Introduction to CSR in India – Part I: From Corporate Giving to Corporate Responsibility

Why CSR is no longer optional in spirit

CSR in India is often reduced to one simple idea: companies giving money for a good cause. That view is incomplete.

Corporate Social Responsibility is not just charity. It is a governance-backed commitment to use corporate resources for social, environmental, and economic value creation. In India, CSR has a legal foundation under Section 135 of the Companies Act, 2013, supported by the Companies (Corporate Social Responsibility Policy) Rules, 2014. Eligible companies are required to spend on CSR and disclose how that money is planned, approved, implemented, monitored, and reported. India’s framework makes CSR a board-level responsibility, not just a philanthropic side activity. 

This legal design reflects a broader policy idea: companies do not operate in a vacuum. They use public resources, benefit from local communities, and depend on social stability, ecological resilience, and institutional trust. That is why CSR in India sits at the intersection of governance, strategy, compliance, and impact. The law does require eligible companies to spend on CSR, but it also expects those expenditures to be thoughtfully planned, approved, monitored, disclosed, and aligned to accepted social priorities. 

Which companies fall under CSR?

A company is required to comply with CSR provisions if, during the immediately preceding financial year, it meets any one of the following thresholds: net worth of ₹500 crore or more, turnover of ₹1,000 crore or more, or net profit of ₹5 crore or more. Such companies are expected to spend at least 2% of the average net profits of the three immediately preceding financial years on CSR activities, subject to the framework laid down under Section 135 and the CSR Rules.

India’s CSR spending has also become too large to treat casually. CSR expenditure increased from ₹10,065.93 crore in FY 2014-15 to ₹34,908.75 crore in FY 2023-24, with 27,188 companies reporting CSR spending in FY 2023-24.

This is important because CSR applicability is not based on corporate intent, brand positioning, or sustainability claims; it is triggered by financial thresholds. Once covered, the company must create an internal governance structure around CSR. This is where many organisations move from “doing some good work” to building a formal and accountable CSR system. There is a shift — from ad hoc donations to a due diligence-driven, policy-backed, board-governed process. 

CSR is a board-driven process

One of the most important features of India’s CSR architecture is that it is board-driven. Section 135 requires the constitution of a CSR Committee in applicable cases, and the committee is expected to formulate and recommend the CSR Policy, recommend the amount of expenditure, and monitor the policy from time to time. The Board, in turn, must approve the CSR Policy, disclose its contents in the Board’s report, place it on the company website, and ensure that approved CSR activities are actually undertaken.  

This board-driven structure matters for two reasons. First, it makes CSR part of corporate governance rather than leaving it to goodwill alone. Second, it demands documented decision-making: identifying priority areas, selecting projects, choosing implementing partners, approving budgets, tracking spend, and recording outcomes.  

Good CSR starts with governance hygiene. A strong CSR system usually includes:

• a functioning CSR Committee;
• a Board-approved CSR Policy;
• an annual action plan;
• project-wise budgets;
• clear implementation responsibilities;
• partner due diligence;
• fund utilisation processes;
• monitoring and reporting mechanisms;
• treatment of unspent CSR amounts;
• documentation for audit and disclosure.

What can count as CSR?

CSR is not an open-ended bucket of “good things.” Eligible CSR activities are expected to fall within the broad areas listed under Schedule VII of the Companies Act. These include activities such as eradicating hunger, poverty and malnutrition; promoting health care and sanitation; promoting education and livelihood enhancement; gender equality; environmental sustainability; protection of national heritage; support for armed forces veterans; sports promotion; contributions to specified public funds; support to technology incubators and research; rural development; and slum area development.

Good CSR is not about spreading money thinly across scattered causes. It is stronger when a company develops a sector focus, stays with two or three thematic areas, builds institutional expertise, and aligns intervention design with both community priorities and the company’s broader values or competencies. In that sense, Schedule VII provides the legal perimeter, but strategy determines the depth and quality of impact within that perimeter.

What does not count as CSR?

