Key Changes to India’s CSR Policy for Companies
Business Tips

What is Corporate Social Responsibility in India?

3 Mins read

Corporate Social Responsibility (CSR) means that companies do not only focus on making profits and gains, but also think about the welfare and betterment of society and the environment. In India, CSR has become an important and key part of how businesses operate and what is the right way of it. It also encourages companies to contribute to the development and growth of society by taking responsibility for the impact of their actions.

Understanding CSR

CSR is a way for companies to give back to society in terms of the betterment and welfare of society. It is about companies taking steps to improve the quality of life for people, protect the environment, and promote sustainable development. CSR activities can include education programs, healthcare initiatives, rural development projects, environmental protection, and more.

The concept of CSR is based on the idea that businesses are a part of society and should not work only for profits but also for the common good. CSR helps build trust between companies and the communities where they operate. It can also improve a company’s image and strengthen relationships with customers, employees, and stakeholders.

CSR in India: Legal Framework

In India, CSR became mandatory under the Companies Act, 2013. According to Section 135 of the Act, companies that meet certain financial criteria must spend at least 2% of their average of net profits from the last three financial years on CSR activities. The criteria for mandatory CSR are:

  • Companies with a net worth of Rs. 500 crore or more, or
  • Companies with a turnover of Rs. 1,000 crore or more, or
  • Companies with a net profit of up to Rs. 5 crore or more.

If a company meets any of these conditions, it must form a CSR committee and prepare a CSR policy. The committee is responsible for planning, implementing, and monitoring CSR activities.

Areas of CSR Activities

The Ministry of Corporate Affairs in India has prescribed guidelines on the areas where companies can spend their CSR funds. Some of these areas include:

  1. Eradicating hunger, poverty, and malnutrition.
  2. Promoting education, especially for women, children, and differently-abled persons.
  3. Promoting gender equality and empowering women.
  4. Reducing child mortality and improving maternal health.
  5. Combating diseases such as HIV, AIDS, malaria, and others.
  6. Ensuring environmental sustainability.
  7. Promoting skills and vocational training to improve employability.
  8. Protecting national heritage, art, and culture.
  9. Measures for the various benefits of armed forces veterans, war widows, and their dependents.
  10. Contributions to government funds set up for socio-economic development and relief.
  11. Rural development projects.
  12. Supporting technology incubators in academic institutions.

Companies can choose one or more of these activities depending on their CSR strategy and goals.

Importance of CSR in India

CSR plays a very important role in India’s social and economic development. Some of the key benefits of CSR include:

  • Social Development: CSR helps improve the basic standard of living in communities by providing them better education, health and employment opportunities.
  • Environmental Protection: Companies that invest in eco-friendly initiatives reduce pollution, conserve resources, and protect biodiversity.
  • Economic Growth: CSR initiatives such as skill development and entrepreneurship programs can help to create new jobs and promote inclusive economic growth.
  • Reputation and Trust: Companies that actively contribute to society earn goodwill, which can help build trust among customers, investors, and employees.
  • Compliance with Law: Companies meeting the eligibility criteria must follow the CSR law, which helps bring uniformity and accountability, and trust in social spending.

Examples of CSR in India

Many Indian companies have carried out successful CSR programs. For example:

  • Tata Group: Known for their wide-ranging CSR efforts, they invest in education, healthcare, rural development, and environment projects…!
  • Infosys: Through Infosys Foundation, the company supports education, healthcare, art and culture, and rural development.
  • Reliance Industries: Their CSR programs focus on healthcare, education, rural transformation, and disaster response.

These initiatives have brought positive change to millions of lives across India.

Challenges in CSR Implementation

Although CSR has made a big difference, there are still challenges, such as:

  • There is a lack of awareness among some companies about the importance of CSR.
  • Difficulty in finding credible NGOs or partners to implement CSR projects.
  • Sometimes companies treat CSR as a mere formality to fulfil legal requirements, instead of a genuine effort.
  • Limited monitoring and evaluation make it difficult to measure the real impact of CSR activities.

Conclusion

Corporate Social Responsibility in India is not just a legal requirement but an opportunity for companies to contribute towards the responsibility such as building a better and more sustainable society. By investing in CSR, businesses can create long-lasting benefits for communities and the environment. It can also help companies earn trust, improve their brand image, and contribute to the nation’s development. As more companies take CSR seriously, it will lead to a stronger, healthier, and more equitable India.

1194 posts

About author
Kanakkupillai is your reliable partner for every step of your business journey in India. We offer reasonable and expert assistance to ensure legal compliance, covering business registration, tax compliance, accounting and bookkeeping, and intellectual property protection. Let us help you navigate the complex legal and regulatory requirements so you can focus on growing your business. Contact us today to learn more.
Articles
Related posts
Business Tips

How to Start a Catering Business?

4 Mins read
Business Tips

How to Start a Zepto Franchise: Costs, Profits and Requirement

4 Mins read
Business Tips

How to Digitize Salary Slip Data from an Image to Excel?

2 Mins read