The Companies Act 2013 – from development perspective

Though the concept of “Creating Shared Values” has been long discussed and debated for its definition and institutional stakes globally, passing of mandatory CSR provisions in India has gained much attention among development professional across borders of its intent, relevance and applicability.

India Companies Act 2013With provisions, targeted for corporate, an approach and impact centric perimeter, The Act seeks to create a space for all the national level development wings along with regional and grass-root level non-profits. Social institutions involved in welfare activities generally suffer from funding to innovate and carry their development goals for marginalized communities. Mandated in the provisions, corporate soft funds to be created as a result present excelling avenues for these organizations to excel with their development choice, righteous approach and clear mandate.


Long awaited, “The Companies Bill 2013” has finally been carved out last month. As it was speculated it has created quite a buzz among professionals from both corporate and development sector as it mandates the companies of certain size to spend 2% of their three year average annual profit towards Corporate Social Responsibility (CSR).  Going a step further from monetization, the bill provides set guidelines for reporting philanthropic spending, bringing a customized structured format to entire CSR portrayal in country.Till now, the framework of sustainability was generally talked about in global political forums and remains a topic of global debate but India has taken a step ahead to become first nation to have social welfare spending as part of company stature by law.

The last few decades have made it clearly evident that issue of development cannot be looked at in isolation from environmental and social disruption. Widely acceptable sustainable development, as we understood today poses a multidimensional challenge – in terms of economic, social and environmental dimensions – with each having competing claims for primacy. Although each one of us is a trustee in sustaining prosperity and posterity but as an important actors in national and global economies, corporate enjoy and capitalize on natural, social, human and economic resources. Now corporate enterprises are expected to adopt policies that balance the tradeoffs between these competing claims. Therefore an enduring and balanced approach to economic activity, social progress and environment protection is what is called for.

As the bill is up for implementation, several questions have been raised in different forums over its relevancy, feasibility, corporate readiness, institutional capacities and what not but the intent of the bill has been welcomed by all. The act is a proactive endeavor by Indian Government to structure the concept of putting back to communities or philanthropy in a formalized manner. With mathematics of more than 5000 companies and funds in range of 25 billion USD to be spent, the bill should be seen as a channel to abridge development gaps with alternate and innovative paths. It can be seen as a step to galvanize corporate competencies and expertise with Government schemes to bring and supplement visionary inclusive growth.

For those who are complaining of its openness, unclear articulations in certain aspects, the bill should be seen as a blank sheet to draw newer things with an option to erase and redraw before selection of the best and widely applicable. As the bill is not having any provisions for any adjudicatory body to overlook the implementation of CSR provisions much has been left with the corporate boards to select, proceed and innovate rather than remaining bound within regulations. For Corporates, the bill conveys not only CSR or philanthropy delineation and reporting but also as R & D by piloting innovative models for livelihood, facilitating basic amenities and gathering evidence of impacts. Long debated, creating shared values by for profit’s to some might be no different from image building but to others it can lead to innovations through the use of social, environmental or sustainability drivers to create new ways of working, new products, services, processes and new market space.

India has witnessed a number of successful and self-sustainable CSR programs by various corporate houses which not only made lasting impacts in social domain but also created a business case for their corporations as well as pithing their voice more strongly for good corporate governance. Pepsico, Tata group, Infosys, Bharti and many more voluntarily made a significant mark in development outreach with integration of their CSR practices with business strategy and outcome focused outlook.

Apart from its targeted audience of for profit organizations, the act has opened up doors for non-governmental and social enterprises which are involved at the grassroots with marginalized section in India. Backed by their tried and tested models in facilitating services across different domains of social welfare, teaming up with a rightful corporate partner would fuel the development sector diring for funds to run their innovations. These corporate CSR funds provisioned with this bill should be translated as softer pools of capital to seed innovations as well as absorb initial market risk which intends to enable market momentum and design at scale approach. In supplementary steps, planning to set up a hub for non-government organizations with a complete database of their geographies expertize projects and outreach is also in pipeline which could become a synergistically match maker platform for For-profit and Non-profit houses.

In concluding thoughts it would be rightfully to say that, yes, India is ready for CSR. Now having the requisite regulatory support, having the corporate commitment towards it, having the capabilities, whether India would become a trailblazer for other developing economies in refurbishing CSR definitions or this ACT would be another pseudo archive to sock away.


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Akhil Choudhary

A Development Professional working as a trade officer for facilitation of Indo-Israel trade in clean-tech sector. Carrying a research oriented approach and honest objective to learn and implement, he has been part of various assignments by working with corporate to development organisations at different technological ends. Passionate about tracking all the latest developments in Clean-tech and Social sector his constant endeavor is to learn its intent and connotations with experienced analyst vision.