The CSR Rules make it equally clear that not every socially sounding expenditure qualifies as CSR. Activities in the normal course of business, activities undertaken outside India (with limited exceptions for Indian sports personnel), political contributions, activities benefiting employees of the company, sponsorships done mainly for marketing benefits, and activities undertaken to fulfil other statutory obligations are excluded from CSR.

This distinction is vital because many first-time CSR practitioners confuse philanthropy, branding, compliance spending, and employee welfare with legal CSR. The discipline of CSR lies in ensuring that projects are socially relevant, legally eligible, and administratively defensible. Documentation, partner checks, utilisation tracking, reporting, and impact orientation are so crucial. In CSR, intent matters — but so do process and proof. 

CSR policy is not a brochure — it is a governance document

A mature CSR system begins with a well-drafted CSR Policy. Under the law, the policy should indicate the activities to be undertaken by the company in line with Schedule VII. A good CSR Policy answers practical questions:

• What themes will the company prioritise?
• Which geographies will it focus on?
• Will projects be implemented directly or through partners?
• How will partners be selected?
• Who approves projects?
• How will funds be released?
• What documents are required for utilisation?
• How will monitoring be done?
• What happens to surplus or unspent CSR funds?
• When is impact assessment required?
• How will outcomes be reported?

Companies that treat the CSR Policy as a living management document usually build better programmes. Those that treat it only as a website disclosure often struggle during monitoring, audit, or board review.

A CSR policy is not a communications document. It is an accountability document. Companies that treat policy as a living management instrument usually build stronger project portfolios than those that treat it as a website disclosure.

Why implementing agencies matter

CSR can be undertaken directly by the company or through eligible implementing agencies. The rules recognise channels such as Section 8 companies, registered public trusts, registered societies, certain government-established entities, and eligible entities with the required registration and qualifications under the CSR Rules. Entities intending to undertake CSR activities are required to register by filing Form CSR-1, after which a unique CSR Registration Number is generated. Companies are also required to make annual CSR disclosures through the prescribed reporting framework, including CSR-2 in the MCA system.

But legal eligibility is only the starting point.Before selecting an implementing agency, companies should examine:

• legal constitution and registration documents;
• CSR-1 registration;
• 12A and 80G status, where relevant;
• FCRA status, if foreign contribution is involved;
• past project experience;
• audited financial statements;
• governance structure;
• board or trustee profile;
• field team strength;
• donor history;
• utilisation certificate practices;
• monitoring systems;
• litigation or reputational risks;
• experience in the proposed geography and theme.

In practical terms, CSR partner due diligence should include review through databases such as NGO Darpan and other publicly available information. That is how companies reduce leakage, misalignment, and reputational risk.

What changed in 2026

As of 13 June 2026, the main change in India’s CSR law in 2026 is the MCA notification dated 27 May 2026 that allows companies to fulfill a portion of their CSR obligation through Zero Coupon Zero Principal (ZCZP) instruments issued by eligible Not for Profit Organizations (NPOs) registered on the Social Stock Exchange (SSE).  The 2026 amendment inserted definitions for:

• “Not for Profit Organization”, linked to the definition under SEBI’s ICDR framework, and
• “Zero coupon zero principal instrument”, defined as a security issued by an eligible NPO registered on the SSE segment of a recognised stock exchange.

A company can use this route only up to 10% of its total CSR expenditure for that financial year. The balance CSR amount must continue to be deployed through other permitted routes. If a company subscribes to a ZCZP instrument, the company is exempt from undertaking impact assessment for projects funded through that instrument.

From cheque-writing to strategic alignment

CSR should be strategically aligned but not reduced to branding. That is exactly the balance good companies need. Strategic alignment means the company chooses causes it can commit to over multiple years, where it can build ecosystems, demonstrate seriousness, and create genuine visibility through outcomes rather than publicity. This may involve linking CSR themes to issues such as livelihoods, climate resilience, education, waste, water, rural development, gender inclusion, or responsible value chains — all while staying within Schedule VII.

For example, a company may choose to focus on decent work and livelihoods, responsible consumption and waste, or climate-linked community resilience, while linking those programmes conceptually to broader development agendas such as the Sustainable Development Goals. The legal framework does not mandate SDG language, but the policy logic of CSR strongly supports it because it helps companies move from one-off activities to structured portfolios with clear outcomes.

