Introduction to CSR in India

Corporate Social Responsibility (CSR) reflects a company’s commitment to ethical operations, sustainable growth, and societal welfare, integrating social, environmental, and governance considerations into business strategy. While philanthropy laid the early groundwork, modern CSR emphasizes strategic initiatives that align with a firm’s core competencies and stakeholder expectations, driving shared value.

Legal Framework under Companies Act, 2013

Section 135 Overview

Section 135 mandates CSR governance structures, including a dedicated CSR Committee of the Board for qualifying firms.

Applicability Criteria

Applies to companies with:

• Net worth ≥ ₹500 crore

• Turnover ≥ ₹1,000 crore

• Net profit ≥ ₹5 crore.

  
  

CSR Spending Requirements

Companies must invest at least 2 percent of their average net profits over the last three financial years in CSR activities. In FY 2023–24, Indian firms collectively spent ₹29,986.92 crore on CSR, up from ₹26,579.78 crore in the previous year. Top companies alone devoted ₹17,967 crore, reflecting an 18 percent rise in average net profit.

Permissible CSR Activities (Schedule VII)

Schedule VII outlines broad areas where CSR funds may be deployed, including:

1. Eradicating hunger, poverty, and malnutrition

2. Promoting education, especially among marginalized groups

3. Healthcare initiatives, preventive and curative

4. Environmental sustainability, including Swachh Bharat and drinking water projects 

5. Rural development, skill training, and women’s empowerment 

6. Contributions to technology incubators and government funds.

   
   

Implementation Methods

• In-house projects: Corporations manage initiatives directly

• Non-profit partnerships: Collaborating with NGOs or foundations 

• Inter-company resource pooling: Joint ventures to leverage scale 

  
  

Emerging CSR Focus Areas

• Climate Action & Sustainability: Renewables, waste management, carbon reduction

• Skill Enhancement: Vocational training and digital literacy programs 

• Diversity & Inclusion: Promoting equitable workplaces and leadership pipelines 

• Employee Engagement: Volunteerism and matching gift programs

  
  

Benefits and Challenges

Advantages

• Strengthened brand reputation and stakeholder trust 

• Enhanced employee morale, retention, and talent attraction 

• Cost savings through sustainable operations 

  
  

Challenges

• Risk of “CSR washing” if initiatives lack alignment with core business 

• Administrative overhead for CSR committees and compliance 

• Potential cost burden passed to consumers if not managed strategically 

  
  

Disclosure, Reporting, and Compliance

Companies must include detailed CSR policies and spending reports in their Board’s Report, filing Form CSR-2 by December 31, 2024 for FY 2023–24, as per recent MCA amendments. Non-disclosure or delayed filings attract fines from ₹50,000 up to ₹25 lakh, and officers-in-default may face imprisonment of up to three years or fines.

Future Trends and Strategic Insights

With India’s CSR spend projected to surpass ₹32,000 crore in the coming fiscal year, firms are exploring impact investing, blended finance models, and deeper integration of UN Sustainable Development Goals into their CSR strategies. Embracing digital tools for monitoring and evaluation, and leveraging cross-sector partnerships will be key to driving scalable, sustainable impact.