International Journal For Multidisciplinary Research

E-ISSN: 2582-2160   •   Impact Factor: 9.24

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Mandatory CSR in India: Impact, Costs, and Corporate Behavior

Author(s) Dr. Paramata Bhuvaneswari, Ms. Ramavathu Naga Malleswari
Country India
Abstract Since the landmark insertion of Section 135 into the Companies Act, 2013 and the operationalization of the Companies (Corporate Social Responsibility Policy) Rules, 2014, India has pioneered a legal experiment: mandatory corporate social responsibility (CSR). The statutory norm—requiring qualifying companies to allocate a minimum of 2% of average net profits for CSR activities—sought to harness corporate resources for national development, encourage corporate-community partnerships, and institutionalize corporate contributions to social goods. This article offers a comprehensive, critical appraisal of mandatory CSR in India. It traces the legal evolution and recent regulatory amendments, analyses direct and indirect costs borne by companies, evaluates behavioral changes in corporate strategy and governance, and assesses the macro and micro impact of compulsory CSR spend. Drawing on statutory texts, regulatory notifications and recent enforcement data, the article identifies key implementation challenges—compliance quality, transparency deficits, administrative bottlenecks and the risk of instrumentalization (including greenwashing). It concludes with policy recommendations aimed at improving impact orientation, strengthening accountability, and rebalancing incentives to ensure that mandatory CSR delivers measurable social returns without unduly distorting corporate decision-making.
Keywords Mandatory CSR; Companies Act, 2013; Section 135; CSR Rules; CSR-1/CSR-2; corporate governance; compliance cost; impact assessment; India.
Field Sociology > Administration / Law / Management
Published In Volume 7, Issue 5, September-October 2025
Published On 2025-10-22
DOI https://doi.org/10.36948/ijfmr.2025.v07i05.58435
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