India's mandatory CSR law: issues and challenges

On April 1, 2014 India became the first country in the world to make CSR mandatory. The Coming in of the Companies Act of 2013 catapulted India into taking lead in establishing a mandatory framework for CSR. The new rules in Section 135 of India’s Companies Act make it mandatory for companies of a certain turnover and profitability to spend two percent of their average net profit for the past three years on CSR. Following the government mandate a large number of companies have dedicated teams to identify CSR needs and plan their CSR programs. These programs range from supporting education, environment, health care, women empowerment, raising the standard and helping farmers attain self-sufficiency. The selection of areas by companies depends on a host of factors namely the nature of business of the company, relevance of the issue to the communities, availability of finances with the companies .However Education, Environment, Healthcare, women empowerment, Livelihood promotion and agricultural development remain the priority areas. The paper explores the main provisions of the act and the 2014 rules. It attempts to analyse the provisions of the act and their efficacy and the issues arising out of the implementation of the Act. Read More