The real purpose of CSR

At its best, CSR is not a legal minimum or a reputation shield. It is the discipline of asking: Where can corporate resources create durable public value? It requires listening before spending, governing before announcing, and measuring before claiming. Companies that do this well treat CSR as a long-term social investment — not in the financial sense of return extraction, but in the sense of strengthening communities, institutions, and environmental systems that make inclusive growth possible,

That is why an introduction to CSR should not end with applicability thresholds or committee composition. It should end with a mindset: CSR is where corporate purpose is tested through governance, implementation, and evidence. In the next part, we will move from the “what” of CSR to the “how” — how to design CSR projects, select implementing partners, manage funds responsibly, monitor progress, and build impact.

Hero MotoCorp: CSR linked to road safety, biodiversity, and inclusion

Hero MotoCorp’s CSR work is useful because it shows how a company can connect CSR with the social risks and responsibilities of its own sector. As a two-wheeler manufacturer, road safety is not a random CSR theme for Hero; it is directly connected to the mobility ecosystem in which the company operates.

Under its Hero WeCare CSR umbrella, the company frames its CSR vision around building a“Greener, Safer and Equitable World.” Its focus areas include biodiversity protection, renewable energy, water conservation, road safety training parks, road-safety awareness, education, skill development, preventive healthcare, community welfare, sports promotion, and support for heroes of the nation.

This makes Hero MotoCorp a good example of strategic CSR alignment. The company is not only funding generic social causes; it is choosing themes that make sense for its business context. For instance, road safety is especially relevant because two-wheelers form a major part of India’s mobility landscape. Hero’s CSR programmes such as Ride Safe India, road safety training parks, and awareness campaigns show how CSR can address a sector-linked public problem without becoming a marketing exercise.

In FY 2024-25, Hero MotoCorp reportedly spent ₹80.54 crore on CSR initiatives, against a CSR obligation of ₹79.99 crore, impacting around 8.47 lakh beneficiaries through its Hero WeCare platform. Its CSR work has also been reported to have impacted 1.4 million people through initiatives in education, livelihoods, road safety awareness, and biodiversity conservation. 

Hero MotoCorp’s Sustainability Report 2024-25 also places CSR within a wider ESG architecture, covering climate action, energy management, water management, waste management, circularity, product stewardship, biodiversity protection, human rights, diversity and inclusion, occupational health and safety, customer engagement, CSR, business ethics, risk management, and value chain management. 

The important lesson from Hero MotoCorp is this: CSR becomes stronger when it is not isolated from business realities. A mobility company can meaningfully work on road safety. A manufacturer can work on water, waste, circularity, and biodiversity around its operations. A large employer can support skilling and inclusion. The point is not to convert CSR into business promotion, but to use a company’s context to identify where its responsibility is most real.

Reference list

• India Code (2013) Companies Act, 2013: Section 135 – Corporate Social Responsibility. 
• India Code (2014) The Companies (Corporate Social Responsibility Policy) Rules, 2014 (inclusive of amendments).
• The Institute of Company Secretaries of India (ICSI) (2021a) Guidance Note on Corporate Social Responsibility (GN-10). New Delhi: ICSI.
• National CSR eXchange (n.d.) Section 135: Corporate Social Responsibility. 
• Government of India, Ministry of Corporate Affairs (2026a) Companies (Corporate Social Responsibility Policy) Amendment Rules, 2026, G.S.R. 415(E), 27 May. 

• Government of India, Ministry of Corporate Affairs (2026b) Amendment in Schedule VII of the Companies Act, 2013, G.S.R. 416(E), 27 May.

• Press Information Bureau (2026) MCA facilitates Corporate Social Responsibility (CSR) through Zero Coupon Zero Principal Instrument by expanding the scope of Schedule VII of the Companies Act, 2013, 29 May.
• Hero MotoCorp Limited (2024) Sustainability Report 2023–24: We Care Today for a Better Tomorrow. 
• Hero MotoCorp Limited (2025) Sustainability Report 2024–25: Building a Better Tomorrow, Together. 
• Hero MotoCorp Limited (n.d.) Corporate Social Responsibility. 

