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Corporate Social Responsibility in India

Corporate Social Responsibility (CSR) in India is a mandatory obligation for eligible companies under Section 135 of the Companies Act, 2013. It requires companies to contribute to social, environmental, and economic development through strategic initiatives aligned with national priorities.

India became the first country in the world to make CSR mandatory, requiring companies meeting specific financial thresholds to spend at least 2% of their average net profits on CSR activities, creating significant positive impact across various sectors.

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Corporate Social Responsibility (CSR) in India is governed by Section 135 of the Companies Act, 2013, making India the first country in the world to mandate CSR spending for eligible companies. This landmark legislation has transformed how businesses contribute to social and environmental development.

CSR Applicability in India

The CSR provisions apply to companies that meet any of the following criteria in the preceding financial year:

Eligibility Criteria for CSR

  • Net worth of more than Rs. 500 crore
  • Turnover of more than Rs. 1,000 crore
  • Net profit of more than Rs. 5 crore
  • Mandatory spending of 2% of average net profits of last three years
  • Formation of CSR Committee with at least one independent director
  • Board-approved CSR Policy focusing on Schedule VII activities

Key Focus Areas for CSR Activities

Companies can undertake CSR activities in various areas as specified in Schedule VII of the Companies Act, including education, healthcare, environmental sustainability, rural development, and more. According to the National CSR Data Portal, education, healthcare, and rural development receive the highest CSR funding in India.

Benefits of CSR Implementation

  • Enhanced Brand Recognition and Reputation
  • Improved Customer Loyalty and Trust
  • Greater Employee Engagement and Retention
  • Positive Social and Environmental Impact
  • Sustainable Business Practices
  • Better Stakeholder Relationships

CSR Implementation Process

Effective CSR implementation involves the following key steps:

  • 1

    Formation of CSR Committee with at least one independent director

  • 2

    Formulation of CSR Policy aligned with Schedule VII activities

  • 3

    Board approval of CSR Policy and disclosure on company website

  • 4

    Implementation through company foundation, NGOs, or direct execution

  • 5

    Monitoring and evaluation of CSR projects and their impact

  • 6

    Annual reporting and disclosure in Board's Report

Leading CSR Examples in India

  • Reliance Industries: Education, healthcare, rural transformation, and environmental sustainability
  • Tata Group: Community development, education, healthcare, and skill development
  • ITC Limited: Water stewardship, sustainable agriculture, and women empowerment
  • Infosys: Education, healthcare, rural development, and arts and culture
  • Mahindra & Mahindra: Education, healthcare, and environmental initiatives
  • Hindustan Unilever: Water conservation, hygiene, and sustainable living
  • Wipro: Education, community care, and ecology
  • HDFC Bank: Financial literacy, education, and skill development
  • Adani Group: Education, healthcare, and sustainable livelihoods
  • Vedanta: Healthcare, education, and women empowerment

Conclusion

Corporate Social Responsibility in India has evolved from voluntary philanthropy to a strategic business imperative. The mandatory CSR framework has channeled significant corporate resources toward addressing social and environmental challenges. With over Rs. 29,987 crore spent annually across 51,966 projects by 24,392 companies, CSR has become a powerful tool for sustainable development and social transformation in India.

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