CSR in India: Eligibility, Laws, and Trends

By Ketul

Updated 03 Jan, 2025

10 min read

Corporate Social Responsibility (CSR) has emerged as a powerful tool for businesses in India to contribute to social and environmental causes. It has transformed from a voluntary act of goodwill to a mandatory requirement for large companies, thanks to the CSR mandate introduced under Section 135 of the Companies Act, 2013. In recent years, CSR spending in India has seen significant growth, with corporations becoming more accountable for their social and environmental impact.

This report provides an overview of the CSR in India, focusing on the CSR expenditure over the last two years, regional distributions, sector-wise allocations, and a closer look at the top companies leading the way in CSR activities.

What is CSR?

Corporate Social Responsibility (CSR) refers to a business model where companies integrate social and environmental concerns into their operations, beyond profit-making. It is a way for companies to contribute positively to society, taking responsibility for their impact on various stakeholders, including employees, customers, communities, and the environment.

CSR in India initiatives often focus on areas like:

Sustainability: Reducing environmental impact, promoting renewable energy, and minimizing waste.
Philanthropy: Donations, charitable work, and volunteering to help communities and causes.
Ethical Labor Practices: Ensuring fair wages, safe working conditions, and respecting human rights.
Community Development: Investing in education, healthcare, infrastructure, and rural development.
Diversity and Inclusion: Fostering equal opportunities for all, regardless of gender, race, or background.

In India, CSR became mandatory for certain companies through the Companies Act of 2013, which requires businesses meeting specific criteria (like revenue and net worth) to spend at least 2% of their average net profits on CSR activities each year.

Overall, CSR not only helps improve the company’s brand image but also contributes to the broader goal of sustainable development and social well-being.

Who is Eligible for CSR?

In India, the Companies Act, 2013 outlines specific criteria for eligibility to undertake Corporate Social Responsibility (CSR) activities. Companies that meet any of the following conditions are required to allocate a minimum of 2% of their average net profit over the last three years to CSR:

Net worth of Rs 500 crore or more
Annual turnover of Rs 1,000 crore or more
Net profit of Rs 5 crore or more

These companies must ensure that their CSR activities are aligned with the guidelines and contribute to societal development in areas such as education, healthcare, rural development, and environmental sustainability. Companies falling under these criteria are also expected to form a CSR committee to monitor and oversee their CSR initiatives effectively.

CSR Spending Trends in India in the Last Two Years (2022-2023 and 2023-2024)

According to the latest data, the total CSR in India spent by companies has consistently risen, with substantial contributions directed toward various sectors like education, healthcare, environment, and rural development.

1. CSR Spend in 2022-2023

Total CSR Spend: INR 29,986.92 crore (approximately)

India’s corporate social responsibility (CSR) spending increased to INR 29,986.92 crore in 2022-2023, up from INR 26,579.78 crore in 2021-2022. Key highlights include:

Sector-wise Spending: Education accounted for one-third of the total CSR spend, while technology incubators received the least.
CSR Projects: The number of CSR projects rose from 44,425 to 51,966.
Private Sector Contribution: Private companies contributed 84% of the total CSR spending.
Agencies Involved: INR 19,000 crore (65%) was funneled through external agencies.
Government Initiatives: CSR contributions to government initiatives like the PMCARES Fund and Namami Gange declined.
Disaster Management & Slum Development: Spending on disaster management fell by 77%, and slum development saw a 75% reduction.

2. CSR Spend in 2023-2024

Total CSR Spend: INR 29,986.92 crore (approximately)

India’s CSR expenditure in FY 2023-2024 reached INR 29,986.92 crore, an increase from INR 26,579.78 crore in FY 2022-2023. Key highlights include:

Sector-wise Spending: Education received the highest share at INR 10,085 crore, followed by health, rural development, and sustainability.
CSR Projects: The number of CSR projects grew from 44,425 in FY 2022 to 51,966 in FY 2023.
Private Sector Contribution: 84% of CSR spending came from private companies.
State-wise Spending: Maharashtra spent the most, with around INR 5,500 crore.
CPSEs Spending: CSR spending by Central Public Sector Enterprises increased by 19%, reaching INR 4,911 crore in FY 2024.

