India’s Ministry of Corporate
Affairs has decided on a phased approach for adopting IFRS and
exempted SMEs from the international standards.

These changes come just over a year
before the April 2011 deadline India had scheduled for IFRS
adoption.

There are three phases to the new adoption
plan. The first phase will see companies that meet one of the
following four criteria adopting IFRS for financial years beginning
on or after 1 April 2011:

• Companies that are part of the National
Stock Exchange of India’s Nifty 50;

• Companies that are part of the Bombay Stock
Exchange’s Sensex 30;

• Companies that have shares or other
securities listed on stock exchanges outside of India; and,

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• Companies, whether listed or not, that have
a net worth of more than INR10 billion ($214 million).

Phase two will see companies, whether listed
or not, that have a net worth between INR5 billion and INR10
billion applying IFRS for financial years beginning on or after 1
April 2013.

Phase three will see all other listed
companies using IFRS for financial years beginning on or after 1
April 2014. Non-listed companies with net worth of less than INR5
billion will not be required to use IFRS and can continue to use
the existing Indian GAAP.

The Ministry of Corporate Affairs has also
announced there will be a separate IFRS adoption road map for the
banking and insurance industries. This is scheduled to be released
by the end of this month.

Institute of Chartered Accountants of India
president Amarjit Chopra told The Accountant the phased approach is
the right way to adopt IFRS.

“You have to have a phased manner of
implementation to provide time to the others to really gear
themselves up to the challenge,” he said.

Chopra also supports the idea of Indian SMEs
continuing with Indian GAAP, rather than moving to an international
framework such as IFRS for SMEs.