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,
• 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.