The Hindu : Due consideration for domestic accounting firms

Online edition of India's National Newspaper
Tuesday, Jul 15, 2003

Business

Business

Due consideration for domestic accounting firms

By Sushma Ramachandran

NEW DELHI JULY 14. The Government will take on board concerns raised by the domestic chartered accountants community while making any offers for liberalisation of this services sector at the World Trade Organisation (WTO). According to official sources, however, it has not yet made any commitment for opening up this sector either during the earlier Uruguay round of negotiations or in the current round of talks on service.

Commerce Ministry officials involved in the WTO negotiations stress that the concerns of domestic industry and service sectors are always given priority while formulating policy stances to be taken during the negotiations.

As chartered accountants appear to be concerned over the entry of giant accounting and consultancy firms into the country, they say this issue would definitely be considered before making any offer at the WTO relating to financial accounting.

At the same time, they point out that the domestic accounting sector should consider the fact that markets abroad will be closed to them in a response to such a closed door policy. The concerns expressed by chartered accountants here over the last few days have already evoked a reaction in the U.S. where the issue of business process outsourcing and loss of jobs is now high on the agenda of several state legislatures. Virtually every day some large American company announces the creation of BPO centres in Indian cities, which means job creation in this country and job loss in the U.S.

The Indian stance on service negotiations has thus been in favour of liberalisation in many service sectors including movement of natural persons, which would enable Indian professionals to work in countries abroad with few restrictions. The argument has been that if developed countries want to open up developing country economies to foreign investment, they should similarly open up for professionals from developing countries like India.

The sources clarified, however, that a commitment was not made to allow entry of foreign accounting firms into the country under the Uruguay Round of GATT negotiations. The existence of foreign management consultancy firms in the country, they say, is through the autonomous normal foreign investment route.

Neither has the government so far made any offer in the present round of negotiations on financial accounting services, they say. The proposals in this respect are now being formulated since the Cabinet Committee on WTO Affairs gave the green signal recently to go ahead with responses to requests made by other countries.

The system in the WTO negotiations on services is the "request and offer'' approach. Initially countries provide their "requests'' on other trading partners and in turn "offer'' the concessions that it is prepared to make to them. In India's case, it has not yet begun the process of giving responses to requests or the list of demands seeking greater market access, made by other countries.

Negotiations on the General Agreement on Trade in Services (GATS) began in January 2000 and are scheduled to be completed by January 1, 2005 as mandated by the Doha ministerial conference of the WTO.

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