Initiatives & Incubation Centres: Establishing specialized incubation centers across ICAI regional offices to mentor accounting and fintech startups, encouraging entrepreneurial ventures in business analytics and automated reporting.
- Development of Accounting Process Outsourcing (APOs): Architecting structured development and training frameworks to set up robust Accounting Process Outsourcing units across Tier-II and Tier-III Indian cities.
- Specialized E-Learning Short-Term Courses: Offering world-class certificate courses and modular training via digital platforms on US GAAP, IFRS, international taxation, forensic accounting, and cybersecurity.
- Capturing Global Students via International Curriculum: Restructuring ICAI’s curriculum and assessment framework to attract international students, enabling cross-border recognition and enrollment.
- Strengthening & Mentoring Accounting Profession Abroad: Providing institutional support, capacity building, and technical mentoring to emerging accounting bodies in developing economies across Africa, Southeast Asia, and the Middle East.
- Training Foreign Nationals under ITEC Programme: Conducting advanced accounting, auditing, and public finance management training for foreign government officials and professionals under the Indian Technical and Economic Cooperation (ITEC) Programme of the Ministry of External Affairs.
- Global Promotion of ‘Brand Indian CA’: Expanding ICAI’s footprint across global financial capitals by actively opening new overseas Chapters and Representative Offices to champion the Indian CA brand.
- Promoting ICAI Digital Learning Hub Globally: Opening ICAI’s state-of-the-art Digital Learning Hub to international subscribers and overseas accounting bodies to disseminate cutting-edge technical content.
Institutional MoUs, International Alignments & Vision Realization
In addition to negotiating Mutual Recognition Agreements (MRAs) and Memoranda of Understanding (MoUs) with premier international accounting institutes (e.g., ICAEW, CPA Australia, CPA Canada, SAICA), ICAI signed two landmark MoUs under the aegis of its Committee for Export of CA Services & WTO with:
1. Invest India
Operating under the Ministry of Commerce & Industry, collaborating to attract global investments, facilitate ease of doing business for inbound investors, and promote India’s financial professional capabilities abroad.
2. Services Export Promotion Council (SEPC)
Partnering to execute targeted international roadshows, generate global market awareness for Indian accounting and auditing services, and address cross-border regulatory and trade barriers.
Furthermore, the Committee is actively finalizing an MoU with the Export Promotion Council for Export Oriented Units (EOUs) and Special Economic Zones (SEZs) to unlock massive operational opportunities for Indian accounting professionals to service multinational tenants operating within IFSC GIFT City and designated export zones.
Government In-Principle Approval & The Path Ahead
All strategic proposals submitted by ICAI have received in-principle approval from both the Ministry of Corporate Affairs and the Ministry of Commerce and Industry. ICAI is committed to mobilizing its technically and ethically formidable cadre of over 3 lakh qualified members and semi-qualified student delivery agents to achieve the Vision 2022 milestones – transforming India into the undisputed global hub for accounting and finance services and establishing “Aatmanirbhar Bharat” in knowledge-driven service exports.