Regional Breakdown of CSR Spend

The CSR expenditure in India is spread across various regions, with states like Maharashtra, Gujarat, Delhi, and Tamil Nadu leading the charge due to their higher concentration of corporate headquarters. However, a growing emphasis on rural areas and underdeveloped states is driven by the government’s push for inclusive development.

Maharashtra: INR 6,000 crores (28%)
Gujarat: INR 4,500 crores (21%)
Delhi/NCR: INR 3,500 crores (16%)
Tamil Nadu: INR 2,200 crores (10%)
Uttar Pradesh: INR 1,700 crores (8%)
Other States: INR 3,100 crores (17%)

Sector-Wise CSR Distribution

CSR investments in India are directed towards several key sectors, with industries focusing on areas that align with both their business goals and societal needs. Below is an analysis of the sectors receiving the highest CSR allocations, including education, healthcare, rural development, and environmental sustainability.

1. Education

Education remains the top priority for CSR investments, with major corporations funding projects to enhance access to quality education, vocational training, and digital learning. Companies in IT, manufacturing, and banking are significant contributors.

➤ TCS and Infosys have made substantial investments in education and skill development programs.

2. Healthcare

Healthcare CSR initiatives include funding for hospitals, health camps, disease research, and vaccination drives, particularly in the aftermath of the COVID-19 pandemic. Pharma giants and IT companies are key players in this sector.

➤ Wipro contributed INR 100 crore for COVID-19 relief efforts, including medical supplies and vaccinations.

3. Rural Development

Many companies focus on improving rural livelihoods by providing access to clean water, promoting sustainable farming, and improving education and healthcare. Leading players in rural development include Mahindra & Mahindra, ITC, and Tata Group.

➤ ITC’s Mission Sunehra Kal has empowered rural communities with access to healthcare, education, and livelihood programs.

4. Environment

Environmental sustainability is a growing priority, with companies investing in renewable energy, afforestation, and waste management initiatives. Major contributors to environmental CSR in India include Reliance Industries, L&T, and Hindustan Unilever.

➤ Reliance Industries has undertaken several projects focused on renewable energy and environmental conservation.

Top Companies Leading CSR in India

Corporate Social Responsibility in India is being driven by some of the country’s largest and most influential companies. These organizations are making a substantial impact through their CSR programs, which focus on addressing critical issues such as education, healthcare, environmental sustainability, and rural development. This section sheds light on the top companies that are pioneering these transformative initiatives and changing lives for the better.

Tata Group: Tata Group remains one of the highest spenders in CSR activities, with a strong focus on education, healthcare, and rural development.
Reliance Industries: Known for its contributions to health and education, Reliance has also invested heavily in renewable energy and sustainable practices.
Wipro: Wipro has a longstanding commitment to education, healthcare, and the environment, with a significant focus on COVID-19 relief and digital literacy.
Infosys: Infosys focuses on educational initiatives and has committed millions to skill-building programs.
ITC Limited: ITC has been instrumental in promoting sustainable livelihoods, rural development, and environmental conservation.

Key Drivers of CSR in India

CSR in India is shaped by several factors that drive companies to integrate social responsibility into their strategies:

Regulatory Mandates: The Companies Act, 2013 mandates CSR spending for companies meeting certain criteria, making CSR a legal obligation for large businesses.
Consumer Expectations: With consumers prioritizing socially responsible brands, companies are aligning their CSR activities with ethical and sustainable practices to boost brand loyalty.
Government Initiatives: The Indian government encourages CSR through various programs like Swachh Bharat Abhiyan and PM CARES Fund, providing platforms for businesses to contribute to national causes.
Global Standards: International frameworks like the UN SDGs push Indian companies to adopt global CSR standards, especially as they expand into international markets.
Environmental Sustainability: CSR investments are increasingly directed towards environmental initiatives, including renewable energy and waste management, driven by growing climate change concerns.
Corporate Reputation: CSR programs enhance corporate reputation, build consumer trust, and contribute to long-term business success.
Stakeholder Pressure: Shareholders and stakeholders demand greater accountability, pushing companies to invest in CSR and report their impact.
Socio-Economic Needs: CSR addresses India’s socio-economic inequalities, focusing on poverty alleviation, healthcare, education, and rural development.
Employee Engagement: Companies with strong CSR initiatives attract and retain talent, especially from younger generations who value ethical business practices.

Market Opportunities in CSR

As businesses increasingly focus on sustainability, social impact, and ethical practices, Corporate Social Responsibility (CSR) is emerging as a key area for growth. With the growing expectations from consumers, governments, and stakeholders, companies now have significant opportunities to align their business strategies with social causes, creating value both for society and their bottom lines. Key opportunities in the CSR in India include:

1. Sustainability Initiatives

Companies are focusing on renewable energy, waste management, and sustainable agriculture. The demand for green technologies and eco-friendly practices is rising, presenting a huge growth potential in the CSR market.

2. Health and Well-being Programs

Post-pandemic, CSR investments in healthcare initiatives like health camps, disease research, vaccination drives, and mental health support are booming. Partnerships in health innovation are a strong opportunity for growth.

3. Education and Skill Development

There’s an increasing demand for CSR investments in education, including digital learning platforms and vocational training. Collaboration with educational institutions and edtech companies is a major opportunity in this sector.

4. Rural Development and Livelihood Enhancement

Companies are investing in improving rural livelihoods through initiatives like access to clean water, sanitation, and sustainable farming practices. There are opportunities for partnerships with NGOs and local organizations to make a meaningful impact.

5. Tech-Enabled CSR

Emerging technologies such as blockchain for transparency and AI for disaster management offer new opportunities for CSR initiatives. Companies can leverage these technologies to enhance the scale and effectiveness of their CSR projects.

6. Disaster Relief and Crisis Management

There’s a growing need for CSR funding in disaster management and crisis relief. Companies have the opportunity to partner with governments and international organizations for efficient disaster response.

7. Regulatory Support and Mandates

The CSR mandate under the Companies Act, 2013 is creating a structured market for CSR activities. As regulations evolve, there will be more demand for CSR consultancy, management, and reporting services.

End Note

CSR spending in India has seen an upward trajectory, with a growing focus on education, healthcare, rural development, and environmental sustainability. Companies, especially large ones, have embraced CSR to create long-term positive impacts on society and the environment. The last two years have seen an increase in CSR expenditure, with a more regionally distributed spending and an emphasis on sectors that address both immediate and long-term challenges faced by Indian society.

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FAQs

1. What is the current CSR in India?

In FY 2022-2023, India’s total CSR expenditure was Rs 29,986.92 crore, up from Rs 26,579.78 crore in FY 2021-2022.

2. What is the 2% CSR law in India?

The 2% CSR law requires companies with an annual turnover of Rs 1,000 crore or more, or net profit of Rs 5 crore or more, to spend 2% of their average net profit on CSR activities.

3. How much does India spend on CSR?

India spent Rs 29,986.92 crore on CSR in FY 2022-2023.

4. What is the CSR rule in India?

The CSR rule mandates that eligible companies spend 2% of their average net profit over the last three years on CSR activities.

5. Who is eligible for CSR?

Companies with a net worth of Rs 500 crore, annual turnover of Rs 1,000 crore, or net profit of Rs 5 crore or more are eligible for CSR.

6. Who started CSR in India?

CSR in India was formalized with the Companies Act, 2013, though companies like the Tatas and Birlas were pioneers in corporate philanthropy.

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CSR in India: Eligibility, Laws, and Trends

Contents

What is CSR?

Who is Eligible for CSR?