Key Takeaways
- CSR in India is mandatory with eligible companies required to spend 2% of profits on social development
- The mandate was introduced to bridge gaps in sectors like health, education and livelihoods where public systems fall short
- CSR has evolved from charity to strategy, moving towards structured, outcome-driven interventions
- Schedule VII offers flexibility, allowing companies to align CSR with national and local development priorities
- Proposed reforms aim to ease compliance, while retaining accountability and impact focus
- NGOs play a critical role, providing last-mile access, contextual understanding and execution capability
- Partnership models are key, combining corporate scale with grassroots expertise
- Impact and accountability are increasingly central, with growing emphasis on measurable outcomes
- Hybrid approaches are emerging, reflecting a shift towards scalable, sustainable CSR models
What is Corporate Social Responsibility (CSR) in India? Meaning and Importance
Before going into the meaning of the word, let’s understand as to why CSR came into existence.
Companies were making huge benefits and it was deepening the divide between the rich and the poor of India. By mandating CSR for eligible companies, their economic resources and management expertise could be utilised for the welfare of the nation.
So, CSR is a business spending mandate of the government wherein companies mobilize substantial funds for critical sectors that traditional government schemes alone are not able to fully cover.
The critical sectors are:
- Education & Skills: Vocational training, building schools and career counseling.
- Healthcare: Sanitation, primary healthcare, maternal and child health, reproductive health, malnutrition eradication.
- Environment: Water conservation, agriculture, renewable energy and afforestation.
- Social Equality: Empowering women, minorities and senior citizens
CSR Law in India under the Companies Act, 2013
Under Section 135 of the Companies Act, 2013, eligible for-profit companies must spend at least 2% of their average net profits from the preceding three years on Corporate Social Responsibility (CSR) activities. Mandatory for companies with a net worth of ₹500 crore+, turnover of ₹1,000 crore+ or net profit of ₹5 crore+, this law requires a CSR Committee to oversee projects aligned with Schedule VII.
In CSR activities, preference needs to be given to local areas where companies operate. This is to ensure that the communities whose lives are most affected by the commercial activities of the companies reap the maximum benefits out of the CSR mandate.
The mandate amount, if not spent, would mean enquiries and a report from the company’s board to the government explaining the reasons for the non-spend. The amount doesn’t remain with the company, it must be either transferred to a special account within 30 days of the financial year-end or to a fund specified in Schedule VII within six months.
Failure to comply can lead to severe consequences with a penalty of ₹1 crore or twice the amount required to be transferred to the CSR fund, whichever is less.
CSR Eligibility Criteria for Companies
As of March 2026, the government has proposed a series of amendments to the Companies Act and LLP laws to promote ease of doing business and reduce compliance burdens. These include changes to CSR norms, decriminalisation of procedural defaults, greater flexibility in share buybacks and relaxations for small firms.
As part of these reforms, the Ministry of Corporate Affairs has specifically proposed changes to Corporate Social Responsibility (CSR) provisions. One key proposal is to increase the net profit threshold for CSR applicability to ₹10 crore, thereby potentially reducing the number of companies required to undertake CSR. Additionally, the time allowed for transferring unspent CSR funds to a designated account is proposed to be extended from 30 days to 90 days, providing companies greater flexibility in compliance.
The amendments also include revisions to the eligibility criteria for the constitution of CSR committees. Currently, companies meeting thresholds of ₹500 crore net worth, ₹1,000 crore turnover or ₹5 crore net profit are required to spend at least 2% of their average net profits on CSR activities.
Overall, these proposed changes signal a shift towards simplifying compliance requirements while maintaining the CSR framework, with an emphasis on flexibility and ease of implementation for companies.
List of CSR Activities as per Schedule VII
Corporate Social Responsibility (CSR) in India is guided by Schedule VII of the Companies Act, 2013, which outlines a broad and flexible set of activities that companies can undertake to contribute to social development. Rather than prescribing rigid categories, the framework allows organisations to align their CSR initiatives with both national priorities and local community needs.
