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Indian MPs debate law requiring companies to spend 2% of profits on CSR initiatives

September 2012

Companies based in India are to be required to spend 2% of their net profit on CSR initiatives, under a law before Indian MPs.
 
And the parliamentary committee, headed by former finance minister Yashwant Sinha, has recommended that companies spend money on activities in and around the region in which they operate.
 
However, the Indian government is facing pressure from companies and trade bodies to veto the recommendation and allow companies to decide their own CSR spending policies.
 
India’s latest Companies Bill, which began its parliamentary passage last year, includes a clause that requires companies with profits of more than INR5m (£57,000) or a turnover of INR1bn (£11.4m) to spend 2% of their net profit from the preceding three years on a prescribed list of activities. These include eradicating poverty, investing in education and health, and enhancing vocational skills. 
 
The move is particularly expected to help deprived areas where mining- and metals-related companies operate.
 
But some believe the government may leave it to companies to implement the law, with boards accountable only to shareholders.



Asia | Regulation

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