Corporate Social Responsibility (CSR) in India

“Corporate Social Responsibility (CSR) in India, formalized under the Companies Act, 2013, mandates certain businesses to undertake initiatives that contribute positively to society and the environment. CSR encompasses a range of activities, including poverty alleviation, education, social welfare, environmental sustainability, and cultural preservation, as listed in Schedule VII of the Act. Companies are obligated to establish a CSR Committee if they meet specific financial criteria: a net worth of INR 500 crore, turnover of INR 1000 crore, or a net profit of INR 5 crore. This committee is responsible for formulating CSR policies that align with regulatory requirements and the company’s core values.

The CSR framework encourages companies to engage in impactful projects that foster societal welfare and environmental conservation, moving beyond mere profit-making. With the Companies Act, 2013 and subsequent amendments, companies in India are legally required to pursue CSR initiatives, especially if they meet the aforementioned financial thresholds. Moreover, the Companies (CSR Policy) Amendment Rules, 2021 refined CSR definitions and clarified that activities aligned with routine business operations are not classified as CSR, with the exception of research and development in healthcare related to COVID-19.

CSR activities must be rooted within India, with limited exceptions for international engagements, such as supporting Indian athletes. Political donations and activities primarily benefiting a company’s employees are excluded from CSR, ensuring that initiatives prioritize broader societal impact.

CSR also offers numerous strategic benefits to companies. It enhances reputation, attracts talent, builds strong stakeholder relationships, and fosters innovation by encouraging companies to develop creative solutions to social and environmental issues. Embracing CSR thus enables companies to integrate responsible practices into their operations, reinforcing their role as corporate citizens committed to sustainable development and social progress.

In conclusion, CSR is an essential component of responsible business in India, emphasizing social accountability and environmental stewardship. Through strategic CSR initiatives, companies can contribute to national development goals and build a reputation as ethically responsible entities that contribute to a sustainable future.