At its core, Schedule VII places strong emphasis on human development and basic needs. This includes efforts to (i) eradicate hunger, poverty and malnutrition, alongside improving access to healthcare, sanitation and safe drinking water. These areas remain critical in addressing structural inequalities and improving quality of life, particularly in underserved regions.
(ii) Education is another central pillar. The framework encourages companies to support formal and informal learning, including special education, vocational training and livelihood enhancement programmes. By focusing on employability and skills, CSR initiatives in this area contribute directly to economic participation and long-term development.
Schedule VII also highlights the importance of (iii) gender equality and social inclusion. Initiatives that empower women, create safe spaces such as hostels and day-care centres, and reduce inequalities faced by marginalised communities are recognised as key CSR activities. This reflects a broader understanding that development must be inclusive to be sustainable.
(iv) Environmental sustainability forms a significant part of the CSR mandate. Companies are encouraged to invest in projects that promote ecological balance, conserve natural resources and improve environmental quality. This includes activities such as afforestation, biodiversity conservation and sustainable resource management, aligning corporate action with global climate and sustainability goals.
In addition, the framework recognises the importance of preserving (v) cultural heritage and national identity. CSR efforts can support the protection and restoration of historically significant sites, as well as promote traditional arts and handicrafts, thereby sustaining cultural ecosystems and livelihoods.
(vi) Support for armed forces veterans and their families, as well as the (vii) promotion of sports — particularly at the grassroots and national levels — are also included within the scope of CSR. These areas contribute to both social welfare and national development.
Schedule VII further enables companies to contribute to government-led initiatives by allowing (viii) donations to specified funds such as the Prime Minister’s National Relief Fund and PM CARES Fund. It also encourages support for (ix) research and innovation through contributions to technology incubators and projects in science and engineering.
Finally, the framework places emphasis on (x) rural and slum area development, as well as (xi) disaster management, including relief, rehabilitation and reconstruction efforts. These areas ensure that CSR remains responsive to both long-term development challenges and immediate humanitarian needs.
Overall, Schedule VII provides a comprehensive yet adaptable structure for CSR in India. By covering a wide spectrum of social, economic and environmental priorities, it enables companies to design interventions that are not only compliant, but also meaningful and impactful.
Real CSR Examples by Companies in India
The roots of CSR in India began in the mid-19th century (1850s), driven by philanthropy and religious traditions. While not labeled as “CSR” at the time, pioneers like the Tatas, Birlas and Godrej families established the first major social initiatives by funding schools, hospitals and temples indicating that social good need not require mandates. These early efforts were based on personal values rather than legal mandates, focusing on community development and relief during famines or epidemics.
Historical Evolution of CSR in India
The idea of corporate social responsibility (CSR) in India did not emerge overnight. It has evolved gradually, shaped by cultural values, economic shifts and changing expectations from businesses. Broadly, this journey can be understood across four distinct phases.
Phase 1 (1850–1914): Charity and Philanthropy
Industrial families such as the Tatas, Birlas, Godrejs, Shrirams and Bajajs played a pioneering role, often funding temples, schools and hospitals. These efforts were driven less by formal strategy and more by a sense of moral responsibility and community welfare.
Phase 2 (1914–1960): Social Development
As India moved through the freedom struggle and into independence, the role of businesses began to shift. CSR became more aligned with national priorities, influenced by Gandhian ideals of trusteeship. Companies increasingly supported social development initiatives, particularly in rural areas and worked alongside the state in nation-building efforts.
Phase 3 (1960–1990): Institutionalisation through Corporate Trusts
During this period, CSR became more structured. Many companies established dedicated trusts and foundations to manage their social initiatives. While the approach was still largely philanthropic, there was greater organisation and continuity in how these activities were planned and implemented.
Phase 4 (1991–2013): Liberalisation and Strategic CSR
Economic liberalisation marked a turning point. As businesses expanded and globalised, CSR began to take on a more strategic role. Partnerships with NGOs, increased stakeholder expectations and the rise of public-private collaborations led companies to think beyond charity and towards long-term impact.
