Corporate affairs and finance minister Nirmala Sitharaman on Friday said the government has decided to expand the scope of corporate spend under Corporate Social Responsibility (CSR) norms.
According to the companies act, firms with net worth of ₹500 crore or more, or turnover of ₹1,000 crore or more or net profit of ₹5 crore or more, are required to spend 2% of average net profit of the preceding three years on corporate social responsibility activities.
These include initiatives that would have social, economic and environmental impact or a way to give back to the society, such as promoting gender equality, empowering women, promoting education, eradicating hunger, poverty, malnutrition, rural development projects, conserving natural resources, among others.
Till now, companies were allowed to provide CSR funds to technology incubators located within Centre-approved academic institutions.
Today’s announcement has widened the scope of CSR activities and companies can now contribute towards research across various fields such as science, technology, medicine. Besides, CSR fund can be spent on incubators funded by the Centre or state or any state-owned companies. This is expected to attract more funds on research and development in the country.
“Now CSR 2% fund can be spent on incubators funded by central or state government or any agency or public sector undertaking of central or state government, and, making contributions to public funded universities, IITs, national laboratories and autonomous bodies (established under the auspices of ICAR, ICMR, CSIR, DAE, DRDO, DST, Ministry of Electronics and Information Technology) engaged in conducting research in science, technology, engineering and medicine aimed at promoting SDGs (sustainable development goals)," the government said in a statement.
"The thrust towards research-based innovation is a much needed step in the right direction. Integration with established private enterprise in key sectors will provide the required impetus for a future ready economy. Additional focus to drive social enterprise to drive localised enterprise and employment opportunities, specially around key social services should be encouraged," Jaivir Singh, Vice Chairman and President PwC India Foundation said.
Spending on CSR has gone up from ₹10,066 crore in 2014-15 to ₹13,327 crore in 2017-18, Mint had reported.
Of the over 21,300 companies obliged to report their CSR activities in 2017-18, over 10,800 have complied.
CSR spending between 2014-15 and 2017-18 was the highest in education, health, fight against poverty and malnutrition, access to clean drinking water, livelihood and for the differently-abled.