CSR in Indian Companies: From Philanthropy to Legal Mandate

Abstract

Corporate social responsibility (CSR) in India has changed considerably from the traditional model of corporate charity and the Gandhian trusteeship model. It is now a mandatory, strategic business framework that builds environmental and social benefits into core operations. Rooted in India’s long heritage of business responsibility, CSR underwent a significant transition after the economic liberalization of the 1990s, moving from philanthropy-based methods to a multi-stakeholder model that addresses financial stakeholders, workers and communities. CSR became a formal accountability mechanism on 1 April 2014, when Section 135 of the landmark Companies Act, 2013 came into force, requiring qualifying companies to spend at least 2% of their average net profits on CSR initiatives. Today, CSR goes beyond philanthropic contributions to serve as a crucial strategic instrument that promotes ethical behavior and sustainable environmental practices while aligning company operations with societal expectations. This paper analyzes the current landscape of CSR in India, tracing its development from conventional philanthropy to a mandatory strategic business model, and examines present practices, implementation hurdles and future possibilities. It investigates the regulatory framework governing CSR, including the Companies Act, 2013, the attendant compliance obligations and the mechanisms for enforcement. The paper seeks to contribute to the academic discourse on CSR in India and to inform policymakers, businesses, academia and civil society about the opportunities and challenges in fostering corporate sustainability and social welfare.