Indian CSR model

Indian Corporate Social Responsibility (CSR) laws have only set minimum standards, but have not created an impetus for positive action. The reported expenditure on CSR projects doesn't give a good metric of societal welfare. Issues are emerging in the Indian CSR model that is worth being paid much attention to. At present, the fate of most CSR can be termed as similar to the glorified IRDP scheme. There is a huge noise but nobody to verify the impact measured. The characteristics of the Indian CSR model:

Integration of business objectives with CSR: A study by Macarthur Foundation has found that CSR spending is highly agenda-driven and closely aligned to the corporation’s business strategies, competencies, and brand recognition. Tata Motors started a safe driving program. ITC went in and realigned its supply chain to help farmers. HUL works with children in schools and mothers through health clinics to educate them about hygiene behavior.

The scope of CSR is limited as it is seen either as a Public Relations exercise or Branding campaign by most of the companies. That is why outreach initiatives involving mass participation, such as the Marathons are funded by CSR rather than direct marketing sponsorship. Few companies responsible for acquiring lands through coercion, disposing of toxic waste unchecked, doing unmeasured usage of groundwater and unethical labor practices can counter this with a positive PR campaign.

Lack of Professional Human Resource: Companies deploy mostly Human resources from HR, Public Relations, and Marketing departments in the CSR wing. CSR with a good budget requires independent function and skilled project managers. The lack of vision leads to poor strategic planning and bias mechanism to channelize the money. There is also too much interference by the top management without the required skill set for the course correction and arbitrary suggestions to partner NGOs.

Government interference in CSR: Current government has been actively encouraging CSR investments in its pet schemes such as the Swachh Bharat Abhiyan initiative. Hence, government priorities have resulted in a very large chunk of CSR money being invested in a handful of programs to win direct or indirect goodwill from the government. Instead of revenue collected through taxation of the companies for democratically determined priorities, CSR money goes into whatever the companies prefer to emphasize. In other words, ‘mandatory’ CSR will remain largely voluntary.

Sectoral Preference: There are interesting insights while reading India CSR Outlook Report 2017. CSR spending is almost uniformly focused on community development, education, and health, and is often directed to mostly well-established NGOs and causes. Education projects received almost one-third of total CSR spent. Skills development projects received 5% while Swachh Bharat related projects received 7.3% of the Country’s CSR spent.

CSR fund is primarily focused on health and education because they are for the short term, tangible, and more visible. Community Development, Relief work, Women empowerment, Environment protection, working with disables & orphans comes secondary activities in the list. The tertiary level of involvement is in the field of skill development, livelihoods, and financial inclusion. These activities are not much taken up due to complexity in program design, lack of professional experience, and exposure of the CSR team in the given sectors. Journalism Fellowship, Rights, and advocacy-based grants are neglected by the CSRs. The reason for the neglect is simple as the funding outcome may come indirectly lead to confrontation with the state.

Funded NGOs: As far as funding NGOs are concerned, CSR spending has more strings attached than a foreign foundation. Instead of organizing the community, NGOs work on survival instincts. Local NGOs are approached by CSRs to implement their own pre-formulated programs according to their own agendas and outreach policies. This means a big gap arises between CSR requirements and real development needs.

Fraudulent Practices: Some companies are using on hire charitable trusts to fabricate CSR spending. Read more at: How Indian companies are misusing public trusts to launder their CSR spending.

Impact Investors: CSR funding currently cannot go directly towards impact investments at present. But Impact investors can currently adopt a Social Venture Fund (SVF) legal entity under Category I of India’s securities regulator SEBI’s Alternative Investment Fund (AIF) Regulations. The recommended amendment will be allowing CSR guidelines for financing to a Social Venture Fund.

There are no quick fixes when it comes to solving social issues. India Inc needs to wake up to its social responsibilities. Indian CSR is in a nascent stage and will take years of maturity to support activities with intangible outcomes. The impact numbers with the length and breadth of the activities are available but there is a lack of strategy and sustainable investment models. The future lies in the deployment of the entrepreneurial mind of corporates in designing the impact interventions. Report on India Inc spending on CSR 2017-18 will give the readers a story towards change in a year.