Major chartered accounting firms enjoying tie-ups with overseas firms have mounted a counterattack on the white paper released by the Institute of Chartered Accountants of India targeting so-called foreign firms operating in India.

Industry sources have also come out in criticism of the ICAI white paper which seeks to deny market access in the services sector to firms allegedly having links with foreign firms.

Speaking at the sidelines of the 150th year anniversary celebrations of the Bengal Chamber of Commerce & Industry which the Prime Minister attended, the CEOs of several top corporates who were also clients of firms like Lovelock and Lewis, PricewaterhouseCoopers and KPMG, said they preferred to retain firms with access to global skills and expertise even if it meant paying a premium for the service.

ICAI's white paper would give an upper hand to protectionist groups in other countries and make services exports more difficult.

Many foreign consulting firms have invested in India since 199, like IBM, EDS, Hewitt, McKenzie, AT Kearney. A protectionist agenda would only drive away these investors, they pointed out.

The 'swadeshi' campaign of ICAI against 'foreign' accounting firms has given an impetus to their swadeshi counterparts in foreign countries, one accounting industry study notes.

Movements in other countries have started against  alleged job losses due to outsourcing of IT, BPO and ITES to India.

Protectionist organisations in foreign countries  have picked up the Indian swadeshi campaign and would use this as an excuse to stop flow of work into India.

National Association of State Boards of Accountancy of US, the apex governing body for accountants in US, has officially told ICAI of its concern and threatened retaliatory action in the US.

They have stated, "You will understand that our members would not wish to further facilitate access to the US market place while our counterparts in other countries (read India) are advocating restrictions on the means by which US CPAs might participate in the market place."

Institute of Chartered Accountants of England and Wales has echoes this concern while the European Commission would soon take up the issue with the Indian government.

The CEO of major automobile component company said the viewpoint of the manufacturing industry groups was identical to the position adopted National Association of Software and Services Companies (Nasscom) which stated recently that it felt "the kind of proposal being mooted by CA Action Council is definitely not in India's interest.

As we have seen in various sectors, including IT software, the opening of global services market works very much in India's favour.

Such moves by the Swadeshi Jagran Manch-affiliated body will quite unnecessarily impinge on our efforts to seek unrestricted access to western markets for ITES-BPO and software services."

Kiran Karnik of Nasscom had said, "Banning foreign firms will not serve India's national interest. Given our human resource reserves and our capabilities, a global free-market in such services will help the country and will also help Indian professionals."

The section of the accounting industry in favour of free market access in the services sector have come together to launch their defence.

Calling the Swadeshi Jagran Manch inspired ICAI white paper "misleading because it is completely based on wrong facts", a paper circulated within the industry has warned that the move would substantially harm Indian consultancy companies and service providers from getting foreign projects.

Under Indian laws, only an Indian chartered accountant having passed the ICAI examination can sign  the statutory accounts of an Indian company under the Companies Act.  Foreign accountants cannot sign statutory accounts in India.

In addition, accounting firms like Price Waterhouse, Lovelock & Lewes, S R Batliboi & Co, S B Billimoria, C C Chokshi, Fraser & Ross, Lodha & Co, etc. have been operating in India close to a century, before the liberlisation process started in 1991.

As they were are purely domestic firms wholly owned by Indians, they could not be called foreign audit firms. However, they exchanged skills and services as associates of independent foreign firms operating overseas.

If anything, firms like PricewaterhouseCoopers Private Limited was an Indian MNC having a fully subsidiary in the UK and a 51 per cent owned subsidiary in Sri Lanka.