Modern CSR Recognition
While philanthropic giving has existed for centuries, the formal recognition of CSR in India matured with the release of the DPE Guidelines in 2010 for public sector enterprises and the subsequent mandate for disclosures. FICCI also played a major role by establishing the first CSR Awards in 1999 to recognize corporate contributions.
How Companies Implement CSR Projects with NGOs
Companies partner with NGOs based on alignment, transparency, accountability and sustainability. For example, a company finding climate solutions will pair up with development organizations who have the in-depth knowledge of disaster-prone areas and invest their funds in helping the affected communities grow more resilient to climate changes.
NGOs that have historically worked with communities for an ample amount of time provide companies with the strategic direction, an exhaustive list of community needs and priorities, on-ground implementation measures and long-term sustainability models to ensure impact lasts beyond the project period.
Why NGOs Play a Critical Role in CSR Implementation
Even as many companies today establish their own foundations to implement CSR programmes, the role of NGOs remains central to driving meaningful impact on the ground. Corporate foundations often bring scale, resources and strategic alignment with business goals. However, translating intent into lasting community change requires a depth of local understanding that NGOs are uniquely positioned to offer.
NGOs act as the bridge between the company intent and the community transformation. They provide the grassroots expertise, local presence, contextual knowledge and implementation capability — all factors that are difficult to build quickly and — are necessary to translate corporate funds into measurable, long-term impact. They understand local socio-cultural dynamics, identify real needs beyond surface-level indicators and design interventions that are both relevant and sustainable.
Importantly, NGOs approach CSR through a social development lens rather than a compliance lens. This allows them to design programmes that address root causes — whether in education, healthcare or livelihoods — rather than just symptoms. Their focus on outcomes and community ownership ensures that interventions continue to create value even after project cycles end.
For companies with their own foundations, partnering with NGOs is not a limitation but a strategic advantage. It enables them to combine institutional capacity with grassroots insight, ultimately leading to more credible, scalable and impactful CSR outcomes.
Benefits of Partnering with an NGO for CSR
- Strong last-mile reach
India has over 3 million NGOs, many working in remote and underserved areas, enabling companies to reach communities beyond their direct operational footprint. - Grassroots expertise
NGOs bring deep understanding of local contexts, ensuring CSR programmes are relevant, culturally appropriate and community-driven. - Better implementation outcomes
Evidence from development programmes shows that initiatives with community participation and local adaptation have higher success and sustainability. - Regulatory compliance made easier
Established NGOs are already registered under MCA (CSR-1) and have systems for reporting, audits and documentation, reducing compliance burden for companies. - Measurable impact and accountability
NGOs use tools like baseline surveys, monitoring frameworks and third-party evaluations, aligning with the growing requirement for impact assessment in CSR. - Cost and time efficiency
Partnering avoids the need to build large in-house CSR teams, allowing companies to leverage existing infrastructure and expertise. - Faster programme rollout
NGOs’ on-ground presence enables quicker implementation compared to setting up new operations from scratch. - Focus on long-term change
NGOs typically design programmes that address root causes, ensuring sustainability beyond short-term CSR cycles. - Enhanced credibility and trust
Working with credible NGOs strengthens stakeholder confidence, including communities, regulators and investors. - Strategic collaboration advantage
Combines corporate scale and funding with NGO insight and execution, leading to more effective and scalable CSR models.
How Smile Foundation Implements CSR Projects Across India
One of the distinguishing aspects of our work in CSR implementation is its hybrid model, which combines Social Venture Philanthropy (SVP) with direct programme execution. This approach allows the organisation to balance scale, quality and long-term sustainability across diverse geographies.
At the core of this model is Social Venture Philanthropy (SVP) — an approach inspired by venture capital principles. Under SVP, Smile Foundation partners with credible community-based organisations (CBOs) to implement development projects. However, the engagement goes far beyond funding. We actively invest in capacity building, training and institutional strengthening, enabling these grassroots partners to deliver programmes effectively and sustainably. By nurturing leadership, improving governance practices and embedding accountability mechanisms, SVP ensures that smaller organisations are equipped to scale their impact over time.
