A brief history of CSR in India

The Parliament Company Act in 2013 introduced business corporate social responsibility in India for the first time. This measure revolutionized the corporate framework which had been focused solely on profit until then.

The law forced businesses to incorporate social welfare within their agenda. Based on the Act, companies should have used their resources to meet social and environmental needs, thus creating shared value. In particular, each year companies should spend at least 2% of their average net profits made during the last three financial years on CSR projects.

The ever-growing globalization has been one of the major drivers for an aggressive implementation of CSR policies in India. These should cover not only large corporates but also micro-, small and medium-sized enterprises (MSMEs).

The roadmap leading to a responsible economic growth

So, what’s the way forward for CSR in the Indian context?

After reviewing the Company Act in 2013 and other relevant legislations, the Indian government High-Level Committee on Corporate Social Responsibility recommended some key actions to undertake in its 2019 report:

• Extension of CSR applicability to Limited Liability Partnerships (LLPs) and banks;
• Focus CSR activities on local areas;
• Align Schedule VII areas with Sustainable Development Goals (SDGs) and other priority themes such as senior citizens’ welfare, welfare of differently-abled persons, disaster management;
• A more solid and clearer reporting and monitoring of CSR projects;
• Tax Benefits for CSR Activities;
• Create Social Impact Companies to boost social change;
• Strengthen the National Foundation for Corporate Social Responsibility (NFCSR) that should act as a CSR advocate and build a network for social change.

The above guidelines light the way to a more sustainable and socially just path in India. With Budget 2021 focusing on the importance of corporate social responsibility for Indian companies, the implementation of a truly responsible roadmap seems to be promising.