Complementing this is our Outreach model, where programmes are implemented directly by the organisation. This approach is particularly relevant in remote or underserved regions, where the complexity of challenges or lack of local capacity requires more intensive, hands-on intervention. By working closely with local communities and stakeholders, Smile Foundation ensures that these programmes are not only professionally managed but also contextually relevant and outcome-driven.
What strengthens this dual approach is a strong emphasis on credibility and accountability. Smile Foundation follows a four-tier audit and evaluation mechanism, ensuring transparency in fund utilisation and rigorous assessment of programme impact. This structured oversight builds trust among corporate partners while ensuring that CSR investments translate into measurable social returns.
Together, the SVP and Outreach models reflect a pragmatic understanding of India’s development landscape — where some contexts require collaboration and capacity building, while others demand direct intervention. This flexibility allows Smile Foundation to deliver CSR partnerships that are both scalable and deeply rooted in community needs.
FAQs — CSR in India
1. What is CSR in India and why is it important?
Corporate Social Responsibility (CSR) in India refers to the legal obligation of certain companies to contribute to social and environmental development. Introduced under the Companies Act, 2013, CSR ensures that businesses go beyond profit-making to play an active role in addressing issues such as education, healthcare, inequality and sustainability. It positions companies as key stakeholders in national development.
2. Which companies are required to comply with CSR provisions?
Companies are required to undertake CSR if they meet any one of the following criteria in the preceding financial year: a net worth of ₹500 crore or more, a turnover of ₹1,000 crore or more, or a net profit of ₹5 crore or more. This threshold ensures that larger, financially capable companies contribute to social impact.
3. How is the CSR spending amount calculated?
Eligible companies must spend at least 2% of their average net profits from the last three financial years on CSR activities. The calculation excludes certain types of income, such as profits from overseas branches, ensuring that CSR spending reflects domestic business performance.
4. What kind of activities are considered valid CSR under Indian law?
CSR activities must fall under the categories listed in Schedule VII of the Companies Act. These include promoting education, improving healthcare and sanitation, supporting gender equality, ensuring environmental sustainability, rural development, disaster relief and more. The framework is broad, allowing companies to design programmes aligned with both national priorities and local needs.
5. How can companies implement their CSR initiatives?
Companies have multiple implementation options. They can run programmes directly, set up their own foundations, or partner with registered NGOs and implementing agencies. In practice, many companies adopt a hybrid approach, combining in-house strategy with NGO-led execution to ensure both scale and effectiveness.
6. Why are NGOs considered important partners in CSR?
NGOs bring deep grassroots knowledge, community trust and implementation expertise. They understand local challenges, can adapt programmes in real time and ensure sustained engagement with beneficiaries. This makes CSR initiatives more relevant, inclusive and impactful, especially in underserved or remote regions.
7. What happens if a company does not spend its CSR budget?
If CSR funds remain unspent, companies are required to transfer the amount to a specified fund or a designated CSR account within a defined timeframe. For ongoing projects, the funds must be utilised within a stipulated period; otherwise, they must be redirected as per regulatory guidelines. This ensures accountability and prevents funds from remaining idle.
8. Is CSR in India voluntary or mandatory?
CSR is mandatory for companies that meet the eligibility criteria, making India one of the first countries to legally require corporate social investment. However, while spending is mandated, companies have flexibility in choosing the areas and methods of implementation.
9. What is the role of impact assessment in CSR?
Impact assessment has become increasingly important, especially for large CSR projects. Companies are expected to evaluate whether their interventions are creating measurable and sustainable outcomes. This includes tracking indicators such as improvements in education, health or livelihoods, moving CSR from a spending exercise to an outcome-driven approach.
10. How is CSR evolving in India today?
CSR in India is gradually shifting from a compliance-driven activity to a more strategic and integrated function. Companies are focusing on long-term programmes, aligning CSR with business values, and building partnerships with NGOs and institutions. There is also greater emphasis on transparency, data-driven decision-making and sustainable development goals.
